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Exhibit 2.1

EXECUTION VERSION

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PURCHASE AGREEMENT


by and between


COLFAX CORPORATION


and


CIRCOR INTERNATIONAL, INC.


Dated as of September 24, 2017

 

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TABLE OF CONTENTS

 

			Page
ARTICLE I PURCHASE AND SALE; ASSUMPTION OF LIABILITIES				1
Section 1.1	Purchase and Sale of the FH Shares			1
Section 1.2	Purchase and Sale of the Acquired FH Assets			2
Section 1.3	Assumption of Assumed Liabilities; Retention of Retained Liabilities			2
ARTICLE II PURCHASE PRICE; CLOSING				2
Section 2.1	Purchase Price			2
Section 2.2	The Closing			2
Section 2.3	Purchase Price Adjustment			4
Section 2.4	Allocation of Purchase Price			6
Section 2.5	Adjustments to Buyer Stock Consideration			6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER				6
Section 3.1	Organization, Etc.			6
Section 3.2	Authority Relative to this Agreement, Etc.			7
Section 3.3	Capitalization			7
Section 3.4	Consents and Approvals; No Violations			8
Section 3.5	Financial Statements			9
Section 3.6	Absence of Certain Changes			9
Section 3.7	Compliance with Law, Permits			9
Section 3.8	Undisclosed Liabilities			10
Section 3.9	Litigation			10
Section 3.10	Taxes			10
Section 3.11	Employee Benefit Plans			11
Section 3.12	Labor Matters			13
Section 3.13	Environmental Matters			14
Section 3.14	Real Property			14
Section 3.15	Intellectual Property			15
Section 3.16	Assets			15
Section 3.17	Brokers and Finders			16
Section 3.18	Contracts			16
Section 3.19	Insurance			17
Section 3.20	Customers			18
Section 3.21	Government Contracts			18
Section 3.22	Anti-Bribery Laws			19
Section 3.23	Export Control and Economic Sanctions			19
Section 3.24	Absence of Claims; Business Relationships With Affiliates			20
Section 3.25	Private Placement Matters			20
Section 3.26	No Additional Representations; No Reliance.			21
Section 3.27	No Other Representations or Warranties			21

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER				22
Section 4.1	Corporate Organization and Standing			22
Section 4.2	Authority Relative to this Agreement, Etc.			22
Section 4.3	Capitalization			22
Section 4.4	Consents and Approvals; No Violations			24
Section 4.5	Brokers and Finders			24
Section 4.6	Financing			24
Section 4.7	Securities Act			25
Section 4.8	Solvency			25
Section 4.9	Investigations; Litigation			26
Section 4.10	Investigation by Buyer			26
Section 4.11	SEC Reports; Financial Statements			26
Section 4.12	Listing and Maintenance Requirements			27
Section 4.13	Compliance with Laws; Buyer Permits			27
Section 4.14	Export Control and Economic Sanctions			27
Section 4.15	Buyer Plans			28
Section 4.16	Taxes			28
Section 4.17	No Additional Representations; No Reliance			29
Section 4.18	No Other Representations or Warranties			30
ARTICLE V COVENANTS				30
Section 5.1	Conduct of Business by Seller			30
Section 5.2	Access to Information			32
Section 5.3	Certain Governmental Approvals			33
Section 5.4	Further Assurances			34
Section 5.5	Intercompany Accounts and Arrangements			35
Section 5.6	Provision of Corporate Records			36
Section 5.7	Retained Names			36
Section 5.8	Guarantees			38
Section 5.9	Post-Closing Access to Information			39
Section 5.10	Production of Witnesses and Individuals			39
Section 5.11	Retention of Records			40
Section 5.12	Confidentiality			40
Section 5.13	Non-Competition; Non-Solicitation			41
Section 5.14	Mail and Other Communications; Accounts			42
Section 5.15	Transfer of Excluded Assets; Restructuring			43
Section 5.16	Obligations Regarding Non-Assignable Assets and Delayed FH Assets			43
Section 5.17	Obligations Regarding Delayed Companies			45
Section 5.18	Directors and Officers			46
Section 5.19	Buyer’s Financing Activities			46
Section 5.20	Conflicts; Privileges			51
Section 5.21	Local Purchase Agreements; Transition Services Agreement			51
Section 5.22	Specified Litigation			51
Section 5.23	Insurance			52
Section 5.24	Later Discovered Assets			52
Section 5.25	Financial Statements and Financial Reporting Matters			52
Section 5.26	Exclusivity			54
Section 5.27	Transaction Confidentiality Agreements			54
Section 5.28	Conduct of Business by Buyer			54
Section 5.29	Termination and Settlement of DPLP Agreement			55
Section 5.30	Obligations Regarding Employee Matters			56

ARTICLE VI EMPLOYEE MATTERS				56
Section 6.1	Transferred Employees			56
Section 6.2	Terms and Conditions; Compensation and Benefits			57
Section 6.3	Treatment of Seller Pension Plans			58
Section 6.4	Treatment of 401(k) Plan Accounts			58
Section 6.5	Treatment of Flexible Spending Accounts			59
Section 6.6	Treatment of Accrued Leave			59
Section 6.7	Labor Consultations			59
Section 6.8	WARN Act			59
Section 6.9	Cooperation			60
Section 6.10	No Third Party Beneficiaries			60
ARTICLE VII TAX MATTERS				60
Section 7.1	Straddle Periods			60
Section 7.2	Tax Returns			61
Section 7.3	Contest Provisions			61
Section 7.4	Transfer Taxes			62
Section 7.5	Certain Post-Closing Settlement Payments and Post-Closing Actions			62
Section 7.6	Mutual Cooperation			63
Section 7.7	Maintenance of Books and Records			63
Section 7.8	Section 338(g) Election and related Matters			64
Section 7.9	Section 338(h)(10) Election			64
Section 7.10	VAT			64
Section 7.11	Withholding Taxes			64
Section 7.12	Miscellaneous			65
ARTICLE VIII CONDITIONS TO THE SALE				65
Section 8.1	Mutual Conditions			65
Section 8.2	Conditions to the Obligations of Seller to Effect the Sale			65
Section 8.3	Conditions to the Obligations of Buyer to Effect the Sale			66
ARTICLE IX TERMINATION AND ABANDONMENT; INDEMNIFICATION				67
Section 9.1	Termination			67
Section 9.2	Procedure and Effect of Termination			68
Section 9.3	Survival of Representations, Warranties and Covenants			69
Section 9.4	Indemnification			69
ARTICLE X MISCELLANEOUS				74
Section 10.1	Amendment and Modifications			74
Section 10.2	Extension; Waiver			74
Section 10.3	Entire Agreement; Assignment			74
Section 10.4	Validity			74
Section 10.5	Notices			75
Section 10.6	Governing Law			75
Section 10.7	Specific Performance			76
Section 10.8	Publicity			76
Section 10.9	Jurisdiction; Forum, Etc.			77
Section 10.10	Descriptive Headings			77
Section 10.11	Counterparts			77
Section 10.12	Expenses			77
Section 10.13	Construction			77
Section 10.14	Parties in Interest			78
Section 10.15	Interpretation			78
Section 10.16	Disclosure Letters			79
Section 10.17	No Recourse to Financing Sources			79

 

PURCHASE AGREEMENT

 

PURCHASE AGREEMENT (this “Agreement”), dated as of September 24, 2017, by and between Colfax Corporation, a Delaware corporation (“Seller”), and CIRCOR International, Inc., a Delaware corporation (“Buyer”). Except as otherwise indicated, capitalized terms used but not defined herein shall have the meanings set forth in Annex A of this Agreement.

 

WHEREAS, in addition to its other businesses, Seller is engaged through certain of its subsidiaries in the FH Business;

 

WHEREAS, the parties hereto desire that the FH Share Sellers sell, convey, assign, transfer and deliver to Buyer, and that Buyer purchase, acquire and accept from the FH Share Sellers, all right, title and interest of the FH Share Sellers in and to the FH Shares, in the manner and subject to the terms and conditions set forth herein and in the Local Purchase Agreements, as applicable;

 

WHEREAS, the parties hereto desire that the FH Asset Sellers sell, convey, assign, transfer, deliver to Buyer, and that Buyer purchase, acquire, accept from the FH Asset Sellers, all right, title and interest of the FH Asset Sellers in and to the Acquired FH Assets, in the manner and subject to the terms and conditions set forth herein and in the Local Purchase Agreements, as applicable;

 

WHEREAS, the parties hereto desire that Buyer assume the Assumed Liabilities in the manner and subject to the terms and conditions set forth herein and in the Local Purchase Agreements, as applicable;

 

WHEREAS, certain FH Share Sellers, the FH Asset Sellers and Buyer prior to the Closing will execute Local Purchase Agreements;

 

WHEREAS, at or prior to the Closing, Seller (and one or more of its Subsidiaries) and Buyer will enter into the Transition Services Agreement; and

 

WHEREAS, the respective Boards of Directors of Seller and Buyer have approved this Agreement, the Local Purchase Agreements, the Transition Services Agreement and the consummation of the transactions contemplated hereby and thereby;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, the parties hereto hereby agree as follows:

 

ARTICLE I


PURCHASE AND SALE; ASSUMPTION OF LIABILITIES

 

Section 1.1            Purchase and Sale of the FH Shares. Upon the terms and subject to the conditions of this Agreement, on the Closing Date:

 

(a)                subject to Section 5.16, Seller shall cause the FH Share Sellers to sell, convey, assign, transfer and deliver to (or as directed by) Buyer, and Buyer shall purchase, acquire and accept (or cause to be purchased, acquired and accepted) from the FH Share Sellers, all right, title and interest of the FH Share Sellers in and to the shares of capital stock (the “FH Shares”) of each of the Transferred FH Companies, free and clear of all Encumbrances other than Permitted Encumbrances; and

 

(b)               notwithstanding any of the foregoing, to the extent it is contemplated by this Agreement that any FH Shares are to be sold, conveyed, assigned, transferred or delivered to Buyer pursuant to a Local Purchase Agreement, such FH Shares shall be sold, conveyed, assigned, transferred or delivered to Buyer pursuant to such Local Purchase Agreement.

 

Section 1.2            Purchase and Sale of the Acquired FH Assets. Upon the terms and subject to the conditions of this Agreement, on the Closing Date Seller shall cause the FH Asset Sellers to, sell, convey, assign, transfer and deliver to (or as directed by) Buyer, and Buyer shall purchase, acquire and accept (or cause to be purchased, acquired and accepted) from the FH Asset Sellers, all of the FH Asset Sellers’ right, title and interest in and to the Acquired FH Assets, free and clear of all Encumbrances other than Permitted Encumbrances.

 

Section 1.3            Assumption of Assumed Liabilities; Retention of Retained Liabilities. Upon the terms and subject to the conditions of this Agreement, on the Closing Date, (a) Buyer shall assume the Assumed Liabilities (other than Assumed Liabilities that are Liabilities solely of the Transferred FH Companies or their Closing Subsidiaries) and (b) Seller, the applicable FH Share Seller or one of its Affiliates shall assume all Retained Liabilities of any Transferred FH Companies or their Closing Subsidiaries.

 

ARTICLE II


PURCHASE PRICE; CLOSING

 

Section 2.1            Purchase Price. Upon the terms and subject to the conditions of this Agreement, on the Closing Date, in consideration for the sale of the FH Shares and the Acquired FH Assets (collectively, the “Sale”), Buyer shall pay to Seller (or one or more Subsidiaries designated by Seller) the Preliminary Purchase Price, subject to adjustment pursuant to Section 2.3(a), and shall assume the Assumed Liabilities (other than Assumed Liabilities that are Liabilities solely of the Transferred FH Companies or their Closing Subsidiaries).

 

Section 2.2            The Closing.

 

(a)                The closing of the Sale (the “Closing”) shall, subject to the satisfaction or waiver of the conditions set forth in Article VIII, be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP at Four Times Square, New York, New York (or such other place or places as the parties may mutually agree), (A) on the third Business Day after all the conditions precedent set forth in Article VIII are satisfied or waived (other than those conditions that, by their nature, are to be satisfied at the Closing (provided such conditions would be so satisfied)) or (B) on such other date as the parties may mutually agree in writing; provided, however, that notwithstanding the satisfaction or waiver of the conditions set forth in Article VIII, Buyer shall not be obligated to effect the Closing prior to the earlier of (i) the third (3rd) Business Day following the final day of the Marketing Period and (ii) a date during the Marketing Period to be specified by Buyer on no fewer than three (3) Business Days’ prior written notice to Seller (but, subject in such case, to the satisfaction or waiver of the conditions set forth in Article VIII (other than those conditions that by their nature are to be satisfied at the Closing (provided such conditions would be so satisfied)). In any instance in which Seller decides to extend the Closing Date in accordance with clause (y) in the immediately preceding sentence, Seller shall provide written notice to Buyer at least two (2) Business Days prior to the date on which the Closing would otherwise be scheduled to occur. The date on which the Closing actually occurs is hereinafter referred to as the “Closing Date.” Except to the extent expressly set forth in this Agreement to the contrary, and notwithstanding the actual occurrence of the Closing at any particular time, the Closing shall be deemed to occur and be effective, in the United States, as of 11:59 p.m. New York time and, in any jurisdiction outside of the United States, as of the time at which the books of the FH Business are normally closed in such jurisdiction, in each case, on the calendar day immediately preceding the Closing Date (the “Effective Time”); provided, however, that in the event the Closing Date shall be extended to the Accounting Period Start Date, for purposes of this Agreement, the “Closing” shall be deemed to occur and be effective, in the United States, as of 11:59 p.m. New York time and, in any jurisdiction outside of the United States, as of the time at which the books of the FH Business are normally closed in such jurisdiction, in each case, on the last day of the calendar month immediately preceding the Accounting Period Start Date. All transactions taking place at the Closing shall be deemed to occur simultaneously.

(b)               On the Closing Date, Seller shall deliver or cause to be delivered to Buyer the following (except as otherwise provided in Section 5.16 or Section 5.17 and except to the extent delivered at or prior to the Closing to Buyer or one of its Subsidiaries pursuant to a Local Purchase Agreement):

 

(i)                 certificates (where applicable) representing the FH Shares duly endorsed (or accompanied by a duly executed stock power) and in form for transfer to Buyer and certificates (where applicable) representing all outstanding equity securities of all Closing Subsidiaries;

 

(ii)               a duly executed bill of sale and assignment, in the form attached as Exhibit A hereto, to evidence the Buyer’s purchase of the Acquired FH Assets;

 

(iii)             the Local Purchase Agreements, duly executed by Seller or its Subsidiaries (to the extent each is a party thereto), to the extent not executed and delivered by such parties prior to the Closing;

 

(iv)             the Transition Services Agreement, duly executed by Seller (and one or more of its Subsidiaries (to the extent each is a party thereto)), to the extent not executed and delivered by such parties prior to the Closing;

 

(v)               the Stockholder Agreement, duly executed by Seller;

 

(vi)             a duly executed instrument of assumption of the Retained Liabilities being assumed by Seller or its Affiliates, in the form attached as Exhibit B-1;

 

(vii)           copies of the resignations, effective as of the Closing and in form and substance reasonably satisfactory to Buyer, of each director and officer of any Transferred FH Company or any Closing Subsidiary requested in writing by Buyer no later than three (3) Business Days prior to the Closing Date;

 

(viii)         from each FH Share Seller and FH Asset Seller that is organized in the United States, a certification from such FH Share Seller or FH Asset Seller that it is not a foreign person in accordance with the Treasury Regulations under Section 1445 of the Code;

 

(ix)             such other instruments of conveyance (such as patent assignments, trademark assignments, real estate deeds, assigned certificates or documents of title and assigned negotiable instruments) as Buyer may reasonably request in order to effect the sale, assignment, transfer and delivery to Buyer or its designee of good and valid title to the Acquired FH Assets free and clear of all Encumbrances (other than Permitted Encumbrances), in each case in form and substance reasonably satisfactory to Buyer and duly executed by the applicable FH Asset Seller; and

 

(x)               all other documents expressly required to be delivered by Seller or its Affiliates on or prior to the Closing Date pursuant to this Agreement.

 

(c)                On the Closing Date, Buyer shall deliver or cause to be delivered to Seller or its designee the following (except to the extent delivered to an FH Share Seller or an FH Asset Seller at or prior to the Closing pursuant to a Local Purchase Agreement):

 

(i)                 the Preliminary Cash Purchase Price in immediately available funds by wire transfer to an account or accounts at such bank or banks specified by Seller at least two (2) Business Days prior to the Closing Date and a book-entry confirmation in form reasonably satisfactory to Seller from the registrar and transfer agent for the Buyer Common Stock evidencing the issuance to Seller of the Buyer Stock Consideration;

 

(ii)               a duly executed instrument of assumption of the Assumed Liabilities being assumed by Buyer or a Subsidiary of Buyer, substantially in the form attached as Exhibit B-2;

 

(iii)             the Local Purchase Agreements, duly executed by Buyer or a Subsidiary of Buyer, to the extent not executed and delivered by such parties prior to the Closing;

(iv)             the Transition Services Agreement, duly executed by Buyer, to the extent not executed and delivered by such parties prior to the Closing;

 

(v)               the Stockholder Agreement, duly executed by Buyer; and

 

(vi)             all other documents expressly required to be delivered by Buyer or its Affiliates on or prior to the Closing Date pursuant to this Agreement.

 

Section 2.3            Purchase Price Adjustment.

 

(a)                Preliminary Purchase Price Adjustment. No later than three (3) Business Days prior to the Closing Date, Seller shall prepare and deliver to Buyer (together with reasonable backup materials) a statement in the form set forth on Section 2.3(a) of the Seller’s Disclosure Letter (the “Estimated Statement”) setting forth Seller’s good faith estimate of the Closing Net Working Capital (the “Estimated Net Working Capital”), as prepared in accordance with GAAP. For purposes of the calculation of Net Working Capital of the FH Business, all FH Shares, Acquired FH Assets and FH Assets shall be deemed to have been conveyed as of the Effective Time (regardless of any delayed transfer pursuant to Section 5.16 or Section 5.17) and shall be included, to the extent applicable, in the calculation of the Final Net Working Capital.

 

(b)               Post-Closing Purchase Price Determination.

 

(i)                 As soon as practicable, but in no event later than forty-five (45) days after the Closing Date, Seller shall deliver to Buyer (together with reasonable backup materials) a statement (the “Preliminary Net Working Capital Statement”), prepared by Seller in accordance with GAAP and in substantially the same format as the Estimated Statement, containing a reasonably detailed calculation by Seller of the Closing Net Working Capital.

 

(ii)               If Buyer disagrees with Seller’s calculation of the Closing Net Working Capital as set forth in the Preliminary Net Working Capital Statement, Buyer shall promptly, but in no event later than forty-five (45) days after receiving the Preliminary Net Working Capital Statement (the “Review Period”) deliver to Seller written notice (the “Dispute Notice”) describing its dispute by specifying those items or amounts as to which Buyer disagrees, together with Buyer’s determination of such disputed items and amounts (the “Disputed Items”). If Buyer either gives notice that it agrees with Seller’s calculation of the Closing Net Working Capital as set forth in the Preliminary Net Working Capital Statement or fails to deliver a Dispute Notice within the Review Period, Seller and Buyer agree that the Preliminary Net Working Capital Statement shall be deemed to set forth the Closing Net Working Capital with respect to those items that have been agreed upon or for which Buyer shall have failed to deliver a Dispute Notice (and shall constitute the Final Net Working Capital). If Buyer delivers a Dispute Notice to Seller within the Review Period, Buyer and Seller will use good faith efforts to resolve the dispute during the thirty (30)-day period commencing on the date Buyer delivers the Dispute Notice to Seller. If Seller and Buyer are not able to resolve all Disputed Items within such thirty (30)-day period, then either party shall have the right to submit the Disputed Items remaining in dispute following the expiration of such thirty (30)-day period to the New York, New York office of Grant Thornton LLP, or if Grant Thornton LLP is unwilling to serve, another mutually acceptable internationally recognized independent accounting firm (the “Accounting Firm”). Subject to the Accounting Firm’s execution of a customary confidentiality agreement, the Accounting Firm shall be given reasonable access to all relevant records of the FH Business to calculate the Closing Net Working Capital. If any remaining Disputed Items are submitted to the Accounting Firm for resolution, each of Buyer and Seller shall submit to the Accounting Firm (with a copy to the other party) a written memorandum setting forth such party’s positions with respect to such Disputed Items and may include with such submission reasonable backup materials. The Accounting Firm shall calculate, based solely on the written submissions of Seller, on the one hand, and Buyer, on the other hand, and not by independent investigation, the Closing Net Working Capital and shall be instructed that its calculation (A) must be made in accordance with GAAP and Section 2.3(a) of the Seller’s Disclosure Letter, and (B) with respect to each item in dispute, must be within the range of values established for such amount as determined by reference to the value assigned to such amount by Buyer in the Dispute Notice and by Seller in the Preliminary Net Working Capital Statement. The Accounting Firm shall submit such calculation to Seller and Buyer as soon as practicable, but in any event within thirty (30) days after the remaining issues in dispute are submitted to the Accounting Firm. The determination by the Accounting Firm of the Closing Net Working Capital, as set forth in a written notice delivered to Buyer and Seller by the Accounting Firm in accordance with this Agreement, will be binding and conclusive on Buyer and Seller, except in cases of fraud or manifest error. A judgment on the determination made by the Accounting Firm pursuant to this Section 2.3(b) may be entered in and enforced by any court having jurisdiction thereover. The Closing Net Working Capital as determined after all disputes have been resolved in accordance with this Section 2.3(b)(ii) is referred to herein as the “Final Net Working Capital”.

 

(iii)             The costs and expenses of the Accounting Firm shall be borne by Buyer in the proportion that the aggregate dollar amount of the items that are successfully disputed by Seller (as finally determined by the Accounting Firm) bears to the aggregate dollar amount of the items submitted to the Accounting Firm and by Seller in the proportion that the aggregate dollar amount of the disputed items that are unsuccessfully disputed by Buyer (as finally determined by the Accounting Firm) bears to the aggregate dollar amount of the items submitted to the Accounting Firm. The Accounting Firm shall include such apportionment of its fees and expenses in its determination.

 

(iv)             In connection with Buyer’s review of the Preliminary Net Working Capital Statement, Seller shall (i) provide reasonable access, during normal business hours and upon reasonable notice, to its employees and all work papers, schedules, memoranda and other documents prepared or reviewed by Seller or any of its employees and accountants or other representatives which are relevant to the Preliminary Net Working Capital Statement (which access shall be provided promptly after request by Buyer and/or its representatives) and (ii) use its reasonable best efforts to cause Seller’s independent accountant to communicate and cooperate with Buyer and its representatives with respect to such review. The Review Period shall be extended by one day for each day that Seller is in breach of its obligations under the preceding sentence.

 

(v)               The process set forth in this Section 2.3(b) shall be the exclusive remedy of Seller and Buyer for any disputes related to the Closing Net Working Capital, provided that this clause (v) shall not preclude or impair the ability of any party to exercise any of its rights or remedies under Section 9.4 provided that no Person shall be entitled to indemnification under Section 9.4 for any Losses to the extent such Losses represent amounts taken into account in the determination of the Final Net Working Capital.

 

(c)                Final Purchase Price Determination.

 

(i)                 The “Final Cash Purchase Price” shall mean an amount equal to the (1) Preliminary Cash Purchase Price (2) (x) plus, if the Final Net Working Capital as determined pursuant to Section 2.3(b)(ii) exceeds the Estimated Net Working Capital, the amount of such excess, (y) minus, if the Estimated Net Working Capital exceeds the Final Net Working Capital as determined pursuant to Section 2.3(b)(ii), the amount of such excess (the “Final Closing Adjustment”), (3) (x) plus if the Primary U.S. Asset Transfer Amount exceeds the Estimated U.S. Asset Transfer Amount, the amount of such excess, (y) minus, if the Estimated U.S. Asset Transfer Amount exceeds the Primary U.S. Asset Transfer Amount, the amount of such excess (the “Final Pension Adjustment”). The “Final Purchase Price” shall mean the Final Cash Purchase Price and the Buyer Stock Consideration, together.

 

(ii)               Buyer or Seller, as the case may be, shall, within five (5) Business Days after the determination of the Final Net Working Capital pursuant to Section 2.3(b)(ii) make payment to the other by wire transfer of immediately available funds to one or more accounts designated by the other of the amount of the Final Closing Adjustment as determined pursuant to Section 2.3(c)(i). Notwithstanding the foregoing, Seller agrees to make one or more installment payments toward the payment provided for in the first sentence of this Section 2.3(c)(ii) at such times as amounts reflected in the calculation of the Final Net Working Capital become fixed and are not Disputed Items and the non-Disputed Items are such that a payment would be due and owing to Buyer pursuant to the first sentence of this Section 2.3(c)(ii). Similarly, Buyer agrees to make one or more installment payments toward the payment provided for in the first sentence of this Section 2.3(c)(ii) at such times as amounts reflected in the calculation of the Final Net Working Capital become fixed and are not Disputed Items and the non-Disputed Items are such that a payment would be due and owing to Seller pursuant to the first sentence of this Section 2.3(c)(ii). The final installment payment to be made after the determination of Final Net Working Capital shall take into account all previously-made installment payments.

 

(iii)             Buyer or Seller, as the case may be, shall within five (5) Business Days after the U.S. Pension Transfer Date make payment to the other by wire transfer of immediately available funds to one or more accounts designated by the other of the Final Pension Adjustment.

 

Section 2.4            Allocation of Purchase Price. Within ninety (90) days after the Closing Date, Buyer shall provide to Seller an allocation of the Final Purchase Price (including an allocation of the Buyer Stock Consideration and Final Cash Purchase Price) and the Assumed Liabilities, to the extent relevant, together with any other amounts properly treated as consideration for U.S. federal income tax purposes (including adjustments to the Final Purchase Price or the Assumed Liabilities for purposes of this Agreement) among the Acquired FH Assets and the FH Shares and, to the extent relevant, the assets of the Transferred FH Companies, in accordance with Sections 338(b)(5) and 1060 of the Code and the Treasury Regulations thereunder and Section 2.4 of the Seller’s Disclosure Letter (the “Purchase Price Allocation”). Prior to and after the Closing Date, Seller shall cooperate as reasonably requested by Buyer, including providing any information reasonably requested by Buyer that is reasonably available to Seller, to enable Buyer and its accountants to prepare timely the Purchase Price Allocation. Seller shall be permitted to review the Purchase Price Allocation delivered by Buyer and shall provide any comments thereon to Buyer within fifteen (15) days of Seller’s receipt of the Purchase Price Allocation. Buyer and Seller shall use good faith efforts to resolve any dispute regarding preparation of the Purchase Price Allocation. If Buyer and Seller cannot resolve any such dispute within fifteen (15) days of Buyer’s receipt of Seller’s comments, such dispute shall be taken to the Independent Accountants. The costs of the Independent Accountants shall be borne by the party that loses the dispute. The Purchase Price Allocation as finally agreed between Seller and Buyer or as finally determined by the Independent Accountants, as the case may be, in accordance with Section 2.4 of the Seller’s Disclosure Letter is referred to as the “Final Purchase Price Allocation.” Seller and Buyer shall be bound by the Final Purchase Price Allocation for all Tax purposes, shall prepare and file all Tax Returns (including Form 8883 and any supplements thereto) on a basis consistent with the Final Purchase Price Allocation and shall not take any position inconsistent with the Final Purchase Price Allocation on any Tax Return or in any proceeding before any Tax Authority, in each case except as otherwise required by applicable Law. Notwithstanding anything herein to the contrary, Buyer and Seller agree that for purposes of the Purchase Price Allocation and the Final Purchase Price Allocation, no amount of the Buyer Stock Consideration shall be allocated to any FH Share Seller or FH Asset Seller that is not (a) a member of Seller’s U.S. consolidated group or (b) an entity disregarded as separate from a member of Seller’s U.S. consolidated group, in each case as determined for U.S. federal income tax purposes.

 

Section 2.5            Adjustments to Buyer Stock Consideration. If at any time during the period between the date of this Agreement and the Closing, any change in the outstanding shares of capital stock of Buyer shall occur as a result of any reclassification, stock split (including reverse stock split) or combination, exchange or readjustment of shares, or any stock dividend or stock distribution with a record date during such period, the number of shares of Buyer Common Stock constituting the Buyer Stock Consideration shall be equitably adjusted; provided, however, that nothing in this Section 2.5 shall be deemed to permit or authorize any such change that is not otherwise authorized or permitted pursuant to this Agreement.

 

ARTICLE III


REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby represents and warrants to Buyer that, except as disclosed in the Seller’s Disclosure Letter (but subject to Section 10.16), the following statements are true and correct:

 

Section 3.1            Organization, Etc.

 

(a)                Section 3.1 of the Seller’s Disclosure Letter sets forth a list of (a) the name of each of the FH Share Sellers, the FH Asset Sellers, the FH Affiliates (in respect of the FH Business), the Transferred FH Companies and the Transferred FH Companies’ Closing Subsidiaries and (b) the jurisdiction of organization of each of the FH Share Sellers, the FH Asset Sellers, the FH Affiliates (in respect of the FH Business), the Transferred FH Companies and the Transferred FH Companies’ Closing Subsidiaries. Each of Seller, the FH Share Sellers, the FH Asset Sellers, the FH Affiliates (in respect of the FH Business), the Transferred FH Companies and the Transferred FH Companies’ Closing Subsidiaries is a corporation, partnership or other legal entity duly organized, validly existing and in good standing (to the extent such concept is recognized) under the Laws of the jurisdiction of its incorporation or organization, except where the failure to be so organized, existing or in good standing, would not, individually or in the aggregate, be reasonably expected to be material to the FH Business, taken as a whole. Each of Seller (in respect of the FH Business), the FH Share Sellers, the FH Asset Sellers, the FH Affiliates (in respect of the FH Business), the Transferred FH Companies and the Transferred FH Companies’ Closing Subsidiaries has all requisite power and authority to conduct its business as it is now being conducted and to own, lease and operate its property and assets, except where the failure to have such power and authority would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole. Each of Seller (in respect of the FH Business), the FH Share Sellers, the FH Asset Sellers, the FH Affiliates (in respect of the FH Business), the Transferred FH Companies and the Transferred FH Companies’ Closing Subsidiaries is qualified or licensed to do business in each jurisdiction in which ownership of property or the conduct of its business requires such qualification or license, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole. None of Seller (in respect of the FH Business), the FH Share Sellers, the FH Asset Sellers, the FH Affiliates (in respect of the FH Business), the Transferred FH Companies or the Transferred FH Companies’ Closing Subsidiaries is in violation of, in conflict with, or in default under, its certificate of incorporation or by-laws (or comparable governing documents), except as would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole.

 

(b)               True and complete copies of the certificate of incorporation and by-laws (or comparable governing documents) of each of Seller, the FH Share Sellers, the FH Asset Sellers, the FH Affiliates, the Transferred FH Companies and the Transferred FH Companies’ Closing Subsidiaries have been made available to Buyer.

 

Section 3.2            Authority Relative to this Agreement, Etc. Each of Seller, the FH Asset Sellers and the FH Share Sellers and any other Affiliate of Seller that is or will be a party to any Transaction Document has all requisite corporate or other power and authority to execute and deliver this Agreement, the Local Purchase Agreements, the Transition Services Agreement and each of the other Transaction Documents to which it is or will be a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, the Local Purchase Agreements, the Transition Services Agreement and each of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by each of Seller, the FH Asset Sellers and the FH Share Sellers, and each other Affiliate of Seller to the extent party thereto. No other corporate proceedings on the part of Seller, the FH Asset Sellers and the FH Share Sellers, or any other Affiliate of Seller, are necessary to authorize the execution, delivery and performance in accordance with their respective terms of this Agreement, the Local Purchase Agreements, the Transition Services Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby. This Agreement, the Local Purchase Agreements, the Transition Services Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, have been (or in the case of the Transition Services Agreement and the Local Purchase Agreements, and the other Transaction Documents, when executed and delivered will be) duly and validly executed and delivered by each of Seller, the FH Asset Sellers and the FH Share Sellers, and any other Affiliate of Seller to the extent party thereto and, assuming this Agreement and such other agreements have been duly authorized, executed and delivered by all of the other parties hereto or thereto (other than Affiliates of Seller), each of this Agreement and such other agreements, and such other Transaction Documents, constitutes (or in the case of the Transition Services Agreement and the Local Purchase Agreements, and the other Transaction Documents, when executed and delivered will constitute) a legal, valid and binding agreement of Seller, the FH Asset Sellers and the FH Share Sellers, or Seller’s other Affiliates to the extent party thereto, enforceable against each such Seller, FH Asset Seller or FH Share Seller, or Seller’s other Affiliates thereof, as the case may be, in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

 

Section 3.3            Capitalization.

 

(a)                Section 3.3(a) of the Seller’s Disclosure Letter sets forth, as of the date hereof, the authorized and outstanding capital stock (or other equity interests) of each Transferred FH Company and the record owners of such outstanding capital stock (or other equity interests). Except as set forth in Section 3.3(a) of the Seller’s Disclosure Letter, all of the issued and outstanding capital stock (or other equity interests) of the Transferred FH Companies are duly authorized, validly issued, fully paid and non-assessable, were offered, issued, sold and delivered in compliance with all applicable Laws governing the issuance of securities and were not issued in violation of (or subject to) any preemptive rights, rights of first refusal or similar rights and free of any preemptive rights or Encumbrances in respect thereof, other than Permitted Encumbrances. The FH Share Sellers own, or at the Closing will own, the FH Shares, in each case, free and clear of any Encumbrances other than Permitted Encumbrances. Except as set forth in Section 3.3(a) of the Seller’s Disclosure Letter, there are no outstanding subscriptions, options, warrants, puts, calls, agreements, understandings, claims or other commitments or rights of any type or other securities (i) requiring the issuance, sale, transfer, repurchase, redemption or other acquisition of any shares of capital stock of any Transferred FH Company or any of its Closing Subsidiaries, (ii) restricting the transfer of any shares of capital stock of any Transferred FH Company or any of its Closing Subsidiaries, or (iii) relating to the voting of any shares of capital stock of any Transferred FH Company or any of its Closing Subsidiaries. Except as set forth in Section 3.3(a) of the Seller’s Disclosure Letter, there are no voting agreements or voting trusts with respect to any of the FH Shares or the shares of capital stock (or other equity securities) of any Transferred FH Company or any Transferred FH Company’s Closing Subsidiaries. No Transferred FH Company or any Transferred FH Company’s Closing Subsidiaries holds any of its shares of capital stock or other equity securities in its treasury.

(b)               Section 3.3(b) of the Seller’s Disclosure Letter sets forth the authorized capital stock (or other equity interests) of each Closing Subsidiary of the Transferred FH Companies, the issued and outstanding shares of capital stock (or other equity interests) of each such Closing Subsidiary and the name of each Person who owns of record any of such shares of capital stock (or other equity interests), as of the date hereof. Except as set forth in Section 3.3(b) of the Seller’s Disclosure Letter, all of the outstanding shares of capital stock (or other equity interests) of the Closing Subsidiaries of each of the Transferred FH Companies are (i) duly authorized, validly issued, fully paid and non-assessable, were offered, issued, sold and delivered in compliance with all applicable Laws governing the issuance of securities and were not issued in violation of (or subject to) any preemptive rights, rights of first refusal or similar rights and free of any preemptive rights or Encumbrances in respect thereof, other than Permitted Encumbrances, and (ii) owned, or at the Closing will be owned, directly or indirectly by a Transferred FH Company or one of its Closing Subsidiaries, free and clear of any Encumbrances other than Permitted Encumbrances.

 

(c)                Except as set forth in Section 3.3(c) of the Seller’s Disclosure Letter, as of the date hereof, none of the Transferred FH Companies nor any of their Closing Subsidiaries owns any material equity interest, or any interest convertible into or exchangeable for a material equity interest, in any Person (other than other Transferred FH Companies or Closing Subsidiaries of Transferred FH Companies).

 

(d)               Section 3.3(d) of the Seller’s Disclosure Letter sets forth a description of all Indebtedness (other than intercompany loans or borrowings incurred in the ordinary course of business consistent with past practice that are the subject of Section 5.5(e)) of any Transferred FH Company or its Closing Subsidiaries as of, or immediately prior to, the Closing.

 

Section 3.4            Consents and Approvals; No Violations. Neither the execution, delivery and performance of this Agreement by Seller nor the execution, delivery and performance of the Local Purchase Agreements and the Transition Services Agreement, and the other Transaction Documents, by Seller, the FH Asset Sellers or the FH Share Sellers, or any other Affiliate of Seller party thereto, nor the consummation of the transactions contemplated hereby and thereby by Seller, the FH Asset Sellers or the FH Share Sellers, or such Affiliate, will (a) violate any provision of the certificate of incorporation or by-laws (or other comparable governing documents) of Seller, any FH Share Seller, FH Asset Seller or any of the Transferred FH Companies or any of the Transferred FH Companies’ Closing Subsidiaries, or any such other Affiliate, (b) require any consent, waiver, approval, license, authorization or permit of, or filing with or notification to (collectively, the “Governmental Filings”), any Governmental Authority except for (i) filings with the Federal Trade Commission (the “FTC”) and with the Antitrust Division of the United States Department of Justice (the “DOJ”) pursuant to the HSR Act, and the rules and regulations promulgated thereunder, (ii) requirements of any foreign Regulatory Laws and Laws regulating trade or exchange or currency controls and (iii) such consents, waivers, approvals, licenses, authorizations, permits, filings or notifications which, if not obtained or made, would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole, (c) conflict with, result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation or acceleration of any obligation of Seller, any FH Affiliate (in respect of the FH Business), any of the Transferred FH Companies or their Closing Subsidiaries, or any other Affiliate of Seller, or a loss of any benefit to which Seller, any FH Affiliate (in respect of the FH Business), any of the Transferred FH Companies or their Closing Subsidiaries, or any other Affiliate of Seller, is entitled under, any of the terms, conditions or provisions of any Contract or Permit of any Transferred FH Company or Closing Subsidiary or any Contract or Permit included in the Acquired FH Assets, except such conflicts, violations, breaches, defaults, terminations, cancellations, accelerations or losses of benefit which would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole, (d) result in the creation or imposition of any Encumbrance on the assets of any Transferred FH Companies or any Transferred FH Company’s Closing Subsidiaries, the FH Shares, the FH Business or any Acquired FH Asset (other than Permitted Encumbrances) except for any such Encumbrance which would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole, or (e) assuming the making of the Governmental Filings and obtaining of the related approval, referred to in clause (b)(i) or (b)(ii) above, violate any Law applicable to Seller, any FH Affiliate (in respect of the FH Business), any of the Transferred FH Companies or their Closing Subsidiaries, or any other Affiliate of Seller or by which any of their respective properties or Assets may be bound, except for such violations which would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole.

 

Section 3.5            Financial Statements.

 

(a)                Attached to Section 3.5(a)(i) of the Seller’s Disclosure Letter are copies of the following: (i) the unaudited balance sheets and statements of income of the FH Business as of December 31, 2015 and 2016 and for the years then ended, respectively, and (ii) copies of the unaudited balance sheet of the FH Business as of June 30, 2017 (the “Base Balance Sheet”) and statement of income of the FH Business for the six (6) months then ended (together with the notes and schedules thereto, if any, the “FH Business Financial Information”). The FH Business Financial Information (i) has been prepared in all material respects from the books and records of Seller and its Subsidiaries, (ii) has been prepared in accordance with GAAP, except as otherwise set forth on the face of the FH Business Financial Information or Section 3.5(a)(ii) of the Seller’s Disclosure Letter, or except as may be indicated in the notes thereto and normal year-end adjustments that are not material, individually or in the aggregate and (iii) fairly presents in all material respects the financial condition and results of operations of the FH Business as currently conducted as of the dates, and for the periods, indicated thereon, subject to the exceptions set forth on the face of the FH Business Financial Information or Section 3.5(a)(ii). The FH Business Financial Information is qualified by the fact that the FH Business has not operated as a separate “stand alone” entity within Seller and is subject to the assumptions described in clause (iii) of the foregoing sentence. The FH Business Financial Information attached to Section 3.5(a)(i) of the Seller’s Disclosure Letter does not include any corporate-level allocated charges or credits and necessarily does not reflect the costs of providing corporate-level services. The Financial Statements, when prepared and furnished to Buyer, will be prepared in all material respects from the books and records of Seller and its Subsidiaries in accordance with GAAP and, when prepared and furnished to Buyer, will fairly present in all material respects the financial condition and results of operations of the FH Business as currently conducted as of the dates, and for the periods, indicated thereon.

 

(b)               (i) Each of the Seller (to the extent related to the FH Business), FH Affiliates (to the extent related to the FH Business), the FH Asset Sellers, the Transferred FH Companies and the Closing Subsidiaries of the Transferred FH Companies maintains accurate books and records reflecting its assets and liabilities in all material respects and (ii) Seller maintains proper and effective internal control over financial reporting and disclosure controls and procedures that are required by Rules 13a-15 or 15d-15 under the Exchange Act and that are reasonably designed to ensure that all material information concerning the FH Business is made known on a timely basis to the individuals responsible for the preparation of the FH Business Financial Information.

 

Section 3.6            Absence of Certain Changes. Except as expressly contemplated by this Agreement, and except as set forth in Section 3.6 of the Seller’s Disclosure Letter, between December 31, 2016 and the date of this Agreement, (a) there has not been any change, event or development that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (b) the FH Affiliates, the FH Asset Sellers and the Transferred FH Companies and the Closing Subsidiaries of the Transferred FH Companies have conducted the FH Business in the ordinary course of business in all material respects or (c) except in connection with the Pre-Closing Restructuring Transactions, none of the Transferred FH Companies or any Closing Subsidiaries of the Transferred FH Companies or any FH Affiliate in respect of the FH Business has taken any of the actions set forth in Sections 5.1(b), (d), (e), (g), (h), (j), (l), (m), (n) or (o).

 

Section 3.7            Compliance with Law, Permits. Other than with respect to any Excluded Assets or Retained Liabilities (for which neither the Buyer nor any of its Affiliates has any liability), the FH Business is being, and since December 31, 2014 has been, conducted in compliance in all material respects with applicable Law. Other than with respect to any Excluded Assets or Retained Liabilities (for which neither the Buyer nor any of its Affiliates has any liability), Seller or an Affiliate of Seller owns or holds all material Permits necessary for the conduct of the FH Business as presently conducted or as conducted at any time since December 31, 2014 (the “FH Business Permits”) and are, and since December 31, 2014 have been, in compliance with the terms of the FH Business Permits, except where the failure to have or to comply with such a FH Business Permit would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole. Except as would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole, the FH Business Permits are valid and subsisting. Except as would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole, since December 31, 2014, neither Seller nor any of its Affiliates has received any notice alleging any actual or potential violation of Law relating to the FH Business or of any FH Business Permit or any notice of termination, modification, non-renewal or cancellation of any FH Business Permit. Notwithstanding anything contained in this Section 3.7, no representation or warranty shall be deemed to be made in this Section 3.7 in respect of any matter the subject matter of which is specifically covered by Section 3.10, Section 3.11, Section 3.13, Section 3.14 or Section 3.15.

 

Section 3.8            Undisclosed Liabilities. Except (a) as set forth in the FH Business Financial Information as of the date of this Agreement or otherwise reflected in the Final Net Working Capital, (b) for Liabilities incurred or expressly permitted to be incurred pursuant to this Agreement, (c) for Liabilities incurred after December 31, 2016 in the ordinary course of business, (d) for Liabilities set forth on Section 3.8 of the Seller’s Disclosure Letter, or (e) for Retained Liabilities, there are no Liabilities of the FH Business other than Liabilities which would not have, individually or in the aggregate, reasonably be expected to be material to the FH Business. Notwithstanding anything contained in this Section 3.8, no representation or warranty shall be deemed to be made in this Section 3.8 in respect of any matter the subject matter of which is specifically covered by Section 3.7, Section 3.10, Section 3.11, Section 3.13, Section 3.14 or Section 3.15.

 

Section 3.9            Litigation. Except as set forth on Section 3.9 of the Seller’s Disclosure Letter and for Actions relating to the Excluded Assets or the Retained Liabilities (for which neither the Buyer nor any of its Affiliates has any liability), as of the date of this Agreement, there is no Action pending, or, to the Knowledge of Seller, Action threatened, against Seller or any of its Affiliates relating to the FH Business, other than Actions which would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole. Neither Seller nor any Affiliate of Seller is subject to any outstanding injunction, writ, judgment, order or decree of any Governmental Authority or arbitration tribunal relating to the FH Business which, individually or in the aggregate, would reasonably be expected to be material to the FH Business, taken as a whole. There is no Action by any Transferred FH Company or its Closing Subsidiaries pending against any other Person that, individually or in the aggregate, is material to the FH Business, taken as a whole. Notwithstanding anything contained in this Section 3.9, no representation or warranty shall be deemed to be made in this Section 3.9 in respect of any matter the subject matter of which is specifically covered by Section 3.10, Section 3.11, Section 3.13, Section 3.14 or Section 3.15.

 

Section 3.10        Taxes.

 

(a)                Each of the Transferred FH Companies and their Closing Subsidiaries and, to the extent related to the FH Business, each FH Asset Seller has (i) timely filed (or had timely filed on its behalf) with the appropriate Tax Authorities all income and other material Tax Returns required to be filed by or on behalf of it, and each such Tax Return was complete and accurate in all material respects, and (ii) timely paid (or had paid on its behalf) all material Taxes due and owing, regardless of whether required to be shown or reported on a Tax Return;

 

(b)               There is no examination, audit or other action of or relating to any Tax Return pending against or with respect to any of the Transferred FH Companies or their Closing Subsidiaries in respect of any material Tax and no written notice of such an examination, audit or other action with respect to any material Tax has been received by Seller, any Affiliate of Seller, any Transferred FH Company or its Closing Subsidiaries, in each case that relates primarily to the FH Business;

 

(c)                No deficiency for a material Tax has been asserted in writing against any of the Transferred FH Companies or their Closing Subsidiaries;

 

(d)               There are no material liens for Taxes upon the FH Shares, the Acquired FH Assets, the FH Assets or the Assets or property of any of the Transferred FH Companies or their Closing Subsidiaries, except for Permitted Encumbrances;

 

(e)                There is no agreement or other document extending, or having the effect of extending, the period of assessment or collection of any material Taxes by or on behalf of any Transferred FH Company or its Closing Subsidiaries other than as a result of any such Transferred FH Company or Closing Subsidiary being a member of any Affiliated Group that includes Seller or any of its Subsidiaries that are neither Transferred FH Companies nor Closing Subsidiaries;

 

(f)                None of the Transferred FH Companies or any of their Closing Subsidiaries has distributed to its shareholders or security holders stock or securities of a controlled corporation, nor has stock or securities of any Transferred FH Company or Closing Subsidiary been distributed, in each case in a transaction to which Section 355 of the Code applies in the three years prior to the date of this Agreement;

 

(g)               Other than those entities listed on Schedule 3.10(g) of the Seller’s Disclosure Letter, none of the Transferred FH Companies or any of their Closing Subsidiaries has made an entity classification (“check-the-box”) election under Section 7701 of the Code;

 

(h)               None of the Transferred FH Companies or any of their Closing Subsidiaries has engaged in a “listed transaction” as set forth in Treasury Regulation Section 301.6111-2(b)(2) or any analogous provision of state or local Law;

 

(i)                 None of the Transferred FH Companies or any of their Closing Subsidiaries is a party to a gain recognition agreement under Section 367 of the Code that will not be triggered in connection with the transactions contemplated by this Agreement;

 

(j)                 For the taxable year immediately preceding the current taxable year, Seller has filed a consolidated federal income Tax Return with Colfax Fluid Handling Reliability Services Company; and

 

(k)               None of the Transferred FH Companies or their Closing Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) any adjustments under Section 481 of the Code (or any similar adjustments under any provision of the Code or the corresponding foreign, state or local Tax Law) made prior to the Closing Date, (ii) any deferred intercompany gain or any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding provision of state, local or foreign Tax Law) in respect of any transaction occurring prior to the Closing Date, (iii) any installment sale or open transaction disposition made on or prior to the Closing Date, (iv) any prepaid amount received on or prior to the Closing Date, or (v) any election made pursuant to Section 108(i) of the Code on or prior to the Closing Date;

 

(l)                 Except insofar as Section 3.6 and Section 3.11 relate to Taxes, notwithstanding anything in this Agreement to the contrary, the representations and warranties made by Seller in this Section 3.10 are the sole and exclusive representations and warranties made regarding Taxes or other Tax matters.

 

Section 3.11        Employee Benefit Plans.

 

(a)                Section 3.11(a) of the Seller’s Disclosure Letter contains a list as of the date hereof of each material Employee Benefit Plan and separately identifies (x) whether each such material Employee Benefit Plan is a Transferred Benefit Plan or Seller Benefit Plan and (y) whether each such Transferred Benefit Plan or Seller Benefit Plan is an International Plan. For purposes of this Agreement, “Employee Benefit Plan” means each (i) “employee benefit plan” (within the meaning of ERISA, whether or not subject to ERISA), (ii) stock option, stock appreciation right, phantom stock, restricted stock, consulting, severance, termination protection, change in control, transaction bonus, retention, or material compensation or benefits plan, program, arrangement, agreement or understanding or (iii) other plan, program, arrangement, agreement or understanding providing for compensation, bonuses, profit-sharing, equity or equity-based compensation or other forms of incentive or deferred compensation, vacation benefits, transaction-based compensation, insurance (including any self-insured arrangement), medical, dental, vision, prescription or fringe benefits, life insurance, relocation or expatriate benefits, perquisites, disability or sick leave benefits, employee assistance program, workers’ compensation, supplemental unemployment benefits or post-employment or retirement benefits (including compensation, pension, health, medical or insurance benefits) that, in each case, is maintained or contributed to by Seller, any Transferred FH Company or any Closing Subsidiary, or any of their Affiliates for the benefit of Employees or Former Employees, or for which any Transferred FH Company or any Closing Subsidiary has or may have any Liability, other than in each case plans, programs, arrangements, agreements or other understandings that are mandated by applicable Law, that do not provide benefits in excess of such mandates, and that are maintained either solely by a Governmental Authority or on behalf of a Governmental Authority by a third-party entity other than Seller or one of its Affiliates (such as Social Security contributions or the foreign equivalent thereof). References in this Section 3.11 and Section 3.12 to Liabilities of Transferred FH Companies and/or the Closing Subsidiaries include not only those in place before the Closing Date but also those assumed as a result of any transfer laws applicable to Employees or Former Employees.

 

(b)               Seller has made available to Buyer, with respect to each material Transferred Benefit Plan, (i) the plan document, (ii) the most recent summary plan description, (iii) the most recent annual report on Form 5500, (iv) the most recent IRS opinion or determination letter, as applicable, with respect to each Transferred Benefit Plan intended to qualify under Section 401(a) of the Code, and (v) with respect to any International Plan, materials that are substantially similar (taking into account differences in applicable Law and practice) to those required by clauses (ii) through (iv). Seller has made available to Buyer, with respect to each material Seller Benefit Plan, a copy of the plan document or a summary thereof.

 

(c)                Each Transferred Benefit Plan has been operated and maintained in material compliance with its terms and applicable Law. Each other Employee Benefit Plan has been maintained in material compliance with its terms and with applicable Law, except where such failure to comply or administer such plan would not, individually or in the aggregate, be reasonably expected to result in Liability for Buyer, the Transferred FH Companies or the Closing Subsidiaries. Each Employee Benefit Plan intended to be qualified within the meaning of Section 401(a) of the Code has received a favorable determination letter from the IRS or is entitled to rely upon a favorable opinion issued by the IRS, and nothing has occurred with respect to the operation of such Employee Benefit Plans that could reasonably be expected to cause the revocation of any such letter or opinion.

 

(d)               No Transferred Benefit Plan is (x) a “multiemployer plan,” as such term is defined in Section 3(37) of ERISA, or (y) subject to Section 302 or Title IV of ERISA or Section 412 of the Code. No Liability under Section 302 or Title IV of ERISA or Section 412 of the Code has been incurred by a Transferred FH Company or their Closing Subsidiaries that has not been satisfied in full and no condition exists that would reasonably be expected to result in any such Liability to a Transferred FH Company or their Closing Subsidiaries. Except as would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole, with respect to each Employee Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (i) there has been no (A) failure by Seller or its ERISA Affiliates to make by its due date a required installment under Section 430(j) of the Code or any failure by any such Employee Benefit Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Employee Benefit Plan, whether or not waived, for which Buyer, the Transferred FH Company or their Closing Subsidiaries would have any material Liability; or (B) determination that any such Employee Benefit Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA); (ii) the fair market value of the assets of such Employee Benefit Plan equals or exceeds the actuarial present value of all accrued benefits under such Employee Benefit Plan (whether or not vested) on a termination basis; (iii) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred, and the consummation of the transactions contemplated by this Agreement will not result in the occurrence of any such reportable event; (iv) all premiums to the Pension Benefit Guaranty Corporation (the “PBGC”) have been timely paid in full; (v) no Liability (other than for premiums to the PBGC) under Title IV of ERISA has been or is expected to be incurred by Seller or its ERISA Affiliates; and (vi) the PBGC has not instituted proceedings to terminate any such Employee Benefit Plan and, to the Knowledge of Seller, no condition exists that reasonably could be expected to present a risk that such proceedings will be instituted or that would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any such Employee Benefit Plan.

 

(e)                Except as set forth in Section 3.11(e) of the Seller’s Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement (either alone or together with any other event) will (i) entitle any Employee or Former Employee to any payment or employee benefit, including any bonus, retention, severance, retirement or job security payment or benefit; (ii) accelerate the time of payment, funding or vesting of any employee benefits or compensation of, or increase the amount of employee benefits or compensation due to, any Employee or Former Employee; (iii) give rise to any “excess parachute payment” as defined in Section 280G(b)(1) of the Code; or (iv) limit or restrict the right, after the Closing, of Buyer, to merge, amend or terminate any Transferred Benefit Plan.

 

(f)                Each Transferred Benefit Plan that is an International Plan, if intended to qualify for special Tax treatment, meets all applicable requirements of Law, and if required to be funded, book-reserved or secured by an insurance policy, is so funded, book-reserved or secured, based on reasonable actuarial assumptions.

 

(g)               With respect to Employee Benefit Plans, there is no Action pending (other than routine claims for benefits or, with respect to Employee Benefit Plans that are not Transferred Benefit Plans, for any Action that would not, individually or in the aggregate, be reasonably expected to result in material Liability for Buyer or any Transferred FH Company or their Closing Subsidiaries) or, to Knowledge of Seller, threatened with respect to such plan or against the assets of any Employee Benefit Plan. Except as would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole, no Transferred Benefit Plan is or since December 31, 2013 has been the subject of, or has received or provided notice that it is the subject of, examination by a Governmental Authority or been a participant in a government sponsored amnesty, voluntary compliance or similar program.

 

(h)               Each Employee Benefit Plan covering any Employee or Former Employee subject to U.S. income Taxes and that is or forms part of a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code has been administered in documentary and operational compliance in all material respects with Section 409A of the Code. Neither Seller, its Affiliates, nor any Transferred FH Company or Closing Subsidiary is required to provide any Employee or Former Employee with a gross-up, make-whole or other additional payment with respect to Taxes, interests or penalties imposed under any Tax provisions, including Code Sections 409A or 4999.

 

(i)                 Neither Seller nor any Affiliate has promised or currently provides any employer premium subsidies or other coverage with respect to post-employment health and welfare benefits for any Employee or Former Employee, except as required by applicable Law.

 

Section 3.12        Labor Matters.

 

(a)                Except as set forth in Section 3.12(a) of the Seller’s Disclosure Letter, neither Seller nor any Affiliate has, since December 31, 2014, been party to, nor bound by, any material CBA, and no Transferred Employee is represented by any labor union, labor organization, works council or other similar body other than in connection with an industry agreement or national labor agreement with respect to their employment with Seller, nor, to the Knowledge of Seller, are any efforts underway with respect to such representation. There are no pending (for which Seller or its Affiliates has received notice) material grievances, labor arbitrations or other labor disputes relating to Employees. With respect to Employees (or, where Liability may still apply to the Transferred FH Companies or their Closing Subsidiaries, Former Employees), Seller and its Affiliates have not engaged in any material unfair labor practices, as defined in the National Labor Relations Act, or materially breached the requirements of any similar Laws applicable to such Employees. Since December 31, 2014, no Employees have engaged in any material strike, picketing, labor disturbance, slowdown or work stoppage affecting Seller or its Affiliates. The consent or consultation of, or the rendering of formal advice by, any labor or trade union, works council or other employee representative body is not required for Seller and its Affiliates to enter into this Agreement or to consummate any of the transactions contemplated by this Agreement.

 

(b)               With respect to Employees, Seller Transferred Employees, and where Liability may still apply to the Transferred FH Companies or their Closing Subsidiaries, Former Employees, Seller and its Affiliates are, and have been since December 31, 2014, in material compliance with all applicable Laws relating to labor and employment, including those relating to labor management relations, wages, hours, overtime, employee classification (for purposes of overtime and in determining the status of consultants or independent contractors), discrimination, sexual harassment, civil rights, affirmative action, work authorization, immigration, safety and health, workers compensation, wage payment and the payment and withholding of Taxes and with the terms of any individual service providing contracts covering Employees, Seller Transferred Employees, or where Liability may still apply to the Transferred FH Companies or their Closing Subsidiaries, Former Employees. No Employees are covered by any consent decree with, or citation by, any Governmental Authority relating to employees or employment practices that would apply to Buyer, the Transferred FH Companies, or their Closing Subsidiaries, except as would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole. Each U.S. Employee’s employment may be terminated with not more than one month’s advance notice (except as otherwise required by applicable Law or any CBA). No Actions are open and pending (or since December 31, 2014 have been settled or otherwise closed) regarding Employees with the Equal Employment Opportunity Commission or other Governmental Authority regulating the employment or compensation of individuals, except as would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole. Neither Seller nor any Affiliate has taken any action that would reasonably be expected to cause Buyer or any of its Affiliates to have any Liability or other obligation under the WARN Act following the Closing Date.

 

(c)                Seller and its Affiliates have all necessary visas, work permits, registrations or other arrangements in place as required by applicable Law in relation to all applicable Employees.

 

Section 3.13        Environmental Matters. Other than with respect to any Excluded Assets or Retained Liabilities (for which neither Buyer nor any of its Affiliates will have any Liability), (a) the FH Business is being, and since December 31, 2014 has been, conducted in compliance in all material respects with all applicable Environmental Laws (which compliance includes, but is not limited to, the possession by such entities of all material Environmental Permits needed to operate and conduct the FH Business, and material compliance with the terms and conditions thereof); (b) there is no Environmental Claim pending or threatened against any Transferred FH Company or their Closing Subsidiaries which would, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole; (c) none of the Transferred FH Companies or their Closing Subsidiaries or the FH Affiliates (in respect of the FH Business) are subject to any material order, decree, injunction, or other legally binding agreement with or by any Governmental Authority relating to liability or obligation under any Environmental Law or relating to Hazardous Substances; (d) have been no Releases of Hazardous Substances on, at, in or underneath any of the Owned Real Property or Leased Real Property that would, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole; and (e) the Transferred FH Companies and their Closing Subsidiaries and the FH Affiliates (in respect of the FH Business) have delivered or otherwise made available for inspection to Buyer copies of any material reports, studies, or unresolved notices of non-compliance from any Governmental Authority possessed by the Transferred FH Companies or their Closing Subsidiaries or the FH Affiliates (in respect of the FH Business) pertaining to Hazardous Substances in, on, beneath or adjacent to any of the Owned Real Property or Leased Real Property, or regarding their compliance with applicable Environmental Laws. Except for products manufactured, distributed or sold by Warren Pumps LLC and IMO Industries, Inc. and each of their predecessor companies, there has not been any asbestos contained in or forming part of any products manufactured, distributed or sold by the FH Business, Seller, its Affiliates or any of their predecessors (to the extent related to the FH Business) or by any Transferred FH Company or their Closing Subsidiaries or any of their predecessors. Notwithstanding anything to the contrary herein, the parties hereby agree that all matters with respect to compliance with, or Liabilities arising under, Environmental Laws and with respect to Environmental Permits shall be excluded from all other representations and warranties in this Article III. The representations and warranties contained in this Section 3.13 shall be the exclusive representations and warranties with respect to such matters.

 

Section 3.14        Real Property.

 

(a)                The applicable Transferred FH Companies and their Closing Subsidiaries or the FH Affiliates (in respect of the FH Business), as set forth on Section A(13) of the Seller’s Disclosure Letter, have (or immediately prior to the Closing will have) good and valid title in fee simple (or local foreign law equivalent) to the Owned Real Property, free and clear of all Encumbrances other than Permitted Encumbrances. Except for Permitted Encumbrances and as disclosed in Section 3.14(a) of the Seller’s Disclosure Letter, with respect to each parcel of Owned Real Property, no Transferred FH Company and their Closing Subsidiaries or the FH Affiliates (in respect of the FH Business) have entered into any lease, sublease, license, option to purchase, right of first refusal, or other similar agreement, written or oral, granting to any Person the present or future right to acquire, use or occupy such parcel of Owned Real Property or any portion thereof. To the Knowledge of Seller, all facilities located on such Owned Real Property are supplied with utilities and other services (such as gas, electricity, water, telephone, sanitary sewer and storm sewer) via public roads or via permanent, irrevocable, appurtenant easements benefiting such parcel, all of which services are sufficient for the conduct of the FH Business as currently conducted in the ordinary course at that location.

 

(b)               Section A(11) of Seller’s Disclosure Letter lists all Leases, including the addresses of the applicable Leased Real Property. True, correct and complete copies of all Leases in effect as of the date hereof relating to the Leased Real Property have heretofore been delivered by Seller to Buyer. To the Knowledge of Seller, all such Leases are valid, binding and in full force and effect and are enforceable by the lessee thereunder, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles. To the Knowledge of Seller, no lessee under any Lease relating to Leased Real Property is in material default under any such Lease.

 

(c)                As of the date hereof, none of the FH Share Sellers, the FH Asset Sellers or any of the Transferred FH Companies or their Closing Subsidiaries or the FH Affiliates (in respect of the FH Business) has received any written notice from any Governmental Authority that the Real Property is in any violation of any federal, state or municipal law, ordinance, order, regulation or requirement that would, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole.

 

(d)               As of the date hereof, none of the Transferred FH Companies or their Closing Subsidiaries or the FH Affiliates (in respect of the FH Business) has received any written notice that (i) any condemnation proceeding is pending or threatened with respect to any Real Property that would reasonably be expected to have a Material Adverse Effect or (ii) any material zoning or building code, ordinance, order or regulation is or will be violated by the continued maintenance, operation or use of any buildings or other improvements on any Real Property in the ordinary course consistent with past practice.

 

Section 3.15        Intellectual Property.

 

(a)                Set forth in Section 3.15(a) of the Seller’s Disclosure Letter is a list, as of the date of this Agreement, of all United States and foreign (collectively, “FH Business Registrations”): (i) issued Patents and Patent applications; (ii) Trademark registrations and Trademark applications; (iii) Internet domain names; and (iv) Copyright registrations and Copyright applications, in each case, included in the Acquired FH Assets, the FH Assets or owned by a Transferred FH Company, any of its Closing Subsidiaries or an FH Affiliate (in respect of the FH Business). To the Knowledge of Seller, all such Intellectual Property is in effect and subsisting and the registrations and applications therefor were filed and prosecuted in accordance with applicable Law.

 

(b)               There are no inventorship challenges, opposition or nullity proceedings or interferences before the United States Patent and Trademark Office pending, or to the Knowledge of Seller, threatened in writing with respect to any Patent included in the FH Business Registrations. The Seller has no Knowledge of any information that would preclude the Transferred FH Companies and their Closing Subsidiaries from having clear title to the FH Business Registrations.

 

(c)                To the Knowledge of Seller, the conduct of the FH Business does not infringe, misappropriate or otherwise violate any Person’s Intellectual Property, and there is no such claim pending or threatened in writing against Seller or its Subsidiaries. Section 3.15(c) of the Seller’s Disclosure Letter lists any outstanding written complaint, claim or notice, or written threat of any of the foregoing (including any written notification that a license under any patent is or may be required), received by the Transferred FH Companies and their Closing Subsidiaries alleging any such infringement, violation or misappropriation and any request or demand for indemnification or defense received by the Transferred FH Companies and their Closing Subsidiaries from any reseller, distributor, customer, user or any other third party since December 31, 2014.

 

(d)               To the Knowledge of Seller, as of the date hereof, (i) no Person is infringing, misappropriating or otherwise violating any Intellectual Property included in the FH Assets or that is owned by a Transferred FH Company, any of its Closing Subsidiaries or an FH Affiliate, and (ii) no such claims are pending or threatened in writing against any Person by Seller, the FH Share Sellers, the FH Asset Sellers or their respective Affiliates. Notwithstanding anything to the contrary herein, Section 3.15(c) and this Section 3.15(d) constitute the only representations and warranties of Seller with respect to any actual or alleged infringement or other violation of any Intellectual Property of any other Person.

 

Section 3.16        Assets.

 

(a)                The Transferred FH Companies (and their Closing Subsidiaries), the FH Asset Sellers and the FH Affiliates (in respect of the FH Business), in the aggregate, own, lease, license or have the legal right to use, and the Transferred FH Companies (and their Closing Subsidiaries) and the FH Asset Sellers will at or immediately prior to the Closing own, lease, license or have the legal right to use, all material Acquired FH Assets or FH Assets, including all material Assets reflected on the Base Balance Sheet (other than Assets used or disposed of since the date thereof in the ordinary course of business or as permitted under Section 5.1), free and clear of all Encumbrances, other than Permitted Encumbrances.

 

(b)               The Acquired FH Assets and the FH Assets that will be held, leased or licensed by the Transferred FH Companies and their Closing Subsidiaries as of Closing, together with all Assets the benefit of which will be provided to Buyer or one of its Subsidiaries (including the Transferred FH Companies and their Closing Subsidiaries) pursuant to this Agreement (including with respect to arrangements contemplated by Section 5.16(b) or Section 5.17(b)), the Local Purchase Agreements or the Transition Services Agreement, and the corporate services provided by Seller or its Subsidiaries to the FH Business set forth in Section 3.16(b) of the Seller’s Disclosure Letter, will constitute, as of Closing, in all material respects all Assets which are required for Buyer and its Subsidiaries (including the Transferred FH Companies and their Closing Subsidiaries) to operate the FH Business substantially in the manner in which it is conducted on the date hereof.

 

Section 3.17        Brokers and Finders. Except for those entities set forth in Section 3.17 of the Seller’s Disclosure Letter, the fees of which will be paid by Seller, in connection with the transactions contemplated by this Agreement, none of Seller, the Transferred FH Companies or their Closing Subsidiaries will incur, any brokerage, finders’ or similar fee for which Buyer, any FH Share Seller, any FH Asset Seller or the Transferred FH Companies or their Closing Subsidiaries are or will be liable.

 

Section 3.18        Contracts. Section 3.18 of the Seller’s Disclosure Letter contains a list, as of the date hereof, of all Contracts (other than Employee Benefit Plans and other than any Material Contracts that are Excluded Assets) related to the FH Business to which Seller or any of its Affiliates is a party or by which any of their respective assets is bound, and that fall within any of the following categories (the “Material Contracts”):

 

(a)                each Contract with a Key Customer (other than (i) any such contract which is terminable by a Transferred FH Company, a Closing Subsidiary of a Transferred FH Company or an FH Affiliate (in respect of the FH Business), as applicable, without material liability, penalty or premium on 90 or fewer days’ notice and (ii) purchase orders, sales orders, rebate agreements or invoices under such contracts entered into in the ordinary course of business);

 

(b)               each Contract with a Key Supplier (other than (i) any such contract which is terminable by a Transferred FH Company, Closing Subsidiary of a Transferred FH Company or FH Affiliate (in respect of the FH Business), as applicable, without material liability, penalty or premium on 90 or fewer days’ notice and (ii) purchase orders, sales orders, rebate agreements or invoices under such contracts entered into in the ordinary course of business);

 

(c)                each Contract which limits the ability, in any material respect, of (i) a Transferred FH Company or any of its Closing Subsidiaries or an FH Affiliate (in respect of the FH Business) to compete with any Person generally or in any geographic area in which any Transferred FH Company or any Closing Subsidiary thereof or an FH Affiliate (in respect of the FH Business) conducts the FH Business, or (ii) a Transferred FH Company or any of its Closing Subsidiaries or any FH Affiliate (in respect of the FH Business) from entering into any line of business, or from freely providing services or supplying products to any customer or potential customer, or in any part of the world;

 

(d)               each material Transferred IP Contract, other than non-disclosure agreements, employee invention assignments, customer end user agreements, “clickwrap”, “shrinkwrap,” open source or similar Contracts for generally commercially available computer software, firmware or data, and similar agreements entered into in the ordinary course of business with annual license fees of less than $100,000;

 

(e)                each Contract that would reasonably be expected to result in payments to or from a Transferred FH Company or any of its Closing Subsidiaries or an FH Affiliate (in respect of the FH Business) in excess of $2,000,000 (or the equivalent value in the applicable currency) over any consecutive 12-month period including the date hereof;

 

(f)                each (A) consulting agreement (other than those that are terminable on no more than thirty (30) days’ prior notice and that provide for a termination fee of less than $50,000), (B) change of control, retention or severance agreement or arrangement or (C) employment agreement, in the case of each of clauses (A) and (C), which (x) provides for mandatory annual cash compensation in excess of $200,000 or (y) includes any bonus or other amount payable in connection with the transactions contemplated hereby;

(g)               each Contract for the disposition of FH Assets in excess of $1,000,000 over any consecutive 12-month period including the date hereof (other than sales of products in the ordinary course of business) or for the acquisition of the assets or business of any other Person in excess of $1,000,000 over any consecutive 12-month period including the date hereof (other than purchases of inventory or components in the ordinary course of business);

 

(h)               each contract in which Seller or any of its Affiliates has granted “most favored nation” pricing provisions or exclusive marketing or distribution rights relating to any products or territory or has agreed to purchase a minimum quantity of goods or services in excess of $1,000,000 or has agreed to purchase goods or services exclusively from a specified person (or group of persons);

 

(i)                 each Contract concerning the establishment or operation of a partnership, joint venture or similar enterprise;

 

(j)                 each Government Contract (other than purchase orders, sales orders, rebate agreements or invoices under such contracts entered into in the ordinary course of business);

 

(k)               any settlement agreement or settlement-related agreement that contains material ongoing restrictions on the operation of the FH Business (including any agreement in connection with which any employment-related claim is settled);

 

(l)                 any agency, distributor, sales representative, franchise or similar agreements with an agent, distributor, sales representative, franchisor or similar service provider outside of the United States that cannot be terminated by the applicable Transferred FH Company, Closing Subsidiary or FH Affiliate on less than 90 days’ notice without material Liability to such Person;

 

(m)             each Contract (other than any Contract included in the Acquired FH Assets) that, following the Closing, would (or would purport to) entitle any third party to receive a license or any other right to Intellectual Property of Buyer or any of Buyer’s Affiliates (other than the Transferred FH Companies and the Closing Subsidiaries) following the Closing or otherwise would bind or purport to bind Buyer or any of Buyer’s Affiliates (other than any Transferred FH Company or any of its Closing Subsidiaries); and

 

(n)               each letter of credit, bank guarantee, performance bond or similar instrument, in each case, in any amount in excess of $100,000 individually, issued for the benefit of any Transferred FH Company or Closing Subsidiary.

 

Each such Material Contract is legal, valid, binding and enforceable against Seller or its Affiliate, as applicable, and, to the Knowledge of Seller, the other parties thereto in accordance with its terms, in each case, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles, and is in full force and effect, except where such failure to be so valid, binding, enforceable or in full force and effect would not, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole. Neither Seller nor any of its Affiliates is in default under or in breach of any such Material Contract except for such defaults or breaches as would not have, individually or in the aggregate, reasonably be expected to be material to the FH Business, taken as a whole. To the Knowledge of Seller, no event has occurred which, after the giving of notice, with lapse of time, or otherwise, would constitute any such default or breach.

 

Section 3.19        Insurance. Section 3.19 of the Seller’s Disclosure Letter sets forth a list of all material insurance policies carried by a Transferred FH Company or its Closing Subsidiaries (the “Insurance Policies”). Seller has delivered to Buyer copies of all Insurance Policies. With respect to each such Insurance Policy, to the extent related to the FH Business such Insurance Policy is legal, valid, binding and enforceable in accordance with its terms and, except for policies that have expired under their terms in the ordinary course of business, is in full force and effect. All premiums payable under all such policies have been timely paid, and each of Seller and its Affiliates is in compliance with the terms of such policies in all material respects.

 

Section 3.20        Customers. No Key Customer has indicated in writing within the past 6 months as of the date hereof that it intends to cancel, terminate or materially and adversely modify its relationship with the FH Business.

 

Section 3.21        Government Contracts.

 

(a)                Since December 31, 2014, each Government Contract in effect during such period has been awarded to or novated in the name of a Transferred FH Company or Closing Subsidiary.

 

(b)               Since December 31, 2014, (i) the FH Business has been conducted in compliance in all material respects with the terms and conditions, including invoicing requirements, of each Government Contract; (ii) all representations and certifications submitted by Seller or any Affiliate thereof with respect to any Government Contract were current, accurate, and complete in all material respects as of their effective date and updated as required and each of Seller and its Affiliates has complied in all material respects with all such representations and certifications; and (iii) neither Seller nor any Affiliate thereof has submitted to any Governmental Authority any inaccurate, untruthful, or misleading cost or pricing data, or certification relating to a Government Contract.

 

(c)                Since December 31, 2014, neither Seller or any Affiliate thereof has been, with respect to any Government Contract, audited or investigated by any Governmental Authority (except for audits in the ordinary course), or subject to any indictment, information or material civil claim; any termination for convenience or default; any material cure notice; any material stop work notice; any material show cause notice; or assertion of liquidated damages, nor has any of the foregoing actions been threatened or reasonably expected. There are no outstanding protests, claims, disputes, or other proceedings relating to any Government Contract, and, to the Knowledge of Seller, no such material protests, claims, disputes, or other proceedings are threatened or reasonably expected.

 

(d)               Since December 31, 2014, neither Seller nor any of its Affiliates has, with respect to any Government Contract, conducted or initiated any internal investigation or made a mandatory or voluntary disclosure, or failed to make any mandatory disclosure, to any Governmental Authority with respect to violations or noncompliance relating to a Government Contract, and to the Knowledge of Seller, there have been no actual or alleged facts or circumstances that would warrant such an investigation or disclosure.

 

(e)                Since December 31, 2014, neither Seller nor any Affiliate thereof, with respect to the FH Business, has been subject to, or is currently subject to, any condition or circumstance that required or would currently require such entity to answer affirmatively to any certification contained in FAR 52.209-5, Certification Regarding Responsibility Matters.

 

(f)                The FH Business is not subject to any organizational conflict of interest mitigation measure that restricts the prospective conduct of the FH Business. Neither Seller nor any Affiliate thereof has, with respect to any current Government Contract on which performance is still open, received any written (or, to the Knowledge of the Seller, other) notice from a Governmental Authority raising organizational conflict of interest concerns or has been required to implement any organizational conflict of interest mitigation plan, or has agreed or undertaken to refrain from any activity for purposes relating to actual or perceived organizational conflicts of interest.

 

(g)               No Governmental Authority, prime contractor or other third party is currently asserting against Seller or any of its Affiliates, and, to the Knowledge of the Seller, there is no basis for, (i) any claim for indemnification arising under or relating to any Government Contract, or (ii) any warranty payment or remedy arising under or relating to any Government Contract except in the ordinary course of business.

 

(h)               Neither Seller nor any of its Affiliates, nor, to the Knowledge of the Seller, any representatives or Affiliates of, or Persons acting for or on behalf of any of the foregoing, has with respect to any Government Contract directly or indirectly made, offered to make, solicited, or received, in violation of any Law, any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, privately or publicly, regardless of form, whether in money, property, or services.

 

(i)                 Since December 31, 2014, with respect to the FH Business, each of Seller and its Affiliates and each of their Representatives, who hold or held security clearances are and have been in compliance, or with respect to former Representatives, complied until the time that such Persons were no longer Representatives, with all applicable obligations relating to the receipt, possession, and disclosure of national security or other sensitive information, including applicable requirements of the National Industrial Security Program Operating Manual (the “NISPOM”), DOD 5220.22-M, and any supplements, amendments or revised editions thereof, any Form DD-254 that is incorporated into any Government Contract; and any comparable Laws of a foreign Governmental Authority. Neither Seller nor any Affiliate thereof, with respect to the FH Business, has been subject to any security audit or inspection by the U.S. Government for which it has received less than a satisfactory rating, and no facts or circumstances currently exist that could reasonably be expected to give rise to the suspension, limitation or revocation of any security clearance of any such entity or any of its current or former Representatives. Except as may be prohibited by the NISPOM, Section 3.21(a) of the Seller’s Disclosure Letter sets forth a list of all facility security clearances related to the FH Business and held by Seller or any Affiliate thereof and, all current personnel engaged in the FH Business who require personnel clearances to perform their responsibilities as employees, indicating the clearance level for each.

 

Section 3.22        Anti-Bribery Laws. The FH Business is being, and since December 31, 2011, has been conducted in compliance with the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., the Organization for Economic Cooperation and Development Convention Against Bribery of Foreign Public Officials in International Business Transactions and legislation implementing such convention, all other international anti-bribery conventions and all applicable anti-corruption or bribery Laws (collectively, “Anti-Bribery Laws”) in any jurisdiction in which the Transferred FH Companies and their Closing Subsidiaries and the FH Affiliates and the FH Asset Sellers has conducted its business (including the FH Business), and the FH Business has instituted and maintains policies and procedures designed to ensure continued compliance therewith. Neither Seller nor any of its Affiliates has received any written communication from any Governmental Authority that alleges that any Seller or any of its Affiliates, or any current or former Representatives thereof, is or may be in violation of, or has, or may have, any liability under, any Anti-Bribery Laws in connection with the FH Business, and no such potential violation of Anti-Bribery Laws has been discovered by or brought to the attention of Seller or any of its Affiliates since December 31, 2011. Neither Seller nor any Affiliate thereof has made nor does it anticipate making any disclosures to any Governmental Authority for potential violations of Anti-Bribery Laws related to the FH Business. No current or former Representatives of Seller or any of its Affiliates that is or has been engaged in the FH Business is currently an officer, agent or employee of a Governmental Authority. Neither Seller (to the extent related to the FH Business) nor any of its Affiliates (to the extent related to the FH Business) nor any of their respective current or former Representatives that is or has been engaged in the FH Business has directly or indirectly, offered, given, reimbursed, paid or promised to pay, or authorized the payment of, any money or other thing of value (including any fee, gift, sample, travel expense or entertainment) or any commission payment payable to (a) any Person who is an official, officer, agent, employee or representative of any Governmental Authority or of any existing or prospective customer (whether or not owned by a Governmental Authority), (b) any political party or official thereof, (c) any candidate for political or political party office or (d) any other Person affiliated with any such customer, political party or official or political office, in each case while knowing or having reason to believe that all or any portion of such money or thing of value would be offered, given, reimbursed, paid or promised, directly or indirectly, for purposes not allowable under the Anti-Bribery Laws.

 

Section 3.23        Export Control and Economic Sanctions. Except as described in Section 3.23 of Seller’s Disclosure Letter, the FH Business is being, and since September 1, 2012 has been, conducted in compliance in all material respects with all applicable United States or foreign import, export control and sanctions laws and regulations, including but not limited to requirements under the Arms Export Control Act (22 U.S.C. 2778), the International Traffic in Arms Regulations (22 C.F.R. pt. 120 et seq.), the Export Administration Regulations (15 C.F.R. pt. 730 et seq.) and executive orders and laws implemented by the Office of Foreign Assets Controls, United States Department of the Treasury (collectively, the “Export Control and Sanctions Laws”). Seller or any of its Subsidiaries is not, and is not controlled by, owned by, or acting on behalf of, (i) a national of or entity located in or organized under the Laws of Cuba, Iran, North Korea, the Crimea region of Ukraine, or Syria; (ii) a Specially Designated National or Blocked Person designated by the U.S. Department of the Treasury Office of Foreign Assets Control; or (iii) a person or entity designated by the U.S. Department of the Treasury as a financial institution of primary money laundering concern.

 

Section 3.24        Absence of Claims; Business Relationships With Affiliates. Neither Seller nor any Affiliate thereof (other than the Transferred FH Companies and the Closing Subsidiaries) owns any Asset, property or right, tangible or intangible, used by the FH Business, has any claim or cause of action against the FH Business, the Transferred FH Companies or the Closing Subsidiaries, or is owed any payment or other obligation by the FH Business, the Transferred FH Companies or the Closing Subsidiaries other than (a) as provided in the Transaction Documents, (b) as set forth on Section 3.24 of Seller’s Disclosure Letter, (c) “cash sweep” practices, cash management systems, and intercompany borrowings consistent with past practices (including through dividends and capital contributions) that are eliminated either at or prior to Closing or as provided in Section 5.5(e) or (d) as would not, individually or in the aggregate, be material to the FH Business, taken as a whole.

 

Section 3.25        Private Placement Matters. Seller represents that it is acquiring the Buyer Stock Consideration to be issued to Seller in connection with this Agreement for its own account and that such Buyer Stock Consideration is being and will be acquired by Seller for the purpose of investment and not with a view to resale in connection with a distribution thereof in violation of the Securities Act. Seller represents that it has had an opportunity to ask questions of and receive answers from the authorized representatives of Buyer and to review relevant documents and records concerning the business of Buyer and the terms and conditions of this investment in the Buyer Stock Consideration. Seller acknowledges that it has been called to its attention that this investment may involve a high degree of risk. Seller acknowledges that it can bear the economic risks of its investment in the Buyer Stock Consideration and that it has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of this investment in the Buyer Stock Consideration and protecting its own interests in connection with this investment. Seller hereby represents and warrants to Buyer that it is an “accredited investor” as such term is defined under Section 501(a) of Regulation D promulgated under the Securities Act. Seller understands that the Buyer Stock Consideration to be issued in connection with the transactions contemplated hereby has not been and will not be registered under the Securities Act prior to issuance, that such shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom, and that Buyer has no obligation to register or qualify the shares within the Buyer Stock Consideration except pursuant to the Stockholder Agreement. Seller further represents that it understands and agrees that unless and until transferred as provided herein and in the Stockholder Agreement, or transferred or are eligible to be transferred pursuant to the provisions of Rule 144 of the Securities Act, all certificates issued in respect of or exchange for the shares of the Buyer Stock Consideration that may be issued hereunder shall bear a legend (and Buyer will make a notation on its transfer books to such effect) prominently stamped or printed thereon reading substantially as follows, or the substance of which will otherwise be reflected on the books and records of the transfer agent of the Buyer Common Stock with respect to book-entry shares:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO RESALE IN CONNECTION WITH A DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.

 

Section 3.26        No Additional Representations; No Reliance.

 

(a)                Seller acknowledges and agrees that neither Buyer nor any of its Subsidiaries, nor any other Person, has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding Buyer or other matters that is not specifically included in this Agreement or the Buyer’s Disclosure Letter. Without limiting the generality of the foregoing, neither Buyer nor its Subsidiaries nor any other Person has made a representation or warranty to Seller with respect to, and neither Buyer nor its Subsidiaries nor any other Person, shall be subject to any liability to Seller or any other Person resulting from, Buyer or its representatives making available to Seller, (i) any projections, estimates or budgets related to Buyer or Buyer’s business, or (ii) any materials, documents or information relating to Buyer or Buyer’s business made available to Seller or its counsel, accountants or advisors in certain “data rooms,” offering memorandum, confidential information memorandum, management presentations or otherwise, in each case, except as expressly covered by a representation or warranty set forth in Article IV of this Agreement. In connection with Seller’s investigation of Buyer or Buyer’s business, Buyer has delivered, or made available to Seller and its respective Affiliates, agents and representatives, certain projections and other forecasts, including but not limited to, projected financial statements, cash flow items and other data of Buyer and its Subsidiaries and certain business plan information of Buyer and its business. Seller acknowledges that there are uncertainties inherent in attempting to make such projections and other forecasts and plans and accordingly is not relying on them, that Seller is familiar with such uncertainties, that Seller is taking full responsibility for making its own evaluation of the adequacy and accuracy of all projections and other forecasts and plans so furnished to it, and that Seller and its Affiliates, agents and representatives shall have no claim against any Person with respect thereto. Accordingly, Seller acknowledges that neither Buyer nor any of its representatives, agents or Affiliates, have made any representation or warranty with respect to such projections and other forecasts and plans.

 

(b)               In furtherance of the foregoing, Seller acknowledges that it is not relying on any representation or warranty of Buyer other than those representations and warranties specifically set forth in Article IV of this Agreement. Seller acknowledges that it has conducted to its satisfaction an independent investigation of the financial condition, Liabilities, results of operations and projected operations of Buyer and its business and the nature and condition of its properties, assets and businesses and, in making the determination to proceed with the transactions contemplated hereby, has relied solely on the results of its own independent investigation and the representations and warranties set forth in Article IV and the other terms and conditions set forth in this Agreement.

 

Section 3.27        No Other Representations or Warranties. Except for the representations and warranties contained in this Article III, none of Seller, the FH Share Sellers, the FH Asset Sellers nor any of their respective Affiliates makes any express or implied representation or warranty with respect to Seller, the FH Share Sellers, the FH Asset Sellers, the Transferred FH Companies or their Closing Subsidiaries or any of their respective Affiliates, the FH Shares, the Acquired FH Assets, the FH Assets, the FH Business or with respect to any other information provided, or made available, to Buyer or any of its Affiliates, agents or representatives in connection with the transactions contemplated hereby. None of Seller, the FH Share Sellers, the FH Asset Sellers or any other Person will have or be subject to any liability or other obligation to Buyer, its Affiliates, agents or representatives or any Person resulting from the sale of the FH Shares or the Acquired FH Assets to Buyer or Buyer’s use of, or the use by any of its Affiliates or representatives of any such information, including information, documents, projections, forecasts or other material made available to Buyer, its Affiliates or representatives in any “data rooms,” teaser, confidential information memorandum or management presentations in connection with the transactions contemplated by this Agreement, unless any such information is expressly and specifically included in a representation or warranty contained in this Article III. Each of Seller, the FH Asset Sellers and the FH Share Sellers and their Affiliates disclaims any and all other representations and warranties, whether express or implied. Notwithstanding anything to the contrary contained in this Agreement, neither Seller, the FH Share Sellers, the FH Asset Sellers nor any of their respective Affiliates makes any express or implied representation or warranty with respect to Excluded Assets, Excluded Businesses or Retained Liabilities.

 

ARTICLE IV


REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to Seller that, except (a) as disclosed or reflected in the SEC Reports filed after December 31, 2016, and prior to the date hereof, but excluding any risk factor disclosures contained under the heading “Risk Factors” or any disclosure of risks included in any “forward-looking statements” disclaimer in each case, other than any specific factual information contained therein, or (b) as disclosed in the Buyer’s Disclosure Letter (but subject to Section 10.16), the following statements are true and correct:

 

Section 4.1            Corporate Organization and Standing. Buyer is (a) a Delaware corporation duly organized, validly existing and duly qualified or licensed and in good standing under the Laws of the state or jurisdiction of its organization with full corporate or other power and authority to own, lease, use and operate its properties and to conduct its business, and (b) duly qualified or licensed to do business and is in good standing in any other jurisdiction in which the nature of the business conducted by it or the property it owns, leases or operates requires it to so qualify, be licensed or be in good standing, except where the failure to be so qualified, licensed or in good standing would not, individually or in the aggregate, have a Buyer Material Adverse Effect.

 

Section 4.2            Authority Relative to this Agreement, Etc. Buyer has all requisite corporate authority and power to execute and deliver this Agreement, the Local Purchase Agreements, the Transition Services Agreement and each of the other Transaction Documents to which it is or will be a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, the Local Purchase Agreements, the Transition Services Agreement and each of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by Buyer. No other corporate proceedings on the part of Buyer (and no action on part of any stockholders of Buyer) or any Subsidiary thereof are necessary to authorize the execution, delivery and performance of this Agreement, the Local Purchase Agreements, the Transition Services Agreement and the other Transaction Documents or the consummation of the transactions contemplated hereby and thereby. This Agreement, the Local Purchase Agreements, the Transition Services Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby have been (or in the case of the Transition Services Agreement and the Local Purchase Agreements, and the other Transaction Documents, when executed and delivered will be) duly and validly executed and delivered by Buyer and, assuming this Agreement and such other agreements have been duly authorized, executed and delivered by all of the other parties hereto or thereto (other than Buyer and its Affiliates), each of this Agreement and such other agreements, and such other Transaction Documents, constitutes (or in the case of the Transition Services Agreement and the Local Purchase Agreements, and the other Transaction Documents, when executed and delivered will constitute) a legal, valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

 

Section 4.3            Capitalization.

 

(a)                As of September 21, 2017, the authorized capital stock of Buyer consists of 29,000,000 shares of Buyer Common Stock, of which 16,500,540 shares are issued and outstanding, 1,372,488 shares are issued and held in the treasury of Buyer, and 769,268 shares are reserved for issuance pursuant to the grant of equity awards under Buyer Equity Compensation Plans. All of the outstanding shares of capital stock of Buyer are duly authorized, validly issued, fully paid and non-assessable.

 

(b)               All of the outstanding shares of capital stock of Buyer were offered, issued, sold and delivered in compliance with all applicable Laws governing the issuance of securities and were not issued in violation of (or subject to) any preemptive rights, rights of first refusal or similar rights and free of any preemptive rights or Encumbrances in respect thereof, other than Permitted Encumbrances.

 

(c)                Except for shares of Buyer Common Stock issued or reserved for issuance pursuant to the Buyer Equity Compensation Plans as set forth in Section 4.3(a) above and as contemplated by this Agreement, as of the date of this Agreement, there are no outstanding warrants, options, Contracts, subscriptions, redemptions, profit participations, stock appreciation, phantom stock, rights of first offer or refusal, anti-dilution rights, preemptive rights or other rights, convertible or exchangeable securities or other commitments, whether written or oral, pursuant to which Buyer or any of its Subsidiaries is or may become obligated to issue, sell, purchase, return, redeem or otherwise acquire any shares of Buyer Common Stock or other securities of Buyer or any of its Subsidiaries convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for or purchase shares of Buyer Common Stock, and no equity interests of Buyer or any of its Subsidiaries are reserved for issuance for any purpose. There are no voting trusts, stockholder agreements, Encumbrances, proxies or other rights or Contracts in effect with respect to the voting, transfer or dividend rights of Buyer’s capital stock to which Buyer is a party or, to the Knowledge of Buyer, between or among Buyer’s stockholders. The issuance of shares of Buyer Common Stock pursuant to this Agreement will not obligate Buyer or any of its Subsidiaries to issue shares of Buyer Common Stock or other securities of Buyer or its Subsidiaries to any Person (other than Seller or its Affiliates) and will not result in a right of any holder of Buyer’s securities to adjust the exercise, conversion, exchange or reset price under any of such securities. Except for the Stockholder Agreement or as contemplated by this Agreement, there are no outstanding Contracts or other obligations of Buyer or any of its Subsidiaries requiring the registration for sale of any shares of Buyer Common Stock or other securities of Buyer or any of its Subsidiaries convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for or purchase shares of Buyer Common Stock and no such additional agreements is currently contemplated.

 

(d)               Section 4.3(d) of the Buyer’s Disclosure Letter includes a list of all of the Subsidiaries of Buyer. All the outstanding shares of capital stock of, or other equity interests in, each such Subsidiary have been validly issued and are fully paid and non-assessable and are owned directly or indirectly by Buyer, free and clear of all Encumbrances, other than applicable restrictions arising under securities Laws. Neither Buyer nor any of its Subsidiaries directly or indirectly owns any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, any corporation, partnership, joint venture or other business association or entity that is or would reasonably be expected to be material to Buyer and its Subsidiaries taken as a whole.

 

(e)                Buyer has no outstanding bonds, debentures, notes or other obligations, the holders of which have the right to vote (or are convertible into or exchangeable or exercisable for, or evidencing the right to subscribe for or purchase, securities having the right to vote) with the stockholders of Buyer on any matter.

 

(f)                The Buyer Stock Consideration shall be, at the time of issuance, duly authorized, validly issued, fully paid and nonassessable, free and clear of all Encumbrances (other than restrictions on transfer under applicable securities Laws) and will not be issued in breach or violation of any preemptive rights or Contract and, upon issuance and delivery of the Buyer Stock Consideration pursuant to the terms of this Agreement, Buyer will issue to Seller, and Seller will acquire legal ownership of, and have good and valid title to, the Buyer Stock Consideration free and clear of any Encumbrances (other than restrictions on transfer under applicable securities Laws and Encumbrances under the Stockholder Agreement). Assuming the accuracy of Seller representations and warranties set forth in Section 3.25, the issuance of the Buyer Stock Consideration in accordance with the terms set forth in the Agreement is exempt from registration under the Securities Act and otherwise issued in compliance with all Laws.

 

(g)               The number of shares of authorized Buyer Common Stock that have not been issued, subscribed for or otherwise committed to be issued is at least equal to the number of shares of Buyer Common Stock to be issued pursuant to this Agreement.

 

Section 4.4            Consents and Approvals; No Violations. None of the execution, delivery or performance of this Agreement, the Local Purchase Agreements, the Transition Services Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby and thereby by Buyer will (a) violate any provision of the certificate of incorporation or bylaws (or other comparable governing documents) of Buyer, (b) require any Governmental Filings with any Governmental Authority, except for (i) filings with the FTC and the DOJ pursuant to the HSR Act, and the rules and regulations promulgated thereunder, (ii) requirements of any foreign Regulatory Laws and Laws regulating trade or exchange or currency controls, (iii) the notice or application to the NYSE for the acquisition and issuance of the shares of Buyer Common Stock constituting the Buyer Stock Consideration for trading thereon and (iv) such consents, waivers, approvals, licenses, authorizations, permits, filings or notifications which, if not obtained or made, would not, individually or in the aggregate, reasonably be expected to (1) be material to Buyer and (2) impair, hinder, delay or adversely affect in any material respect the ability of Buyer to perform its obligations under this Agreement and to consummate the Sale or other material transactions contemplated hereby, (c) conflict with, result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default under, or give rise to any right of termination, cancellation or acceleration of any obligation or a loss of any benefit to which Buyer is entitled under, any of the terms, conditions or provisions of any Contract or Permit to which Buyer is a party or by which Buyer or any of its properties or Assets may be bound, except such conflicts, violations, breaches, defaults, terminations, cancellations, accelerations or losses of benefit which would not, individually or in the aggregate, reasonably be expected to (1) be material to Buyer and (2) impair, hinder, delay or adversely affect in any material respect the ability of Buyer to perform its obligations under this Agreement and to consummate the Sale or other material transactions contemplated hereby or (d) assuming the making of the Governmental Filings and obtaining of the related approval referred to in clause (b)(i) or (b)(ii) above, violate any Law applicable to Buyer or by which any of its properties or Assets may be bound, except for such violations which would not, individually or in the aggregate, reasonably be expected to (1) be material to Buyer and (2) impair, hinder, delay or adversely affect in any material respect the ability of Buyer to perform its obligations under this Agreement and to consummate the Sale or other material transactions contemplated hereby.

 

Section 4.5            Brokers and Finders. None of Buyer or any of its officers, directors or employees has employed any investment banker, broker or finder or incurred any Liability for any investment banking fees, brokerage fees, commissions or finders’ fees in connection with the transactions contemplated by this Agreement for which Seller or any Retained Subsidiary or, in the event the Closing does not occur, any Transferred FH Company or its Closing Subsidiaries, has or could have any Liability.

 

Section 4.6            Financing.

 

(a)                Buyer has delivered to Seller a true, accurate and complete copy of an executed commitment letter, including all exhibits, schedules and annexes thereto, dated the date hereof, from Deutsche Bank AG New York Branch (the “Debt Commitment Letter”), pursuant to which, and subject to the terms and conditions of which (including any “market flex” provisions included in the fee letter dated the date hereof referred to therein (the “Fee Letter”)), the lender parties thereto have committed to lend the amounts set forth therein to Buyer for the purpose of funding the transactions contemplated by this Agreement (the “Debt Financing”).

 

(b)               The Debt Commitment Letter is in full force and effect and, as of the date of this Agreement, has not been withdrawn or terminated, or otherwise amended or modified in any respect. The Debt Commitment Letter, in the form so delivered, is a legal, valid and binding obligation of Buyer and, to the Knowledge of Buyer, the other parties thereto, enforceable in accordance with its terms, subject to the qualification that such enforceability may be limited by bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting rights of creditors or by general principles of equity. Except for the Fee Letter, of which Buyer has delivered true, accurate and complete redacted copies to Seller (provided that only the fee amounts, pricing caps and other economic terms, and the rates and amounts included in the “market flex” provisions (but not covenants), may be redacted, none of which redacted provisions could adversely affect the conditionality, enforceability, termination or aggregate principal amount of the Debt Financing) prior to the date hereof, there are no other agreements, side letters, or arrangements relating to the Debt Commitment Letter that would reasonably be expected to affect the amount, availability or conditionality of the Debt Financing. As of the date of this Agreement, no event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Buyer under any term or condition of the Debt Commitment Letter or result in any portion of the Debt Financing not being available on the Closing Date. As of the date of this Agreement, no lender party to the Debt Commitment Letter has notified Buyer of its intention to terminate the Debt Commitment Letter or not to provide the Debt Financing. As of the date of this Agreement, assuming the accuracy of the representations and warranties set forth in Article III such that the condition set forth in Section 8.3(a) is satisfied and the performance by Seller of its obligations under this Agreement and the satisfaction of the other conditions set forth in Section 8.1 and Section 8.3, Buyer has no reason to believe that it will be unable to satisfy, on a timely basis, any term or condition of closing to be satisfied by it contained in the Debt Commitment Letter or that the full amounts committed pursuant to the Debt Commitment Letter will not be available as of the Closing if the conditions of closing to be satisfied by it contained in the Debt Commitment Letter are satisfied. Buyer has fully paid any and all commitment fees or other fees required by the Debt Commitment Letter to be paid on or before the date of this Agreement, and Buyer will pay when due all other commitment or other fees arising under the Debt Commitment Letter as and when they become payable. Assuming the satisfaction of the conditions set forth in Section 8.1 and Section 8.3 and that the Debt Financing is funded in accordance with the Debt Commitment Letter, the aggregate proceeds from the Debt Financing constitute all of the financing required for the consummation of the transactions contemplated by this Agreement and are sufficient in amount for Buyer to pay the Preliminary Cash Purchase Price (as well as the Final Cash Purchase Price) and all associated fees, costs and expenses in connection with the transactions contemplated by this Agreement (the “Required Amount”). The Debt Commitment Letter contains all of the conditions precedent to the obligations of the parties thereunder to make the Debt Financing available to Buyer on the terms therein, other than the payment of customary fees. As of the date of this Agreement, the Debt Commitment Letter has not been withdrawn and Buyer does not know of any facts or circumstances that may be expected to result in any of the conditions set forth in the Debt Commitment Letter not being satisfied.

 

(c)                Buyer’s obligations under this Agreement are not subject to any conditions regarding Buyer’s, its Affiliates’, or any other Person’s ability to obtain financing for the consummation of the transactions contemplated hereby.

 

Section 4.7            Securities Act. Buyer is acquiring the FH Shares solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act, or any applicable foreign securities Laws. Buyer acknowledges that the FH Shares are not registered under the Securities Act, any applicable state securities Law or any applicable foreign securities Law, and that such FH Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or applicable foreign securities Laws or pursuant to an applicable exemption therefrom and pursuant to state securities Laws, as applicable.

 

Section 4.8            Solvency. Assuming satisfaction of the condition set forth in Section 8.3(a), immediately after giving effect to the transactions contemplated by this Agreement (including any Debt Financing), Buyer and its Subsidiaries (including the Transferred FH Companies and their Closing Subsidiaries) will be Solvent. No transfer of property is being made, and no obligation is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of Buyer or Seller or any of their Subsidiaries or any Transferred FH Company or any of their Closing Subsidiaries.

 

Section 4.9            Investigations; Litigation. There is no investigation or review pending (or, to the Knowledge of Buyer, threatened) by any Governmental Authority with respect to Buyer or any of its Subsidiaries which would have, individually or in the aggregate, a Buyer Material Adverse Effect, and there are no Actions pending (or, to Buyer’s Knowledge, threatened) against or affecting Buyer or any of its Subsidiaries, or any of their respective properties at law or in equity before, and there are no orders, judgments or decrees of, or before, any Governmental Authority, in each case, which would have, individually or in the aggregate, a Buyer Material Adverse Effect.

 

Section 4.10        Investigation by Buyer. Buyer has conducted its own evaluation of the FH Business and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its purchase of the FH Shares and the Acquired FH Assets and of its assumption of the Assumed Liabilities. Buyer confirms that (i) it can bear the economic risk of its investment in the FH Shares and the Acquired FH Assets and can afford to lose its entire investment in the FH Shares and the Acquired FH Assets and (ii) Seller has made available to Buyer (A) the opportunity to ask questions of the officers and management employees of Seller and its Subsidiaries and to acquire additional information about the business and financial condition of the FH Business, and (B) in the electronic data room maintained in connection with the transactions contemplated by this Agreement, information and documents, including written responses to questions submitted by, or on behalf of, Buyer, relating to the FH Business, the Transferred FH Companies and their Closing Subsidiaries and the FH Assets.

 

Section 4.11        SEC Reports; Financial Statements.

 

(a)                Buyer has filed with or furnished to the SEC all reports, schedules, forms, statements and other documents required to be filed or furnished by Buyer under the Securities Act, the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, and the rules and regulations of the New York Stock Exchange since January 1, 2014 (the foregoing materials, including the exhibits thereto, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Buyer has made available to Seller copies of all comment letters received by Buyer from the SEC since January 1, 2014 and relating to the SEC Reports, together with all written responses of Buyer thereto. As of the date of this Agreement, there are no outstanding or unresolved comments in such comment letters received by Buyer from the SEC. As of the date of this Agreement, to the Knowledge of Buyer, none of the SEC Reports is the subject of any ongoing review by the SEC. No principal executive officer or principal financial officer of Buyer has failed to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to the applicable SEC Reports. None of Buyer’s Subsidiaries is, or since January 1, 2014 has been, required to file periodic reports or other reports, schedules, forms, statements or other documents with the SEC pursuant to the Securities Act or the Exchange Act. As of the date of this Agreement, there are no amendments or modifications to any SEC Report that were required to be filed with (or furnished to) the SEC prior to the date of this Agreement, but that have not yet been filed with (or furnished to) the SEC. No Subsidiary of Buyer is subject to the periodic reporting requirements of the Exchange Act.

 

(b)               The financial statements of Buyer included (or incorporated by reference) in the SEC Reports (including the notes thereto) comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of Buyer and its consolidated Subsidiaries as of and for the dates thereof and the results of operations, shareholders’ equity and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal year-end audit adjustments, none of which are material, individually or in the aggregate. Since January 1, 2017, Buyer has not made any change in the accounting practices and policies applied in the preparation of its financial statements, except as required by GAAP, SEC rule or policy or applicable Law. No financial statements of any Person other than Buyer are required by GAAP to be included in the financial statements of Buyer.

 

(c)                Buyer maintains accurate books and records reflecting its assets and liabilities and maintains proper and effective internal control over financial reporting and disclosure controls and procedures that are required by Rules 13a-15 or 15d-15 under the Exchange Act and that are reasonably designed to ensure that all material information concerning Buyer is made known on a timely basis to the individuals responsible for the preparation of the financial statements included in the SEC Reports.

 

(d)               Except (a) for Liabilities incurred or expressly permitted to be incurred pursuant to this Agreement, (b) for Liabilities incurred after December 31, 2016 in the ordinary course of business, or (c) for Liabilities set forth on Section 4.11(d) of the Buyer’s Disclosure Letter, there are no Liabilities of the Buyer or its Subsidiaries other than Liabilities which would not have, individually or in the aggregate, reasonably be expected to be material to Buyer.

 

Section 4.12        Listing and Maintenance Requirements. The Buyer Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and Buyer has taken no action designed to, or which to its Knowledge is likely to have the effect of, terminating the registration of Buyer Common Stock under the Exchange Act nor has Buyer received any written notification that the SEC is contemplating revoking, terminating or suspending such registration. Buyer is, and since January 1, 2014 has been, in material compliance with the listing and maintenance requirements and any other applicable rules and regulations of the NYSE.

 

Section 4.13        Compliance with Laws; Buyer Permits.

 

(a)                The business of Buyer is being, and since December 31, 2014 has been, conducted in compliance in all material respects with applicable Law. Buyer owns or holds all material Permits necessary for the conduct of the Buyer’s business as presently conducted or as conducted at any time since December 31, 2014 (“Buyer Permits”), and since December 31, 2014, has been, in compliance with the terms of the Buyer Permits in all material respects.

 

(b)               Buyer is, and since December 31, 2011, has been in compliance with the Anti-Bribery Laws in any jurisdiction in which Buyer and its Subsidiaries have conducted its business, and the Buyer has instituted and maintains policies and procedures designed to ensure continued compliance therewith. Neither Buyer nor any of its Affiliates has received any written communication from any Governmental Authority that alleges that any Buyer or any of its Affiliates, or any current or former Representatives thereof, is or may be in violation of, or has, or may have, any liability under, any Anti-Bribery Laws, and no such potential violation of Anti-Bribery Laws has been discovered by or brought to the attention of Buyer or any of its Affiliates since December 31, 2011. Neither Buyer nor any Affiliate thereof has made nor does it anticipate making any disclosures to any Governmental Authority for potential violations of Anti-Bribery Laws. No current or former Representatives of Buyer or any of its Affiliates is currently an officer, agent or employee of a Governmental Authority. Neither Buyer nor any of its Affiliates nor any of their respective current or former Representatives has directly or indirectly, offered, given, reimbursed, paid or promised to pay, or authorized the payment of, any money or other thing of value (including any fee, gift, sample, travel expense or entertainment) or any commission payment payable to (i) any Person who is an official, officer, agent, employee or representative of any Governmental Authority or of any existing or prospective customer (whether or not owned by a Governmental Authority), (ii) any political party or official thereof, (iii) any candidate for political or political party office or (iv) any other Person affiliated with any such customer, political party or official or political office, in each case while knowing or having reason to believe that all or any portion of such money or thing of value would be offered, given, reimbursed, paid or promised, directly or indirectly, for purposes not allowable under the Anti-Bribery Laws.

 

Section 4.14        Export Control and Economic Sanctions. Buyer is, and since September 1, 2012 has been, in compliance in all material respects with all Export Control and Sanctions Laws. Buyer or any of its Subsidiaries is not controlled by, owned by, or acting on behalf of, (i) a national of or entity located in or organized under the Laws of Cuba, Iran, North Korea, the Crimea region of Ukraine, Sudan, or Syria; (ii) a Specially Designated National or Blocked Person designated by the U.S. Department of the Treasury Office of Foreign Assets Control; or (iii) a person or entity designated by the U.S. Department of the Treasury as a financial institution of primary money laundering concern.

 

Section 4.15        Buyer Plans.

 

(a)                No Buyer Plan is (x) a “multiemployer plan,” as such term is defined in Section 3(37) of ERISA, or (y) subject to Section 302 or Title IV of ERISA or Section 412 of the Code. No Liability under Section 302 or Title IV of ERISA or Section 412 of the Code has been incurred by Buyer or its ERISA Affiliates that has not been satisfied in full and no condition exists that would reasonably be expected to result in any such Liability to Buyer or its ERISA Affiliates. With respect to each Buyer Plan that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (i) there has been no (A) failure by Buyer or its ERISA Affiliates to make by its due date a required installment under Section 430(j) of the Code or any failure by any such Buyer Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Buyer Plan, whether or not waived; or (B) determination that any such Buyer Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA); (ii) the fair market value of the assets of such Buyer Plan equals or exceeds the actuarial present value of all accrued benefits under such Buyer Plan (whether or not vested) on a termination basis; (iii) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred, and the consummation of the transactions contemplated by this Agreement will not result in the occurrence of any such reportable event; (iv) all premiums to the PBGC have been timely paid in full; (v) no Liability (other than for premiums to the PBGC) under Title IV of ERISA has been or is expected to be incurred by Buyer or its ERISA Affiliates; and (vi) the PBGC has not instituted proceedings to terminate any such Buyer Plan and, to the Knowledge of Buyer, no condition exists that reasonably could be expected to present a risk that such proceedings will be instituted or that would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any such Buyer Plan.

 

(b)               Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement (either alone or together with any other event) will (i) entitle any employee or former employee of Buyer or its Affiliates to any payment or employee benefit, including any bonus, retention, severance, retirement or job security payment or benefit; or (ii) accelerate the time of payment, funding or vesting of any employee benefits or compensation of, or increase the amount of employee benefits or compensation due to, any employee or former employee.

 

Section 4.16        Taxes.

 

(a)                Each of the Buyer and its Subsidiaries has (i) timely filed (or had timely filed on its behalf) with the appropriate Tax Authorities all income and other material Tax Returns required to be filed by or on behalf of it, and each such Tax Return was complete and accurate in all material respects, and (ii) timely paid (or had paid on its behalf) all material Taxes due and owing, regardless of whether required to be shown or reported on a Tax Return;

 

(b)               There is no examination, audit or other action of or relating to any Tax Return pending against or with respect to the Buyer or any of its Subsidiaries in respect of any material Tax and no written notice of such an examination, audit or other action with respect to any material Tax has been received by Buyer or any of its Subsidiaries;

 

(c)                No outstanding deficiency for a material Tax has been asserted in writing against the Buyer or any of its Subsidiaries;

 

(d)               There are no material liens for Taxes upon the Buyer or any of its Subsidiaries, except for Permitted Encumbrances;

 

(e)                None of Buyer or any of its Subsidiaries has distributed to its shareholders or security holders stock or securities of a controlled corporation, nor has stock or securities of Buyer or any of its Subsidiaries been distributed, in each case in a transaction to which Section 355 of the Code applies in the three years prior to the date of this Agreement;

 

(f)                None of the Buyer or any of its Subsidiaries has engaged in a “listed transaction” as set forth in Treasury Regulation Section 301.6111-2(b)(2) or any analogous provision of state or local Law;

 

(g)               Notwithstanding anything in this Agreement to the contrary, the representations and warranties made by Buyer in this Section 4.16 are the sole and exclusive representations and warranties made regarding Taxes or other Tax matters.

 

Section 4.17        No Additional Representations; No Reliance.

 

(a)                Buyer acknowledges and agrees that neither Seller nor any of the FH Share Sellers, the FH Asset Sellers nor any of their respective Subsidiaries, nor any other Person, has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding the Transferred FH Companies, their Closing Subsidiaries, the FH Assets, the Acquired FH Assets, the FH Business or other matters that is not specifically included in this Agreement or the Seller’s Disclosure Letter. Without limiting the generality of the foregoing, neither Seller nor any of the FH Share Sellers, the FH Asset Sellers nor their Subsidiaries nor any other Person has made a representation or warranty to Buyer with respect to, and neither Seller nor any other Person, shall be subject to any liability to Buyer or any other Person resulting from, Seller or its representatives making available to Buyer, (i) any projections, estimates or budgets for the Transferred FH Companies or the FH Business, or (ii) any materials, documents or information relating to the Transferred FH Companies or their Closing Subsidiaries, the FH Share Sellers, the FH Asset Sellers or the FH Business made available to Buyer or its counsel, accountants or advisors in certain “data rooms,” offering memorandum, confidential information memorandum, management presentations or otherwise, in each case, except as expressly covered by a representation or warranty set forth in Article III of this Agreement. In connection with Buyer’s investigation of the FH Business, Seller has delivered, or made available to Buyer and its respective Affiliates, agents and representatives, certain projections and other forecasts, including but not limited to, projected financial statements, cash flow items and other data of Seller and its Subsidiaries relating to the FH Business and certain business plan information of the FH Business. Buyer acknowledges that there are uncertainties inherent in attempting to make such projections and other forecasts and plans and accordingly is not relying on them, that Buyer is familiar with such uncertainties, that Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of all projections and other forecasts and plans so furnished to it, and that Buyer and its Affiliates, agents and representatives shall have no claim against any Person with respect thereto. Accordingly, Buyer acknowledges that neither Seller nor any FH Share Seller, nor any FH Asset Seller nor any of their respective representatives, agents or Affiliates, have made any representation or warranty with respect to such projections and other forecasts and plans.

 

(b)               Notwithstanding anything contained in this Agreement, it is the explicit intent of the parties hereto that the Seller, the FH Share Sellers and the FH Asset Sellers are not making any representation or warranty whatsoever, express or implied, beyond those expressly given in Article III of this Agreement, including (except as expressly provided in Article III of this Agreement and subject to the terms and conditions of this Agreement) any implied warranty or representation as to the value, condition, non-infringement, merchantability, suitability or fitness for a particular purpose as to any of the FH Assets and, except as expressly provided in Article III of this Agreement and subject to the terms and conditions of this Agreement, it is understood that Buyer is acquiring the Transferred FH Companies and their Closing Subsidiaries as is and where is with all faults as of the Closing Date with any and all defects.

 

(c)                In furtherance of the foregoing, Buyer acknowledges that it is not relying on any representation or warranty of Seller, the FH Asset Sellers or the FH Share Sellers, other than those representations and warranties specifically set forth in Article III of this Agreement. Buyer acknowledges that it has conducted to its satisfaction an independent investigation of the financial condition, Liabilities, results of operations and projected operations of the FH Business and the nature and condition of its properties, assets and businesses and, in making the determination to proceed with the transactions contemplated hereby, has relied solely on the results of its own independent investigation and the representations and warranties set forth in Article III and the other terms and conditions set forth in this Agreement.

 

Section 4.18        No Other Representations or Warranties. Except for the representations and warranties contained in this Article IV, Buyer makes no express or implied representation or warranty with respect to Buyer or any of its Affiliates or with respect to any other information provided, or made available, to Seller or any of its Affiliates, agents or representatives in connection with the transactions contemplated hereby. Neither Buyer nor any other Person will have or be subject to any liability or other obligation to Seller or its Affiliates, agents or representatives or any Person resulting from the sale of Buyer Common Stock to Seller or Seller’s use of, or the use by any of its Affiliates or representatives of any such information, including information, documents, projections, forecasts or other material made available to Seller, its Affiliates or representatives in any “data rooms,” teaser, confidential information memorandum or management presentations in connection with the transactions contemplated by this Agreement, unless any such information is expressly and specifically included in a representation or warranty contained in this Article IV. Each of Buyer and its Affiliates disclaims any and all other representations and warranties, whether express or implied.

 

ARTICLE V


COVENANTS

 

Section 5.1            Conduct of Business by Seller. During the period from the date of this Agreement to the Closing Date, except (i) as set forth in Section 5.1 of the Seller’s Disclosure Letter, (ii) as contemplated in connection with the Pre-Closing Restructuring Transactions, (iii) as otherwise contemplated in connection with or expressly permitted by this Agreement, (iv) as Buyer shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), and (v) as required by Law or the terms of any Contract, Seller agrees that it will, and will cause each of the Transferred FH Companies and their Closing Subsidiaries and the FH Asset Sellers and FH Affiliates (in respect of the FH Business) to, (x) conduct the FH Business in all material respects in the ordinary course consistent with past practice, and (y) use commercially reasonable efforts to maintain and preserve the FH Business and its organization intact, retain its present officers and employees and maintain and preserve its relationships with its suppliers, vendors, customers, licensors, licensees, distributors, regulatory authorities and others having business relations with it (provided that Seller shall not be obligated to pay any compensation beyond compensation paid in the ordinary course of business to retain such individuals). During the period from the date of this Agreement to the Closing Date, except (i) as set forth in Section 5.1 of the Seller’s Disclosure Letter, (ii) as contemplated in connection with the Pre-Closing Restructuring Transactions, (iii) as contemplated by this Agreement, (iv) as Buyer shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed) and (v) as required by Law or the terms of any Contract disclosed in the Seller’s Disclosure Letter or that is not required to be disclosed in the Seller’s Disclosure Letter, Seller covenants and agrees that it shall not, and it shall cause the Transferred FH Companies, any of their Closing Subsidiaries and the FH Asset Sellers and the FH Affiliates, in each case solely with respect to the FH Business, not to take any of the following actions:

 

(a)                amend the charter, bylaws or similar organizational documents of any of the Transferred FH Companies or their Closing Subsidiaries;

 

(b)               with respect to any of the Transferred FH Companies or their Closing Subsidiaries, issue or agree to issue any additional shares of capital stock, or issue or agree to issue any other equity interests or securities convertible into or exchangeable or exercisable for, or options with respect to, or warrants to purchase or rights to subscribe for, shares of capital stock of any of the Transferred FH Companies or any of their Closing Subsidiaries, or sell, transfer or otherwise dispose of or encumber any shares of capital stock of any of the Transferred FH Companies or their Closing Subsidiaries, except in each case for any issuance, sale, transfer or disposition to a Transferred FH Company or a Wholly Owned Subsidiary of a Transferred FH Company;

 

(c)                with respect to any of the Transferred FH Companies or their Closing Subsidiaries, declare, set aside, or pay any dividend or other distribution payable in cash, stock or property (other than Excluded Assets) with respect to its capital stock or other equity interests therein, except for any dividend or distribution of the capital stock of any of the Transferred FH Companies or their Closing Subsidiaries to any of the Transferred FH Companies or their Closing Subsidiaries;

 

(d)               make or agree to make any capital expenditures in excess of $100,000 individually, or $1,000,000 in the aggregate, other than in accordance with capital expenditures approved by the Seller prior to the date of this Agreement and attached to Section 5.1(d) of the Seller’s Disclosure Letter;

 

(e)                adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization under local Law;

 

(f)                (i) permit any Transferred FH Company or Closing Subsidiary to incur any obligations under any letter of credit or similar obligation with Liability to the applicable Transferred FH Company or Closing Subsidiary in excess of $150,000 individually or $500,000 in the aggregate, or (ii) except as required by Law or contractual obligations, permit any of the Transferred FH Companies or any of their Closing Subsidiaries or any FH Affiliate in respect of the FH Business to issue any note, bond, or other debt security, or create, incur, assume or guarantee any other material Indebtedness not discharged in full at or prior to the Closing, in each case of this clause (ii), other than in the ordinary course of business consistent with past practice, and other than intercompany loans or advances;

 

(g)               sell or otherwise dispose of, or incur, create or assume any Encumbrance (other than Permitted Encumbrances) with respect to, any assets of the FH Business, other than (i) pursuant to transactions where the fair market value of the assets transferred in connection with such transactions would not exceed $100,000 individually or $1,000,000 in the aggregate and (ii) sales of inventory in the ordinary course of business consistent with past practice;

 

(h)               change in any material respect any financial accounting method used by it relating to the FH Business, unless required by GAAP or applicable Law;

 

(i)                 except as otherwise required by any Employee Benefit Plan or CBA existing on the date of this Agreement and listed in Section 3.11(a) or Section 3.12(a) of the Seller’s Disclosure Letter or applicable Law, (1) grant any increase in the compensation of, or pay or grant any bonus to, any Employee other than, in each case, increases or grants to Employees with an annual base salary of less than $200,000 in the ordinary course of business consistent with past practice, (2) grant or pay any severance or change in control pay to any Employee, (3) accelerate the time of payment or vesting of any compensation or benefit payable to an Employee, (4) enter into, amend or terminate any Transferred Benefit Plan or any employee benefit plan, policy, program, agreement, trust or arrangement that would have constituted a Transferred Benefit Plan if it had been in effect on the date of this Agreement other than, in each case, amendments made in the ordinary course of business not resulting in a material increase in liability to the Buyer or any Transferred FH Company or Closing Subsidiary, (5) terminate the employment of any Employee (other than for cause, including for performance-related reasons), (6) hire any individual who would qualify as an Employee if employed as of the date hereof (other than (i) persons hired in the ordinary course of business, at will (where applicable), and with no more severance or retention protections than provided by applicable Law, or (ii) persons hired in the ordinary course of business with an annual base salary of less than $200,000), (7) take any action to fund or in any other way secure the payment of compensation or benefits under any Employee Benefit Plan or compensatory arrangement, other than contributions or funding due in the ordinary course of business irrespective of the transactions contemplated by this Agreement, (8) cause or permit any individual employed (i) by a Transferred FH Company or Closing Subsidiary or (ii) as an employee by an FH Asset Seller to become a Seller Transferred Employee or cause or permit any Seller Transferred Employee or other employee of Seller and its Affiliates who is not then an Employee to become an Employee (in each case except for (x) the permitted transfer of individuals set forth in Section 5.1 of the Seller’s Disclosure Letter, or (y) transfers required by applicable Law or a CBA);

 

(j)                 acquire any Person or business for total consideration in excess of $1,000,000 (other than purchases of goods and services in the ordinary course of business);

 

(k)               enter into any Contract that is (or, if entered into prior to the date hereof, would constitute) a Material Contract or materially amend, modify or waive any material right under any such Contract, other than in the ordinary course of business in a manner that would not reasonably be expected to adversely affect the FH Business, taken as a whole;

 

(l)                 settle any claim or litigation that would impose a material ongoing Liability on a Transferred FH Company or its Closing Subsidiaries;

 

(m)             open or close any facility or office that is material to the FH Business, taken as a whole;

 

(n)               except as would not reasonably be expected to materially affect the Tax liability of the Transferred FH Companies or their Closing Subsidiaries (or, following the Closing, Buyer or any of its Affiliates in a Post-Closing Tax Period, with respect to any of the Transferred FH Companies or their Closing Subsidiaries), (i) make or change any material Tax election, (ii) change an annual accounting period, (iii) file any material amended Tax Return, (iv) enter into any closing agreement, (v) waive or extend any statute of limitations with respect to Taxes, (vi) settle or compromise any Tax liability, claim or assessment, or (vii) surrender any right to claim a refund of Taxes, in each case other than as related to Taxes paid on an affiliated, consolidated, combined or unitary basis with Seller or any of its Subsidiaries that are neither Transferred FH Companies nor Closing Subsidiaries;

 

(o)               merge or consolidate with or into another Person; or

 

(p)               agree to take any of the actions described in this Section 5.1.

 

Notwithstanding any provision herein to the contrary, prior to the Closing, without the consent of Buyer, each of Seller, the FH Share Sellers, the FH Affiliates and the Transferred FH Companies and their Closing Subsidiaries will be permitted to (i) declare and pay dividends and distributions of, or otherwise transfer or advance, to Seller or any Subsidiary thereof, (x) any Excluded Assets (including in connection with any “cash sweep”, cash management practices, and intercompany borrowings consistent with past practices), (y) any other Assets which are not contemplated to be owned or held by Buyer or a Transferred FH Company or a Closing Subsidiary of a Transferred FH Company pursuant to the Transaction Documents and (z) copies of any Seller Books and Records, (ii) make any payments under, repay (in part or in full), or otherwise extinguish or cause to be extinguished any Indebtedness or other balances owing by any Transferred FH Company or a Closing Subsidiary of a Transferred FH Company (in each case whether intercompany or otherwise), including, for the avoidance of doubt, by making or causing to be made capital contributions or similar transactions to enable such Transferred FH Company or such Closing Subsidiary to repay or otherwise extinguish such amounts and (iii) take any action contemplated pursuant to Section 5.15, including any action with respect to or implementing the Pre-Closing Restructuring Transactions.

 

Section 5.2            Access to Information. Subject to applicable Laws, from the date of this Agreement until the Closing, Seller will, and will cause its Subsidiaries to, give Buyer and its Representatives reasonable access to (i) all of the Acquired FH Assets and FH Assets and assets of the Transferred FH Companies and their Closing Subsidiaries, Real Property, the Transferred FH Books and Records and to such personnel, offices and other facilities and properties of the Transferred FH Companies and their Closing Subsidiaries and to furnish such other information in respect of the operation of the FH Business as Buyer may reasonably request; provided, that all requests for access pursuant to this Section 5.2 shall be made in writing and shall be directed to and coordinated with the Vice President, Investor Relations, Colfax Corporation, or such person or persons as he/she shall designate; provided, further, that any such access shall be conducted at a reasonable time, upon reasonable advance notice to Seller, and in such a manner as not to interfere unreasonably with the operation of any business conducted by any Transferred FH Company or its Closing Subsidiaries; provided, further, that any such access or information request shall not involve any Phase 2 environmental assessment or other invasive sampling, investigation or work of any kind. All such information and access shall be subject to the terms and conditions of the confidentiality agreement dated May 8, 2017 between Buyer and Seller (the “Confidentiality Agreement”). Notwithstanding the foregoing, Seller and its Subsidiaries shall not be required to provide any such information (i) as and to the extent it relates to the Excluded Businesses, the Excluded Assets or the Retained Liabilities, (ii) if the Seller or any of its Subsidiaries believes in good faith that doing so presents a significant risk, based on advice of outside counsel of resulting in a loss of the ability to successfully assert a claim of Privilege or (iii) if Seller or any of its Subsidiaries, on the one hand, and Buyer or any of its Subsidiaries, on the other hand, are adverse parties in a litigation (other than a litigation with respect to this Agreement) and such information is reasonably pertinent thereto; provided, further, that, in the case of clause (ii) above, the parties hereto shall reasonably cooperate in seeking to find a way to allow disclosure of such information without resulting in a loss of the ability to successfully assert a claim of Privilege.

 

Section 5.3            Certain Governmental Approvals.

 

(a)                Subject to the terms and conditions set forth in this Agreement, each of the parties hereto shall use its reasonable best efforts (subject to, and in accordance with, Regulatory Law) to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable under applicable Regulatory Laws to consummate and make effective the transactions contemplated by this Agreement, as promptly as practicable.

 

(b)               Without limiting the generality of the undertakings pursuant to Section 5.3(a) above:

 

(i)                 Seller and Buyer shall, as promptly as practicable, but in no event later than (x) ten (10) Business Days after the date hereof, file the notification and report form pursuant to the HSR Act and (y) fifteen (15) Business Days after the date hereof, effect all other necessary notifications, or registrations to obtain the Required Antitrust Approvals, in each case as required for the transactions contemplated hereby;

 

(ii)               Seller and Buyer shall use reasonable best efforts to cooperate with each other in (A) determining whether any filings are required to be made with, or consents, permits, authorizations, waivers or approvals are required to be obtained from, any third parties or other Governmental Authorities under any other applicable Regulatory Law in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement and (B) timely making all such filings and timely seeking all such consents, permits, authorizations or approvals;

 

(iii)             Seller and Buyer shall use reasonable best efforts to make, as promptly as practicable following the date hereof, any filings or notifications with the State Department’s Directorate of Defense Trade Controls that are required under ITAR, including applicable notifications contemplated under 22 C.F.R. § 122.4.

 

(iv)             Seller and Buyer shall keep each other apprised of the status of matters relating to the completion of the transactions contemplated by this Agreement and promptly furnish the other with copies of notices or other communications (or, in the case of material oral communications, advise the other orally of such communications) between Seller or Buyer and their representatives and counsel, as the case may be, or any of their respective Subsidiaries, and any Governmental Authority with respect to such transactions. Seller and Buyer shall keep each other timely apprised of any inquiries or requests for additional information from any Governmental Authority pursuant to any Regulatory Law, and shall comply promptly with any such reasonable inquiry or request. Seller and Buyer shall permit counsel for the other party reasonable opportunity to review in advance, and consider in good faith the views of the other party in connection with, any proposed written communication to any Governmental Authority. Each of Seller and Buyer agrees not to participate in any substantive meeting or discussion, either in person or by telephone, with any Governmental Authority in connection with the transactions contemplated by this Agreement unless it consults with the other party in advance and, to the extent not prohibited by such Governmental Authority, gives the other party the opportunity to attend and participate. Neither party shall consent to any voluntary extension of any statutory deadline or waiting period or to any voluntary delay of the consummation of the transactions contemplated by this Agreement or withdraw its notification and report form pursuant to the HSR Act or any other filing made pursuant to any Regulatory Law unless the other party has given its prior written consent to such extension or delay; and

 

(v)               without limiting Section 5.3(b)(iv) above, each of Seller and Buyer, in the event that any permanent or preliminary injunction or other order is entered or becomes reasonably foreseeable to be entered in any proceeding that would make consummation of the acquisition of the FH Shares, the Acquired FH Assets or the other transactions contemplated hereby in accordance with the terms of this Agreement unlawful or that would prevent or delay consummation of the acquisition of the FH Shares, the Acquired FH Assets or the other transactions contemplated by this Agreement, shall use its reasonable best efforts necessary to vacate, modify or suspend such injunction or order so as to permit such consummation on a schedule as close as possible to that contemplated by this Agreement unless, by mutual agreement, Seller and Buyer decide that litigation is not in their respective best interests.

 

(c)                In the event that (i) any Non-Material Antitrust Approval of any Governmental Authority is not obtained on or prior to the Closing Date or (ii) there exists, at such time as the conditions to the Closing shall have been satisfied or waived (other than those conditions that are satisfied by action taken at the Closing, provided, that such conditions would be so satisfied), any Regulatory Law (except with respect to the Required Antitrust Approvals) that makes illegal or enjoins or prevents in any respect the consummation of the transactions contemplated by this Agreement (each of clauses (i) and (ii), a “Delayed Antitrust Approval”), then Seller and Buyer shall effect the Closing (including payment of the entire Preliminary Purchase Price), subject to the terms of this Agreement (including, but not limited to, Section 8.1(b)), with respect to all FH Shares, the Acquired FH Assets and Assumed Liabilities outside of the jurisdiction of any such Governmental Authority or such Regulatory Law; provided, however, that the obligations of the parties hereto set forth in this Section 5.3 shall continue with respect to each such Delayed Antitrust Approval until such Delayed Antitrust Approval is obtained, and upon receipt of such Delayed Antitrust Approval, the parties hereto shall effect the transfer of the affected FH Shares, Acquired FH Assets and Assumed Liabilities in accordance with this Agreement and the applicable Local Purchase Agreement. Each such transfer, upon occurrence, shall be retroactive to and be deemed to have occurred on the Closing Date. Furthermore, as of the Closing Date, Seller and Buyer shall, subject to applicable Law, enter into mutually agreeable alternative business arrangements consistent with the terms of this Agreement or other arrangements which provide Buyer with the net economic benefit or loss (after taking into account any adverse Tax consequences to Seller) of, and liability for, the affected FH Shares, the FH Assets and Assumed Liabilities from and after the Closing Date and continuing until each Delayed Antitrust Approval is obtained. Notwithstanding the foregoing, in the event that any Delayed Antitrust Approval has not been obtained within twenty-four (24) months of the Closing Date, Seller shall have the right at any time thereafter, in its sole discretion, to sell any of the affected FH Shares, the FH Assets or Assumed Liabilities to a third party at a price determined in good faith by Seller to be a commercially reasonable price, and upon consummation of any such sale, (x) Seller shall pay the proceeds of such sale to Buyer (provided that Seller may reduce such payment by an amount equal to its fees and expenses (or an estimate thereof) and any Taxes payable as a result of such sale) and (y) the obligations of the parties pursuant to this Section 5.3(c) (other than pursuant to the preceding clause (x)) with respect to such FH Shares, the FH Assets or Assumed Liabilities shall cease.

 

(d)               None of Buyer or the Subsidiaries of Buyer shall, and shall not cause any Person to, without the prior consent of Seller, acquire (whether via merger, consolidation, stock or asset purchase or otherwise), or enter into any definitive agreement to so acquire, any assets of or any equity in any other Person or any business or division thereof (excluding, for the avoidance of doubt, any acquisition of any goods or services in the ordinary course of business), unless that acquisition or agreement would not reasonably be expected to, in any material respect, (x) increase the risk of not obtaining any authorizations, consents, orders, declarations or approvals of any Governmental Authority necessary to consummate the transactions contemplated by this Agreement or the expiration or termination of any waiting period under any Regulatory Law; (y) increase the risk of any Governmental Authority entering an order prohibiting the consummation of the transactions contemplated by this Agreement, or materially increase the risk of not being able to remove any such order on appeal or otherwise; or (z) delay or prevent the consummation of the transactions contemplated by this Agreement.

 

(e)                Buyer shall use reasonable best efforts to cause the shares of Buyer Common Stock constituting the Buyer Stock Consideration to be approved for listing on the NYSE, with such listing to be effective as of the Closing, subject only to official notice of issuance.

 

Section 5.4            Further Assurances. Except as otherwise provided in this Agreement and subject to Section 5.3, each of the parties hereto agrees to use its reasonable best efforts before and after the Closing Date to take or cause to be taken all action, to do or cause to be done, and to assist and cooperate with the other party hereto in doing, all things necessary, proper or advisable under applicable Laws to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement, including, but not limited to, (i) the satisfaction of the conditions precedent to the obligations of the other party; (ii) the obtaining of all necessary consents, approvals or waivers from Governmental Authorities or other third parties required to be obtained by such party, or its Affiliates, in connection with the transactions contemplated by this Agreement (other than with respect to Regulatory Laws which are the subject of Section 5.3); and (iii) the execution and delivery of such instruments, and the taking of such other actions, as the other party hereto may reasonably require in order to carry out the intent of this Agreement.

 

Section 5.5            Intercompany Accounts and Arrangements.

 

(a)                Except for the Transition Services Agreement, Local Purchase Agreements and the other Transaction Documents, intercompany accounts not settled or cancelled as of the Closing pursuant to Section 5.5(e) or the agreements set forth on Section 5.5(a) of the Seller’s Disclosure Letter hereto, all intercompany arrangements and agreements, whether written or oral, providing, leasing or licensing goods, services, tangible or intangible properties or joint activities between Seller or any of the Retained Subsidiaries, on the one hand, and any of the Transferred FH Companies or their Closing Subsidiaries, on the other hand, shall be terminated and of no further force and effect effective as of the Closing (or, to the extent that any equity interests in a Transferred FH Company or Closing Subsidiary of a Transferred FH Company are not transferred to Buyer at the Closing pursuant to Section 5.16 or Section 5.17, such later date on which all such equity interests are transferred to Buyer).

 

(b)               Except to the extent provided to the contrary in Section 5.5(a), effective as of the Closing, Buyer, on behalf of itself and its Affiliates, including the Transferred FH Companies and their Closing Subsidiaries, effective as of the Closing, hereby releases Seller and each of the Retained Subsidiaries (and their respective officers, directors and employees, acting in their capacity as such) from any Liability, obligation or responsibility to any of them for any and all past actions or failures to take action prior to the Closing, including any actions which may be deemed to have been negligent or grossly negligent, relating to or arising out of Contracts with Seller or a Subsidiary thereof or the operation or conduct of any businesses, Assets (including activities performed thereat) or operations managed or operated by, or operationally related to, directly or indirectly, to the FH Business or the Excluded Businesses, except for any obligation pursuant to the provisions of the Transaction Documents.

 

(c)                Except to the extent provided to the contrary in Section 5.5(a), effective as of the Closing, Seller, on behalf of itself and its Affiliates, including each of the Retained Subsidiaries, effective as of the Closing, hereby releases the Transferred FH Companies and their Closing Subsidiaries (and their respective officers, directors and employees, acting in their capacity as such) from any Liability, obligation or responsibility to any of them for any and all past actions or failures to take action prior to the Closing, including any actions which may be deemed to have been negligent or grossly negligent, except for any obligation pursuant to the provisions of the Transaction Documents.

 

(d)               Notwithstanding anything contained in this Agreement to the contrary, Seller its Subsidiaries and the Transferred FH Companies and their Closing Subsidiaries shall be permitted to maintain through the Closing Date their respective cash management systems, and periodically settle intercompany balances with respect to intercompany borrowings consistent with past practices (including through dividends and capital contributions). Seller and its Subsidiaries (other than the Transferred FH Companies and their Closing Subsidiaries) shall have the right to withdraw all Cash Equivalents of the Transferred FH Companies and their Closing Subsidiaries prior to the Closing.

 

(e)                Without limiting anything set forth in this Section 5.5, of Seller’s Disclosure Letter, Seller shall use commercially reasonable efforts to settle all outstanding intercompany accounts, whether payables or receivables, between Seller or any of the Retained Subsidiaries, on the one hand, and any of the Transferred FH Companies or their Closing Subsidiaries, on the other hand, with effect as of the Closing Date (it being understood that the settlement or cancellation of such amounts shall not in any way affect the Transition Services Agreement or any amounts which may be payable pursuant to the Transition Services Agreement); provided, however, that if any such intercompany accounts are not settled or cancelled as of the Closing, Seller and Buyer shall use commercially reasonable efforts to cooperate to settle or cancel such intercompany accounts as promptly as practicable following the Closing without liability to Buyer (which liability shall be calculated net of any Cash Equivalents of the Transferred FH Companies and their Closing Subsidiaries as of the Closing that would otherwise constitute Excluded Assets, which Cash Equivalents shall not constitute Excluded Assets or constitute Later Discovered Assets to the extent used by Buyer to satisfy such intercompany accounts).

 

Section 5.6            Provision of Corporate Records.

 

(a)                As soon as practicable after the Closing Date, as permitted by Law, Seller shall use its reasonable best efforts to deliver or cause to be delivered to Buyer all Transferred FH Books and Records then in the possession of Seller or any Retained Subsidiary, and Buyer shall use its reasonable best efforts to deliver or cause to be delivered to Seller all Seller Books and Records then in the possession of any Transferred FH Company or any of its Closing Subsidiaries. The foregoing shall be limited by the following specific provisions:

 

(i)                 To the extent any document (other than that stored on electronic media) can be subdivided without unreasonable effort into two portions, one of which constitutes a Transferred FH Book and Record and the other of which constitutes a Seller Book and Record, such document (other than that stored on electronic media) shall be so sub-divided, and the original of the portion such document (other than that stored on electronic media) which constitutes a Transferred FH Book and Record shall be provided to Buyer (with a copy thereof provided to Seller) and the original of the portion such document (other than that stored on electronic media) shall constitute a Seller Book and Record.

 

(ii)               For purposes of this Section 5.6, “reasonable best efforts” shall require, without limitation, deliveries of any such specific and discrete books and records requested in writing by either party and then in the possession of the other party.

 

(b)               Each party may retain copies of the books and records of the other already in its possession, and may use such books and records as reasonably required for its normal business purposes, subject to this Agreement and the Transition Services Agreement, and subject to holding in confidence information contained in such books and records in accordance with the requirements and limitations of this Agreement including Section 5.12 and Section 5.13. If either party has a reasonable concern regarding the other party’s use of such books and records, such party may, upon reasonable prior written notice and at such party’s expense, audit the other party’s use of such books and records at times and in a manner reasonably acceptable to all parties.

 

(c)                Each party may refuse to furnish any Information if it believes in good faith that doing so presents, based on advice of counsel (which can be inside counsel), a significant risk of loss of the ability to successfully assert a claim of Privilege; provided, that the parties hereto shall cooperate in seeking to find a way to allow disclosure of such information without resulting in a loss of the ability to successfully assert a claim of Privilege.

 

(d)               Neither party shall be required to deliver to the other books and records or portions thereof (i) if such delivery would violate any applicable Law or (ii) which are subject to confidentiality agreements which would by their terms prohibit such delivery; provided, however, if requested by the other party, such party shall use its reasonable best efforts to seek a waiver of such confidentiality restriction.

 

(e)                Seller may redact any Information covered by this Section 5.6 as and to the extent such Information relates to the Excluded Businesses, the Excluded Assets or the Retained Liabilities.

 

(f)                Buyer may redact any Information covered by this Section 5.6 as and to the extent such Information relates to Buyer’s business, assets or liabilities other than the Transferred FH Companies and their Closing Subsidiaries, the FH Assets and the Assumed Liabilities.

 

Section 5.7            Retained Names.

 

(a)                Except as otherwise provided in this Section 5.7, Buyer shall use commercially reasonable efforts to cease and discontinue all uses of the Retained Names immediately upon the Closing.

 

(b)               Notwithstanding the provisions of Section 5.7(a), Buyer is not required to (and may use the Retained Names as contemplated by this Section 5.7(b)):

 

(i)                 remove, strike over, or otherwise obliterate all Retained Names from all assets and other materials owned or possessed by the Transferred FH Companies and their Closing Subsidiaries, including any vehicles, business cards, schedules, stationery, packaging materials, displays, signs, manuals, forms, websites, email, computer software and other materials and systems, until no later than 60 days following the Closing Date;

 

(ii)               file all such documents with Governmental Authorities and otherwise take such steps as are necessary to cause the Transferred FH Companies and their Closing Subsidiaries to change their corporate and assumed names, as applicable, to names that do not include Retained Names (including descriptions such as “formerly known as” preceding or modifying a Retained Name), until no later than 60 days following the Closing Date;

 

(iii)             complete the removal of any of the Retained Names from all acquired product, service and technical information, promotional aids, promotional materials, literature and other printed material of the FH Business until no later than 60 days following the Closing Date;

 

(iv)             with respect to FH Assets bearing any Retained Names, re-label such assets or remove such Retained Names from such assets until no later than six (6) months after the Closing Date;

 

(v)               cease using name plates and molds bearing any Retained Names until the date that is six (6) months after the Closing Date;

 

(vi)             cease using the Retained Names on inventories existing on the Closing Date until eighteen (18) months after the Closing Date; and

 

(vii)           refrain from disclosing to its customers and potential customers that it is conducting the FH Business as a successor to the Seller from and after the Closing Date;

 

provided, however, that, notwithstanding the above (including time periods listed in clauses (i) through (vii)), Buyer agrees (x) to use commercially reasonable efforts to complete the above actions as promptly as practicable following the Closing, (y) that after the Closing Date Buyer and its Affiliates will not expressly, or by implication, do business as or represent themselves as Seller or its Affiliates, and (z) that Buyer shall use its commercially reasonable efforts to cause third party users of any of the Retained Names, whose rights terminate upon the Closing pursuant to this Section 5.7, to cease use of the Retained Names, except as expressly authorized thereafter by Seller. Buyer and its Affiliates shall not apply to register or register any of the Trademarks forming a part of or associated with the Retained Names.

 

(c)                Any use of the Retained Names by the Transferred FH Companies and their Closing Subsidiaries permitted by this Section 5.7 shall be subject to the following conditions:

 

(i)                 Use of the Retained Names shall be in the same form and manner, to the same extent (without an increase in the extent or type of uses of the Retained Names), and subject to the same standards of quality, of that in effect for the Retained Names as of the Closing Date;

 

(ii)               The Retained Names shall not be used in a manner that may reflect negatively on such name and marks or on Seller or any of its Affiliates;

 

(iii)             Any press release or similar public announcement or communication that references any of the Retained Names shall include a statement that Buyer or its Affiliates, as applicable, and Seller, are not Affiliates or otherwise related to each other;

 

(iv)             Buyer and its Affiliates shall, in connection with all written uses of the Retained Names in connection with the FH Business, including on any packaging materials, displays, signs, promotional materials, forms, and websites, include a clear statement that the associated products or services are manufactured by or otherwise emanate from the Transferred FH Companies and their Closing Subsidiaries and not from Seller; and

 

(v)               Effective upon the expiration or termination of their respective rights under this Section 5.7, Buyer and its Affiliates hereby assign to Seller their rights, if any, to any Trademarks forming a part of or associated with the Retained Names that they may retain.

 

(d)               At the request of Seller, Buyer shall and shall cause its Affiliates to provide to Seller reasonable and representative samples of products and materials used or created under or in connection with this Section 5.7, in their possession, custody, or under their control bearing any of the Retained Names and shall permit Seller to inspect their premises and shall otherwise cooperate with Seller to assist Seller in ensuring that the conditions of use of the Retained Names set forth under Section 5.7(c) are complied with.

 

(e)                Buyer and its Affiliates, other than the Transferred FH Companies and their Closing Subsidiaries, shall have no right to use any of the Retained Names.

 

(f)                Without limitation to any other remedies, if Buyer and its Affiliates fail to comply with the foregoing terms and conditions or otherwise fail to comply with any reasonable direction of Seller or any of its Affiliates in relation to the use of the Retained Names, Seller shall (i) be entitled to a temporary, preliminary or permanent injunction or other equitable relief in accordance with Section 10.7, and (ii) have the right to terminate all rights to use the Retained Names as described in this Section 5.7, effective immediately. Buyer and its Affiliates shall indemnify and hold harmless Seller and its Affiliates for any Losses arising from or relating to the use by Buyer or any of its Affiliates of the Retained Names pursuant to this Section 5.7.

 

Section 5.8            Guarantees.

 

(a)                Prior to the Closing Date, Seller and Buyer shall cooperate and shall use their respective commercially reasonable efforts to terminate, or, if the parties are unable to so terminate, cause Buyer or one of its Affiliates to be substituted in all respects for Seller or the applicable Retained Subsidiary in respect of, all obligations of Seller or any of the Retained Subsidiaries under Seller Guarantees on the Closing Date.

 

(b)               With respect to any Seller Guarantees that remain outstanding after the Closing Date, (i) Seller and Buyer shall continue to cooperate and use their respective commercially reasonable efforts to terminate, or, if the parties are unable to so terminate, cause Buyer or one of its Affiliates to be substituted in all respects for Seller or any Retained Subsidiary in respect of, all obligations under Seller Guarantees, (ii) Buyer shall indemnify and hold harmless Seller Indemnified Parties for any Losses arising from or relating to such Seller Guarantees solely to the extent related to the period after the Closing and (iii) Buyer shall not permit any of the Transferred FH Companies or any of their Closing Subsidiaries or Affiliates to (A) renew or extend the term of, (B) increase its obligations under, (C) transfer to another third party or (D) amend in any manner, except as contemplated pursuant to clause (i) above or otherwise required by this Agreement, any loan, Contract or other obligation for which Seller or any Retained Subsidiary is or would reasonably be expected to be liable under such Seller Guarantee. To the extent that Seller or the Retained Subsidiaries have performance obligations under any Seller Guarantee, Buyer will use commercially reasonable efforts to (x) perform such obligations on behalf of Seller and the Retained Subsidiaries or (y) otherwise take such action as reasonably requested by Seller so as to put Seller and the Retained Subsidiaries in the same position as if Buyer, and not Seller or a Retained Subsidiary, had performed or were performing such obligations.

 

(c)                Prior to the Closing Date, Seller and Buyer shall cooperate and Buyer shall use commercially reasonable efforts to replace all letters of credit issued by Seller or the Retained Subsidiaries on behalf of or in favor of any of the Transferred FH Companies, any of their Closing Subsidiaries or the FH Business (the “Seller LCs”) as promptly as practicable with letters of credit from Buyer or one of its Affiliates as of the Closing Date. With respect to any Seller LCs that remain outstanding after the Closing Date, Buyer shall (i) indemnify and hold harmless Seller Indemnified Parties for any Losses arising from or relating to such letters of credit, including any fees in connection with the issuance and maintenance thereof, in each case solely to the extent related to the period after the Closing, and (ii) without the prior written consent of Seller, Buyer and its Subsidiaries shall not, and shall not permit any of the Transferred FH Companies or any of their Closing Subsidiaries or Affiliates to, enter into, renew or extend the term of, increase its obligations under, or transfer to a third party, any loan, lease, Contract or other obligation in connection with which Seller or any Retained Subsidiary has issued any letters of credit which remain outstanding. The parties hereto agree that neither Seller nor any of the Retained Subsidiaries will have any obligation to renew any letters of credit issued on behalf of any Transferred FH Company (or any Closing Subsidiary thereof) or the FH Business after the expiration of any such letter of credit.

 

(d)               For purposes of this Section 5.8, with respect to Seller, “commercially reasonable efforts” shall not require Seller to, or to cause any of its Subsidiaries to, make or accelerate any payment under any loan, Contract or other obligation for which Seller or any Retained Subsidiary is or may be liable under any Seller Guarantee or Seller LC.

 

Section 5.9            Post-Closing Access to Information. For a period of seven (7) years from the Closing Date, except as prohibited by applicable Law, Seller and Buyer shall, subject to compliance by the other with the provisions of Section 5.12 and the Transition Services Agreement, afford to each other and to each other’s Representatives reasonable access and duplicating rights (with copying costs to be borne by the requesting party) during normal business hours to all books and records, documents and other information (collectively, “Information”) within the knowledge, possession or control of the other party or its Affiliates solely to the extent relating to (a) in the case of requests by Buyer, the FH Business, Transferred FH Companies (and their Closing Subsidiaries), FH Assets, the Acquired FH Assets, Assumed Liabilities or Transferred Employees and (b) in the case of requests by Seller, the Excluded Businesses, the Excluded Assets or the Retained Liabilities, insofar in each case as such access is reasonably required by Seller or Buyer or any of their Subsidiaries or Affiliates for legitimate business reasons and does not violate any applicable Law or any confidentiality obligations applicable to Seller or Buyer or any of their Subsidiaries or Affiliates, as the case may be (and shall use reasonable efforts to cause persons or firms possessing relevant Information to give similar access) and, to the extent practicable, such Information is identified by the requesting party with reasonable specificity; provided, however, that no party shall be required to disclose any Information if (i) it believes in good faith that doing so presents a significant risk, based on advice of counsel (which can be inside counsel) of resulting in a loss of the ability to successfully assert a claim of Privilege or (ii) Seller or any of its Subsidiaries, on the one hand, and Buyer or any of its Subsidiaries, on the other hand, are adverse parties in a litigation (other than a litigation with respect to a claim for indemnification under this Agreement) and such information is reasonably pertinent thereto; provided, further, that, in the case of clause (i) above, the parties hereto shall reasonably cooperate in seeking to find a way to allow disclosure of such information without resulting in a loss of the ability to successfully assert a claim of Privilege; provided, further, that Seller and its Affiliates shall not be required to provide Buyer or its Representatives with any information related to the Sale Process or Seller’s or its Representatives’ evaluation thereof, including projections, financial or other information related thereto other than projections, financial or other information prepared in the ordinary course of the FH Business without being primarily prepared for the Sale Process. Without limiting the generality of the foregoing, Information may be requested under this Section 5.9 for audit and accounting purposes and in connection with Actions, as well as for purposes of fulfilling disclosure and reporting obligations.

 

Section 5.10        Production of Witnesses and Individuals. From and after the Closing Date, Seller and Buyer shall use and shall cause their respective Subsidiaries to use reasonable efforts to make available to each other, upon written request, its officers, directors, employees and agents for fact finding, consultation and interviews and as witnesses to the extent that any such person may reasonably be required in connection with any Actions in which the requesting party may from time to time be involved relating to the conduct of the FH Business or the Excluded Businesses. Seller and Buyer agree to reimburse each other for reasonable out-of-pocket expenses (other than officers’ or employees’ salaries) incurred by the other in connection with providing individuals and witnesses pursuant to this Section 5.10. Notwithstanding the foregoing, the provisions of this Section 5.10 shall not apply to Actions brought between Seller and its Affiliates (but not including the Transferred FH Companies and their Closing Subsidiaries), on the one hand, and Buyer and its Affiliates (including after the Closing Date, the Transferred FH Companies and their Closing Subsidiaries) on the other hand.

 

Section 5.11        Retention of Records. Except when a longer retention period is otherwise required by Law or agreed to in writing, including as set forth in Section 7.7, Seller and its Subsidiaries and the Transferred FH Companies and their Closing Subsidiaries shall retain, in accordance with their respective records control schedule policy existing from time to time, all Information relating to the FH Business and the Excluded Businesses, respectively. The parties hereto agree that upon written request from the other that certain Information relating to the FH Business or the transactions contemplated hereby be retained in connection with an Action, the parties shall use reasonable efforts to preserve and not to destroy or dispose of such Information without the consent of the requesting party.

 

Section 5.12        Confidentiality.

 

(a)                For a period of five (5) years from the Closing Date, Seller and Buyer shall hold and shall cause their respective Affiliates (including the Transferred FH Companies and their Closing Subsidiaries) to hold, and shall each use their reasonable best efforts to cause their respective Representatives to hold, in strict confidence and not to disclose or release without the prior written consent of the other party, any and all Confidential Information (as defined herein); provided, that the parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective Representatives who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the parties hereto and in respect of whose failure to comply with such obligations, Seller or Buyer, as the case may be, will be responsible or (ii) if the parties hereto, their Affiliates or their Representatives are compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of independent legal counsel, by other requirements of Law. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, Seller or Buyer, as the case may be, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which both parties will reasonably cooperate in obtaining (each at their own expense). In the event that such appropriate protective order or other remedy is not obtained, the party who is required to disclose such Confidential Information shall furnish, or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed. As used in this Section 5.12, “Confidential Information” shall mean all proprietary technical, economic, environmental, operational, financial and/or other business Information or material of one party which, prior to or following the Closing Date, has been disclosed by Seller or its Affiliates, on the one hand, or Buyer or its Affiliates (including the Transferred FH Companies and their Closing Subsidiaries), on the other hand, in written, oral (including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other, in each case including pursuant to the access provisions of Section 5.9 hereof or any other provision of this Agreement or the Transition Services Agreement or, (A) in the case of Seller and its Affiliates and Representatives, to the extent relating to the FH Business or the FH Assets prior to the Closing or (B) in the case of Buyer and its Affiliates and Representatives, to the extent relating to the Excluded Assets, the Retained Liabilities or the Excluded Businesses, including (a) ideas and concepts for existing products, processes and services; (b) specifications for products, Equipment and processes; (c) manufacturing and performance specifications and procedures; (d) engineering drawings and graphs; (e) technical, research and engineering data; (f) formulations and material specifications; (g) laboratory studies and benchmark tests; (h) service and operation manuals; (i) quality assurance policies, procedures and specifications; (j) evaluation and/or validation studies; (k) pending patent applications; (l) all other know-how, methodology, procedures, techniques and trade secrets related to research, engineering, development and manufacturing; and (m) business information, including marketing and development plans, forecasts, research and development agreements, and customer and vendor information (except to the extent that such Information can be shown to have been (1) in the public domain through no fault of such party or its Affiliates (including, in the case of Seller, any of the Retained Subsidiaries or, in the case of Buyer, any of its Subsidiaries (including the Transferred FH Companies and their Closing Subsidiaries)) or (2) lawfully acquired from other sources by the party (or its Affiliates (including the Transferred FH Companies and their Closing Subsidiaries)) to which it was furnished; provided, however, in the case of (2) that such sources did not provide such Information in breach of any confidentiality or other legal obligations). Notwithstanding the foregoing, nothing herein shall prevent Seller or its Subsidiaries or Affiliates or their respective Representatives from using any Confidential Information used or held for use in any Excluded Business as of the date of this Agreement.

 

(b)               Notwithstanding anything to the contrary set forth herein, (i) Seller and its Affiliates, on the one hand, and Buyer and its Affiliates (including the Transferred FH Companies and their Closing Subsidiaries), on the other hand, shall be deemed to have satisfied their obligations hereunder with respect to Confidential Information if they exercise the same degree of care (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar Information and (ii) confidentiality obligations provided for in any agreement between Seller or any of its Affiliates, or Buyer or any of its Affiliates (including the Transferred FH Companies and their Closing Subsidiaries), on the one hand, and any employee of Seller or any of its Affiliates (or, prior to the Closing Date, any of the Transferred FH Companies and their Closing Subsidiaries), or Buyer or any of its Affiliates (including, after the Closing Date, the Transferred FH Companies and their Closing Subsidiaries), on the other hand shall remain in full force and effect. Confidential Information of Seller and its Affiliates, on the one hand, or the Transferred FH Companies and their Closing Subsidiaries, on the other hand, in the possession of and used by the other as of the Closing Date may continue to be used by Seller or its Affiliates, or Buyer or its Affiliates (including the Transferred FH Companies and their Closing Subsidiaries), as the case may be, in the operation of their businesses with the prior written consent of the other party, so long as the Confidential Information is maintained in confidence and not disclosed in violation of this Agreement. Such continued right to use may not be transferred to any third party (other than an Affiliate of a party hereto) unless the third party purchases all or substantially all of the business and Assets in one transaction or in a series of related transactions for which or in which the relevant Confidential Information is used or employed.

 

(c)                Notwithstanding the foregoing in this Section 5.12, to the extent that the Transition Services Agreement or another Contract pursuant to which a party hereto is bound provides that certain Confidential Information shall be maintained confidential on a basis that is more protective of such Confidential Information or for a longer period of time than provided for in this Section 5.12, then the applicable provisions contained in the Transition Services Agreement or other Contract shall control with respect thereto.

 

Section 5.13        Non-Competition; Non-Solicitation.

 

(a)                Commencing on and for a period of three (3) years following the Closing Date, Seller shall not, and shall cause its Subsidiaries not to, directly or indirectly, develop, manufacture, market or sell Products or perform the Services (the “Prohibited Activities”). For the avoidance of doubt, Prohibited Activities do not include, and Seller and its Subsidiaries may engage in, the development, manufacture, marketing and sale of components of Product (but not Product itself) and nothing shall prohibit Howden, a Subsidiary of Seller, from (x) engaging in the development, manufacturing, marketing and sale of screw compressors for gas compression applications or the sale of auxiliary systems which contain the Product or (y) performing the Services in the ordinary course of business consistent with past practice; provided, further, that the parties agree that nothing herein shall prohibit Seller and its Subsidiaries from:

 

(i)                 acquiring or investing in any Person, or the assets thereof, if less than ten percent (10%) of the gross revenues, assets and income of such Person or assets (based on such Person’s latest annual audited consolidated financial statements) are related to or were derived from any of the Prohibited Activities;

 

(ii)               acquiring or investing in any Person, or the assets thereof, if ten percent (10%) or more than ten percent (10%) of the gross revenues, assets and income of such Person or assets (based on such Person’s latest annual audited consolidated financial statements) are related to or were derived from any of the Prohibited Activities; provided, that within one year of such acquisition, Seller or its Subsidiaries enter into a definitive agreement to divest themselves of all or substantially all of the assets or operations so acquired that are engaged in any of the Prohibited Activities (and use reasonable best efforts to consummate such transaction as soon as reasonably practicable thereafter);

 

(iii)             acquiring or investing in securities representing not more than five percent (5%) of the outstanding voting power of any Person; or

 

(iv)             acquiring or investing in any equity interest in any Person through any employee benefit plan of Seller or its Subsidiaries.

 

(b)               Commencing on and for a period of two (2) years following the Closing Date, Seller shall not, and shall cause its Subsidiaries not to, directly or indirectly, solicit for employment (whether as an employee, consultant or otherwise), offer to hire, hire or enter into any employment or consulting agreement or arrangement with any Transferred Employee or employee, contractor, subcontractor, consultant or sales representative of the FH Business; provided, that this prohibition shall not apply to (i) solicitation of any such individual who has been terminated by Buyer or its Affiliates more than six (6) months prior to such time, (ii) solicitations made to the public or the industry generally through advertising or electronic listing which are not targeted at employees of Buyer or any of its Subsidiaries or (iii) hirings of persons either (A) in connection with solicitations permitted under clause (i) or (ii) or (B) who independently approach such party and, in each of subclauses (A) and (B), whom were not otherwise solicited in breach of this Section 5.13(b).

 

(c)                The parties agree that, notwithstanding anything to the contrary herein, the provisions of Section 5.13(a) and Section 5.13(b) shall not prohibit (i) Seller or any of its Subsidiaries from performing under any Contract or owning or operating any other Asset that constitutes an FH Asset which is not transferred, conveyed or assigned to Buyer or one of its Subsidiaries as of the Closing Date or (ii) Seller or any of its Subsidiaries from performing its obligations under this Agreement or the Transition Services Agreement.

 

(d)               The following terms used in this Agreement shall have the following meanings:

 

(i)                 “Product” shall mean progressive cavity, two- and three-screw pumps, centrifugal pumps, seawater cooling pumps, internal gear pumps, oil mist lubrication systems and heat transfer fluid pumps, oil purification equipment, lubrication distribution systems, oil mist generators and bearing lubrication systems of the same or similar type as those developed, manufactured, marketed or sold by the Transferred FH Companies (and their Closing Subsidiaries), the FH Asset Sellers and the FH Affiliates as of the date hereof or as of the Closing.

 

(ii)               “Services” shall mean the following services performed by the Transferred FH Companies (and their Closing Subsidiaries), the FH Asset Sellers and the FH Affiliates as of the date hereof or as of the Closing: industrial chemical cleaning services, high velocity oil systems flush, oil reclamation and emergency water and particulate removal.

 

Section 5.14        Mail and Other Communications; Accounts.

 

(a)                After the Closing Date, each of Seller and its Subsidiaries and Buyer and its Subsidiaries may receive mail, packages and other communications (including electronic communications) properly belonging to the other (or the other’s Subsidiaries). Accordingly, at all times after the Closing Date, each of Seller and Buyer authorizes the other and their respective Subsidiaries to receive and open all mail, packages and other communications received by it and not unambiguously intended for the other party (or its Subsidiaries) or any of the other party’s (or its Subsidiaries’) officers or directors, and to retain the same to the extent that they relate to the FH Business (in the case of receipt by Buyer and its Subsidiaries) or the Excluded Businesses (in the case of receipt by Seller and its Subsidiaries), or to the extent that they do not relate to the FH Business (in the case of receipt by Buyer and its Subsidiaries) or the Excluded Businesses (in the case of receipt by Seller and its Subsidiaries), the receiving party shall promptly after becoming aware thereof refer, forward or otherwise deliver such mail, packages or other communications (or, in case the same relate to both the FH Business and the Excluded Businesses, copies thereof) to the other party. The provisions of this Section 5.14 are not intended to, and shall not be deemed to, constitute an authorization by either Seller or Buyer to permit the other to accept service of process on its behalf and neither party is or shall be deemed to be the agent of the other for service of process purposes.

 

(b)               All payments and reimbursements received by Seller or its Subsidiaries in connection with or arising out of the FH Business, the FH Assets, the Acquired FH Assets or the Assumed Liabilities after the Closing shall be held by such Person in trust for the benefit of Buyer and, immediately upon receipt by such Person of any such payment or reimbursement, such Person shall pay over to Buyer the amount of such payment or reimbursement, without right of set off.

 

(c)                All payments and reimbursements received by Buyer or its Subsidiaries in connection with or arising out of the Excluded Assets, Retained Liabilities or Excluded Businesses, after the Closing shall be held by such Person in trust for the benefit of Seller and, immediately upon receipt by such Person of any such payment or reimbursement such person shall pay over to Seller the amount of such payment or reimbursement without right of set off.

 

Section 5.15        Transfer of Excluded Assets; Restructuring. Seller shall use reasonable best efforts to effect the restructuring transactions set forth on Section 5.15 of the Seller’s Disclosure Letter (as may be amended pursuant to this sentence, the “Pre-Closing Restructuring Transactions”) on or before the Closing Date; provided, however, that following the date hereof, but subject to Seller’s indemnification obligations in Section 9.4, Seller shall be permitted to amend Section 5.15 of the Seller’s Disclosure Letter to the extent the effect of such amendments would not in any material respect adversely affect the operations of the FH Business or otherwise adversely affect in any material respect Buyer or its Affiliates. Notwithstanding anything to the contrary herein, Seller shall take (or cause one or more of its Affiliates to take) such action as is reasonably necessary or advisable to transfer effective as of, or prior to, the Closing Date the Excluded Assets or the Retained Liabilities from the Transferred FH Companies or any of their Closing Subsidiaries to Seller or one or more of its Retained Subsidiaries for such consideration or for no consideration, as may be determined by Seller in its sole discretion. After the Closing Date, Buyer and its Subsidiaries (including the Transferred FH Companies and their Closing Subsidiaries) shall use commercially reasonable efforts to take all actions (or shall cause their Affiliates to take all actions) reasonably requested by Seller to effect the provisions of this Section 5.15, including the transfer of any Excluded Assets to Seller or one or more of its designees for no additional consideration; provided, however, that Seller shall reimburse Buyer for all reasonable third-party costs associated with any such actions.

 

Section 5.16        Obligations Regarding Non-Assignable Assets and Delayed FH Assets.

 

(a)                Notwithstanding anything else in this Agreement to the contrary, unless and until such consent, approval or amendment described below is no longer required or has been obtained, this Agreement, the Transition Services Agreement and the Local Purchase Agreements shall not constitute an agreement to assign, license, sublicense, lease, sublease, convey or transfer at the Closing any FH Asset (excluding any equity interests in a Delayed Company) or any claim or right or any benefit arising thereunder or resulting therefrom as to which consent or approval from any Person (including consents and approvals of Governmental Authorities) to assignment, license, sublicense, lease, sublease, conveyance or transfer thereof or amendment thereof is required but has not been obtained as of the Closing Date (such Asset, a “Delayed FH Asset”); provided, however, that, except as otherwise expressly provided herein, neither Seller or any of its Affiliates nor Buyer or any of its Affiliates shall be required to commence any litigation or offer or pay any money or otherwise grant any accommodation (financial or otherwise) to any third party. Without limiting the generality of Section 5.3 and Section 5.4, Seller and Buyer shall use, and cause each of their Subsidiaries to use, commercially reasonable efforts to obtain any such consent, approval or amendment, including after the Closing Date; provided, however, that Buyer acknowledges that Seller has no obligation to novate Government Contracts prior to the Closing Date. Upon obtaining the requisite consents or approvals, such Delayed FH Asset shall be transferred and assigned to Buyer hereunder without additional consideration therefor.

 

(b)               With respect to Government Contracts that are subject to a requirement for novation, during the pendency of any novation request pursuant to Section 42.1204 of the Federal Acquisition Regulations (FAR) or other process as may be specified by the authorized contracting officer(s) of the applicable Governmental Authority:

 

(i)                 Buyer shall perform, to the maximum extent permitted by applicable law, all of the obligations of Seller or its applicable Affiliate under such Government Contracts to the extent such Government Contracts have not yet been fully performed by Seller or such Affiliate and closed out;

 

(ii)               Buyer shall inure to all rights and benefits conferred or accruing under such Government Contracts, whether such rights and benefits are conferred or accrue before, on or after the Closing Date, but such inurement shall not include any payment made to Seller or such Affiliate prior to the Closing Date;

 

(iii)             Each of Buyer and Seller shall, at each party’s own expense, use its commercially reasonable efforts and shall cooperate with one another to secure novation of the Government Contracts as soon as practicable; and

 

(iv)             Neither Seller nor any Affiliate thereof shall take any action or fail to take any action in connection with any such Government Contract that would frustrate the intent of, or materially impair or diminish the performance of, or any of Buyer’s or Seller’s (or such Affiliate’s) rights under, any such Government Contract.

 

(c)                Except as otherwise provided in the last sentence of this Section 5.16(c) or in cases of Government Contracts that are subject to Section 5.16(b), in the event and to the extent that, prior to the Closing, Seller or any Retained Subsidiary is unable to obtain a consent, approval or amendment required to assign, license, sublicense, lease, sublease, convey or transfer any Delayed FH Asset to Buyer, then following the Closing, Seller shall, and shall cause the Retained Subsidiaries to, use commercially reasonable efforts to (i) continue to hold, and to the extent required by the terms applicable to such Delayed FH Asset, operate such Delayed FH Asset in all material respects in the ordinary course of business consistent with past practice and taking into account the transactions contemplated by this Agreement, (ii) cooperate in any arrangement, reasonable and lawful as to Seller and Buyer, designed to provide to Buyer or its Subsidiaries the benefits arising under such Delayed FH Asset, including accepting such reasonable direction as Buyer shall request of Seller and (iii) enforce at Buyer’s request, or allow Buyer and its Affiliates to enforce in a commercially reasonable manner, any rights of the applicable Seller under such Delayed FH Asset against the other party or parties thereto; provided, however, that the costs and expenses incurred by Seller or its Affiliates at Buyer’s request shall be borne solely by Buyer. Seller shall, and shall cause the Retained Subsidiaries to, without further consideration therefor, pay and remit to Buyer promptly all monies, rights and other consideration received in respect of such performance. Buyer shall pay, perform and discharge fully, promptly when due, all of the obligations of Seller or the Retained Subsidiaries in respect of such performance, and Buyer shall be responsible for all Assumed Liabilities related thereto and indemnify the Seller Indemnified Parties for all Losses arising out of any actions (or omissions to act) of Seller or any Retained Subsidiary arising out of such performance or taken at the direction of Buyer or any of its Subsidiaries. With respect to Government Contracts that are subject to a requirement for novation and not novated prior to Closing, Seller shall, and shall cause the Retained Subsidiaries to, use commercially reasonable efforts to novate such Government Contracts as soon as reasonably practicable following the Closing.

 

(d)               Notwithstanding anything else set forth in this Section 5.16, neither Seller nor any other of its Subsidiaries shall be required to take any action that may, in the good faith judgment of Seller or such Subsidiary, (i) result in a violation of any obligation which Seller or any such Subsidiary has to any third party or (ii) violate applicable Law.

 

(e)                Buyer acknowledges that certain consents and approvals to the transactions contemplated by this Agreement may be required from certain third parties, and that such consents and approvals have not been and may not be obtained. Buyer agrees that Seller and its Affiliates shall not have any liability whatsoever arising out of or relating to, the failure to obtain any consents or approvals that may have been or may be required in connection with the transactions contemplated by this Agreement or because of the default under or acceleration or termination of any Contracts, FH Business Permits or Environmental Permits or other right or obligation, as a result thereof. Buyer further agrees that no representation, warranty, covenant or other obligation of Seller contained herein shall be breached or deemed breached, and no condition to Buyer’s obligations to consummate the transactions contemplated by this Agreement shall be deemed not satisfied, as a result of the failure to obtain any such consent or approval or as a result of any such default, acceleration or termination.

 

Section 5.17        Obligations Regarding Delayed Companies.

 

(a)                Notwithstanding anything herein to the contrary, the equity interests of any Transferred FH Company or Closing Subsidiary of a Transferred FH Company for which Seller and its Subsidiaries have not received all necessary consents and approvals of any Governmental Authority which are required to transfer the equity interests of any such entity to Buyer or a Subsidiary of Buyer pursuant to this Agreement or any Local Purchase Agreement at the Closing (such entity, a “Delayed Company”) shall be treated in the manner set forth in this Section 5.17. Without limiting the generality of Section 5.3 and Section 5.4, Seller shall, and shall cause the applicable FH Share Sellers to, and Buyer shall, use their commercially reasonable efforts to take such actions required to obtain any consent, approval or amendment required to convey, assign, transfer and deliver to Buyer such FH Share Sellers’ equity interests in a Delayed Company (the “Delayed Company Interests”); provided, however, that this Agreement, the Transition Services Agreement and the Local Purchase Agreements shall not constitute an agreement to convey, assign, transfer or deliver any Delayed Company Interests as to which consent or approval to conveyance, assignment, transfer or delivery thereof or amendment thereof has not been obtained as of the Closing Date unless and until such consent, approval, or amendment is no longer required or has been obtained; provided, further, that neither Seller nor any of its Affiliates shall be required to commence any litigation or offer, pay any money or otherwise grant any accommodation (financial or otherwise) to any third party in connection with obtaining any such consent, approval or amendment. Buyer shall indemnify the Seller Indemnified Parties against any Losses arising in connection with the transfer, or attempted transfer, of the Delayed Company Interests, or the FH Shares of the Transferred FH Companies and their Closing Subsidiaries holding Delayed Company Interests, hereunder. Notwithstanding the foregoing, neither Seller nor any FH Share Seller makes any representation or warranty that any such consent or approval shall be obtained either prior to, on or after the Closing Date and neither Seller nor any of its Subsidiaries shall have any Liability to Buyer or any of its Subsidiaries for failure to obtain any consent, approval or amendment required to convey, assign, transfer and deliver to Buyer the Delayed Company Interests.

 

(b)               In the event and to the extent that Seller or any FH Share Seller is unable to obtain any such required consent, approval or amendment required to convey, assign, transfer and deliver any Delayed Company Interests to Buyer, Seller shall, and shall cause the Retained Subsidiaries to, continue to retain title to such Delayed Company Interests; provided, that Seller may transfer any such interests to any Wholly Owned Subsidiary of Seller, with the prior written consent of Buyer (not to be unreasonably, withheld) and if not in violation of the associated organizational and governance documents of the Delayed Company; provided, further, that if any such Delayed Company Interests are held by a Transferred FH Company and such Transferred FH Company is to be conveyed to Buyer or a Subsidiary of Buyer under this Agreement, Seller shall use commercially reasonable efforts to restructure such company or its sale to Buyer or its Subsidiaries so that Seller or a Retained Subsidiary retains the Delayed Company Interests. Buyer agrees to reasonably cooperate with Seller in effectuating any such restructuring. Until the transfer to Buyer of such Delayed Company Interests: (i) Buyer shall pay, perform and discharge fully, promptly when due, all the reasonable obligations of Seller or the applicable FH Share Seller thereunder from and after the Closing Date; (ii) Buyer shall, and shall cause its Subsidiaries to, be responsible for all Assumed Liabilities related thereto and indemnify Seller and its Affiliates and the applicable FH Share Sellers and their Affiliates for all Losses arising out of such performance (or any failure to perform) by Buyer or any of its Subsidiaries and any Losses arising out of Seller’s entering into such an arrangement and (iii) Buyer shall, and shall cause its Subsidiaries to, cooperate and provide such support and services to Seller and its Affiliates as Seller shall reasonably request in connection with such arrangement. Seller shall, and shall cause the applicable FH Share Sellers to, without further consideration therefor, pay and remit to Buyer promptly all monies, rights and other considerations received in respect of such performance; provided, however, that notwithstanding the foregoing, Seller and its Affiliates may retain, and shall not be required to remit to Buyer or any of its Affiliates, any Tax distributions received from any Delayed Company made for the purposes of paying any Taxes that are Retained Liabilities attributable to the income of such Delayed Company generated on or after the Closing Date and for which Seller or any of its Affiliates is liable pursuant to applicable Law. In the event that (x) Seller or a Retained Subsidiary is required under the applicable organizational and governance documents of the Delayed Company to fund or (y) subject to the prior written consent of Buyer (not unreasonably to be withheld), Seller or a Retained Subsidiary otherwise funds, any capital call from, or otherwise makes any capital contribution to, any Delayed Company after the Closing but prior to the transfer to Buyer or one of its Subsidiaries of Seller’s or a Retained Subsidiary’s interests in such Delayed Company, then at the time of such transfer, Buyer shall be obligated to reimburse Seller for the amount of cash funded into such capital call.

(c)                The obligations of Buyer to purchase and accept any Delayed Company Interests, and the obligations of the FH Share Sellers to sell, assign and transfer any Delayed Company Interests, which was not transferred pursuant to Section 1.1 at the Closing, shall be subject to the fulfillment, or written waiver by Buyer, or by Seller, on behalf of itself and the FH Share Sellers, as the case may be, at or prior to such transfer, of only the following conditions: (i) the receipt of each material consent, approval or amendment required to convey, assign, transfer and deliver to Buyer or any of its Subsidiaries such Delayed Company Interests, and (ii) no statute, rule, regulation, executive order, decree, preliminary or permanent injunction or restraining order shall have been enacted, entered, promulgated or enforced by any Governmental Authority which prohibits or restricts the transfer of such Delayed Company Interests nor shall any proceeding by any Governmental Authority seeking the foregoing be pending.

 

(d)               Notwithstanding anything else set forth in this Section 5.17, neither Buyer, Seller nor any of the FH Share Sellers shall be required to take any action that may, in the reasonable judgment of Buyer, Seller or such FH Share Seller, violate applicable Law. In addition, to the extent that it is contemplated that any Delayed Company Interests are to be conveyed, assigned, transferred and delivered to Buyer pursuant to a Local Purchase Agreement, such Delayed Company Interests shall be conveyed, assigned, transferred and delivered to Buyer pursuant to such Local Purchase Agreement.

 

(e)                For purposes of this Section 5.17, “commercially reasonable efforts” shall not require Buyer or Seller or any of their respective Subsidiaries to take any action which would result in adverse Tax consequences or costs for Buyer or Seller or any of their respective Subsidiaries.

 

Section 5.18        Directors and Officers.

 

(a)                If the Closing occurs, Buyer shall and shall cause the Transferred FH Companies and their Closing Subsidiaries to take any necessary actions to provide, for a period of six (6) years from the Closing Date, that all rights to indemnification and all limitations on liability existing in favor of any current or former officers, directors, partners, members, managers or employees of the Transferred FH Companies or their Closing Subsidiaries (or their respective predecessors) (collectively, the “FH Indemnitees”), as provided in (i) the organizational documents of the Transferred FH Companies and their Closing Subsidiaries in effect on the date of this Agreement or (ii) any agreement providing for indemnification by the Transferred FH Companies or their Closing Subsidiaries of any of the FH Indemnitees in effect on the date of this Agreement to which the FH Share Sellers or the Transferred FH Companies or their Closing Subsidiaries are a party, shall survive the consummation of the transactions contemplated hereby and continue in full force and effect and be honored by the Transferred FH Companies or their Closing Subsidiaries after the Closing.

 

(b)               In the event that the Transferred FH Companies or their Closing Subsidiaries or Buyer or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or a majority of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Transferred FH Companies or their Closing Subsidiaries or Buyer, as the case may be, shall succeed to the obligations set forth in this Section 5.18.

 

(c)                The obligations of Buyer under this Section 5.18 shall not be terminated or modified in such a manner as to adversely affect any indemnitee to whom this Section 5.18 applies without the express written consent of such affected indemnitee (it being expressly agreed that the indemnitees to whom this Section 5.18 applies shall be third party beneficiaries of this Section 5.18).

 

Section 5.19        Buyer’s Financing Activities.

 

(a)                Except as set forth in this Section 5.19 (and without limiting Seller’s other obligations under this Agreement, including to the extent they relate to the Debt Financing), Buyer acknowledges and agrees that Seller, its Affiliates and their respective Representatives shall have no responsibility for any financing that Buyer may raise in connection with the transactions contemplated hereby. Any bank syndication materials and other marketing materials prepared by or on behalf of or utilized by Buyer, or Buyer’s financing sources, in connection with Buyer’s financing activities in connection with the transactions contemplated hereby which include any information provided by Seller, its Affiliates or their respective Representatives shall include a conspicuous disclaimer to the effect that none of Seller, its Affiliates or their respective Representatives have any responsibility for the content of such document and disclaim all responsibility therefor.

 

(b)               Subject to the terms of this Agreement (including the rights of Buyer in this Section 5.19(b) to obtain Alternative Financing), Buyer shall use its reasonable best efforts to take, or cause to be taken, all actions and use its reasonable best efforts to do, or cause to be done, all things necessary, proper or advisable to arrange the Debt Financing and to consummate the Debt Financing at or prior to the Closing, including using reasonable best efforts to (i) comply with the terms of, and maintain in effect, the Debt Commitment Letter; (ii) satisfy (or seek a waiver of) on a timely basis all of the conditions precedent and covenants set forth in the Debt Commitment Letter and the definitive documentation for the Debt Financing; (iii) negotiate, execute and deliver definitive documentation for the Debt Financing (and promptly upon the execution and delivery thereof, provide true and complete copies of such definitive documentation to Seller) that reflects the terms contained in the Debt Commitment Letter or on other terms not materially less favorable, in the aggregate, to Buyer (subject to any “market flex” provisions included in the Fee Letter or any fee letter relating to an Alternative Financing) and that would not, if such other terms constituted an amendment to the Debt Commitment Letter, be prohibited by clauses (A) through (D) in the proviso below; and (iv) in the event that the conditions set forth in Section 8.1 and Section 8.3 and the conditions precedent set forth in the Debt Commitment Letter have been satisfied or, upon funding would be satisfied, cause the financing providers to fund the Debt Financing in accordance with the terms of the Debt Commitment Letter including, if necessary, enforcing rights under the Debt Commitment Letter and the definitive documentation for the Debt Financing; provided, however, that under no circumstances shall Buyer be required to commence or sustain any legal proceeding in connection therewith. Buyer shall have the right from time to time to amend, restate, replace, supplement or otherwise modify, or waive any of its rights under, the Debt Commitment Letter and/or substitute other debt or equity financing for all or any portion of the Debt Financing from the same and/or alternative financing sources (together with any alternative financing as described in clause (c) below, each an “Alternative Financing”); provided, that any such amendment, restatement, supplement, replacement or other modification to or waiver of any provision of the Debt Commitment Letter that amends the Debt Financing and/or substitution of all or any portion of the Debt Financing shall not, without the prior written consent of Seller, (A) except as otherwise set forth herein, reduce the aggregate amount of the Debt Financing (including by increasing the amount of fees to be paid or original issue discount) to be funded at or prior to Closing in a manner that would adversely impact the ability of Buyer to consummate the Sale or that would otherwise be expected to prevent, delay or impede the Sale, (B) impose new or additional conditions precedent or contingencies to the Debt Financing as set forth in the Debt Commitment Letter or otherwise amend, modify, or expand any conditions precedent to the funding of the Debt Financing (unless such conditions precedent or contingencies to the Alternative Financing would not be reasonably expected to (i) prevent, impede or delay the Closing, (ii) make the funding of the Debt Financing or a material portion thereof (or the satisfaction of the conditions to obtaining the Debt Financing or a material portion thereof) less likely to occur, (iii) adversely affect the ability of Buyer to consummate the transactions contemplated by this Agreement or (iv) adversely impact the ability of Buyer to enforce its rights against the other parties to the Debt Commitment Letter or the definitive documentation with respect thereto), (C) release or consent to the termination of the obligations of the lenders under the Debt Commitment Letter (except for assignments and replacements of an individual lender under the terms of or in connection with the syndication of the Debt Financing or as otherwise expressly contemplated by the Debt Commitment Letter), or (D) otherwise (i) prevent, impede or delay the Closing, (ii) adversely affect the ability of Buyer to consummate the transactions contemplated by this Agreement or (iii) adversely impact the ability of Buyer to enforce its rights against the other parties to the Debt Commitment Letter or the definitive agreements with respect thereto; provided, further, that Buyer may amend, restate, replace, supplement or otherwise modify the Debt Commitment Letter (or any Alternative Financing) on one or more occasions to add additional arrangers, bookrunners, agents and lenders in accordance with the terms of the Debt Commitment Letter (but not to make any other changes other than to the extent otherwise permitted under this Section 5.19(b)). For purposes of this Agreement, the definition of “Debt Commitment Letter” shall include any amendment, restatement, supplement or other modification or waiver thereto, or any replacement thereof, and the definition of “Debt Financing” shall include any amendment thereof or substitution of any portion thereof with any Alternative Financing, in each case permitted under this Section 5.19(b) or Section 5.19(c) below.

 

(c)                If any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Debt Commitment Letter (subject to any “market flex” provisions included in the Fee Letter and other than on account of any Alternative Financing referred to in clause (b) above having been completed) other than due to the failure of a condition to the consummation of the Debt Financing resulting from a material breach of any representation, warranty, or covenant of Seller set forth in this Agreement or the failure of any condition set forth in Section 8.1 or Section 8.3, Buyer shall promptly so notify Seller and use its reasonable best efforts to obtain any such portion from alternative debt or equity sources as promptly as practicable following the occurrence of such event in an amount that will still enable Buyer to pay the Required Amount at the Closing (including the payment of all fees, premiums and expenses associated therewith).

 

(d)               Buyer shall keep Seller informed on a reasonably current basis in reasonable detail of the status of Buyer’s efforts to arrange the Debt Financing (including any Alternative Financing) and shall provide to Seller copies of any amendment, restatement, replacement, supplement or modification of the Debt Commitment Letter (including any new commitment letters relating to any Alternative Financing and related fee letters, redacted as to the same scope as the Fee Letter) and all executed final definitive documents relating to the Debt Financing (excluding any provisions related solely to fees, economic and “market flex” terms (other than covenants) agreed to by the parties thereto and any provisions in any fee or engagement letters as customarily excluded by the Financing Sources). Without limiting the generality of the foregoing, Buyer shall give Seller prompt written notice (in any event within three (3) Business Days), which shall include reasonably detailed information regarding the applicable circumstances referenced in the following clauses: (i) if Buyer becomes aware of any breach or default by any party to the Debt Commitment Letter or any definitive document related to the Debt Financing or termination or threatened termination thereof, if such breach, default or termination would reasonably be expected to affect the timely availability of, or the amount of, the Debt Financing; (ii) of the receipt by it of any written notice or other written communication from any Person with respect to any (A) actual or potential breach, default, termination or repudiation by any party to the Debt Commitment Letter or any definitive document related to the Debt Financing or any provisions of the Debt Commitment Letter or any definitive document related to the Debt Financing, or (B) material dispute or disagreement between or among any parties to the Debt Commitment Letter or any definitive document related to the Debt Financing with respect to the obligation to fund any portion of the Debt Financing or the amount of the Debt Financing to be funded at Closing; and (iii) if for any reason Buyer believes in good faith that it will not be able to obtain all or any portion of the Debt Financing on the terms and conditions, in the manner or from the sources contemplated by the Debt Commitment Letter (subject to the “market flex” provisions included in the Fee Letter or any fee letter relating to any Alternative Financing) or the definitive documents related to the Debt Financing. As soon as reasonably practicable, after the date Seller delivers Buyer a written request, Buyer shall provide any additional information reasonably requested by Seller relating to any circumstance referred to in clause (i), (ii) or (iii) of the immediately preceding sentence.

 

(e)                Seller shall, and shall cause its Subsidiaries and their respective Representatives to, furnish Buyer and its Financing Sources with the (i) the Required Financial Statements; and (ii) as promptly as practical after requested by Buyer, all information regarding the FH Business reasonably requested by Buyer to prepare pro forma financial statements of the type and form and for periods, in each case, customarily included in information memoranda and syndication materials used in syndicated bank financings (the information and documents in clauses (i) and (ii), collectively, the “Required Information”); provided that such Required Information (A) shall not include, and Buyer shall be solely responsible for, pro forma information or projections, including pro forma cost savings, synergies, capitalization or other pro forma adjustments desired to be incorporated into any pro forma information and (B) shall not include “segment reporting”, information required by Rules 3-09, 3-10 and 3-16 of Regulation S-X under the Securities Act or otherwise include separate financial statements of any Subsidiary or any compensation discussion and analysis required by Item 402(b) of Regulation S-K under the Securities Act. From the date hereof until the earlier of (i) the Closing Date and (ii) termination of this Agreement pursuant to Section 9.1, Seller shall, and shall cause its Subsidiaries to, use reasonable best efforts to provide such customary assistance and cooperation (and to use reasonable best efforts to cause its and their respective Representatives to provide such customary assistance and cooperation), at Buyer’s sole cost and expense, with respect to any Debt Financing as is reasonably requested by Buyer, including using reasonable best efforts with respect to: (i) upon reasonable request, participating in and assisting with the due diligence and marketing efforts related to such Debt Financing, including, upon reasonable advance notice and during normal business hours, participating in a reasonable number of meetings (including one-on-one meetings or conference calls with the parties acting as agents or arrangers for, and prospective lenders, investors in, and purchasers of, the Debt Financing), presentations, due diligence sessions, drafting sessions, road shows and sessions with prospective lenders, investors and rating agencies and other syndication activities; (ii) delivering to Buyer and its Financing Sources as promptly as reasonably practicable documentation and other information that is required under applicable “know-your customer” and anti-money laundering rules and regulations, including the USA Patriot Act and that is reasonably requested by the Financing Sources at least ten (10) Business Days prior to Closing; (iii) requesting Seller’s independent auditors to cooperate with the Debt Financing consistent with their customary practice, including by participating in a reasonable number of drafting sessions, providing customary assistance with the due diligence activities of Buyer and the Financing Sources (including, upon reasonable advance notice and during normal business hours, participating in a reasonable number of accounting due diligence sessions); (iv) assisting Buyer and the Financing Sources in the preparation of (A) customary syndication documents and materials, including bank information memoranda (confidential and public), lender and investor presentations and similar documents for the Debt Financing and (B) customary materials for rating agency presentations, and similar documents in connection with the Debt Financing; (v) cooperating reasonably with each Financing Source’s due diligence including in relation to the provision of, and reliance on, any reports produced in connection with the transaction; (vi) executing and delivering customary definitive financing documents, including certificates and other documents, to the extent reasonably requested by Buyer and customary for financings of the type similar to the Debt Financing; (vii) providing all financial statements, financial data, audit reports and other information with respect to the FH Business customarily included in marketing materials, lender and investor presentations and similar documents for the syndication of credit facilities similar to those described in the Debt Commitment Letter; provided that the only financial statements required to be delivered shall be those described in Section 3.5 and Section 5.25; and (viii) providing customary projected financial information relating only to the FH Business as reasonably requested by Buyer to permit Buyer to prepare customary projected financial information relating to Buyer (to be prepared on a pro forma basis assuming the consummation of the Sale) which are customarily required by financing sources for the syndication of credit facilities similar to those described in the Debt Commitment Letter or for purposes of obtaining corporate and debt ratings; provided that the effectiveness of any certificate, definitive agreements or other documentation executed by Seller or any of its Subsidiaries shall be subject to the Closing of the Sale. In addition, if, in connection with the marketing of the Debt Financing, Buyer reasonably determines in consultation with the lead arrangers for the Debt Financing that the disclosure of any material non-public information with respect to the FH Business or the pro forma combined financial position or results of operations of the Buyer and the FH Business is necessary or advisable to include in any syndication materials or other similar documents to be delivered to any “public side” lenders, then Buyer shall have the right, upon prior written notice to Seller, to file or furnish one or more Current Reports on Form 8-K (each a “Buyer Form 8-K”) containing such material non-public information and any required reconciliations, which Buyer Form 8-K shall in no event contain (x) financial projections or other estimates of future performance with respect to the FH Business, (y) any information with respect to the FH Business that would result in the loss of the ability to successfully assert any attorney-client privilege of Seller or any of its Subsidiaries, or (z) any material non-public information with respect to the FH Business the disclosure of which would reasonably be expected to conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under any Contract to which Seller or any of its Subsidiaries is a party, in each case to the extent existing as of the date of this Agreement; provided, that nothing herein shall prevent, limit or restrict the disclosure of any financial information or financial data, including the Required Financial Statements and the Required Information. Additionally, Buyer will use reasonable best efforts to limit the amount and scope of such material non-public information with respect to the FH Business or the pro forma combined financial position or results of operations of the Buyer and the FH Business contained in any Buyer Form 8-K, but subject in all respects to compliance with applicable Law regarding the disclosure of material non-public information in syndication materials or other similar documents. Seller hereby consents to the use of all of its and its Subsidiaries’ logos in connection with the Debt Financing, provided that such logos are used solely in a manner that is reasonable and customary for such purposes and that is not intended to or reasonably likely to harm or disparage Seller or any of its Subsidiaries or the reputation or goodwill of Seller or any of its Subsidiaries or any of their respective products, services, offerings or intellectual property rights and on such other customary terms and conditions as Seller shall reasonably impose. Seller shall be given reasonable opportunity to review and comment on any syndication materials or other similar documents (including drafts of any Buyer Form 8-Ks), or any materials for rating agencies, that include information about Seller or any of its Subsidiaries prepared in connection with the Debt Financing.

 

(f)                Notwithstanding any other provision set forth herein or in any other agreement between Seller and Buyer (or its Affiliates), the Seller agrees that Buyer and its affiliates may share customary projections with respect to the FH Business with the Financing Sources identified in the Debt Commitment Letter and to any existing lenders of Buyer, and that Buyer, its affiliates and such Financing Sources may share such information with potential Financing Sources in connection with any marketing efforts in connection with the Debt Financing, provided that the recipients of such information are subject to customary confidentiality arrangements between Buyer and such parties (which need not include Seller). Notwithstanding anything to the contrary in this Agreement, none of Seller, any of its Subsidiaries or any of its or their respective directors or officers or other personnel shall be required by this Section 5.19 to: (1) take any action or provide any assistance that unreasonably interferes with the ongoing operations of Seller and its Subsidiaries; (2) pass resolutions or consents to approve or authorize the execution of the Debt Financing or the documents related to the Debt Financing prior to the Closing (other than customary authorization and representation letters provided in connection with marketing or offering documents); (3) execute or deliver any certificate, document, instrument or agreement that is effective prior to the Closing or agree to any change or modification of any existing certificate, document, instrument or agreement that is effective prior to the Closing (other than customary authorization and representation letters and a payoff letter with respect to any credit agreement); (4)(i) execute or deliver any solvency certificate with respect to Seller or any of its Subsidiaries, (ii) request that Seller’s independent accountants provide any consent or comfort letter or (iii) request that any counsel for Seller or any of its Subsidiaries deliver any opinion in connection with the Debt Financing (5) pay any commitment or other similar fee; (6) cause any director, officer or other personnel to incur any personal liability; (7) without limiting Seller’s obligation to furnish the Required Information or obtain the Seller Lender Consent, take any action that would reasonably be expected to conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, Seller’s or any of its Subsidiary’s organizational documents, any applicable Laws or any Contract to which Seller or any of its Subsidiaries is a party, in each case to the extent existing as of the date of this Agreement; (8) cause any representation or warranty in this Agreement to be breached; or (9) require Seller to provide access or disclose any information that would jeopardize any attorney-client privilege of Seller or any of its Subsidiaries.

 

(g)               Buyer shall indemnify and hold harmless Seller, its Subsidiaries and its and their respective Representatives from and against any and all losses, damages, claims and out-of-pocket costs or expenses (including reasonable attorneys’ fees), actually suffered or incurred by them in connection with any Debt Financing (including any action taken in accordance with this Section 5.19) and any information utilized in connection therewith (other than information provided by Seller or any of its Representatives in writing for use in the Debt Financing documents), in any case, except to the extent suffered or incurred as a result of the gross negligence, willful misconduct, fraud or Intentional Breach by or of the Seller or its Subsidiaries or their respective Representatives. In addition, Buyer shall, promptly upon request by Seller, reimburse Seller for all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by Seller or its Subsidiaries in connection with the performance of Seller’s obligations under this Section 5.19, except as otherwise provided in Section 5.24(a).

 

Section 5.20        Conflicts; Privileges. It is acknowledged by each of the parties that Seller has retained Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) to act as its counsel in connection with the transactions contemplated hereby and that Skadden has not acted as counsel for any other Person in connection with the negotiation and execution of the Transaction Documents (the “Matter”) and the transactions contemplated hereby and that no other party or Person has the status of a client of Skadden for conflict of interest or any other purposes as a result thereof. Buyer hereby agrees that, in the event that a dispute arises between Buyer or any of its Affiliates (including, after the Closing, the Transferred FH Companies and their Closing Subsidiaries) and Seller or any of its Affiliates (including, prior to the Closing, the Transferred FH Companies and their Subsidiaries) related to the Matter, Skadden may represent Seller or any such Affiliate in such dispute even though the interests of Seller or such Affiliate may be directly adverse to Buyer or any of its Affiliates (including, after the Closing, the Transferred FH Companies and their Closing Subsidiaries) and even though Skadden may have represented a Transferred FH Company or one of its Closing Subsidiaries in a matter substantially related to such dispute, or may be handling ongoing matters for Buyer or a Transferred FH Company or one of its Closing Subsidiaries, and Buyer and the Transferred FH Companies and their Closing Subsidiaries hereby waive, on behalf of themselves and each of their Affiliates, any conflict of interest in connection with such representation by Skadden to the extent related to the Matter. Buyer further agrees that, as to all communications, whether written or electronic, to the extent related to the Matter, among Skadden, Seller and its Subsidiaries, the Transferred FH Companies and their Closing Subsidiaries, and all files, attorney notes, drafts or other documents, to the extent related to the Matter and that predate the Closing, the attorney-client privilege, the expectation of client confidence and all other rights to any evidentiary privilege belong to Seller and may be controlled by Seller and shall not pass to or be claimed by Buyer or its Subsidiaries or the Transferred FH Companies or any of their Closing Subsidiaries, but in no event shall Seller waive any such privilege to the extent related to any of the Transferred FH Companies or any one of its Closing Subsidiaries. Seller and Buyer agree to take and to cause their respective Affiliates to take, all steps necessary to implement the intent of this Section 5.20. Seller and Buyer further agree that Skadden and its respective partners and employees are third party beneficiaries of this Section 5.20.

 

Section 5.21        Local Purchase Agreements; Transition Services Agreement.

 

(a)                The parties hereto agree to enter into, and to cause their respective Subsidiaries, as applicable, to enter into, the Transition Services Agreement at or prior to the Closing. To the extent there is a conflict between any of the provisions of this Agreement and the Transition Services Agreement, the provisions of the Transition Services Agreement shall control with respect to the subject matter thereof.

 

(b)               Immediately prior to the Closing, Seller, on the one hand, and Buyer, on the other hand, shall cause the applicable executed Local Purchase Agreements to be delivered to the other parties thereto and to consummate the Sale as provided for therein and, after the Closing, Seller and Buyer shall cause their respective Subsidiaries party to the Local Purchase Agreements to comply with such respective Subsidiaries’ obligations thereunder; provided, that the foregoing obligations are subject to Section 5.16 and Section 5.17. To the extent there is a conflict between any of the provisions of this Agreement and any Local Purchase Agreement, the provisions of this Agreement shall control.

 

Section 5.22        Specified Litigation. Without limiting Section 5.10, following the Closing Date, Seller shall have exclusive authority and control over the investigation, prosecution, defense and appeal of all Actions relating to or arising in connection with the Excluded Businesses, the Excluded Assets or the Retained Liabilities (each, a “Seller Action”), and may settle or compromise, or consent to the entry of any judgment with respect to any such Action without the consent of Buyer; provided, however, that if both Seller (or a Retained Subsidiary) and Buyer (or any of its Subsidiaries, including any Transferred FH Company or its Closing Subsidiaries) are named as parties to any Seller Action (a “Joint Action”), Seller shall not settle such Joint Action without the written consent of Buyer (not to be unreasonably withheld) unless such settlement releases Buyer (or such of its Subsidiaries named as parties) from all Liabilities in connection with such Joint Action and provides relief consisting solely of money damages borne by Seller (or a Retained Subsidiary), and provided further that, to the extent this Section 5.22 conflicts with Section 7.3 (with respect to Tax Audits), Section 7.3 shall govern.

 

Section 5.23        Insurance. From and after the Closing, and excluding for the avoidance of doubt insurance policies and coverage covering claims or losses related to Retained Asbestos Liabilities and any other Retained Liabilities, Seller shall, and shall cause its Subsidiaries to, reasonably cooperate with Buyer to afford to Buyer, the FH Business, the Transferred FH Companies and the Closing Subsidiaries rights to seek insurance coverage under occurrence-based insurance policies covering pre-Closing occurrences, accidents, events, injuries and/or damages in respect of covered claims or losses to the extent related to an Assumed Liability, so that Buyer, the FH Business, the Transferred FH Companies and the Closing Subsidiaries may seek the benefit of such coverage and, to the extent applicable, the right to proceeds, under any such policies in respect of any such covered claim or losses related to an Assumed Liability. Any such rights of to receive the benefit of coverage under and, to the extent applicable, proceeds with respect to, any such insurance claim shall be subject to any deductibles, self-insured retentions, retained amounts, retentions or exclusions and to the other terms of the applicable insurance policy. For the avoidance of doubt, this Section 5.23 shall not require the Seller or any of its Subsidiaries to provide access to or benefits under any insurance policies of Seller or its Subsidiaries for Retained Asbestos Liabilities. This Section 5.23 shall not require Seller to convert any “claims made” policy to an “occurrence based” policy and shall not obligate Seller to maintain any insurance policy in effect such that it covers claims made or events occurring after the Closing. Buyer shall promptly reimburse Seller for any reasonable and documented out-of-pocket costs incurred by Seller in the performance of its obligations under this Section 5.23.

 

Section 5.24        Later Discovered Assets.

 

(a)                In the event that there are any contracts, agreements or other assets that are FH Assets or Acquired FH Assets and were not transferred to Buyer as part of this Agreement because such contracts, agreements or other assets were not discovered until after the Closing or inadvertently were not assigned (each, a “Later Discovered Asset”), Seller agrees, at Buyer’s request and expense, to the extent permitted under the terms and conditions of such Later Discovered Asset and under applicable Laws, to assign such Later Discovered Asset to Buyer or its Affiliates. To the extent that Seller’s, any FH Asset Seller’s, or any FH Affiliate’s rights under any such Later Discovered Asset may not be assigned to Buyer (or any designated Affiliate) without the consent of any Person, such Later Discovered Asset shall be treated in accordance with Section 5.17.

 

(b)               In the event that there are any contracts, agreements or other assets that are Excluded Assets and that were inadvertently transferred to Buyer and its Affiliates as part of this Agreement, or not transferred by a Transferred FH Company or its Closing Subsidiaries to Seller prior to Closing, Buyer agrees, at Seller’s request and expense, to the extent permitted under the terms and conditions of such assets and under applicable Law, to assign such assets to Seller or its Affiliates promptly following discovery thereof.

 

Section 5.25        Financial Statements and Financial Reporting Matters.

 

(a)                At Seller’s sole cost and expense, Seller shall deliver to Buyer:

 

(i)                 as promptly as practical following the date of this Agreement, (A) audited carve-out combined balance sheets, income statements and statements of cash flows and shareholder’s equity (deficit) of the FH Business as of and for the years ending December 31, 2015 and December 31, 2016 (such audited combined financial statements, the “Required Audited Financial Statements”) and (B) unaudited carve-out combined balance sheets, income statements and statements of cash flows and shareholder’s equity (deficit) of the FH Business (which shall have been reviewed by Seller’s independent accountants as provided in the procedures specified by the Public Company Accounting Oversight Board in AS 4105) as of and for the nine (9) month period ending September 29, 2017 (and the corresponding periods from the previous year) (collectively, with the Required Audited Financial Statements and each financial statement described in clause (iii) or (iv) of this Section 5.25(a) that becomes deliverable prior to the Closing pursuant to such clause, the “Required Financial Statements”);

 

(ii)               as promptly as practicable after the date of this Agreement (and in no event more than 30 days after the Closing), unless audited financial statements for a subsequent fiscal year have been provided pursuant to clause (iv) below, audited carve-out combined income statement and statements of cash flows and shareholder’s equity (deficit) of the FH Business as of and for the year ending December 31, 2014 (such audited combined financial statements, if required to be provided, the “2014 Audited Financial Statements” and collectively, with the Required Financial Statements, the “Financial Statements”);

 

(iii)             as promptly as practicable after the end of any fiscal quarter (except the fourth quarter of any fiscal year) that ends after September 29, 2017 and prior to the Closing Date (and in any event no later than 45 days after the end of such fiscal quarter), unaudited carve-out combined balance sheets, income statements and statements of cash flows and shareholder’s equity (deficit) of the FH Business which shall have been reviewed by Seller’s independent accountants as provided in the procedures specified by the Public Company Accounting Oversight Board in AS 4105) as of and for the three-month, six-month or nine-month period then ended (and the corresponding interim period from the previous year); and

 

(iv)             as promptly as practicable after the end of any fiscal year that ends after the date of this Agreement and prior to the Closing Date (and in any event no more than 90 days after the end of such fiscal year), audited carve-out combined balance sheets, income statements and statements of cash flows and shareholder’s equity (deficit) of the FH Business as of and for such completed fiscal year (together with an unqualified report of Seller’s independent accountants thereon) of the FH Business.

 

(b)               The Financial Statements shall be prepared in accordance with GAAP and shall comply in all material respects with the requirements of Regulation S-K and Regulations S-X under the Securities Act applicable to “carve-out” financial statements that would apply to a registration statement of Buyer filed with the SEC on Form S-3 that is required to contain or incorporate by reference such Financial Statements pursuant to Section 3-05 of Regulation S-X.

 

(c)                From and after the Closing, Seller shall, at Buyer’s sole cost and expense, reasonably cooperate as requested by Buyer in connection with Buyer’s preparation of historical financial statements of the FH Business for the quarterly and annual fiscal periods ending after the Closing Date and to, but not after, December 31, 2018 (the “Post-Closing Financial Statements”) and/or the filing with the SEC of any of the Financial Statements on or before December 31, 2018 and the filing at any time of any auditor consent necessary to (i) file with the SEC of any Financial Statement or Post-Closing Financial Statement or (ii) file or maintain the effectiveness of any registration statement of the Company, in each case as Buyer reasonably determines are required to be filed with the SEC pursuant to the Securities Act or the Exchange Act following the Closing in connection with the filing of any registration statement, current or periodic report or other form or report of Buyer or any of its Subsidiaries. Such cooperation shall include, without limitation, providing, as promptly as reasonably practicable, (a) such financial and operating data regarding the FH Business relating to any pre-Closing period included in the Post-Closing Financial Statements or the Financial Statements as is reasonably requested by Buyer, (b) customary management representation letters and other customary documents as may be reasonably requested by Buyer or any independent registered public accounting firm that participates in the audit, review or preparation of such Post-Closing Financial Statements, Financial Statements or pro forma financial statements of Buyer that include the Post-Closing Financial Statements or Financial Statements in connection with the delivery to Buyer by such accounting firm of all consents necessary for Buyer to file with the SEC any such financial statement as Buyer reasonably determines are required by the Securities Act or the Exchange Act in connection with the filing of any registration statement, current or periodic report or other form or report of Buyer or any of its Subsidiaries and (c) upon request by Buyer, request any independent registered public accounting firm that participated in the preparation of the Post-Closing Financial Statements or the Financial Statements to deliver to Buyer or its designees the consent of such independent registered public accounting firm and customary comfort letters with respect to the financial information described in the Post-Closing Financial Statements or the Financial Statements (including customary negative assurance comfort with respect to periods following the end of the latest fiscal year and fiscal quarter for which financial statements are provided), in each case in connection with the use of any such Post-Closing Financial Statements or Financial Statements required to be included or incorporated by reference in any registration statement (or related prospectus or prospectus supplement), report or other filing filed with, or furnished to, the SEC by Buyer. Buyer acknowledges and agrees that, subject to Seller’s express obligations under this Section 5.25, the preparation of such Post-Closing Financial Statements within the time period required by the SEC is the sole responsibility of Buyer, and, except in the case of a breach of Seller’s express obligations under this Section 5.25, neither Seller nor any of its Affiliates shall have any liability arising out of any failure by Buyer or its respective Affiliates to timely satisfy any requirements of the SEC with respect to the preparation of the Post-Closing Financial Statements or any other financial information of the FH Business and any actual or anticipated failure to timely satisfy such requirements shall not, in and of itself, be deemed to constitute a breach of this Agreement by Seller or any of its Affiliates. Buyer shall bear all reasonable out-of-pocket costs and expenses incurred by Seller or its Affiliates in connection with this Section 5.25(c) or otherwise in connection with the preparation and audit of historical financial statements after the Closing, including costs of staff augmentation or professional fees. Buyer further acknowledges that, following the Closing, neither Seller nor its Affiliates will be required to provide or prepare financial, operating data or other information regarding the FH Business, to the extent such information is transferred to Buyer as part of the books and records of the FH Business or is derivable therefrom; provided, however, that if any such information is not reasonably accessible to Buyer, notwithstanding the transfer of such information to Buyer as part of the books and records of the FH Business, Seller shall use commercially reasonable efforts to assist Buyer in accessing such information.

 

Section 5.26        Exclusivity. From and after the date hereof until the Closing: (a) Seller shall not, and shall us commercially reasonable efforts to cause its respective Representatives and Affiliates not to, directly or indirectly: (i) initiate, solicit, encourage or otherwise facilitate any inquiry, proposal, offer or discussion with any party concerning any Acquisition Transaction with a Person other than Buyer and its Affiliates, (ii) furnish any information concerning the FH Business (or any portion thereof) or the properties or assets of Seller related to the FH Business to any Person for the purposes of soliciting an Acquisition Transaction with a Person other than Buyer and its Affiliates or (iii) engage in discussions or negotiations with any party concerning any Acquisition Transaction with a Person other than Buyer and its Affiliates; and (b) Seller shall, and shall cause its respective Representatives and Affiliates to, (i) immediately cease any discussions or negotiations of the nature described in Section 5.26(a) that were pending as of the date hereof.

 

Section 5.27        Transaction Confidentiality Agreements. Effective as of the Closing, (a) to the extent any right or interest of Seller under any Transaction Confidentiality Agreement is assignable without the consent of a third party, Seller hereby assigns to Buyer all rights and interests of Seller under such Transaction Confidentiality Agreement, and (b) to the extent any right or interest of Seller under a Transaction Confidentiality Agreement is not assignable without the consent of a third party, Seller agrees to enforce its rights under such Transaction Confidentiality Agreement for the benefit of Buyer and its Affiliates as Buyer directs.

 

Section 5.28        Conduct of Business by Buyer. During the period from the date of this Agreement to the Closing Date, except (i) as set forth in Section 5.28 of the Buyer’s Disclosure Letter, (ii) as otherwise contemplated by this Agreement, (iii) as Seller shall otherwise consent in writing, such consent not to be unreasonably withheld, conditioned or delayed, and (iv) as required by Law or the terms of any Contract disclosed in the Buyer’s Disclosure Letter or not required to be disclosed in the Buyer’s Disclosure Letter, Buyer covenants and agrees that it shall not, and it shall cause its Subsidiaries not to, take any of the following actions:

 

(a)                amend the charter, bylaws or similar organizational documents of Buyer or (except as may be required in connection with the Debt Financing (i) in a manner that would not be adverse to Seller and (ii) that will not become effective prior to Closing) any of its Subsidiaries;

 

(b)               issue or agree to issue any additional shares of capital stock, or issue or agree to issue any other equity interests or securities convertible into or exchangeable or exercisable for, or options with respect to, or warrants to purchase or rights to subscribe for, shares of capital stock of any of Buyer or any of its Subsidiaries, or sell, transfer or otherwise dispose of or encumber any shares of capital stock of any of Buyer or any of its Subsidiaries, except in each case for (i) any issuance, sale, transfer or disposition to Buyer or a Subsidiary of Buyer, (ii) the issuance of shares of Buyer Common Stock upon the exercise or vesting of equity awards issued pursuant to the Buyer Equity Compensation Plans, and (iii) the grant of equity awards to directors, officers and employees in the ordinary course of business;

 

(c)                adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization under local Law;

 

(d)               declare, set aside, or pay any dividend or other distribution payable in stock or property with respect to its capital stock or other equity interests therein, except for any dividend or distribution to Buyer or a Subsidiary of Buyer and quarterly cash dividends on Buyer Common Stock in the ordinary course of business;

 

(e)                in the case of Buyer, reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock, except pursuant to any board authorized buyback programs in effect on the date of this Agreement;

 

(f)                grant to any other Person the right, contractual or otherwise, to cause Buyer or any of its Subsidiaries to register under the Securities Act any capital stock of Buyer with registration rights that interfere with, supersede, limit or take priority over, the registration rights of Seller pursuant to the Stockholder Agreement; or

 

(g)               agree to take any of the actions described in this Section 5.28.

 

Section 5.29        Termination and Settlement of DPLP Agreement.

 

(a)                Termination. The Seller shall cause the domination and profit and loss transfer agreement entered into between Allweiler Group GmbH and Allweiler GmbH dated June 14, 2000 (the “DPLP Agreement”) to be terminated no later than as of and with effect from the Closing Date. For that purpose, notwithstanding anything to the contrary contained in this Agreement, the Seller shall be entitled to change the fiscal year of the Allweiler GmbH (the “Company”) and to take all steps necessary or beneficial to terminate the DPLP Agreement as of the end of the shortened fiscal year by mutual consent or unilateral termination declaration (Kündigung), including to hold shareholder meetings, pass shareholder resolutions and request the consent of the tax authorities (the end of the day on which the DPLP Agreement terminates, the “DPLP Termination Date”). Within three (3) Business Days after the DPLP Financial Statements Approval Date (as defined below), (i) the Buyer shall cause the Company to (x) fulfill its obligations, if any, pursuant to Section 301 AktG or the respective provision in the DPLP Agreement, and in compliance with German Tax laws (such obligations, the “DPLP Company Liability”) and (y) pay the amount of the DPLP Company Liability to Allweiler Group GmbH, or, in case no DPLP Company Liabilities are owed, (ii) the Allweiler Group GmbH shall fulfil its obligations pursuant to Section 302 AktG or the respective provision in the DPLP Agreement, and in compliance with German Tax laws (the corresponding claim of the Company, the “DPLP Company Claim”) and pay the amount of the DPLP Company Claim to the Company, in each case of (i) or (ii) attributable to the DPLP Period and based on the DPLP Financial Statements (as defined below).

 

(b)               DPLP Financial Statements. In order to determine the DPLP Company Liability or, as the case may be, the DPLP Company Claims, the Seller, and after the Closing Date the Buyer, shall (i) cause the Company to (y) prepare (aufstellen), as soon as reasonably practical after the DPLP Termination Date, the financial statements of the Company pursuant to the German Commercial Code (Handelsgesetzbuch) and German generally accepted accounting principles in accordance with past practice for the DPLP Period and (z) have such financial statements audited by the auditors that completed the most recent audit of Allweiler GmbH and (ii) approve (feststellen) such financial statements by a shareholder resolution of the Company (such audited and approved financial statements, the “DPLP Financial Statements”, and the date on which such financial statements have been audited and approved, the “DPLP Financial Statements Approval Date”). After the Closing, the Buyer shall (i) keep the Seller reasonably informed of the steps taken in connection with the preparation, audit and approval of the DPLP Financial Statements, (ii) give the Seller the opportunity to review and comment on the final draft of the DPLP Financial Statements before they are submitted to the auditor (iii) procure that all reasonable comments on such final draft DPLP Financial Statements provided by the Seller to the Buyer be implemented and reflected in the DPLP Financial Statements unless the auditor rejects such comments after having discussed them with the Seller.

 

(c)                Settlement. The parties agree and shall procure that, upon profit transfer by the Company or loss compensation by Allweiler Group GmbH, based on the DPLP Financial Statements and in accordance with applicable law and the DPLP Agreement, all rights and obligations between Allweiler Group GmbH and the Company related to any profit transfer or loss compensation or any other claim under the DPLP Agreement shall be finally settled and that the DPLP Financial Statements or any financial statements of the Company as of any previous date shall not be challenged by the Buyer or by or on behalf of the Company after the Closing Date.

 

(d)               Indemnification. With effect from the Closing Date, the Buyer shall procure (steht dafür ein), and hereby guarantees, that the Company will not assert any claims against the Allweiler Group GmbH, and the Buyer shall indemnify and hold harmless the Seller Indemnified Parties (including Allweiler Group GmbH) from and against any obligation, (i) under German law in connection with the termination of the DPLP Agreement to provide security to creditors of the Company, (ii) pursuant to Section 302 AktG or the relevant provision in the DPLP Agreement or in connection with the DPLP Agreement (other than Allweiler Group GmbH’s obligation to fulfil the DPLP Company Claim) and (iii) any Losses (including any Taxes, any losses of Tax Items and any other Tax-related disadvantages) caused by a violation of the covenants of the Buyer or any of its Affiliates (including, after the Closing Date, the Company) set forth in this Section 5.29 (a), (b) or (e). With effect from the Closing Date, the Seller shall procure (steht dafür ein), and hereby guarantees, that Allweiler Group GmbH and its Affiliates will not assert any claims against the Company or its Closing Subsidiaries, and the Seller shall indemnify and hold harmless the Buyer Indemnified Parties (including the Company and its Closing Subsidiaries) from and against any obligation pursuant to Section 301 AktG or the relevant provision in the DPLP Agreement or in connection with the DPLP Agreement (other than Company’s obligation to fulfil the DPLP Company Liability).

 

(e)                If and to the extent Allweiler Group GmbH pays an amount to the Company in fulfilment of the DPLP Company Claim, the Buyer shall promptly reimburse the Seller (or its designee) in the same amount. If and to the extent the Company pays an amount to Allweiler Group GmbH in fulfilment of the DPLP Company Liability, the Seller shall promptly reimburse the Buyer (or its designee) in the same amount. For the avoidance of doubt, nothing in this Section 5.29 shall affect or limit the indemnification obligations of the Seller under Section 9.4.

 

(f)                In relation to any audits, adjustments, assessments, examinations or proceedings (whether judicial or administrative) for Pre-Closing Tax Periods which may affect the liability for Taxes or a Tax Item of the Allweiler Group GmbH or any of its Affiliates after the Closing Date as a result of the fiscal unity (Organschaft) between Allweiler Group GmbH and Allweilwer GmbH for German corporate income, trade tax or VAT purposes (a “Fiscal Unity Tax Audit”), Section 7.3 shall apply mutatis mutandis and Seller shall control any Fiscal Unity Tax Audit.

 

Section 5.30        Obligations Regarding Employee Matters. Within 30 days following the signing of this Agreement, Seller shall (i) identify any industry agreement or national labor agreement applicable to any Transferred Employee with respect to their employment with Seller, (ii) provide a list of all persons who ceased to be Employees on or after February 28, 2017 and became Seller Transferred Employees and (iii) with respect to any International Plan that is materially consistent with market practices in the relevant jurisdiction and with respect to which Seller lacks information as of the date of this Agreement to comply with the scheduling in Section 3.11(a), provide the information required by Section 3.11(a) and, if applicable, Section 3.11(b).

 

ARTICLE VI


EMPLOYEE MATTERS

 

Section 6.1            Transferred Employees.

 

(a)                Continuation of Employment. Buyer shall or shall cause each one of its Affiliates to continue the employment of each then-current Transferred FH Company Employee immediately following the Closing on the terms set forth in this Article VI.

 

(b)               Offers of Employment. Not later than thirty (30) days prior to the anticipated date of Closing (or such greater period as required by applicable Law), Buyer shall or shall cause one of its Affiliates to offer employment with Buyer or one of its Affiliates to each then-current Offer Employee, commencing as of the Closing on the terms set forth in this Article VI.

 

(c)                Automatic Transfer Employees. It is intended that in accordance with the Transfer Regulations, the employment and the contracts of employment of the Automatic Transfer Employees will (other than in respect of any such employee who objects to a transfer or resigns and leaves prior to the Closing Date) transfer automatically to Buyer or one of its Affiliates as a result of the transactions contemplated in this Agreement, and accordingly each such contract of employment shall have effect from the Closing Date as if originally made between Buyer, or its applicable Affiliate, and the applicable Automatic Transfer Employee, and all rights, powers, duties, liabilities and obligations of Seller or its Affiliates in respect of, or in relation to, such Automatic Transfer Employees and their contracts of employment in force immediately before the Closing shall transfer to Buyer or its applicable Affiliate in accordance with the Transfer Regulations. Buyer and its Affiliates shall provide such information as Seller or its Affiliates may reasonably require in sufficient time to enable Seller and its Affiliates to meet any information and consultation requirements they may have pursuant to the Transfer Regulations or other applicable Law with or in relation to their employees or any Employee Representative in connection with the transactions contemplated by this Agreement. Buyer and its Affiliates shall not propose any change to any Automatic Transfer Employee’s working conditions or terms and conditions or employment or otherwise take any action (including communication with any Automatic Transfer Employee or Employee Representative) that is intended to cause an Automatic Transfer Employee to resign prior to the Closing. If the contract of employment of any Employee based in a jurisdiction where the Transfer Regulations might apply does not transfer to the Buyer or any of its Affiliates in accordance with the Transfer Regulations as intended, such Employee shall then be an Offer Employee and Buyer or its Affiliate shall offer such Employee employment in accordance with Section 6.1(b) provided that such offer shall be on the terms that would have applied, including recognition of continuity of service, had the Employee transferred to Buyer or its Affiliates pursuant to the Transfer Regulations.

 

(d)               Delayed Transfer Employees. Notwithstanding anything set forth in Section 6.1(b) to the contrary, each Delayed Transfer Employee who has a legal or contractual right to return to employment with a Transferred FH Company or Closing Subsidiary shall become a Transferred Employee effective as of the date on which such Delayed Transfer Employee is eligible to return to active service; provided, that all references in this Agreement to events that take place with respect to Offer Employees as of the Closing shall take place with respect to any Delayed Transfer Employee as of such Delayed Transfer Employee’s commencement of employment with Buyer or one of its Affiliates.

 

(e)                Payments Pursuant to Transferred Benefit Plans. Buyer shall cause each applicable Transferred FH Company or Closing Subsidiary to pay all amounts payable under each Transferred Benefit Plan maintained by such Transferred FH Company or Closing Subsidiary no later than the date such amounts become due in the time and manner set forth in such Transferred Benefit Plan to the extent such amounts are Retained Liabilities. To the extent any such payment is a Retained Liability and is not reflected in Final Net Working Capital, Buyer shall notify Seller of such payment and Seller shall reimburse Buyer for such amount, including in each case any payroll Taxes attributable thereto, within thirty (30) days of receiving notice.

 

Section 6.2            Terms and Conditions; Compensation and Benefits.

 

(a)                Subject, and in addition, to the requirements imposed by applicable Law, during the period commencing on the Closing Date and ending on the first anniversary of the Closing Date (the “Continuation Period”), Buyer shall, or shall cause one of its Affiliates to, provide each Transferred Employee with (i) a base salary or hourly wage rate that is at least equal to the base salary or hourly wage rate provided to the Transferred Employee immediately prior to the Closing, and (ii) cash incentive compensation opportunities as a percentage of base salary or hourly wage rates that are at least equal to the cash incentive compensation opportunities provided to the Transferred Employee immediately prior to the Closing as such a percentage, and (iii) to provide the Transferred Employees in the aggregate with other compensation and employee benefits (other than severance payments and benefits and equity compensation) that are substantially comparable in the aggregate to the other compensation and employee benefits (other than severance payments and benefits and equity compensation) provided to such Transferred Employees in the aggregate, provided, that Buyer is not obligated to take into account for comparability any (x) retention, deal-based bonuses, or other changes in compensation in each case established in connection with preparing for and carrying out the transactions contemplated by this Agreement, (y) any benefits continuing to be provided by Seller pursuant to the Transition Services Agreement, and (z) 401(k) plan benefits for up to thirty (30) days following Closing.

 

(b)               Subject, and in addition, to the requirements imposed by applicable Law, Buyer shall, or shall cause one of its Affiliates to, provide each Transferred Employee whose employment terminates during the Continuation Period with severance payments and benefits that are no less favorable than the severance payments and benefits that would have been provided to the Transferred Employee upon a similar termination of employment immediately prior to the Closing.

 

(c)                Except as otherwise agreed to between the Buyer and the Seller with respect to an Offer Employee, Buyer shall, or shall cause one of its Affiliates to, provide each Transferred Employee with full credit for such Transferred Employee’s service with Seller or any of its Affiliates or predecessors prior to the Closing for eligibility, vesting, and determination of vacation and severance benefits under any benefit plan sponsored or maintained by the Buyer or any of its Affiliates (each, a “Buyer Plan”) in which such Transferred Employee is eligible to participate on or following the Closing Date; provided, however, that such service shall not be recognized to the extent that such recognition would result in a duplication of benefits or provide service credits for defined benefit accruals with respect to defined benefit plans. With respect to each Buyer Plan in which one or more Transferred Employees are eligible to participate on or following the Closing Date that is a health or benefits plan, Buyer shall, or shall cause one of its Affiliates to, (i) use commercially reasonable efforts to waive any limitation on health coverage of such Transferred Employees due to pre-existing conditions, waiting periods, active employment requirements and requirements to show evidence of good health, and (ii) use commercially reasonable efforts to credit each such Transferred Employee with all deductible payments, co-payments and co-insurance paid by such Transferred Employee under any Employee Benefit Plan prior to the Closing during the year in which the Closing occurs for the purpose of determining the extent to which any such Transferred Employee has satisfied any applicable deductible and whether such Transferred Employee has reached the out-of-pocket maximum for such year, such crediting to be required if and only to the extent that Seller has provided all information, and in a format, reasonably requested by Buyer and necessary to provide such credit.

 

(d)               Buyer shall, or shall cause one of its Affiliates to, assume all obligations of Seller with respect to each Transferred Employees under each CBA, except to the extent prohibited by Law, and honor the terms thereof until such CBA expires pursuant to its terms or is modified by the parties thereto.

 

Section 6.3            Treatment of Seller Pension Plans.

 

(a)                Assumed Pension Liabilities. From and after the Closing, the Assumed Pension Liabilities shall become or remain, as applicable, the responsibility of the applicable Transferred FH Company or Closing Subsidiary. Seller shall ensure that all Assumed Pension Assets related to the Assumed Pension Liabilities shall be transferred to or held by the applicable Transferred FH Company or Closing Subsidiary. All other Liabilities relating in any manner to any Seller Pension Plan shall be retained or assumed by Seller or its applicable post-Closing Affiliate.

 

(b)               Upon completion of the transfer of assets and liabilities as described in this Section 6.3, Buyer or such applicable Affiliate and the applicable Buyer pension plan shall be fully responsible for all benefits relating to past service of such Transferred Pension Participants and none of Seller nor any of its Affiliates shall have any liabilities whatsoever with respect to such benefits. Effective as of the Closing Date, the Transferred Pension Participants shall cease to accrue any additional benefits under any Seller Pension Plans. Effective as of the Closing Date, Buyer shall use reasonable best efforts to ensure that Seller and its Affiliates are released from any existing surety (if applicable) for Assumed Pension Liabilities.

 

(c)                Specific procedures for the determination and transfer of Assumed Pension Assets and Assumed Pension Liabilities for the Seller U.S. DB Plan are listed in Section 6.3(c) of the Seller’s Disclosure Letter.

 

Section 6.4            Treatment of 401(k) Plan Accounts.

 

(a)                Effective as of the Closing, Buyer shall, or shall cause one of its Affiliates to, have in effect a defined contribution retirement plan that is tax-qualified under Section 401(a) of the Code and includes a qualified cash or deferred arrangement within the meaning of Section 401(k) of the Code (the “Buyer 401(k) Plan”). Each U.S. Transferred Employee who is a participant immediately prior to the Closing in a defined contribution retirement plan of the Seller that is tax-qualified under Section 401(a) of the Code (each, a “Seller 401(k) Plan”) shall be enrolled in the Buyer 401(k) Plan as soon as practicable following the Closing Date. Each U.S. Transferred Employee who is not a participant in the Seller 401(k) Plan immediately prior to the Closing shall be permitted to enroll in the Buyer 401(k) Plan after the Closing Date in accordance with the terms of the Buyer 401(k) Plan.

 

(b)               Buyer shall cause the Buyer 401(k) Plan to provide each U.S. Transferred Employee with full credit for such U.S. Transferred Employee’s service with Seller or any of Seller’s Affiliates or predecessors prior to the Closing for purposes of eligibility and vesting under the Buyer 401(k) Plan.

 

(c)                As soon as practicable on or after the Closing Date, Seller shall take all commercially reasonable measures needed to cause the transfer to the Buyer 401(k) Plan of all of the assets and liabilities of Seller 401(k) Plan that are attributable to U.S. Transferred Employees, including all promissory notes and receivables in respect of plan loans to U.S. Transferred Employees under the Seller 401(k) Plan that remain outstanding as of the Closing and accrued liabilities arising out of any applicable qualified domestic relations order. Buyer shall direct the trustee of the Buyer 401(k) Plan to accept such transfer of assets and liabilities from the Seller 401(k) Plan. Such transfer of assets and liabilities shall be made in accordance with the applicable requirements of Section 411(d)(6) and 414(l) of the Code.

 

(d)               Buyer and Seller shall cooperate to take any and all commercially reasonable measures needed to effect the transition to the Buyer 401(k) Plan of all outstanding loans under the Seller 401(k) Plan with respect to U.S. Transferred Employees so as to prevent, to the extent reasonably possible, a deemed distribution or loan offset with respect to such outstanding loans. Such actions may include, for example, amending the Seller 401(k) Plan to permit a U.S. Transferred Employee to continue to make scheduled loan payments to the Seller 401(k) Plan after the Closing, but before the Seller 401(k) Plan assets and liabilities are transferred to the Buyer 401(k) Plan, and adopting administrative procedures to facilitate such loan payments.

 

Section 6.5            Treatment of Flexible Spending Accounts. Unless otherwise agreed to by Buyer and Seller, effective as of the Closing, Buyer shall, or shall cause one of its Affiliates to, have in effect a flexible spending account plan in which the U.S. Transferred Employees shall be eligible to participate (the “Buyer FSA Plan”). Effective on or as soon as practicable after the Closing, Seller shall transfer the account balances of the U.S. Transferred Employees from the applicable medical and dependent care account plans of Seller and its Affiliates (each, a “Seller FSA Plan”) to the Buyer FSA Plan, and Buyer shall be responsible for the obligations of the Seller FSA Plan to provide benefits to the U.S. Transferred Employees with respect to such transferred account balances at or after the Closing. Buyer shall continue to honor all payroll deductions as most recently elected by the U.S. Transferred Employee under the Seller FSA Plan for the remainder of the year in which the Closing occurs. Effective on or as soon as practicable after the Closing, (i) if the aggregate benefits paid by the Seller FSA Plan to the U.S. Transferred Employees prior to the Closing exceed the aggregate payroll deductions made in respect of the U.S. Transferred Employees at or prior to the Closing, then Buyer shall reimburse Seller for the amount of such excess or (ii) if the aggregate payroll deductions made in respect of the U.S. Transferred Employees at or prior to the Closing exceed the aggregate benefits paid by the Seller FSA Plan to the U.S. Transferred Employees prior to the Closing, then Seller shall reimburse Buyer for the amount of such excess.

 

Section 6.6            Treatment of Accrued Leave. Effective as of the Closing, Buyer shall, or shall cause one of its Affiliates to, assume or retain, as the case may be, all obligations of the Seller and its Affiliates (including the Transferred FH Companies and the Closing Subsidiaries) for the accrued and unpaid annual leave, vacation, and paid time off of the Employees except where, pursuant to applicable Law, Seller and its Affiliates are required to pay an accrued amount to an Employee in connection with Closing. For a period of one year following the Closing (or such longer period as is required by applicable Law), Buyer shall, or shall cause its Affiliates to, provide annual leave, vacation and paid time off benefits to Transferred Employees that are at least as favorable as those provided under the applicable programs of Seller and its Affiliates.

 

Section 6.7            Labor Consultations. Seller and its Affiliates shall, and Buyer and its Affiliates shall, cooperate fully in meeting any information and consulting obligations or otherwise discussing or negotiating with, relevant Employee Representatives. Seller shall complete, or cause to be completed, prior to the Closing, and Buyer shall assist and cooperate fully with Seller in causing to be completed, all notifications to, and all consultations with, employees, Employee Representatives, labor boards and relevant Governmental Authorities concerning the acquisition and the other transactions contemplated hereby whether an information or consulting obligation or otherwise pursuant to the Transfer Regulations or other applicable Law. Buyer and the Transferred FH Companies and the Closing Subsidiaries, jointly and severally, shall indemnify Seller against any Liability which arises out of a complaint or failure or alleged failure to provide applicable information or otherwise cooperate fully with Seller and its Affiliates in meeting any and all information and consultation obligations or in respect of any subsequent award of compensation in respect of a breach or alleged breach of the information and consultation obligations where that complaint or failure to act is primarily a result of an act or omission of Buyer or one of its Affiliates.

 

Section 6.8            WARN Act. Buyer, on behalf of itself and its Affiliates, agrees to provide any required notice under the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar applicable state, local, or foreign law or regulation requiring notice to employees in the event of a closing or layoff (the “WARN Act”) after the Closing Date, and to otherwise comply with the WARN Act with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act) or group termination or similar event affecting Employees (including as a result of the consummation of transactions contemplated by this Agreement) and occurring from and after the Closing. Buyer shall not, and shall not permit its Affiliates to, take any action on or after the Closing Date that would cause any termination of employment of any Employees by any member of the Seller or its Affiliates occurring prior to the Closing Date to constitute a “plant closing,” “mass layoff” or group termination or similar event under the WARN Act. On or before the Closing Date, Seller shall provide a list of the name and site of employment of any and all employees of Seller who have experienced, or will experience, an employment loss or layoff as defined by the WARN Act within ninety (90) days prior to the Closing Date. Seller shall update this list up to and including the Closing Date.

 

Section 6.9            Cooperation. Seller and Buyer and their respective Affiliates (including the Transferred FH Companies and the Closing Subsidiaries) shall use reasonable efforts to cooperate with each other to effectuate the provisions set forth in this Article VI relating to the transfer of the Employees and the transfer of applicable employment-related Assets and Liabilities, including by using reasonable efforts to cooperate to (i) exchange information related to Employees and their dependents and beneficiaries, including employment records and benefits information and any historic records needed to administer obligations under assumed pension plans and retiree plans and programs (subject in each case to the Seller’s reasonable, good faith determination that the exchange of such information is in compliance with all applicable employee data protection Laws), (ii) transfer the participation of Transferred Employees from Seller Benefit Plans to Buyer Plans where applicable, (iii) allow Employees to remain on medical coverage with Seller for a post-Closing transition period of ninety (90) days to facilitate Buyer’s providing comparable benefits, and (iv) encourage Employees to become Transferred Employees. Seller and Buyer and their respective Affiliates (including the Transferred FH Companies and their Closing Subsidiaries) shall mutually agree, in good faith, to reasonable processes, procedures and/or documentation relating to any material employee communications following the date hereof in relation to the Sale, including matters addressed in this Article VI. Buyer shall, or shall cause on of its Affiliates to, provide Seller with information reasonably requested by Seller to allow Seller to evaluate in good faith whether the obligations of Buyer set forth in this Article VI, including Section 6.2, have been satisfied.

 

Section 6.10        No Third Party Beneficiaries. Seller and Buyer acknowledge and agree that all provisions contained in this Article VI are included for the sole benefit of Seller and Buyer and nothing contained herein shall (i) be construed as an amendment to any employee benefit plan or program, (ii) create any third-party beneficiary or other rights in any other person, including any employee or former employee of Seller or Buyer or their respective Affiliates, or dependent or beneficiary thereof, or (iii) otherwise obligate Seller or Buyer or any of their respective Affiliates to maintain any particular employee benefit plan or retain the employment of any particular employee following the Closing. Sections 6.2 and 6.6 shall not apply to Employees outside the United States and no provision of this Article VI shall apply to the extent such sections conflict with any applicable Law or any CBA, but Buyer shall instead interpret and apply such sections as necessary to comply with applicable Law and applicable contracts (including, as applicable, any CBAs that transfer).

 

ARTICLE VII


TAX MATTERS

 

Section 7.1            Straddle Periods.

 

(a)                Buyer and Seller agree that they will treat the Transferred FH Companies and the Closing Subsidiaries as if they ceased to be part of the Seller’s “affiliated group” (within the meaning of Section 1504 of the Code, and any comparable or similar provision of state, local or foreign Laws), as of the close of business on the Closing Date. Buyer and Seller agree that if any Transferred FH Company or Closing Subsidiary is permitted but not required under applicable foreign, state or local Tax Laws to treat the Closing Date as the last day of a taxable period, Buyer and Seller shall treat such day as the last day of a taxable period; provided, however, and without affecting the provisions of Section 7.1(b), Seller shall not be required to treat the Closing Date as the last day of the taxable period of any Transferred FH Company or Closing Subsidiary to the extent that such treatment would materially increase the Tax liability of Seller, the applicable FH Share Seller or such Transferred FH Company or Closing Subsidiary in each case attributable to the Pre-Closing Tax Period.

 

(b)               In the case of any taxable period that includes (but does not end on) the Closing Date (a “Straddle Period”), the determination of Taxes attributable to the Pre-Closing Tax Period and the Post-Closing Tax Period shall be made by assuming that the Straddle Period ended on the Closing Date (and for such purpose, the taxable period of any partnership or other pass-through entity will be deemed to terminate at such time), except that (1) exemptions, allowances or deductions that are calculated on an annual basis and (2) Taxes (such as real or personal property Taxes) that are imposed on a periodic basis, in each case, shall be prorated on the basis of the number of days in the Pre-Closing Tax Period as compared to the number of days in the Post-Closing Tax Period. Taxes attributable to Subpart F income, determined in accordance with Section 952 of the Code, of a Transferred FH Company or Closing Subsidiary that is characterized as a foreign corporation for U.S. federal income tax purposes for the taxable year including the Closing Date shall be allocated between the Pre-Closing Tax Period and the Post-Closing Tax Period assuming that the taxable year of the Transferred FH Company or Closing Subsidiary terminated on the Closing Date.

 

Section 7.2            Tax Returns.

 

(a)                Except as provided in Section 7.4 hereof, Seller shall (at its own expense) prepare, or cause to be prepared, and file or cause to be filed, when due, (i) all Tax Returns for any Affiliated Group of which any Transferred FH Company or Closing Subsidiary is a member that also includes Seller or any of its Subsidiaries or Affiliates), (ii) all Tax Returns of the FH Asset Sellers, (iii) all income Tax Returns of the Transferred FH Companies and Closing Subsidiaries for any Pre-Closing Tax Period (other than a Straddle Period), and (iv) all other Tax Returns of the Transferred FH Companies and Closing Subsidiaries required to be filed (taking into account extensions) prior to the Closing Date. Buyer shall and shall cause the Transferred FH Companies and their Closing Subsidiaries to cooperate with, and take any action reasonably requested by, Seller with respect to the preparation and filing of such Tax Returns. The immediately preceding sentence shall, in no way, be construed as limiting or otherwise modifying the rights and obligations of the parties under Section 7.6 hereof. With respect to any such Tax Returns filed after the Closing Date, such Tax Returns shall be prepared in a manner consistent with the past practice of Seller and its Subsidiaries and their Affiliates unless otherwise required by Law, and Seller shall provide drafts of such Tax Returns (or in the case of Tax Returns of an Affiliated Group, pro forma versions of such Tax Returns reflecting only the items of the Transferred FH Companies and Closing Subsidiaries) to Buyer at least forty-five (45) days prior to the due date for filing such Tax Returns in the case of income Tax Returns, and in such period of time prior to filing as Seller shall reasonably determine to be practicable in the case of other Tax Returns. Buyer shall provide any comments to Seller with respect to such Tax Returns within fifteen (15) days of Buyer’s receipt thereof (or as soon as reasonably practicable if such Tax Return was provided for review less than thirty (30) days prior to filing), and Seller shall incorporate all reasonable comments provided by Buyer.

 

(b)               Except as provided in Section 7.4 hereof, Buyer shall (at its own expense) prepare, or cause to be prepared and file or cause to be filed, when due, all Tax Returns with respect to the Transferred FH Companies and their Closing Subsidiaries or the Acquired FH Assets required to be filed, other than those described in Section 7.2(a) hereof, and each such Tax Return with respect to any Pre-Closing Tax Period shall be prepared in a manner consistent with the past practice of the Transferred FH Companies and Closing Subsidiaries unless otherwise required by Law. If Seller may be required to indemnify Buyer pursuant to Section 9.4(a), in respect of Taxes shown on any such Tax Return, Buyer shall provide drafts of such Tax Return to Seller at least forty-five (45) days prior to the due date for filing such Tax Return in the case of income Tax Returns, and in such period of time prior to filing as Buyer shall reasonably determine to be practicable in the case of other Tax Returns. Seller shall provide any comments to Buyer with respect to such Tax Returns within fifteen (15) days of Seller’s receipt thereof (or as soon as reasonably practicable if such Tax Return was provided for review less than thirty (30) days prior to filing), and Buyer shall incorporate all reasonable comments provided by Seller.

 

(c)                If for any reason the Buyer or Seller does not agree with any of the comments provided by the other party pursuant to Section 7.2(a) or Section 7.2(b), the Buyer or Seller, as applicable, shall notify the other party of its disagreement within fifteen (15) days of receiving such comments. Seller and Buyer shall negotiate in good faith to resolve any disputes over such Tax Returns for fifteen (15) days. Any disputes over such Tax Returns that cannot be resolved through negotiations between Buyer and Seller shall be taken to the Independent Accountants. Notwithstanding the foregoing, neither Buyer nor Seller shall be obligated to take any position on any such Tax Returns that the Independent Accountants do not determine to be at least more likely than not to be sustained by a court of law if challenged; provided, however, that the foregoing limitation shall not apply and Buyer or Seller shall be required to take any such position if the other party (at its expense) provides an opinion (or other written advice or evidence) to Buyer or Seller, as the case may be, from a nationally recognized law or accounting firm, which opinion (or other written advice or evidence) is reasonably satisfactory to the party to which it is provided, concluding that such position is at least more likely than not to be sustained by a court of law if challenged. The costs and expenses of the Independent Accountants shall be borne by Buyer and Seller, respectively, in the proportion that the aggregate dollar amount of the items that are unsuccessfully disputed by Buyer or Seller, as the case may be, (as finally determined by the Independent Accountants) bears to the aggregate dollar amount of the items submitted to the Independent Accountants.

 

Section 7.3            Contest Provisions.

 

(a)                Notification of Contests. Seller and its Affiliates, on the one hand, and Buyer and its Affiliates, on the other hand (the “Recipient”), shall notify the other party in writing within ten (10) Business Days of receipt by the Recipient of written notice of any pending or threatened audits, adjustments, assessments, examinations or proceedings (whether judicial or administrative) which may affect the liability for Taxes of such other party or may give rise to an indemnification payment under Section 9.4(a) or Section 9.4(b) by such other party (a “Tax Audit”); provided, that failure to give such notice (or the provision of notice that is not in sufficient detail to notify the other party of the nature of the Tax Audit) shall not void any indemnification obligation hereunder except to the extent such failure to give proper notice materially adversely affects the other party’s right to participate in and contest the Tax Audit.

 

(b)               Control of Tax Audits.

 

(i)                 In the case of any Tax Audit of (A) any Tax Return prepared and filed by Seller or required to be prepared and filed by Seller hereunder and, or (B) any Tax Return in respect of any Straddle Period which Tax Audit relates primarily to Taxes for which Seller is liable hereunder, Seller may assume the defense of such Tax Audit by providing written notice to Buyer within fifteen (15) days of the receipt of the notice required under Section 7.3(a). Subject to Section 7.3(b)(iii), Buyer may observe, at its own expense, the defense of such Tax Audit and employ counsel of its choice at its expense and Seller shall keep Buyer informed regarding the progress and substantive aspects of such Tax Audit and, upon the reasonable request Buyer, shall consult with Buyer from time to time regarding the conduct of such Tax Audit. If Seller does not assume the defense of any such Tax Audit, Buyer shall defend such Tax Audit in accordance with the provisions of Section 7.3(b)(ii) and shall not settle or otherwise dispose of such Tax Audit without Seller’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

 

(ii)               Except as provided in Section 7.3(b)(i), and Section 7.3(b)(iii), Buyer shall control all Tax Audits; provided that (i) Buyer shall keep Seller informed regarding the progress and substantive aspects of any issues in such Tax Audit for which Seller may have liability pursuant to this Agreement or be entitled to a payment pursuant to Section 7.5, (ii) Seller shall be entitled to participate in such Tax Audit with respect to any issues for which Seller may have liability pursuant to this Agreement and (iii) Buyer shall not settle or otherwise dispose of any issues in such Tax Audit for which the Seller may have liability pursuant to this Agreement, without obtaining Seller’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed).

 

(iii)             Notwithstanding any other provision of this Agreement to the contrary, Buyer shall not be entitled to participate in any Tax Audit relating to any consolidated, combined, affiliated or unitary Tax Return that includes the Seller or any of its Affiliates. If any Tax Audit controlled by Seller pursuant to Section 7.3(b)(i) may have the effect of materially increasing the Tax liability of Buyer, the Transferred FH Companies, any Closing Subsidiary, or any other Subsidiary or Affiliate of Buyer for any Post-Closing Tax Period and for which the Buyer Indemnified Parties would not have a right to indemnification hereunder, Seller shall not settle or otherwise dispose of any such Tax Audit without Buyer’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed).

 

Section 7.4            Transfer Taxes. Notwithstanding any other provision of this Agreement, all Taxes with respect to any excise, sales, use, transfer (including real property transfer), stamp, documentary, filing, recordation and other similar Taxes arising directly or indirectly from the signing of this Agreement or Closing (including, for the avoidance of doubt, those arising pursuant to the Local Purchase Agreements) (“Transfer Taxes”) shall be borne fifty percent (50% by Buyer and fifty percent (50%) by Seller. The Parties shall (i) file any Tax Returns required to be filed for purposes of any Transfer Taxes as a result of signing of this Agreement or Closing (including, for the avoidance of doubt, those arising pursuant to the Local Purchase Agreements) and (ii) cooperate as reasonably requested by the other party and keep each other reasonably informed in relation to any Transfer Taxes. For the avoidance of doubt, Transfer Taxes shall not include VAT described in Section 7.10.

 

Section 7.5            Certain Post-Closing Settlement Payments and Post-Closing Actions.

 

(a)                Refunds and Credits. Seller shall be entitled to any Tax refunds that are received by Buyer and any amounts credited against Tax to which the Buyer, the Transferred FH Companies or their Closing Subsidiaries become entitled (including as a result of any amended Tax Returns) that relate to the Transferred FH Companies or their Closing Subsidiaries for all Pre-Closing Tax Periods or that are subject to indemnification by Seller pursuant to this Agreement (including, for the avoidance of doubt, refunds or credits in respect of VAT attributable to a Pre-Closing Tax Period), to the extent such refunds or credits were not taken into account in determining Final Net Working Capital and are not attributable to the carryback of a net operating loss of any Transferred FH Company or Closing Subsidiary generated in a Post-Closing Tax Period. Buyer shall transfer, or cause to be transferred, to Seller, within ten (10) days of receipt, the amount of the refund or credit (including interest) received or utilized by Buyer, the Transferred FH Companies or any of their Closing Subsidiaries, or any of their respective Affiliates, net of any reasonable out-of-pocket costs incurred in obtaining such refund or credit and any Taxes borne by Buyer, the Transferred FH Companies or any of their Closing Subsidiaries, or any of their respective Affiliates as a direct result of their receipt of such refund or utilization of any such credit. Buyer shall claim any such refund or to utilize any such credit as soon as reasonably possible upon Seller’s written request. Buyer agrees to furnish to Seller all information, records and assistance reasonably requested by Seller to verify the amount of the refund or credit, provided that Buyer shall not be required to furnish to Seller any consolidated, combined, affiliated or unitary Tax Return that includes Buyer or any Subsidiary or Affiliate of Buyer other than the Transferred FH Companies or any of their Closing Subsidiaries. The amount of economic benefit of any such refunds or credits of the Transferred FH Companies and their Closing Subsidiaries for any Straddle Period shall be equitably apportioned between Seller and Buyer in a manner consistent with Section 7.1 hereof.

 

(b)               Pre-Closing Tax Returns. None of Buyer, the Transferred FH Companies or their Closing Subsidiaries or any of their Affiliates shall amend any Tax Return prepared and filed by Seller pursuant to Section 7.2(a) hereof without the prior written consent of Seller (which shall not be unreasonably withheld, conditioned or delayed).

 

(c)                Post-Closing Actions. After the Closing, none of Buyer or its Affiliates and the Transferred FH Companies or their Closing Subsidiaries or any of their respective Affiliates shall make or change any Tax election or take any other action relating in whole or in part to the Transferred FH Companies or their Closing Subsidiaries or agree to the waiver or extension of the statute of limitations with respect to Taxes of the Transferred FH Companies or their Closing Subsidiaries, in each case with respect to a Pre-Closing Tax Period and that would have retroactive effect in a Pre-Closing Tax Period, without the prior written consent of Seller (which shall not be unreasonably withheld, conditioned or delayed).

 

Section 7.6            Mutual Cooperation. Seller and Buyer shall, and each shall cause its Affiliates to, cooperate with each other in paying any Taxes, filing any Tax Return and conducting any Tax Audit (including any judicial or administrative proceeding) contemplated by this Agreement and, except as set forth to the contrary in this Agreement, take such action as the other party may reasonably request including the following: (a) provide data for the preparation of any Tax Return, including schedules; (b) provide required documents and data and cooperate in any Tax Audit or investigation of any Tax Return and execute appropriate powers of attorney in favor of the other party and/or its agents; (c)  execute Tax Returns or other documents reasonably required by the other party; (d) take any of the actions of the type described in Treasury Regulation Section 1.1502-77(a), which describes the scope of the agency of the common parent of a group of affiliated corporations; (e) provide complete access to, and comply with reasonable requests for copies of, all Tax Returns, books and records, data, documents, work papers, materials and other information relating to the Taxes of the Transferred FH Companies or their Closing Subsidiaries for any taxable period; (f) make reasonably available to each other, its officers, directors, employees and agents for any fact finding, consultation and discussions related to the preparation and filing of any Tax Return, the conduct of any Tax Audit (including any judicial or administrative proceeding), and any other matter with respect to Taxes; (g) execute such powers of attorney as are reasonably requested and required by Seller or any of Seller’s Affiliates or Buyer or any of Buyer’s Affiliates on behalf of, as the case may be, Buyer or any of Buyer’s Affiliates or Seller or any of Seller’s Affiliates to enable the requesting party to represent the other party in a Tax Audit involving a Tax for which the requesting party is liable under applicable Law; and (h) take any action reasonably necessary to obtain and provide any receipts or other proof of payment form any Tax Authority with respect to Taxes that are the subject of this Agreement. Notwithstanding anything to the contrary contained herein, neither Seller nor any of its Affiliates shall be required to disclose to Buyer or any of its Affiliates any consolidated, combined, unitary, or other similar Tax Return of which Seller or its Affiliates is the common parent (other than a Transferred FH Company or a Closing Subsidiary) or any information related to Taxes or Tax Returns other than information relating solely to the Transferred FH Companies, the Closing Subsidiaries and the Acquired FH Assets. Seller and Buyer hereby agree to reimburse each other for reasonable out-of-pocket expenses (excluding officers’ or employees’ salaries and general corporate overhead and other similar expenses) incurred by the other in connection with satisfying its obligations under this Section 7.6.

 

Section 7.7            Maintenance of Books and Records. Until the applicable statute of limitation (including periods of waiver) has expired for any Tax Return filed or required to be filed with respect to the Transferred FH Companies, the Closing Subsidiaries, or the Acquired FH Assets covering Pre-Closing Tax Periods (including any Straddle Periods), each of Buyer and Seller and their respective Affiliates shall retain all Tax work papers and related materials in its possession and under its control that were used in the preparation of any such Tax Return. Each party will notify the other party sixty (60) days prior to disposing of any Tax records relating to Pre-Closing Tax Periods and will deliver to such other party any such records requested by such party.

 

Section 7.8            Section 338(g) Election and related Matters.

 

(a)                Buyer shall not, without the prior written consent of Seller (which may not be unreasonably withheld, conditioned or delayed), make or file an election under Section 338(g) of the Code (or any similar provision of the law of any state or other taxing jurisdiction) with respect to the Transferred FH Companies or any of their Closing Subsidiaries in connection with the transactions contemplated by this Agreement; provided, however, Buyer shall make or cause to be made such timely and effective election or elections with respect to Colfax Pompe SpA. Buyer and Seller shall cooperate in good faith to determine, as soon as reasonably practicable after the Closing, for which Transferred FH Companies and their Closing Subsidiaries a Section 338(g) election shall be made.

 

(b)               With respect to any of the Transferred FH Companies or their respective Closing Subsidiaries that is characterized as a foreign corporation for U.S. federal income tax purposes from the Closing Date through the end of the taxable period of such entity that includes the Closing Date, other than any such Transferred FH Company or Closing Subsidiary for which an election under Section 338(g) of the Code was made in compliance with Section 7.8(a), without the prior written consent of Seller (which may not be unreasonably withheld, conditioned or delayed), Buyer shall not, and shall cause its Affiliates (including the Transferred FH Companies and their respective Closing Subsidiaries) not to, (i) take any action that changes the entity classification under Treasury Regulation Section 301.7701-3 of any such Transferred FH Companies or Closing Subsidiaries, or (ii) otherwise take any action or enter into any transaction that may be considered under the Code to constitute the payment of an actual or deemed dividend by such Transferred FH Company or its Closing Subsidiary, including pursuant to Section 304 of the Code.

 

Section 7.9            Section 338(h)(10) Election.

 

(a)                With respect to the purchase and sale of Colfax Fluid Handling Reliability Services Company, Seller and Buyer shall, in the manner described herein, make an election pursuant to Section 338(h)(10) of the Code (and the Treasury Regulations and administrative pronouncements thereunder) and any comparable provision of state, local or foreign Tax Law (collectively, a “Section 338(h)(10) Election”). At least ten (10) days prior to the Closing Date, Seller and Buyer shall agree on the form and content of the IRS Form 8023 (the “Form 8023”) and any analogous forms on which the Section 338(h)(10) Election shall be made and at or prior to the Closing, Seller shall deliver to Buyer, and Buyer shall deliver to Seller, the properly executed and mutually agreed upon Form 8023 and any analogous forms containing information then available, which Seller shall file, or cause to be filed, with the IRS not later than thirty (30) days following the Closing Date. With respect to the Section 338(h)(10) Election, Seller and Buyer shall cooperate with each other to take all other actions necessary and appropriate (including filing such forms, returns, elections, schedules and other documents as may be required) to effect, perfect and preserve such election in accordance with the provisions of Treasury Regulation Section 1.338(h)(10)-1 (and any comparable provisions of state, local or foreign Tax Law) or any successor provisions. Seller and Buyer shall file all Tax Returns in a manner consistent with the Section 338(h)(10) Election and shall not take any position contrary thereto.

 

Section 7.10        VAT. The purchase price shall be exclusive of VAT and if VAT is properly charged or chargeable upon Seller or any of its Affiliates, Buyer shall pay Seller (in addition to the purchase price) the amount of such VAT within five (5) Business Days of receipt of a VAT invoice pursuant to applicable local Laws.

 

Section 7.11        Withholding Taxes. Notwithstanding any other provision in the Transaction Documents, Buyer shall have the right to deduct and withhold Taxes from any payments to be made hereunder if such withholding is required by Law and to collect any necessary Tax forms, including Forms W-8 or W-9, as applicable, or any similar information, from Seller and any other recipients of payments hereunder; provided, however, that if Buyer or Seller becomes aware that any amount is required to be so withheld, it shall promptly notify the other party of any such required withholding and the parties shall cooperate which each other in good faith to minimize or eliminate such withholding Taxes. Any amounts so withheld shall be timely paid over to the applicable Tax Authorities and the party withholding any such amounts shall promptly provide evidence of such payment to the other party. To the extent that amounts are so withheld and paid to the applicable Tax Authorities, such withheld amounts shall be treated for all purposes of the Transaction Documents as having been delivered and paid to Seller or any such other recipient of payments in respect of which such deduction and withholding was made.

 

Section 7.12        Miscellaneous.

 

(a)                Termination of Existing Tax Sharing Agreements. Seller hereby agrees and covenants that any Tax Sharing Agreement to which any of the Transferred FH Companies and their Closing Subsidiaries is a party (other than such a Tax Sharing Agreement among exclusively Transferred FH Companies and their Closing Subsidiaries) will cease to apply to the Transferred FH Companies and their Closing Subsidiaries as of the Closing Date, and, after the Closing Date, Buyer, the Transferred FH Companies, their Closing Subsidiaries and their Affiliates shall not be bound thereby or have any liability thereunder for amounts due in respect of periods ending on or before the Closing Date.

 

(b)               Interpretation. To the extent that there is a conflict between any provision of this Article VII and any other provision of this Agreement that otherwise would be applicable with respect to any Taxes, Tax Returns, Tax Audits, Tax indemnification claims or any other matter related to Taxes, the provisions of this Article VII shall govern.

 

(c)                Purchase Price Adjustment. Except to the extent otherwise required by applicable Law any payment made pursuant to this Article VII or Section 9.4 shall be treated as an adjustment to purchase price for all Tax purposes. Each of Buyer and Seller shall notify the other party if it (or its Affiliate) receives notice that any Tax Authority proposes to treat any indemnity payment under this Agreement as other than an adjustment to the purchase price for Tax purposes.

 

ARTICLE VIII


CONDITIONS TO THE SALE

 

Section 8.1            Mutual Conditions. The respective obligations of each party hereto to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment at or prior to the Closing of each of the following conditions:

 

(a)                No Injunction or Proceeding. No statute, rule, regulation, executive order, decree, preliminary or permanent injunction or restraining order shall have been enacted, entered, promulgated or enforced by any Governmental Authority which prohibits or restricts the consummation of the Sale and remains in effect; and

 

(b)               Required Antitrust Approvals. The Required Antitrust Approvals shall have been obtained, waived or made, as applicable, and the respective waiting periods required in connection with Required Antitrust Approvals shall have expired or been terminated.

 

Section 8.2            Conditions to the Obligations of Seller to Effect the Sale. The obligation of Seller to effect the Sale and the other transactions contemplated hereby shall be subject to the fulfillment, or written waiver by Seller, at or prior to the Closing of each of the following conditions:

 

(a)                Representations and Warranties. Each of the representations and warranties of Buyer contained in Section 4.1 (Corporate Organization and Standing), Section 4.2 (Authority Relative to this Agreement, Etc.), Section 4.3(e) (Issuance of Buyer Stock Consideration) and Section 4.4(a) (Absence of Conflicts with Organizational Documents) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (provided that representations and warranties made as of a specified date shall be true and correct only as of such specified date). The representations and warranties of Buyer in Section 4.3(a) (Capitalization) shall be true and correct (other than for de minimis inaccuracies) as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (provided that representations and warranties made as of a specified date shall be true and correct (other than for de minimis inaccuracies) only as of such specified date). The representations and warranties of Buyer contained in Article IV (other than the representations and warranties specified in the foregoing sentences) shall be true and correct (disregarding any materiality or Buyer Material Adverse Effect qualification set forth therein) as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (provided that representations and warranties made as of a specified date, shall be true and correct (disregarding any materiality or Buyer Material Adverse Effect qualification set forth therein) only as of such specified date), except where the failure to be true and correct, individually or in the aggregate, would not have a Buyer Material Adverse Effect.

 

(b)               Performance by Buyer. Buyer shall have performed and complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Buyer on or prior to the Closing.

 

(c)                Certificates. Buyer shall have furnished Seller with a certificate signed by its Chief Executive Officer and its Chief Financial Officer to the effect that the conditions set forth in Section 8.2(a) and Section 8.2(b) hereof have been satisfied.

 

(d)               No Buyer Material Adverse Effect. Since the date of this Agreement, there shall not have occurred and be continuing a Buyer Material Adverse Effect.

 

(e)                Buyer Stock Consideration. The shares of Buyer Common Stock constituting the Buyer Stock Consideration shall have been approved for listing on the NYSE.

 

(f)                Closing Deliverables. Seller shall have received (i) the items contemplated by Section 2.2(c)(i), (ii) the Local Purchase Agreements, (iii) the Transition Services Agreement, (iv) the Stockholder Agreement, and (v) the instrument of assumption contemplated by Section 2.2(c)(ii), in each case, to the extent applicable, duly executed by Buyer or its applicable Subsidiary.

 

Section 8.3            Conditions to the Obligations of Buyer to Effect the Sale. The obligation of Buyer to effect the Sale and the other transactions contemplated hereby shall be subject to the fulfillment, or written waiver by Buyer, at or prior to the Closing of each of the following conditions:

 

(a)                Representations and Warranties of Seller. Each of the representations and warranties of Seller contained in Section 3.1(a) (Organization, Etc.) (excluding the first sentence of Section 3.1(a) (Organization, Etc.)), Section 3.2 (Authority Relative to this Agreement, Etc.) and Section 3.4 (Consents and Approvals; No Violations) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (provided that representations and warranties made as of a specified date, shall be true and correct only as of such specified date). The representations and warranties of Seller in Section 3.3(a), (b) and (c) (Capitalization) shall be true and correct (other than immaterial inaccuracies) as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (provided that representations and warranties made as of a specified date shall be true and correct (other than immaterial inaccuracies) only as of such specified date). The representations and warranties of Seller contained in Article III (other than the representations and warranties specified in the foregoing sentence) shall be true and correct (disregarding any materiality or Material Adverse Effect qualification set forth therein) as of the date of this Agreement and as of the Closing Date as though made on the Closing Date (provided that representations and warranties made as of a specified date, shall be true and correct (disregarding any materiality or Material Adverse Effect qualification set forth therein) only as of such specified date), except where the failure to be true and correct, individually or in the aggregate, and would not have a Material Adverse Effect.

 

(b)               Performance by Seller. Seller shall have performed and complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by them on or prior to the Closing. For the avoidance of doubt, Seller shall not be obligated to provide fiscal quarter and fiscal year financial statements pursuant to Sections 5.25(a)(iii) and (a)(iv) at or prior to the Closing to the extent the 45-day or 90-day period, as applicable, will end on a date following the Closing; provided that Seller shall provide such financial information within the permitted time period following Closing.

 

(c)                Certificates. Seller shall have furnished Buyer with such certificate signed by its Chief Executive Officer and its Chief Financial Officer to the effect that the conditions set forth in Section 8.3(a) and Section 8.3(b) hereof have been satisfied.

 

(d)               No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred and be continuing a Material Adverse Effect.

 

(e)                No Litigation. There shall not be pending by any Governmental Authority any Action that seeks to prohibit or restrict the consummation of the Sale.

(f)                Pre-Closing Restructuring Transactions. The Pre-Closing Restructuring Transactions shall have been completed.

 

(g)               Closing Deliverables. Buyer shall have received (i) the items contemplated by Section 2.2(b)(i), (ii) the bill of sale contemplated by Section 2.2(b)(ii), (iii) the Local Purchase Agreements, (iv) the Transition Services Agreement, (v) the Stockholder Agreement, and (vi) the instrument of assumption contemplated by Section 2.2(b)(vii), in each case, to the extent applicable, duly executed by Seller or its applicable Subsidiary.

 

(h)               Seller Lender Consent. Buyer shall have received the Seller Lender Consent.

 

ARTICLE IX


TERMINATION AND ABANDONMENT; INDEMNIFICATION

 

Section 9.1            Termination. This Agreement may be terminated at any time prior to the Closing:

 

(a)                by mutual written consent of Seller and Buyer;

 

(b)               by Seller or Buyer if the Closing shall not have occurred by 11:59 p.m., New York City time, on March 26, 2018 (the “Outside Date”); provided, that if on the Outside Date the conditions to the Closing set forth in Section 8.1(b) shall not have been satisfied but all other conditions to the Closing shall be satisfied or waived (other than those conditions that, by their nature, are to be satisfied at the Closing (provided such conditions would be satisfied as of such date)), then either party shall have the right to extend the Outside Date to 11:59 p.m., New York City time, on June 25, 2018 by notifying the other party in writing of such election before the Outside Date; provided, further, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement in any material respect shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date;

 

(c)                by Seller or Buyer if any Governmental Authority shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting any material portion of the transactions contemplated hereunder and such order, decree, ruling or other action shall have become final and nonappealable; provided that the right to terminate this Agreement under this Section 9.1(c) shall not be available to any party whose failure to fulfill any obligation under this Agreement in any material respect shall have been the cause of, or shall have resulted in, such order, decree, ruling or other action;

 

(d)               by Buyer upon written notice to Seller, if there shall have been a breach of any of the representations, warranties, agreements or covenants set forth in this Agreement on the part of Seller that would cause any condition set forth in Section 8.1 or Section 8.3 not to be fulfilled, such breach has not been waived by Buyer, and, if capable of being cured by the Outside Date, the breach has not been cured within 30 days following Buyer’s written notice of such breach; provided, however, that the right to terminate this Agreement under this Section 9.1(d), if not exercised, shall terminate 60 days following delivery of such written notice; provided, further, that the right to terminate this Agreement under this Section 9.1(d) shall not be available to Buyer if it is then in material breach of any representation, warranty, covenant, or other agreement contained herein;

 

(e)                by Seller upon written notice to Buyer, if there shall have been a breach of any of the representations, warranties, agreements or covenants set forth in this Agreement on the part of Buyer that would cause any condition set forth in Section 8.1 or Section 8.2 not to be fulfilled, such breach has not been waived by Seller, and, if capable of being cured by the Outside Date, the breach has not been cured within 30 days following Seller’s written notice of such breach; provided, however, that the right to terminate this Agreement under this Section 9.1(e), if not exercised, shall terminate 60 days following delivery of such written notice; provided, further, that the right to terminate this Agreement under this Section 9.1(e) shall not be available to Seller if it is then in material breach of any representation, warranty, covenant, or other agreement contained herein; or

 

(f)                by Seller upon written notice to Buyer, if the conditions set forth in Section 8.1 and Section 8.3 (other than those conditions that, by their nature, are to be satisfied at the Closing (provided such conditions would have been satisfied as of such date) or those conditions the failure of which to be satisfied is attributable primarily to a material breach by Buyer of its representations, warranties, covenants or agreements contained in this Agreement), Seller confirms in a written notice delivered to Buyer that Seller is prepared to and able to, and will, consummate the Closing on the date on which the Closing is required to occur pursuant to Section 2.2(a) and Buyer fails to consummate the Closing on such date.

 

Notwithstanding the foregoing, the parties agree that neither party shall have the right to terminate this Agreement pursuant to Section 9.1(b) during the pendency of a legal proceeding by a party hereto for specific performance pursuant to Section 10.7.

 

Section 9.2            Procedure and Effect of Termination.

 

(a)                In the event of termination of this Agreement pursuant to Section 9.1 hereof, written notice thereof shall forthwith be given to the other party, and, except as set forth in this Section 9.2, this Agreement and any Local Purchase Agreement as of the date of such termination shall terminate and be void and have no effect and the transactions contemplated hereby shall be abandoned; provided, that if (x) such termination shall (I) result from the Intentional Breach of any representation, warranty, covenant or other agreement contained herein or (II) occur following an Intentional Breach or (y) the Intentional Breach of any representation, warranty, covenant or other agreement contained herein shall cause the Closing not to occur, then, except as otherwise provided in Section 9.2(b), such breaching party shall be fully liable for any and all damages incurred or suffered by the other party as a result of such failure or breach. If this Agreement is terminated as provided herein:

 

(i)                 each party hereto will redeliver, and will cause its agents (including attorneys and accountants) to redeliver, all documents, work papers and other material of each party hereto relating to the transactions contemplated hereby, whether obtained before or after the execution hereof;

 

(ii)               all Information received by Buyer with respect to the business, operations, Assets or financial condition of Seller or its Subsidiaries shall remain subject to the Confidentiality Agreement;

 

(iii)             notwithstanding the termination hereof, the Confidentiality Agreement, and the following Sections of this Agreement shall remain in full force and effect: (A) Section 3.17 and Section 4.5 relating to brokers, (B) the penultimate sentence of Section 5.2 relating to confidentiality matters, (C) Section 5.19(g), (D) Section 9.1 and this Section 9.2 and (E) Article X.

 

(b)               In the event Seller shall terminate this Agreement in accordance with Section 9.1(f), Buyer shall pay, or cause to be paid, to Seller an amount equal to $50,000,000 (the “Reverse Termination Fee”) by wire transfer of immediately available funds to an account designated in writing by Seller not later than the second (2nd) Business Day following such termination, it being understood that in no event shall the Reverse Termination Fee be payable on more than one occasion. The parties agree that, in the circumstances in which the Reverse Termination Fee is payable, the Reverse Termination Fee is liquidated damages and not a penalty, and the payment of the Reverse Termination Fee in such circumstances is supported by due and sufficient consideration.

 

(c)                The parties acknowledge that the agreements contained in this Section 9.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the parties would not enter into this Agreement; accordingly, if Buyer fails to promptly pay the amount due pursuant to Section 9.2(b), and, in order to obtain such payment, Seller commences a suit that results in a judgment against Buyer for the amount set forth in Section 9.2(b) or any portion thereof, Buyer shall pay to Seller’s designee its reasonable out-of-pocket costs and expenses (including attorneys’ fees) incurred in connection with such suit.

 

(d)               Subject to Seller’s right to seek specific performance pursuant to Section 10.7 and any order pursuant thereto, in any circumstance in which Seller is permitted to terminate this Agreement pursuant to Section 9.1(f) and receive the Reverse Termination Fee pursuant to Section 9.2(b), Seller’s termination of this Agreement pursuant to Section 9.1(f) and receipt of the Reverse Termination Fee from Buyer pursuant to Section 9.2(b) shall be the sole and exclusive remedy of Seller and its Affiliates against Buyer, the Financing Sources and the Financing Related Parties and any of their respective, direct or indirect, former, current or future general or limited partners, stockholders, managers, members, directors, officers, Affiliates, employees, agents, other Representatives or assignees (collectively, with the Buyer, the “Buyer Related Parties”) for any loss suffered as a result of any breach of any representation, warranty, covenant or agreement in this Agreement, the transactions contemplated hereby or the Debt Commitment Letter, and upon such termination by Seller and receipt of the Reverse Termination Fee, none of the Buyer Related Parties shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby or the Debt Commitment Letter (except that Buyer shall remain obligated for, and Seller and its Subsidiaries may be entitled to remedies with respect to, any breach of the Confidentiality Agreement and any reimbursement obligations of Buyer pursuant to Section 9.2(c)), whether in equity or at law, in contract, in tort or otherwise.

 

Section 9.3            Survival of Representations, Warranties and Covenants. The representations and warranties contained herein shall survive the Closing and shall thereupon terminate on the one year anniversary of the Closing Date; provided, that (a) Seller Fundamental Representations and the Buyer Fundamental Representations shall survive the Closing for a period of five (5) years; (b) the representations and warranties set forth in Section 3.10 (Taxes) shall survive and remain in full force and effect until ninety (90) days following the expiration of the relevant statute of limitations (including all extensions or waivers thereof); and (c) the representations and warranties set forth in Section 3.13 (Environmental Matters) shall survive the Closing for a period of four (4) years. All covenants and agreements contained herein which by their terms contemplate actions or impose obligations following the Closing shall survive the Closing and remain in full force and effect in accordance with their terms (or indefinitely if no term is set forth in any such covenant or agreement); provided, that for the avoidance of doubt, (x) the obligations of Buyer to assume, and to indemnify Seller Indemnified Parties for, the Assumed Liabilities and (y) the obligations of Seller to retain, and indemnify Buyer Indemnified Parties for, the Retained Liabilities shall in each case survive the Closing indefinitely. All other covenants and agreements contained herein shall not survive the Closing and shall thereupon terminate.

 

Section 9.4            Indemnification.

 

(a)                From and after Closing, and subject to Section 9.3 and this Section 9.4, Seller shall defend, indemnify and hold harmless Buyer and its Subsidiaries and each of their Affiliates and each of Buyer’s, its Subsidiaries’, and its Affiliates’ respective officers, directors, employees, and agents (collectively, the “Buyer Indemnified Parties”) from and against and will compensate and reimburse Buyer for (regardless of whether such Losses relate to any Third Party Claim) any (i) Losses (other than indemnification related to Taxes) to the extent arising from or directly relating to, (A) the failure of Seller to duly perform or observe any covenant or agreement to be performed or observed by Seller pursuant to this Agreement (the remedy for which survives the Closing), (B) any of the Retained Liabilities, (C) any breach of any representation or warranty of Seller set forth in Article III of this Agreement or in the certificate delivered by Seller pursuant to Section 8.3(c), (D) any Indebtedness of any Transferred FH Company or Closing Subsidiary as of immediately prior to the Closing (other than any Indebtedness incurred pursuant to the Debt Financing), and (E) any of the Pre-Closing Restructuring Transactions and (ii) without duplication, Losses (other than, except in the case of clause (G), the costs and expenses of the preparation of Tax Returns and the Independent Accountants that are allocated among the parties pursuant to Section 7.2) to the extent arising from or directly relating to (A) any Taxes attributable to or imposed on the Acquired FH Assets for or relating to any taxable period ending on or before the Closing Date and the portion of any Straddle Period (as defined herein) ending on the Closing Date (computed in accordance with Section 7.1 hereof) (each, a “Pre-Closing Tax Period”); (B) any Taxes of the Transferred FH Companies and their Closing Subsidiaries, for or relating to any Pre-Closing Tax Period; (C) any liability for the Taxes of any Person (other than a Transferred FH Company or any of their Closing Subsidiaries) imposed on Buyer or any of its Affiliates, or after the Closing, any of the Transferred FH Companies or any of their Closing Subsidiaries, as a transferee or successor, pursuant to any contractual obligation or otherwise, as a result of transactions or events occurring, or contracts or agreements entered into, prior to the Closing, or as a result of any Transferred FH Company being part of or owned by, or ceasing to be part of or owned by, an affiliated, combined, consolidated, unitary, or similar group that includes any Person other than the Transferred FH Companies and their Closing Subsidiaries on or prior the Closing Date; (D) any Taxes realized upon implementation of the Pre-Closing Restructuring Transactions; (E) any Transfer Taxes for which Seller is responsible under Section 7.4; (F) any Taxes attributable to any breach of any of the representations or warranties of Seller set forth in Section 3.10 or, to the extent related to Taxes, Section 3.6 or Section 3.11, (G) any Taxes directly attributable to the failure of Seller to duly perform or observe any covenant or agreement to be performed or observed by Seller pursuant to this Agreement (the remedy for which survives the Closing); (H) any Taxes that are Retained Liabilities, or (I) any Taxes attributable to any Subpart F income, determined in accordance with Section 952 of the Code, of any Transferred FH Company or Closing Subsidiary that is a characterized as a foreign corporation for U.S. federal income tax purposes to the extent allocated to the Pre-Closing Tax Period in accordance with Section 7.1(b).

 

(b)               From and after Closing, and subject to Section 9.3 and this Section 9.4, Buyer shall defend, indemnify and hold harmless Seller and its Subsidiaries and each of their Affiliates and each of Seller’s, its Subsidiaries’ and its Affiliates’ respective officers, directors, employees, and agents (collectively, the “Seller Indemnified Parties”) from and against and will compensate and reimburse Buyer for (regardless of whether such Losses relate to any Third Party Claim) (i) any Losses or Taxes to the extent arising from or directly relating to, (A) the failure of Buyer to duly perform or observe any covenant or agreement to be performed or observed by Buyer pursuant to this Agreement (the remedy for which survives the Closing), (B) any of the Assumed Liabilities (regardless of whether such Assumed Liabilities were assumed by Buyer pursuant to Section 1.3), or (C) any breach of any representation of Buyer set forth in Article IV of this Agreement or in the certificate delivered by Buyer pursuant to Section 8.2(c) and (ii) without duplication, (A) any Taxes attributable to or imposed on the Acquired FH Assets for or relating to any taxable period beginning after the Closing Date and the portion of any Straddle Period beginning after the Closing Date (computed in accordance with Section 7.1 hereof) (each, a “Post-Closing Tax Period”); (B) any Taxes of the Transferred FH Companies and their Closing Subsidiaries for or relating to a Post-Closing Tax Period; (C) any Taxes attributable to any Subpart F income, determined in accordance with Section 952 of the Code, of a Transferred FH Company or Closing Subsidiary that is a characterized as a foreign corporation for U.S. federal income tax purposes to the extent such Subpart F income is allocated to the Post-Closing Tax Period in accordance with Section 7.1(b); (D) all liability for Taxes related to a Buyer Tax Act; and (E) any Transfer Taxes for which Buyer is responsible under Section 7.4; provided, however, notwithstanding anything to the contrary in this Agreement, in no event shall (x) Buyer have any obligations under this Section 9.4(b) with respect to any matter for which any Buyer Indemnified Party is or would be entitled to indemnification under Section 9.4(a), disregarding for this purpose any limitations, including as to time, survival periods, deductibles, thresholds, caps, knowledge or materiality qualifiers or (y) Seller or any of its Affiliates have any right of contribution against any Transferred FH Company or Closing Subsidiary with respect to any matter for which any Buyer Indemnified Party is or would be entitled to indemnification under Section 9.4(a), disregarding for this purpose any limitations, including as to time, survival periods, deductibles, thresholds, caps, knowledge or materiality qualifiers.

 

(c)                An Indemnified Party shall use commercially reasonable efforts to recover under any insurance policy for which coverage is or may be reasonably available in respect of such Loss. Any calculation of Losses for purposes of this Section 9.4 (including for purposes of determining the amount of Losses for purposes of sub-sections (i) and (j) below) or any indemnity payments made under Article VII hereof shall be (i) net of any insurance or other third party recovery made by the Indemnified Party (whether paid directly to such Indemnified Party or assigned by the Indemnifying Party to such Indemnified Party), after deducing all costs and expenses incurred in connection with obtaining such insurance or other third party recovery and any increases in insurance premiums and (ii) reduced to take into account any net Tax benefit realized by any of the Indemnified Parties organized outside of the United States arising from the deductibility of any such Losses or Taxes realized in the taxable year of such Loss or Tax, or the immediately succeeding taxable year. A party (and its Affiliates) shall not be deemed to have suffered a “Loss” with respect to an item to the extent such party was actually compensated therefor by reason of an increase in the amount otherwise paid to it or a reduction in the amount otherwise paid by it pursuant to Section 2.3 hereof.

 

(d)               If a party is entitled to bring a claim under more than one provision of Section 9.4(a) or Section 9.4(b), as the case may be, such party may choose in its sole and absolute discretion the provision or provisions under which it seeks indemnification but in no event shall any party be entitled to recover more than once in respect of the same Loss.

 

(e)                No Action or claim for Losses subject to indemnification under this Section 9.4 with respect to a breach of any representation or warranty contained in this Agreement shall be brought or made after the date on which such representation or warranty shall terminate pursuant to Section 9.3 hereof, regardless of when the facts underlying such claim are first discovered; provided, however, that any claim made after the Closing and prior to such termination date with reasonable specificity by the Indemnified Party to the Indemnifying Party shall survive (and be subject to indemnification) until it is finally and fully resolved. Any Action or claim for Losses subject to indemnification under this Section 9.4 with respect to a breach of any covenant or agreement may be made at any time during the term of such covenant or agreement or prior to the one year anniversary of any termination of such covenant or agreement pursuant to Section 9.3.

 

(f)                Notwithstanding any provision herein to the contrary, no indemnity may be sought pursuant to Section 9.4(a) in respect of any Losses or Taxes to the extent such Losses or Taxes were taken into account in determining the Final Net Working Capital. Notwithstanding any provision herein to the contrary, no indemnity may be sought pursuant to Section 9.4(a)(ii) in respect of any Losses or Taxes (i) that result from any action taken on the Closing Date by Buyer or any of its Affiliates outside of the ordinary course of business (other than any such action expressly required or permitted by this Agreement or required by applicable Law) (a “Buyer Tax Act”) or (ii) that are Transfer Taxes for which Buyer is responsible under Section 7.4, or (iii) that are Taxes attributable to a Post-Closing Tax Period other than such Taxes (A) attributable to a breach of representations and warranties set forth in Section 3.10(g), Section 3.10(i), Section 3.10(j), or Section 3.10(k), or (B) that are subject to indemnification pursuant to Section 9.4(a)(ii)(C), Section 9.4(a)(ii)(E), Section 9.4(a)(ii)(G) or Section 9.4(a)(ii)(H).

 

(g)                

 

(i)                 Upon receipt by a Buyer Indemnified Party or Seller Indemnified Party (the “Indemnified Party”) of notice from a third party of any Third Party Claim against such Indemnified Party with respect to which such Indemnified Party desires to make a claim for Losses under this Section 9.4 (other than any such action, suit, proceeding, claim, demand or assessment relating to Taxes), the Indemnified Party (or Seller or Buyer on behalf of an Indemnified Party) shall promptly give written notice thereof to the party from whom indemnification is sought (the “Indemnifying Party”) setting forth, with reasonable specificity, the nature of and facts underlying each particular claim (including a description of the basis on which indemnification is being sought under this Agreement), a copy of any documentation received from the third party and, to the extent known, an estimate of the Losses relating thereto; provided, however, that failure to give such notice shall not eliminate the right to indemnification provided hereunder except to the extent the Indemnifying Party shall have been prejudiced as a result of such failure. The Indemnifying Party shall have the right, at its option, to assume the defense of, at its own expense and by its own counsel, any such matter as to which the Indemnified Party is seeking indemnification hereunder; provided that the Indemnifying Party may assume control of such defense only if (A) it acknowledges in writing to the Indemnified Party that any Losses that may be assessed against the Indemnified Party in connection with such Third Party Claim constitute Losses for which the Indemnified Party shall be indemnified fully pursuant to this Section 9.4 and (B) such Third Party Claim does not involve criminal liability of the Indemnified Party or any of its Affiliates or seek material injunctive relief against the Indemnified Party or any of its Affiliates. If the Indemnifying Party shall, in accordance with the preceding sentence, undertakes to assume control of the defense of such Third Party Claim, it shall notify the Indemnified Party of its intention to do so within thirty (30) days after the Indemnifying Party initially receives notice of such Third Party Claim from the Indemnified Party (it being understood that the Indemnified Party shall have the right prior to receipt of such notice from the Indemnifying Party to take all actions that the Indemnified Party deems necessary or appropriate to preserve its rights with respect to such Third Party Claim), and the Indemnified Party shall agree to cooperate fully, at the Indemnifying Party’s expense, with the Indemnifying Party and its counsel in the compromise of, or defense against, any such Third Party Claim; provided, however, that the Indemnifying Party shall not settle any such asserted liability without the prior written consent of the Indemnified Party (not to be unreasonably withheld) unless such settlement fully and unconditionally releases the Indemnified Party in connection with such matter and provides relief consisting solely of money damages borne by the Indemnifying Party. Notwithstanding an election of the Indemnifying Party to assume the defense of such Third Party Claim, the Indemnified Party shall have the right to employ separate counsel and to participate in the defense of such Third Party Claim. The Indemnifying Party shall bear the reasonable fees, costs and expenses of one firm of counsel to the Indemnified Party in each jurisdiction (and shall pay such fees, costs and expenses to or as directed by the Indemnified Party at least quarterly), if, but only if, (x) the defendants in, or targets of, any such action or proceeding include both an Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have reasonably concluded, based on the advice of counsel, that there is a material conflict of interest between the Indemnifying Party and the Indemnified Party with respect to such proceeding (in which case the Indemnifying Party shall not have the right to direct the defense of such action or proceeding on behalf of the Indemnified Party) or (y) the Indemnified Party controls the defense of such Third Party Claim in accordance with this Section 9.4(g). In any event, the Indemnified Party and its counsel shall cooperate with the Indemnifying Party and the non-controlling party and its counsel and shall not assert any position in any proceeding inconsistent with that asserted by the controlling party. The controlling party shall keep the non-controlling party advised of the status of such Third Party Claim and the defense thereof and shall consider in good faith recommendations made by such non-controlling party with respect thereto. Notwithstanding anything to the contrary in this Agreement, the provisions of Section 9.4(g) of the Seller’s Disclosure Letter will apply with respect to any Third Party Claim relating to Retained Asbestos Liabilities.

 

(ii)               If the Indemnifying Party does not assume or have the right to assume control of the defense of any Third Party Claim pursuant to Section 9.4(g)(i) above, then the Indemnifying Party shall have the right to participate in any such defense at its sole cost and expense, but in such case, the Indemnified Party shall control the investigation and defense of the Third Party Claim; provided, however, that, the Indemnified Party shall not consent to any settlement of a Third Party Claim without the prior written consent of the Indemnifying Party (not to be unreasonably withheld). The Indemnifying Party’s decision to allow the Indemnified Party to take the lead with respect to any indemnity obligation of the Indemnifying Party shall not limit, expand or otherwise affect the Indemnifying Party’s obligation to indemnify the Indemnified Party with respect to any such indemnity obligation, and if an Indemnified Party settles a Third Party Claim it is defending pursuant to this Section 9.4(g)(ii) without obtaining the Indemnifying Party’s written consent to such settlement in violation of the immediately preceding sentence, then the Indemnifying Party shall be relieved of its indemnification obligations hereunder with respect to such Third Party Claim, to the extent the Indemnifying Party is prejudiced thereby.

 

(iii)             In the event any Indemnified Party should have an indemnification claim against any Indemnifying Party under this Agreement that does not involve a Third Party Claim, promptly after becoming aware of any facts or circumstances which the Indemnified Party believes have given or would reasonably be expected to give rise to a right of indemnification pursuant to this Agreement, the Indemnified Party shall deliver notice of such claim to the Indemnifying Party in writing setting forth, with reasonable specificity, the nature of and facts underlying each particular claim (including a description of the basis on which indemnification is being sought under this Agreement) and, to the extent known, an estimate of the Losses relating thereto. The failure by any Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it may have to such Indemnified Party, except to the extent that the Indemnifying Party has been prejudiced by such failure. If the Indemnifying Party disputes its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved by litigation in the appropriate court of competent jurisdiction.

 

(h)               Except in cases of fraud or Intentional Breach, the indemnification provisions of this Agreement (i) shall be the sole and exclusive remedy (other than injunctive relief or specific performance as contemplated by Section 10.7) following the Closing with respect to any breach or non-fulfillment of any representation, warranty, agreement, covenant or any other obligation contained in this Agreement or the Transition Services Agreement, (ii) shall apply without regard to, and shall not be subject to, any limitation by reason of set-off, limitation or otherwise and (iii) are intended to be comprehensive and not to be limited by any requirements of Law concerning prominence of language or waiver of any legal right under any Law (including rights under any workers compensation statute or similar statute conferring immunity from suit). In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted by applicable Law, any and all other rights, claims and causes of action (including rights of contributions, if any) known or unknown, foreseen or unforeseen, which exist or may arise in the future, that it may have against Seller or any of its Affiliates or Buyer or any of its Affiliates, as the case may be, arising under or based upon any Law (including any such Law relating to environmental matters (including Environmental Laws) or arising under or based upon any securities Law, common Law or otherwise).

 

(i)                 Notwithstanding anything to the contrary set forth herein, except in cases of fraud or Intentional Breach or, in the case of the following clause (ii), breaches of Seller Fundamental Representations or Buyer Fundamental Representations, neither Seller nor Buyer shall be required to provide indemnification for Losses under Section 9.4(a)(i)(C), Section 9.4(a)(ii)(F) or Section 9.4(b)(i)(C) to the Buyer Indemnified Parties or Seller Indemnified Parties, respectively, (i) for any individual item where the Loss relating thereto is less than $75,000 (the “De Minimis Claim Threshold”) or (ii) in respect of each individual item where the Loss relating thereto is equal to or greater than the De Minimis Claim Threshold, unless (i) in the case of breaches of Section 3.24, the aggregate amount of all Losses incurred by the Buyer Indemnified Parties in respect of claims that exceed the De Minimis Claim Threshold (in the aggregate) exceeds $1,000,000 (the “Lower Basket”), in which case the obligation to provide indemnification under Section 9.4(a)(i)(C) to the Buyer Indemnified Parties shall only apply with respect to such amounts that are in excess of the Lower Basket or (ii) the aggregate amount of all Losses incurred by the Buyer Indemnified Parties or Seller Indemnified Parties, as applicable, in respect of claims that exceed the De Minimis Claim Threshold (in the aggregate) (other than Losses incurred by the Buyer Indemnified Parties in respect of breaches of Section 3.24 by Seller, which shall not be taken into account) exceeds $6,000,000 (the “Basket”), in which case the obligation to provide indemnification under Section 9.4(a)(i)(C), Section 9.4(a)(ii)(F) or Section 9.4(b)(i)(C) to the Buyer Indemnified Parties or Seller Indemnified Parties, as the case may be, shall only apply with respect to such amounts that are in excess of the Basket.

 

(j)                 Notwithstanding anything to the contrary set forth herein, except in cases of fraud or Intentional Breach, neither Seller nor Buyer shall be required to make payments for indemnification to Buyer Indemnified Parties or the Seller Indemnified Parties, respectively, (i) under Section 9.4(a)(i)(C) or Section 9.4(a)(ii)(F)(other than in cases of breaches of Seller Fundamental Representations) or Section 9.4(b)(i)(C) (other than in cases of breaches of Buyer Fundamental Representations) when the aggregate amounts paid by Seller or Buyer, as applicable, with respect thereto exceeds $58,250,000 or (ii) under Section 9.4(a)(i)(C), Section 9.4(a)(ii)(F) or Section 9.4(b)(i)(C) when the aggregate amounts paid by Seller or Buyer, as applicable, with respect thereto exceeds the Final Purchase Price.

 

(k)               Notwithstanding anything to the contrary in this Agreement, for purposes of determining (i) whether there has been a breach of any representation or warranty set forth in this Agreement or any certificate delivered pursuant to Section 8.2(c) or Section 8.3(c) and (ii) the amount of Losses for which an Indemnified Party is entitled to indemnification under this Section 9.4, each such representation or warranty (other than the representations and warranties set forth in Section 3.5(a), the first sentence of Sections 3.6, 3.8, 4.11(b), 4.11(d) and any other representations and warranties calling for a list of “material” items) shall be deemed to have been made without any qualifications or limitations as to materiality (including any qualifications or limitations made by reference to a Material Adverse Effect or Buyer Material Adverse Effect).

 

(l)                 Any payments made to a party pursuant to this Section 9.4 shall be treated as an adjustment to the Final Purchase Price for Tax purposes to the extent permitted by Law.

 

(m)             (i)          Notwithstanding anything to the contrary set forth herein, Seller’s indemnity obligation pursuant to Section 9.4(a)(i)(C) with respect to any breach of Seller’s representations and warranties set forth in Section 3.13 shall be subject to the following limitations:

 

(1)               if the cost of Cleanup or for correcting a non-compliance with Environmental Law subject to indemnity by Seller is increased after the Closing due to an act or omission by any Person other than Seller, any of its respective employees or representatives or a Governmental Authority acting pursuant to its jurisdiction, Seller shall not be responsible for any such increase in costs incurred;

 

(2)               Seller shall not be responsible for any costs, including costs of Cleanup and for corrective actions, to the extent such costs are incurred due to (A) any change in Environmental Laws; (B) any change resulting or arising from the closure, sale, modification, excavation, or construction of, or at, a facility, premises or business; (C) any change in use of the facilities from manufacturing to any other use; or (D) implementation of any Cleanup or corrective action that is not conducted to achieve the least stringent applicable Remediation Standards and in the most cost-effective manner to the extent approved by relevant Governmental Authority; and

 

(3)               Seller shall not be responsible for costs of Cleanup, corrective action, or other Losses arising out of or related to any investigation, compliance or risk audit, assessment, study or other remedial or corrective action that any Buyer Indemnified Party voluntarily initiates, performs or causes to be performed by any Person or Governmental Authority (including costs or Losses arising out of or related to any investigation, compliance or risk audit, assessment, study or other remedial or corrective action that any Buyer Indemnified Party initiates, performs or causes to be performed which is not required by any Environmental Law or by a Governmental Authority).

 

(ii)               With respect to any claim involving a demand for the investigation or Cleanup of any exposure to or Release of Hazardous Substance, Seller shall have the right to take the lead and implement any such investigation or Cleanup. Buyer may, at its own expense, remain reasonably involved. However, for the avoidance of doubt, Buyer’s involvement as provided in this paragraph shall not include voluntary communications or contact of any nature whatsoever with any Person or Governmental Authority except as specifically pre-approved in writing by Seller. Seller shall undertake any such work required herein in a manner designed to minimize disruption, to the extent reasonably practicable, with the conduct of operations at the Real Property. Buyer shall agree to allow reasonable access to conduct any of the work contemplated herein and shall fully cooperate with Seller in the performance of the work.

(iii)             If Buyer or its Affiliates (1) settles any Third Party Claim, or (2) initiates contact with any Governmental Authority, in relation to any matter for which Seller has an indemnity obligation pursuant to Section 9.4(a)(i)(C) for any breach of Seller’s representations and warranties set forth in Section 3.13 without obtaining Seller’s prior written consent (not to be unreasonably withheld), then Seller shall be relieved of its indemnification obligations hereunder with respect to such matter.

 

ARTICLE X


MISCELLANEOUS

 

Section 10.1        Amendment and Modifications. This Agreement may be amended, modified or supplemented at any time by the parties hereto, but only by an instrument in writing signed on behalf of the parties. Notwithstanding anything to the contrary in this Section 10.1 or elsewhere in this Agreement, Section 9.2(d), this Section 10.1, Section 10.2, Section 10.9(b), Section 10.9(c), Section 10.14 and Section 10.17 (and any definition set forth in, or other provision of, this Agreement to the extent that an amendment or modification of such definition or other provision would amend or modify the substance of any of the foregoing provisions) may not be amended or modified in a manner that would be materially adverse to any Financing Source or any of its Financing Related Parties without the prior written consent of such adversely affected Financing Source (and any such amendment or modification without such prior written consent shall be null and void).

 

Section 10.2        Extension; Waiver. At any time prior to the Closing, the parties hereto entitled to the benefits of the respective term or provision may (a) extend the time for the performance of any of the obligations or other acts of the parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document, certificate or writing delivered pursuant hereto or (c) waive compliance with any obligation, covenant, agreement or condition contained herein; provided that there shall be no waiver of Section 9.2(d), this Section 10.2, Section 10.1, Section 10.9(b), Section 10.9(c), Section 10.14 or Section 10.17 (or any provision of this Agreement to the extent a waiver of such provision would modify the substance of any of the foregoing provisions) in a manner that would be materially adverse to any Financing Source (or its Financing Related Parties) without the prior written consent of such Financing Source (and any such waiver without such prior written consent shall be null and void). Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of the party not entitled to the benefits of such extension or waiver. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of such right preclude other or further exercise thereof or any other right.

 

Section 10.3        Entire Agreement; Assignment. This Agreement (a) constitutes, together with the Local Purchase Agreements and the Transition Services Agreement, the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof (other than the Confidentiality Agreement) and (b) shall not be assigned by operation of law or otherwise; provided, however, that either party may assign its rights and obligations to any Wholly Owned Subsidiary of such party (unless to do so would restrict or delay the consummation of the transactions contemplated by this Agreement), but no such assignment shall relieve either party of its obligations hereunder; provided further that Buyer may grant a security interest in, and collaterally assign, any of its rights under this Agreement in connection with the Debt Financing (so long as any such assignment does not relieve Buyer of its obligations hereunder).

 

Section 10.4        Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, each of which shall remain in full force and effect.

 

Section 10.5        Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, telecopied (which is confirmed) or sent by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses:

 

If to Buyer, to:

 

CIRCOR International, Inc.

30 Corporate Drive, Suite 200

Burlington, MA 01803

Attn: Jennifer H. Allen, Esq.

Phone: 781-270-1255 (office)

Email: jennifer.allen@circor.com

 

With a copy to:

 

Wilmer Cutler Pickering Hale and Dorr LLP

1875 Pennsylvania Avenue, N.W.

Washington, D.C. 20006

Attn: Stephanie C. Evans, Esq.

Joseph B. Conahan, Esq.

Email: stephanie.evans@wilmerhale.com

joseph.conahan@wilmerhale.com

 

If to Seller, to:

 

Colfax Corporation

420 National Business Parkway

Annapolis Junction, MD 20701

Attn: Lynne Puckett, Esq.

Email: lynne.puckett@colfaxcorp.com

 

With a copy to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Attn: Ann Beth Stebbins, Esq.

Email: annbeth.stebbins@skadden.com

 

or to such other address as the Person to whom notice is given may have previously furnished to the others in writing in the manner set forth above (provided that notice of any change of address shall be effective only upon receipt thereof).

 

Section 10.6        Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. Notwithstanding anything to the contrary contained herein, each of the parties hereto agrees that, except as specifically set forth in the Debt Commitment Letter, all claims or causes of action (whether at law, in equity, in contract, in tort or otherwise) against any of the Financing Sources or any of the Financing Related Parties in any way relating to this Agreement, the Debt Financing or the performance thereof or the transactions contemplated hereby or thereby shall be exclusively governed by, and constructed in accordance with, the internal laws of the State of New York and without reference to the choice-of-law principles that would result in the application of the laws of a different jurisdiction.

 

Section 10.7        Specific Performance. The parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that, subject to the following provisions of this Section 10.7, the parties shall be entitled to an injunction, specific performance or other equitable relief to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in addition to any other remedy at law or in equity. Except as otherwise contemplated by this Section 10.7, the parties further agree not to assert that a remedy of injunctive relief, specific performance or other equitable relief is unenforceable, invalid, contrary to law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy. Except as otherwise contemplated by this Section 10.7, each of the parties hereto hereby waives (a) any defenses in any action for specific performance, including the defense that a remedy at law would be adequate and (b) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief. The parties hereto agree that, notwithstanding anything herein to the contrary, Seller shall be entitled to specific performance (or any other equitable relief), to cause Buyer to consummate the transactions contemplated hereby, including to effect the Closing in accordance with Section 2.2, on the terms and subject to the conditions in this Agreement, if, and only if: (i) all conditions in Section 8.1 and Section 8.3 have been satisfied as of the date on which the Closing would otherwise be required to occur (other than those conditions that, by their nature, are to be satisfied at the Closing (provided such conditions would have been satisfied as of such date)), (ii) Buyer fails to complete the Closing by the date the Closing would otherwise be required to have occurred pursuant to Section 2.2, (iii) the full proceeds of the Debt Financing would be available to Buyer at the Closing and (iv) Seller has confirmed in a written notice delivered to the Buyer that Seller is prepared to and able to, and will, effect the Closing upon the funding of the Debt Financing. The parties hereto agree that Seller shall be entitled to enforce specifically Buyer’s obligations under this Agreement to draw upon the Debt Financing if, and only if, each of the following conditions has been satisfied: (x) all of the conditions set forth in Section 8.1 and Section 8.3 and all of the conditions precedent set forth in the Debt Commitment Letter have been satisfied as of the date on which the Closing would otherwise be required to occur (other than those conditions that, by their nature, are to be satisfied at the Closing (provided such conditions would have been satisfied as of such date)), (y) Buyer fails to complete the Closing by the date the Closing would otherwise be required to have occurred pursuant to Section 2.2 and (z) Seller has confirmed in a written notice delivered to Buyer that Seller is prepared to and able to, and will, effect the Closing upon the funding of the Debt Financing. The election of Seller to pursue an injunction or specific performance shall not restrict, impair or otherwise limit Seller from subsequently seeking to terminate this Agreement and seeking to collect the Reverse Termination Fee pursuant to Section 9.2(b); provided, however, that under no circumstances shall Seller be permitted or entitled to receive both a grant of specific performance of the consummation of the transactions contemplated hereby pursuant to this Section 10.7 and the payment of the Reverse Termination Fee.

 

Section 10.8        Publicity. Except as otherwise expressly permitted by this Agreement, each of the parties to this Agreement hereby agrees with the other party hereto that no press release or similar public announcement or communication shall, if prior to, or after, the Closing, be made or be caused to be made (including by such parties’ respective Affiliates) concerning the execution or performance of this Agreement unless the parties shall have agreed in advance with respect thereto. Notwithstanding the foregoing (i) either party may make or cause to be made any press release or similar public announcement or communication as may be required to comply with the requirements of any applicable Laws or the rules and regulations of each stock exchange upon which the securities of one of the parties is listed and (ii) Seller may disclose any information concerning the transactions contemplated hereby which it deems appropriate in its reasonable judgment, in light of its status as a publicly owned company, including to securities analysts and institutional investors and in press interviews; provided, that with respect to the FH Business (except to the extent it relates to Seller’s activities with respect to the effect on Seller of the separation or disposition of the FH Business), to the extent practicable, Seller will try in good faith to remain within the bounds of the parties’ prior disclosures.

 

Section 10.9        Jurisdiction; Forum, Etc. 

 

(a)                The parties hereto agree that the appropriate, exclusive and convenient forum for any disputes between any of the parties hereto arising out of this Agreement or the transactions contemplated hereby shall be in any state or federal court in the State of Delaware. The parties hereto further agree that the parties will not bring suit with respect to any disputes arising out of this Agreement or the transactions contemplated hereby in any court or jurisdiction other than the above specified courts; provided, however, that the foregoing shall not limit (i) Seller’s or any of its Subsidiaries’ ability or right to join, implead or otherwise bring any third-party claim against Buyer or any of its Subsidiaries in an action brought against Seller or any of its Subsidiaries by a third party in a jurisdiction outside of the State of Delaware and Buyer agrees that it (and its Subsidiaries, as applicable) will submit to such jurisdiction or (ii) Buyer’s or any of its Subsidiaries’ ability or right to join, implead or otherwise bring any third-party claim against Seller or any of its Subsidiaries in an action brought against Buyer or any of its Subsidiaries by a third party in a jurisdiction outside of the State of Delaware and Seller agrees that it (and its Subsidiaries, as applicable) will submit to such jurisdiction. The parties hereto further agree, to the extent permitted by law, that final and unappealable judgment against a party in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and amount of such judgment.

 

(b)               EACH PARTY HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY DISPUTE DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT (INCLUDING ANY SUCH ACTION INVOLVING ANY FINANCING SOURCE OR FINANCING RELATED PARTY) OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(c)                Notwithstanding anything herein to the contrary, each of the parties hereto agrees that it will not bring or support any action, cause of action, claim, cross-claim or third-party claim of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against any Financing Source or Financing Related Party in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including any dispute arising out of or relating in any way to the Debt Financing or the performance thereof, in any forum other than any federal court of the United States of America located in, or, if that court does not have subject matter jurisdiction, in any state court located in, in each case, the Borough of Manhattan in the City of New York.

 

Section 10.10    Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

 

Section 10.11    Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto. For the convenience of the parties, any number of counterparts hereof may be executed, each such executed counterpart shall be deemed an original and all such counterparts together shall constitute one and the same instrument. Facsimile transmission (including the e-mail delivery of documents in Adobe PDF format) of any signed original counterpart and/or retransmission of any signed facsimile transmission shall be deemed the same as the delivery of an original.

 

Section 10.12    Expenses. Whether or not the transactions contemplated by this Agreement are consummated, and except as otherwise expressly set forth herein, all costs and expenses (including legal fees, accounting fees, investment banking fees and filing fees) incurred in connection with the transactions contemplated by this Agreement shall be paid by the party incurring such expenses (“Transaction Expenses”); provided, however, that any filing fees required in connection with seeking the Required Antitrust Approvals shall be borne equally by Buyer and Seller.

 

Section 10.13    Construction. The parties to this Agreement acknowledge that each party and its counsel have reviewed and revised this Agreement and that any rule of strict construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

Section 10.14    Parties in Interest. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than Seller and Buyer (and their respective Subsidiaries), FH Indemnitees under Section 5.18, Skadden and its respective partners and employees under Section 5.20, any rights or remedies under or by reason of this Agreement, it being understood that the foregoing shall not limit the right of a Seller Indemnified Party or a Buyer Indemnified Party to bring claims for indemnification under Section 9.4 in respect of Losses; provided, that the Financing Sources and, to the extent specifically described therein their respective Financing Related Parties shall be third party beneficiaries of Section 9.2(d), this Section 10.14, Section 10.1, Section 10.2, Section 10.9(b), Section 10.9(c) and Section 10.17.

 

Section 10.15    Interpretation. An item arising with respect to a specific representation or warranty shall be deemed to be “reflected on,” “set forth in” or “given effect in numbers on” a balance sheet or financial statement, to the extent any such phrase appears in such representation or warranty, to the extent that (a) there is a reserve, accrual or other similar item underlying a number on the face of such balance sheet or financial statement that relates to the subject matter of such representation or (b) such item is otherwise set forth on the face of such balance sheet or financial statement or in the notes thereto.

 

When a reference is made in this Agreement to an Article, Section or Exhibit, such reference shall be to an Article or Section of, or an Exhibit to, this Agreement unless otherwise indicated. Wherever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” References to “dollar” or “$” contained herein are to United States Dollars (unless otherwise specified). The words “hereof,” “herein,” “hereby,” “hereto” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “date hereof” or “date of this Agreement” shall refer to the date of this Agreement. The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning. References to any federal, state, local or foreign Law shall be deemed to refer to such federal, state, local or foreign Law as amended from time to time and to any rules or regulations promulgated thereunder (provided that for purposes of any representations and warranties contained in this Agreement that are made as of a specific date or dates, references to any statute shall be deemed to refer to such statute, as amended, and to any rules or regulations promulgated thereunder, in each case, as of such date). References to a contract or agreement mean such contract or agreement as amended or otherwise supplemented or modified from time to time; provided that with respect to any contract or agreement listed on any Schedule or disclosure letter, all such amendments, supplements and modifications must also be listed in the appropriate Schedule or disclosure letter. References to a Person are also to its permitted successors and assigns. References to accounting terms used and not otherwise defined herein have the meaning assigned to them under GAAP. References to any list on or attachment to a Schedule or disclosure letter shall mean that such list or attachment is true, correct and complete. References to “ordinary course of business” or “ordinary course” shall be deemed to mean “ordinary course of business consistent with past practices.” “Extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean simply “if.” A term that begins with an initial capital letter, is not defined herein and reflects a different part of speech than a correlative term that begins with an initial capital letter and is defined herein, shall be interpreted in a correlative manner. No summary of this Agreement prepared by any party shall affect the meaning or interpretation of this Agreement. If any date on which a party is required to make a payment pursuant to the terms hereof is not a Business Day, then such party shall make such payment on the next succeeding Business Day. If the Closing shall occur, notwithstanding anything in this Agreement to the contrary, any payment obligation of Buyer hereunder shall be a joint and several obligation of Buyer and the Transferred FH Companies and their Closing Subsidiaries (other than any Transferred FH Companies or Closing Subsidiaries thereof that, at such time, have not been transferred, directly or indirectly, to Buyer in accordance with this Agreement).

 

Section 10.16    Disclosure Letters. Each disclosure letter shall be arranged in sections and subsections that correspond to the sections and subsections of this Agreement. The disclosure of any matter in any disclosure letter to this Agreement shall expressly not be deemed to constitute an admission to any third party by Seller or Buyer, or to otherwise imply, that any such matter is material for the purpose of this Agreement. Any information, item or other disclosure set forth in any section of a disclosure letter shall be deemed to have been set forth in any other section of such disclosure letter, if, and only if, the relevance of such disclosure to such other section of such disclosure letter is reasonably apparent from the fact specified in such disclosure.

 

Section 10.17    No Recourse to Financing Sources. Notwithstanding anything herein to the contrary, (a) it is acknowledged and agreed that all claims, obligations, liabilities or causes of action, whether at law, in equity, in contract, in tort or otherwise, that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Agreement, the negotiation, execution or performance of this Agreement (including any representation or warranty made in, in connection with, or as an inducement to enter into, this Agreement) or the transactions contemplated by this Agreement may be made only against (and are those solely of) the entities that are expressly identified as parties to this Agreement in the Preamble to this Agreement and (b) the Seller agrees, on behalf of itself, its Affiliates and each of its and its Affiliates’ respective former, current or future general or limited partners, stockholders, managers, members, controlling persons, agents or Representatives (collectively, the “Seller Parties”) that the Financing Sources and each of their respective Financing Related Parties shall be subject to no liability or claims to the Seller Parties in connection with the Debt Financing or in any way relating to this Agreement or any of the transactions contemplated hereby or thereby, whether at law, in equity, in contract, in tort or otherwise.

 

[Signature Page Follows]

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

[Signature Page to Purchase Agreement]

ANNEX A


DEFINITIONS

 

For purposes of this Agreement, the following terms, when used in this Agreement, shall have the meanings assigned to them in this Annex A.

 

“2014 Audited Financial Statements” shall have the meaning set forth in Section 5.25(a)(i).

 

“Accounting Firm” shall have the meaning set forth in Section 2.3(b)(ii).

 

“Accounting Period Start Date” has the meaning set forth in Section 2.2(a).

 

“Acquired FH Assets” shall mean all FH Assets (other than any FH Shares or any shares of capital stock or other equity securities of any Closing Subsidiary) not held by a Transferred FH Company or Closing Subsidiary as of the Closing, including the assets set forth in Section A(1) of the Seller’s Disclosure Letter.

 

“Acquisition Transaction” means any merger, liquidation, recapitalization, consolidation or other business combination relating primarily to the FH Business, the Acquired FH Assets or the FH Assets or any Transferred FH Companies or their respective Closing Subsidiaries or the direct acquisition of any capital stock or other securities of any Transferred FH Companies or their respective Closing Subsidiaries, or any material portion of the FH Assets, or any combination of the foregoing (excluding the transactions contemplated hereby); provided, however, that Acquisition Transaction shall not include any merger, liquidation, recapitalization, consolidation involving Seller, or any of its assets or Subsidiaries other than the Acquired FH Assets or the FH Assets.

 

“Action” shall mean any action, claim, suit, arbitration, subpoena, discovery request, proceeding or investigation by or before any court or grand jury, any Governmental Authority or arbitration tribunal.

 

“Affiliate” shall mean, with respect to any specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person. For purposes of this definition, “control”, when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by Contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. For purposes of this Agreement, (a) the Transferred FH Companies and their respective Closing Subsidiaries shall be deemed to be (i) Affiliates of Seller (but not Buyer) with respect to the period prior to and as of the Closing and (ii) Affiliates of Buyer (but not Seller) with respect to the period following the Closing, and (b) Seller and its Subsidiaries, on the one hand, shall not be deemed to be Affiliates of Buyer or its Subsidiaries, on the other hand.

 

“Affiliated Group” shall mean a group of entities with which any Transferred FH Company or Closing Subsidiary has filed (or was required to file) consolidated, combined, unitary or similar Tax Returns.

 

“Agreement” shall have the meaning set forth in the preamble.

 

“Alternative Financing” shall have the meaning set forth in Section 5.19(b).

 

“Anti-Bribery Laws” shall have the meaning set forth in Section 3.22.

 

“Asbestos Liabilities” shall mean actual or alleged Liabilities resulting from, or relating to, directly or indirectly, the actual or alleged presence of or exposure to asbestos, including actual or alleged Liabilities resulting from, or relating to, asbestos contained in or forming part of any building, structure or asset, and actual or alleged Liabilities resulting from, or relating to, the manufacture, distribution, sale, marketing, handling or use of asbestos or asbestos-containing products.

 

“Asset” shall mean, with respect to any Person, any and all of such Person’s right, title and ownership interest in and to all of the properties, assets, claims, Contracts and businesses of every kind, character and description, whether real, personal or mixed, whether tangible or intangible, whether accrued, contingent or otherwise, and wherever located, including the following: (i) all real properties, including plants, buildings and other structures and improvements (including construction in progress) located thereon, fixtures contained therein and appurtenances thereto; (iii) all leases and subleases and all machinery, Equipment (including all transportation and office equipment), fixtures, trade fixtures and furniture; (iv) all office supplies, production supplies, spare parts, other miscellaneous supplies and other tangible property of any kind; (v) all capital stock, partnership interests and other equity or ownership interests or rights, directly or indirectly, in any Subsidiary or other entity; (vi) all raw materials, work-in-process, finished goods, consigned goods and other inventories; (vii) all Intellectual Property; (viii) all rights existing under all Contracts; (ix) all IT Assets, (x) all prepayments, deposits, performance bonds or prepaid expenses and, to the extent they constitute an asset and not a liability of such party, deferred tax accounts; (xi) all claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind; (xii) all customer lists and records pertaining to customers and accounts, personnel records (except with respect to each Offer Employee), all lists and records pertaining to suppliers and agents, and all books, ledgers, files and business records of every kind; (xiii) all advertising materials and all other printed or written materials, including purchase orders, forms, labels, shipping materials, catalogues, sales brochures, operating manuals, and instructional documents; (xiv) all permits, licenses, approvals and authorizations, to the extent transferable, of Governmental Authorities or third parties relating to the ownership, possession or operation of the Assets; (xv) all goodwill as a going concern and all other general intangible properties; (xvi) all employee contracts, including the right thereunder to restrict an employee from competing in certain respects; and (xvii) all trucks, automobiles and other vehicles.

 

“Assumed Environmental Liabilities” shall mean all Liabilities (other than Retained Asbestos Liability and Retained Environmental Liabilities) to the extent arising out of the FH Business or the FH Assets and arising out of, based on, resulting from or relating to: (a) the presence, Release of, or exposure to any Hazardous Substances; (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law; or (c) any other matters covered or regulated by, or for which Liability is imposed under, Environmental Law.

 

“Assumed Liabilities” shall mean any and all Liabilities (other than any Retained Liabilities), whether arising before, on or after the Closing Date, of Seller or any of its Affiliates, to the extent relating to, resulting from or arising out of the present, past or future operation, conduct or actions of the FH Business or the operation of the FH Business by any predecessor companies, businesses, Affiliates, Subsidiaries or divisions thereof, or the present, past or future ownership or use of the FH Assets. Assumed Liabilities shall include the following:

 

(i)                 all Liabilities assumed by, retained by or agreed to be performed by Buyer or any of its Subsidiaries (including the Transferred FH Companies or any of their Closing Subsidiaries) pursuant to the terms of the Transaction Documents;

 

(ii)               all Liabilities in respect of the employment or termination of employment of any Employee or Former Employee (except as otherwise specifically included as a Retained Liability), all Liabilities in respect of Transferred Benefit Plans, any compensation owed to any Employee or Former Employee engaged in the FH Business pursuant to any severance, change of control, retention, bonus or similar payment obligations payable in connection with the transactions contemplated by this Agreement that is further contingent on a cessation of employment or the provision of additional services (provided, however, that the portion of any such retention or bonus obligation pro-rated according to the number of days between the effective date of such obligation and the day prior to the Closing Date, if any, shall only be deemed an Assumed Liability to the extent reflected in Final Net Working Capital), any additional compensation paid to an Employee by Buyer as an inducement to become a Transferred Employee, all Liabilities relating to or arising out of any CBA assumed, and any other Liabilities assumed by Buyer or an Affiliate pursuant to Article VI, plus in each case any payroll Taxes attributable thereto, together with any interest or penalties thereon;

 

(iii)             all Liabilities relating to, resulting from or arising out of the Seller Guarantees or the Seller LCs, solely to the extent related to the period after the Closing;

 

(iv)             all Liabilities for Taxes for which Buyer is liable pursuant to Article VII or, except as provided otherwise in Article VII or Section 9.4(a), applicable Law;

(v)               all intercompany Liabilities solely between or among the Transferred FH Companies or their Closing Subsidiaries;

 

(vi)             solely to the extent provided in Section 5.5(e), Liabilities arising out of or relating to intercompany agreements;

 

(vii)           all Assumed Environmental Liabilities;

 

(viii)         all Liabilities set forth on Section A(2) of the Seller’s Disclosure Letter; and

 

(ix)             all Liabilities expressly assumed by Buyer under Section 6.3.

 

“Assumed Pension Assets” means the Assets under the Transferred DB Plans, as determined in accordance with Section 6.3(c) of the Seller’s Disclosure Letter.

 

“Assumed Pension Liabilities” means the Liabilities under the Transferred DB Plans, as determined in accordance with Section 6.3(c) of the Seller’s Disclosure Letter.

 

“Automatic Transfer Employee” shall mean an Employee, other than a Transferred FH Company Employee, to whom the Transfer Regulations apply.

 

“Average Per Share Price” means the volume-weighted average sales price per share taken to four decimal places of Buyer Common Stock for the five trading days beginning on the sixth trading day immediately preceding the Closing Date and concluding on the trading day immediately preceding the Closing Date, with each trading day measured from 9:30 a.m. New York time until 4:00 p.m. New York time, as published by Bloomberg L.P. under its AQR function.

 

“Base Balance Sheet” shall have the meaning set forth in Section 3.5(a).

 

“Basket” shall have the meaning set forth in Section 9.4(i).

 

“Bid” means any quotation, bid or proposal Seller or any Affiliate thereof which is related to the FH Business and which, if accepted or awarded, would lead to a contract with a Governmental Authority or a prime contractor or subcontractor to a Governmental Authority, for the supply of goods, licensing of property, or provision of services by Seller or such Affiliate.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on which United States banks are closed generally.

 

“Buyer” shall have the meaning set forth in the preamble.

 

“Buyer 401(k) Plan” has the meaning set forth in Section 6.4(a).

 

“Buyer Common Stock” shall mean the common stock, par value $0.01 per share, of Buyer.

 

“Buyer Equity Compensation Plans” means the equity compensation plans and agreements of Buyer and its Subsidiaries described in Section 4.3(a) of the Buyer’s Disclosure Letter.

 

“Buyer Form 8-K” shall have the meaning set forth in Section 5.19(e).

 

“Buyer FSA Plan” has the meaning set forth in Section 6.5.

 

“Buyer Fundamental Representations” shall mean the representations and warranties in Section 4.1 (Corporate Organization and Standing), Section 4.2 (Authority Relative to this Agreement, Etc.), Section 4.3 (Capitalization), Section 4.4(a) (Absence of Conflicts with Organizational Documents) and Section 4.5 (Brokers and Finders).

 

“Buyer Indemnified Parties” shall have the meaning set forth in Section 9.4(a).

 

“Buyer Material Adverse Effect” shall mean any change, event, development or effect that, individually or in the aggregate with all other changes, events, developments or effects, (a) has had, or would reasonably be expected to have, a material adverse effect on the business, results of operations or financial condition of the business of Buyer and its Subsidiaries, taken as a whole; or (b) impairs, hinders, delays or adversely affects in any material respect, or would reasonably be expected to impair, hinder, delay or adversely affect, in any material respect, the ability of Buyer and its Subsidiaries to perform their obligations under this Agreement and to consummate the Sale or the other material transactions contemplated hereby, other than, solely for the foregoing clause (a), any change, event, development or effect to the extent resulting from or arising out of the following, either alone or in combination, shall not be considered in determining whether there has been a “Buyer Material Adverse Effect”: (i) general economic conditions (including changes in (A) financial or market conditions, (B) currency exchange rates, (C) prevailing interest rates or credit markets or (D) the prevailing price of commodities or raw materials (or the securities, syndicated loan, credit or financial markets globally)); (ii) local, regional, national or international conditions in any of the industries or markets in which Buyer or its Subsidiaries operates (except to the extent Buyer or its Subsidiaries are materially disproportionately adversely affected by such conditions relative to other participants in industries in which Buyer or its Subsidiaries operates (in respect of the business conducted by them in such industries)), (iii) changes in Law, GAAP or other applicable accounting standards or the interpretation thereof, (iv) acts of God or other calamities, national or international political or social conditions, including the engagement by any country in hostilities, whether commenced before or after the date hereof, and whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack (except to the extent Buyer or its Subsidiaries are materially disproportionately adversely affected by such conditions relative to other participants in industries in which Buyer or its Subsidiaries operates (in respect of the business conducted by them in such industries)), or (v) any actions taken, or failures to take action, at the written request of Seller, (vi) any failure by Buyer and its Subsidiaries to meet budgets, plans, projections or forecasts (whether internal or otherwise) for any period (it being understood that the underlying cause of the failure to meet such budgets, plans, projections or forecasts may be taken into account in determining whether a Buyer Material Adverse Effect has occurred unless such causes are otherwise excepted under this paragraph), (vii) any change in Buyer’s stock price or trading volume (it being understood that the underlying cause of such change may be taken into account in determining whether a Buyer Material Adverse Effect has occurred unless such causes are otherwise excepted under this paragraph), or (viii) the announcement or pendency of this Agreement and the other agreements contemplated hereby, or the taking of action expressly required by this Agreement and other agreements contemplated hereby, including by reason of the identity of Seller or any acts or omissions of Seller or its Affiliates in violation of this Agreement and including the impact of any of the foregoing on relationships with customers, suppliers, lenders, officers, employees or regulators and any suit, action or proceeding arising therefrom or in connection therewith.

 

“Buyer Permits” shall have the meaning set forth in Section 4.13(a).

 

“Buyer Plan” shall have the meaning set forth in Section 6.2(c).

 

“Buyer Related Parties” shall have the meaning Section 9.2(d).

 

“Buyer Stock Consideration” shall mean 3,283,424 shares of Buyer Common Stock, subject to adjustment as provided in Section 2.5; provided, that if such number of shares shall equal or exceed twenty percent (20%) of the total number of shares of Buyer Common Stock issued and outstanding immediately prior to the Closing (the “Share Cap”), then such number of shares paid at Closing shall be reduced by the number of such shares that exceed the Share Cap (for purposes of this calculation, rounded up to the nearest whole share), and the Preliminary Cash Purchase Price shall be increased by the Share Adjustment Amount. Buyer shall notify Seller in writing at least three (3) Business Days prior to the Closing of any such adjustment.

 

“Buyer Tax Act” shall have the meaning set forth in Section 9.4(f).

 

“Buyer’s Disclosure Letter” shall mean the disclosure letter that Buyer has delivered to Seller as of the date of this Agreement.

 

“Cash Equivalents” shall mean cash, checks, money orders, marketable securities, short-term instruments and other cash equivalents, funds in time and demand deposits or similar accounts and any evidence of indebtedness issued or guaranteed by any Governmental Authority, each calculated in accordance with GAAP, minus (a) outstanding (uncleared) checks, drafts, wire transfers or other debits in process issued or initiated (provided that any such item will reduce on a dollar-for-dollar basis any accounts payable to the extent such item is being paid in respect of such accounts payable), plus (b) deposits in transit, and other credits in process (provided that any such item will reduce on a dollar-for-dollar basis any accounts receivable to the extent such item is being paid in respect of such accounts receivable).

 

“CBA” shall mean labor agreements, collective bargaining agreements, information or consultation agreements, and any other labor-related agreements or arrangements with any labor union, labor organization, works council or other similar bodies applicable to the Transferred Employees.

 

“Cleanup” shall mean all actions required to: (1) cleanup, remove, treat or remediate Hazardous Substances in the indoor or outdoor environment; (2) prevent the Release of Hazardous Substances so that they do not migrate, endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (3) perform pre-remedial studies and investigations and post-remedial monitoring and care; or (4) respond to requests of any Governmental Authority for information or documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup, removal, treatment or remediation of Hazardous Substances in the indoor or outdoor environment.

 

“Closing” shall have the meaning set forth in Section 2.2(a).

 

“Closing Date” shall have the meaning set forth in Section 2.2(a).

 

“Closing Net Working Capital” shall mean Net Working Capital of the FH Business calculated as of 11:59 p.m. local time on the Business Day immediately preceding the Closing Date (or, in any jurisdiction outside of the United States, the day immediately preceding the time at which the books of the FH Business are normally closed in such jurisdiction).

 

“Closing Subsidiary” shall mean any Subsidiary of a Transferred FH Company as of immediately prior to the Closing and after giving effect to the Pre-Closing Restructuring Transactions.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Company” shall have the meaning set forth in Section 5.29(a).

 

“Compliant” means, without giving effect to any supplements or updates, (a) the Required Information, taken as a whole, does not contain any untrue statement of a material fact or omit to state any material fact, in each case with respect to the FH Business, the Acquired FH Assets or Assumed Liabilities, necessary in order to make such Required Information not misleading in the light of the circumstances in which they were made, (b) no audit opinion with respect to any of the Required Financial Statements shall have been withdrawn, amended or qualified (including any going concern qualification) and (c) the Required Financial Statements have been prepared in accordance with GAAP in all material respects (excluding “segment reporting”, information required by Rules 3-09, 3-10 and 3-16 of Regulation S-X under the Securities Act, separate financial statements of any Subsidiary or any compensation discussion and analysis required by Item 402(b) of Regulation S-K under the Securities Act).

 

“Confidential Information” shall have the meaning set forth in Section 5.12(a).

 

“Confidentiality Agreement” shall have the meaning set forth in Section 5.2.

 

“Continuation Period” shall have the meaning set forth in Section 6.2(a).

 

“Contract” shall mean any contract, agreement, lease, license (other than Permits), instrument or other commitment that is binding on any Person or entity or any part of its property under applicable Law, whether written or not.

 

“Copyrights” shall have the meaning set forth in the definition of Intellectual Property.

 

“De Minimis Claim Threshold” shall have the meaning set forth in Section 9.4(i).

 

“Debt Commitment Letter” shall have the meaning set forth in Section 4.6(a) and Section 5.19(b).

 

“Debt Financing” shall have the meaning set forth in Section 4.6(a) and Section 5.19(b).

 

“Delayed Antitrust Approval” shall have the meaning set forth in Section 5.3(c).

 

“Delayed Company” has the meaning set forth in Section 5.17(a).

 

“Delayed Company Interests” shall have the meaning set forth in Section 5.17(a).

 

“Delayed FH Asset” shall have the meaning set forth in Section 5.16(a).

 

“Delayed Transfer Employee” shall mean an Offer Employee who is receiving income replacement benefits under a Seller Benefit Plan that is a fully insured long-term disability plan as of the Closing.

 

“Dispute Notice” shall have the meaning set forth in Section 2.3(b)(ii).

 

“Disputed Items” shall have the meaning set forth in Section 2.3(b)(ii).

 

“DOJ” shall have the meaning set forth in Section 3.4.

 

“DPLP Agreement” shall have the meaning set forth in Section 5.29(a).

 

“DPLP Company Claim” shall have the meaning set forth in Section 5.29(a).

 

“DPLP Company Liability” shall have the meaning set forth in Section 5.29(a).

 

“DPLP Financial Statements” shall have the meaning set forth in Section 5.29(b).

 

“DPLP Financial Statements Approval Date” shall have the meaning set forth in Section 5.29(b).

 

“DPLP Period” means the period beginning on January 1 of the calendar year in which the DPLP Termination Date occurs and ending on the DPLP Termination Date.

 

“DPLP Termination Date” shall have the meaning set forth in Section 5.29(a).

 

“Effective Time” shall have the meaning set forth in Section 2.2(a).

 

“Employee” shall mean each individual who is primarily dedicated to the FH Business including (i) each Transferred FH Company Employee, (ii) each Offer Employee, and (iii) each Automatic Transfer Employee.

 

“Employee Benefit Plan” has the meaning set forth in Section 3.11(a).

 

“Employee Representative” means any labor union, labor organization, works council, staff association, worker representative, trade union or any other employee representative body (whether elected or not).

 

“Encumbrance” shall mean any lien, encumbrance, security interest, charge, mortgage, deed of trust, deed to secure debt, option, pledge or restriction on transfer of title or voting of any nature whatsoever.

 

“Environmental Claim” shall mean any Liability or Action alleging potential liability (including potential liability for investigatory costs, Cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, medical monitoring or penalties) arising out of, based on or resulting from: (i) the presence, Release or threatened Release of any Hazardous Substance at any location; (ii) exposure to any Hazardous Substance; or (iii) circumstances forming the basis of any violation of or failure to comply with any Environmental Laws or Environmental Permits.

 

“Environmental Laws” shall mean all Laws relating to pollution or protection of human health or safety or the environment, including Laws relating to the exposure to, or Release, threatened Release or the presence of solid waste or Hazardous Substances, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, transport or handling of solid waste or Hazardous Substances; all Laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting solid waste or Hazardous Substances; all laws relating to endangered or threatened species of fish, wildlife and plants and the management or use of natural resources.

 

“Environmental Permit” shall mean any permit, license, approval or other authorization under any applicable Law or issued by any Governmental Authority relating to Environmental Laws or Hazardous Substances.

 

“Equipment” shall mean all equipment, fixtures, physical facilities, machinery, inventory, spare parts, supplies, tools and other tangible personal property but excluding any IT Assets.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” shall mean, with respect to any entity, (i) a member of any “controlled group” (within the meaning of Section 414(b) of the Code) of which that entity is or was within the prior six (6) years also a member, (ii) a trade or business, whether or not incorporated, under common control (within the meaning of Section 414(c) of the Code) with that entity within the prior six (6) years, or (iii) a member of any affiliated service group (within the meaning of Section 414(m) of the Code) of which that entity is or was within the prior six (6) years also a member.

 

“Estimated Net Working Capital” shall have the meaning set forth in Section 2.3(a).

 

“Estimated Statement” has the meaning set forth in Section 2.3(a).

 

“Estimated U.S. Asset Transfer Amount” means the product of (i) the total assets of the Seller U.S. DB Plan as of the Closing multiplied by (ii) a fraction, the numerator of which is the projected benefit obligation of the U.S. Transferred Pension Participants and the denominator of which is the total projected benefit obligation under the Seller U.S. DB Plan, each determined as of the date of, and using the same assumptions as utilized for, the most recent year-end balance sheet.

 

“EU Merger Regulations” shall mean European Union Council Regulation No. 139/2004 of January 20, 2004.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Excluded Assets” shall mean (i) all Assets (other than IT Assets) constituting ownership interests in, or that are used or held for use in, the Excluded Businesses but are not Assets primarily or exclusively used or primarily or exclusively held for use in the FH Business; (ii) all Cash Equivalents (except to the extent taken into account in the calculation of the Closing Net Working Capital); (iii) all intercompany receivables, as of the Closing, for amounts due and owing solely from Seller or any of the Retained Subsidiaries; (iv) with respect to the FH Affiliates, all Tax losses and Tax loss carry forwards and rights to receive refunds, credits and credit carry forwards with respect to any and all Taxes, to the extent attributable to a taxable period (or portion thereof) ending on or prior to the Closing Date, including interest thereon, whether or not the foregoing is derived from the FH Business; (v) any deposit or similar advance payment of the FH Affiliates with respect to Taxes; (vi) all current and prior insurance policies of Seller or any of its Subsidiaries (other than the Transferred FH Companies and the Closing Subsidiaries), and all current and prior insurance policies of any Transferred FH Company or the Closing Subsidiaries to the extent they provide coverage for Retained Asbestos Liabilities, and all rights of any nature with respect thereto, including all insurance recoveries thereunder and rights to assert claims with respect to any such insurance recoveries; (vii) all legal and beneficial interest in the share capital or equity interests of Retained Subsidiaries; (viii) all rights of Seller under this Agreement and any documents delivered or received in connection herewith; (ix) all Retained IP and any Intellectual Property of Seller and its Subsidiaries that is not FH IP; (x) all Assets in respect of any Seller Benefit Plan, except for those Assets which are being transferred to Buyer pursuant to Article VI or by operation of Law; (xi) all files (including all emails) relating to the Sale Process or any Action included in the Retained Liabilities; (xii) all email accounts relating to the FH Business; (xiii) any servers or hard drives that store information relating to, or otherwise used by, both the FH Business and any Excluded Businesses; (xiv) all Legacy Sites; and (xv) the Assets identified on Section A(3) of the Seller’s Disclosure Letter (the “Excluded FH Software Licenses”).

 

“Excluded Businesses” shall mean all of the former, present or future businesses of Seller and its Subsidiaries, other than the FH Business.

 

“Excluded FH Software Licenses” has the meaning set forth in the definition of Excluded Assets.

 

“Export Control and Sanctions Laws” shall have the meaning set forth in Section 3.23.

 

“Fee Letter” shall have the meaning set forth in Section 4.6(a).

 

“FH Affiliates” shall mean Seller and its Subsidiaries (excluding the Transferred FH Companies and their Closing Subsidiaries) that hold, lease or license any FH Assets.

 

“FH Asset Seller” shall mean, individually and/or collectively, each Person that holds Acquired FH Assets other than any FH Shares or shares of capital stock or other equity securities of any Closing Subsidiary as of the Closing, including the Persons identified on Section 3.1(a) of the Seller’s Disclosure Letter, as such Schedule may be amended prior to the Closing Date by Seller to the extent necessary to reflect amendments to Section 5.15 of the Seller’s Disclosure Letter after the date hereof in accordance with Section 5.15 (provided that any entities included on such amended Exhibit are Wholly Owned Subsidiaries of Seller).

 

“FH Assets” shall mean all right, title and interest, as of immediately prior to Closing, of Seller or any of its Affiliates in all Assets primarily or exclusively used or primarily or exclusively held for use in connection with the FH Business (excluding the Excluded Assets except to the extent specifically included pursuant to one or more of the clauses below in this definition), including:

 

(i)                 the Owned Real Property;

 

(ii)               Leases, including the right to prepaid rent and to all security deposits and other amounts and instruments deposited by, on behalf of, or for the benefit of, the Transferred FH Companies and their Closing Subsidiaries thereunder, to the extent not theretofore applied under the Leases;

 

(iii)             all Equipment (and leases thereof) primarily or exclusively used or primarily or exclusively held for use in connection with the FH Business;

(iv)             the FH Inventories;

 

(v)               the Intellectual Property set forth on Section A(4) of the Seller’s Disclosure Letter or that relates exclusively to the FH Business, other than Retained Names (the “FH IP”);

 

(vi)             all Contracts to which Seller or any of its Subsidiaries is a party or by which any of the FH Assets is subject, in each case that relate primarily or exclusively to or are used primarily or exclusively in connection with the FH Business (other than (A) any of the foregoing constituting an IP Contract or relating to the Excluded Assets, (B) the Leases and (C) leases with respect to the Equipment);

 

(vii)           all Permits relating primarily or exclusively to the FH Business;

 

(viii)         all Transferred FH Books and Records;

 

(ix)             all Transferred IP Contracts;

 

(x)               the intercompany receivables, as of the Closing, for amounts due and owing solely among or between any of the Transferred FH Companies and their Closing Subsidiaries;

 

(xi)             any rights and claims of Seller under any confidentiality agreement, to the extent related to the FH Business, entered into by Seller with third Persons regarding the Sale Process;

 

(xii)           the FH IT Assets;

 

(xiii)         all Assets in respect of any Transferred Benefit Plan, except for those Assets which are being retained by Seller pursuant to Article VI or by operation of Law;

 

(xiv)         any other Assets of the FH Affiliates owned, leased or licensed and primarily or exclusively relating to or primarily or exclusively used in the FH Business, if and to the extent that such Assets are not referred to in the preceding paragraphs of this definition and

 

(xv)           the Assets set forth on Section A(5) of the Seller’s Disclosure Letter;

 

(xvi)         Cash Equivalents to the extent taken into account in the calculation of the Closing Net Working Capital; and

 

(xvii)       the Assets related to the Transferred DB Plans.

 

“FH Business” shall mean the development, manufacture, marketing, sale, service and support of progressive cavity, two- and three-screw pumps, centrifugal pumps, seawater cooling pumps, internal gear pumps, oil mist lubrication systems and heat transfer fluid pumps, oil purification equipment, lubrication distribution systems, oil mist generators and bearing lubrication systems as conducted by the Transferred FH Companies (and their Closing Subsidiaries), the FH Asset Sellers and the FH Affiliates of the date hereof and the performance of the Services; provided, however that the term “FH Business” when used in the definitions of “Assumed Liabilities,” “Assumed Environmental Liabilities,” and “Retained Asbestos Liabilities” shall not be limited to such activities and operations conducted as of the date hereof, but shall also include any historical activities and operations of the Transferred FH Companies (and their Closing Subsidiaries and any predecessor companies of the Transferred FH Companies and their Closing Subsidiaries) and, as relates to such activities and operations, the FH Asset Sellers and the FH Affiliates (and any predecessor companies of the FH Asset Sellers and the FH Affiliates).

 

“FH Business Financial Information” has the meaning set forth in Section 3.5(a).

 

“FH Business Permit” has the meaning set forth in Section 3.7.

 

“FH Business Registrations” shall have the meaning set forth in Section 3.15(a).

 

“FH Indemnitees” shall have the meaning set forth in Section 5.18(a).

 

“FH Inventories” shall mean all inventory of raw materials, supplies and consumables, packaging material, work-in-progress or finished goods used or held for use in the operation and conduct of the FH Business and owned by Seller or any of its Subsidiaries (including the Transferred FH Companies or any their Closing Subsidiaries).

 

“FH IP” shall have the meaning set forth in the definition of FH Assets.

 

“FH IT Assets” means all right, title and interest of Seller, the FH Share Sellers and their respective Affiliates (including the Transferred FH Companies and their Closing Subsidiaries) in (i) the IT Assets (other than Assets identified in Section A(3) of the Seller’s Disclosure Letter as Excluded Assets) that are used or held for use in the FH Business as of the Closing and during the twelve (12) month period prior to the Closing (or for the life of such applicable IT Asset prior to the Closing, if such life span is less than twelve (12) months as of the Closing), and (ii) the IT Assets set forth on Section A(6) of the Seller’s Disclosure Letter.

 

“FH Share Sellers” shall mean the Persons identified on Section 3.1(a) of the Seller’s Disclosure Letter, as such Exhibit may be amended prior to the Closing Date by Seller to the extent necessary to reflect amendments to Section 5.15 of the Seller’s Disclosure Letter after the date hereof in accordance with Section 5.15 (provided that any entities included on such amended Exhibit are Wholly Owned Subsidiaries of Seller).

 

“FH Shares” shall have the meaning set forth in Section 1.1(a).

 

“Final Cash Purchase Price” shall have the meaning set forth in Section 2.3(c)(i).

 

“Final Closing Adjustment” shall have the meaning set forth in Section 2.3(c)(i).

 

“Final Net Working Capital” shall have the meaning set forth in Section 2.3(b)(ii).

 

“Final Pension Adjustment” shall have the meaning set forth in Section 2.3(c)(i).

 

“Final Purchase Price” shall have the meaning set forth in Section 2.3(c)(i).

 

“Final Purchase Price Allocation” shall have the meaning set forth in Section 2.4.

 

“Financial Statements” shall have the meaning set forth in Section 5.25(a)(ii).

 

“Financing Related Parties” shall mean any Financing Source’s Affiliates or any of its or its Affiliates’ former, current or future general or limited partners, stockholders, managers, members, controlling persons, agents, employees, accountants, consultants, legal counsel, financial advisors or any of their successors or assigns.

 

“Financing Sources” shall mean the agents, arrangers, lenders and other parties to the Debt Commitment Letter and each other Person that has committed to provide or otherwise entered into any commitment letter, engagement letter, credit agreement or other agreement with Buyer or any of its Affiliates in connection with, or that is otherwise acting as an arranger, bookrunner, administrative or collateral agent, trustee or a similar representative in respect of, any Debt Financing (including any Alternative Financing) or any of their respective successors or assigns.

 

“Fiscal Unity Tax Audit” shall have the meaning set forth in Section 5.29(f);

 

“Form 8023” shall have the meaning set forth in Section 7.9(a).

 

“Former Employee” shall mean any individual who would have been eligible to be a Transferred Employee, but whose employment with the Seller and its Affiliates terminated for any reason at any time prior to the Closing Date.

 

“FTC” shall have the meaning set forth in Section 3.4.

“GAAP” shall mean United States generally accepted accounting principles as in effect on the date or for the period with respect to which such principles are applied, applied on a consistent basis (it being understood that all concepts of materiality shall be measured by reference to the FH Business and not to Seller and its Affiliates).

 

“Government Contract” shall mean any prime contract, subcontract, basic ordering agreement, letter contract, purchase order, delivery order, Bid, change order, arrangement or other commitment of any kind that is related to the FH Business and is between Seller or any of its Affiliates, on the one hand, and any Governmental Authority or prime contractor or subcontractor to a Governmental Authority, on the other hand.

 

“Governmental Authority” shall mean any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission or court, whether domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.

 

“Governmental Filings” shall have the meaning set forth in Section 3.4.

 

“Hazardous Substance” shall mean any substances defined, listed, classified or regulated as “hazardous substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous wastes”, “restricted hazardous wastes”, “toxic substances”, “toxic pollutants”, “contaminants”, “pollutants”, “wastes”, “radioactive materials”, “petroleum”, “oils”, or words of similar import under any Environmental Law.

 

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“Indebtedness” of any Person shall mean: (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property or Assets purchased by such Person, (d) all Indebtedness of others secured by any mortgage, lien, pledge, or other Encumbrance on property or Assets owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (e) all guarantees by such Person of Indebtedness of others, (f) all lease obligations of such Person which are required to be capitalized in accordance with GAAP, (g) all obligations of such Person to pay the deferred purchase price of property or services, including earnouts or other contingent payments, except trade accounts payable arising in the ordinary course of business, (h) all obligations of such Person in respect of direct pay letters of credit and bankers’ acceptances and (to the extent drawn and/or to the extent that any Person has any reimbursement obligations which are due and payable) standby letters of credit or surety bonds in each case, to the extent drawn, (i) all obligations of such Person under interest rate or currency swap transactions (valued at the termination value thereof) and (j) all Transaction Expenses of such Person.

 

“Indemnified Party” shall have the meaning set forth in Section 9.4(g)(i).

 

“Indemnifying Party” shall have the meaning set forth in Section 9.4(g)(i).

 

“Independent Accountants” shall mean the dispute resolution group of one of the “Big 4” accountancy firms or such other independent accountants or financial firm of nationally recognized standing as Buyer and Seller shall mutually agree upon.

 

“Information” shall have the meaning set forth in Section 5.9.

 

“Insurance Policies” shall have the meaning set forth in Section 3.19.

 

“Intellectual Property” shall mean all (i) patents, patent applications, invention disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions thereof (“Patents”), (ii) trademarks, service marks, names, corporate names, trade names, domain names, logos, slogans, trade dress, design rights, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing (“Trademarks”), (iii) copyrights and copyrightable subject matter (“Copyrights”), (iv) trade secrets and all other confidential or proprietary information, know-how, inventions, processes, formulae, models, and methodologies, (v) rights in data, database, software and firmware and (vi) all applications and registrations for the foregoing.

 

“Intentional Breach” shall mean, with respect to any representation, warranty, agreement or covenant, an action or omission (including a failure to cure circumstances) taken or omitted to be taken in connection with the execution and delivery of this Agreement or after the date hereof that the breaching Person intentionally takes (or fails to take) and knows (or should reasonably have known) would, or would reasonably be expected to, cause a material breach of such representation, warranty, agreement or covenant.

 

“International Plan” shall mean any Employee Benefit Plan that primarily covers Persons who are located outside of the United States of America.

 

“IP Contracts” means Contracts that primarily relate to (i) the receiving or granting or limiting of rights in or to any Intellectual Property, or (ii) confidentiality of any Intellectual Property.

 

“IRS” shall mean the United States Internal Revenue Service or any successor agency.

 

“IT Assets” means all information technology hardware, including laptop computers, desktop computers, servers, tablet devices and other handheld computing devices, but excluding any Contracts, software, firmware, data or other Intellectual Property thereon.

 

“ITAR” shall mean the International Traffic in Arms Regulations.

 

“Joint Action” shall have the meaning set forth in Section 5.22.

 

“Key Customer” shall mean the top ten (10) customers of the FH Business during the last full fiscal year, set forth in Section A(7) of the Seller’s Disclosure Letter, based on dollar sales volumes of the FH Business during the twelve(12) month period ended December 31, 2016.

 

“Key Supplier” shall mean the ten (10) most significant suppliers of the FH Business, set forth in Section A(8) of the Seller’s Disclosure Letter, based on amounts invoiced during the twelve (12) month period ended December 31, 2016.

 

“Knowledge” shall mean (a) with respect to Seller, the knowledge after reasonable inquiry (including an inquiry of the members of the management team of the FH Business who would reasonably be expected to have knowledge of the matter in question) of any of the persons listed on Section A(9) of the Seller’s Disclosure Letter and (b) with respect to Buyer, the knowledge after reasonable inquiry of any of the persons listed on Section A(10) of the Buyer’s Disclosure Letter.

 

“Later Discovered Asset” shall have the meaning set forth in Section 5.24(a).

 

“Law” shall mean any law, statute (including the Code), ordinance, rule, regulation, order, writ, judgment, injunction or decree of any Governmental Authority.

 

“Leased Real Property” shall mean the real property used primarily or exclusively in the conduct of the FH Business that is leased or subleased by Seller or one of its Affiliates pursuant to a Lease set forth on Section A(11) of the Seller’s Disclosure Letter, together with all fixtures, buildings, structures and improvements located thereon.

 

“Leases” shall mean all leases, subleases, licenses and agreements pursuant to which Seller or any Affiliate thereof leases, uses or occupies Leased Real Property.

 

“Legacy Site” means each property formerly owned or operated by the FH Business prior to the Closing that is not within the definition of Real Property, including each of the properties described in Section 10.19 of the Seller’s Disclosure Letter.

 

“Liabilities” shall mean any and all Indebtedness, liabilities and obligations, whether accrued, fixed or contingent, mature or inchoate, known or unknown, reflected on a balance sheet or otherwise, including, but not limited to, those arising under any Law or any judgment of any court of any kind or any award of any arbitrator of any kind, and those arising under any Contract, commitment or undertaking.

“Local Purchase Agreement” shall mean the several forms and agreements and the Schedules and Exhibits thereto to be entered into by those FH Share Sellers identified on Section 3.1(a) of the Seller’s Disclosure Letter of the Seller’s Disclosure Letter, on the one hand, and Buyer, on the other hand, providing for the sale, conveyance, assignment, assumption, transfer, delivery and, as applicable, the license, sublicense, lease or sublease, of certain FH Shares, the Acquired FH Assets and Assumed Liabilities in the jurisdictions set forth in Section A(12) of the Seller’s Disclosure Letter, substantially in the forms attached as Exhibit C.

 

“Losses” shall mean any and all damages, losses, liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the reasonable costs and expenses of attorneys incurred in the defense thereof), but excluding (a) consequential damages, special damages, incidental damages, loss of profits, diminution in value, damages based on multiple of earnings, loss of business reputation and (b) punitive and exemplary damages (other than such damages awarded to any third party against an Indemnified Party).

 

“Lower Basket” shall have the meaning set forth in Section 9.4(i).

 

“Marketing Period” means the first period of at least twenty (20) consecutive Business Days, commencing on the first (1st) Business Day after the date of delivery of the Required Information, throughout which (i) Buyer shall have the Required Information and the Required Information are Compliant; provided that if Seller shall in good faith believe it has provided the Required Information, it may deliver to Buyer a written notice to that effect (stating when it believes it completed such delivery), in which case the Marketing Period shall be deemed to have commenced on the date of such notice (or, if later, on the date specified in such notice as the date of delivery of the Required Information) unless Buyer in good faith believes Seller has not completed the delivery of the Required Information and, within two (2) Business Days after the delivery of such notice by Seller, delivers a written notice to Seller to that effect (stating with specificity which Required Information Seller has not delivered), in which case this clause (i) shall not be satisfied until Seller has provided all such Required Information specifically set forth in such notice, and (ii) the conditions set forth in Section 8.1(a) and Section 8.3 shall be satisfied (other than any those conditions that by their nature are to be satisfied at the Closing) and nothing has occurred and no condition exists that has caused any of the conditions set forth in Section 8.1(a) and Section 8.3 to fail to be satisfied assuming the Closing were to be scheduled for any time during such twenty (20) consecutive Business Day period; provided, further that the Marketing Period shall not be deemed to have commenced if, prior to the completion of such twenty (20) consecutive Business Day period, any Required Information are not or would not be Compliant at any time during such twenty (20) consecutive Business Day period (it being understood that if any Required Information provided at the initiation of the Marketing Period ceases to be Compliant at any time during such twenty (20) consecutive Business Day period, then the Marketing Period shall be deemed not to have commenced); provided, further that the Marketing Period shall end on any earlier date that is the date on which the entire Debt Financing has been consummated in accordance with its terms; and provided, further that (a) if the Marketing Period has not been completed on or prior to December 18, 2017, the Marketing Period shall commence no earlier than January 2, 2018 and (b) November 24, 2017 shall be excluded from the determination of such twenty (20) consecutive Business Day period.

 

“Material Adverse Effect” shall mean any change, event, development or effect that, individually or in the aggregate, (a) has had or would reasonably be expected to have a material adverse effect on the business, assets, liabilities, results of operations or financial condition of the FH Business, taken as a whole, or (b) materially impairs or materially delays the ability of the FH Share Sellers to consummate the transactions contemplated by the Transaction Documents, other than, solely for the foregoing clause (a), any change, event, development or effect that results from, arises out of or is related to (i) general economic conditions (including changes in (A) financial or market conditions, (B) currency exchange rates, (C) prevailing interest rates or credit markets or (D) the price of commodities or raw materials used in the FH Business) (except to the extent the FH Business is materially disproportionately adversely affected by such conditions relative to other participants in industries in which the FH Business operates (in respect of the business conducted by them in such industries)), (ii) local, regional, national or international conditions in any of the industries or markets in which the FH Business is conducted (except to the extent the FH Business is materially disproportionately adversely affected by such conditions relative to other participants in industries in which the FH Business operates (in respect of the business conducted by them in such industries)), (iii) changes in Law, GAAP or other applicable accounting standards or the interpretation thereof, (iv) acts of God or other calamities, national or international political or social conditions, including the engagement by any country in hostilities, whether commenced before or after the date hereof, and whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack (except to the extent the FH Business is materially disproportionately adversely affected by such conditions relative to other participants in industries in which the FH Business operates (in respect of the business conducted by them in such industries)), or (v) any actions taken, or failures to take action, at the written request of Buyer, (vi) any failure to meet internal projections relating to the FH Business or changes in credit ratings (it being understood that the underlying causes of the failure to meet such projections shall be taken into account in determining whether a Material Adverse Effect has occurred, unless such causes are otherwise excepted under this paragraph) or (vii) the announcement or pendency, or the taking of any action expressly required by this Agreement and the other agreements contemplated hereby, including by reason of the identity of Buyer or any communication by Buyer regarding the plans or intentions of Buyer with respect to the FH Business and including the impact of any of the foregoing on relationships with customers, suppliers, lenders, officers, employees or regulators and any suit, action or proceeding arising therefrom or in connection therewith.

 

“Material Contracts” shall have the meaning set forth in Section 3.18.

 

“Matter” shall have the meaning set forth in Section 5.20.

 

“Net Working Capital of the FH Business” shall have the meaning set forth in Section A(18) of the Seller’s Disclosure Letter.

 

“NISPOM” shall have the meaning set forth in Section 3.21(i).

 

“Non-Material Antitrust Approval” shall mean the filings, consents and approvals set forth in Section A(13) of the Seller’s Disclosure Letter.

 

“NYSE” shall mean the New York Stock Exchange.

 

“Offer Employee” shall mean Employee, other than a Transferred FH Company Employee, to whom the Transfer Regulations do not apply.

 

“Outside Date” shall have the meaning set forth in Section 9.1(b).

 

“Owned Real Property” shall mean the real property owned by the Transferred FH Companies, their Closing Subsidiaries or the FH Affiliates (in respect of the FH Business) set forth on Section A(14) of the Seller’s Disclosure Letter, together with all fixtures, buildings, structures and improvements thereon and all easements and other rights and interest appurtenant thereto.

 

“Patents” shall have the meaning set forth in the definition of Intellectual Property.

 

“PBGC” shall have the meaning set forth in Section 3.11(d).

 

“Permit” means any governmental permits, licenses, certificates, qualifications, registrations, approvals for their products, other approvals and other similar authorizations.

 

“Permitted Encumbrances” shall mean:

 

(i)                 Encumbrances identified on Section A(15) of the Seller’s Disclosure Letter;

 

(ii)               To the extent any of the following do not individually or in the aggregate materially and adversely interfere with the operation or use or materially impair the value of any Asset in the FH Business as currently conducted: easements, rights-of-way, servitudes, permits, licenses, surface leases and other rights, conditions, covenants or other restrictions; and easements for streets, alleys, highways, telephone lines, power lines and railways, and all matters of record, over or in respect of any Real Property;

 

(iii)             Encumbrances for Taxes, assessments, or other governmental charges not yet due or payable or that may be subsequently paid without penalty or that are being contested in good faith by appropriate proceedings;

 

(iv)             any materialman’s, mechanics’, repairman’s, employees’, contractors’, operators’, landlord’s or other similar liens arising in the ordinary course of business;

 

(v)               non-exclusive licenses of rights to use Intellectual Property entered into in the ordinary course of business;

 

(vi)             Encumbrances that have been placed by any developer, landlord or other third party on property over which any Transferred FH Company or a Closing Subsidiary thereof has easement rights or on any Leased Real Property and subordination or similar agreements relating thereto;

 

(vii)           all matters that an accurate survey would disclose, which would not materially interfere the FH Business’ present use or occupancy of such Real Property;

 

(viii)         zoning or building codes, variances, covenants or other recorded deed restrictions affecting title to the Real Property, that do not materially impair the value of the Real Property and do not materially or adversely interfere with the use of the Real Property;

 

(ix)             any restrictions imposed on, or obligations related to, the use of or activities conducted at the Real Property imposed by Governmental Authorities as part of environmental Cleanup, including any maintenance or monitoring obligations, that do not materially impair the value of the Real Property and do not materially or adversely interfere with the use of the Real Property;

 

(x)               Encumbrances that will be released and, as appropriate, removed of record, at or prior to the Closing Date; and

 

(xi)             in the case of securities, the restrictions imposed by federal, state and foreign securities laws.

 

“Person” shall mean any individual, corporation, limited liability company, partnership, trust or other entity.

 

“Post-Closing Financial Statements” shall have the meaning set forth in Section 5.25(b).

 

“Post-Closing Tax Period” shall have the meaning set forth in Section 9.4(b).

 

“Pre-Closing Restructuring Transactions” shall have the meaning set forth in Section 5.15.

 

“Pre-Closing Tax Period” shall have the meaning set forth in Section 9.4(a).

 

“Preliminary Cash Purchase Price” shall equal $542,000,000 (i) plus, if the Estimated Net Working Capital exceeds the Reference Net Working Capital, an amount equal to such excess, (ii) minus, if the Reference Net Working Capital exceeds the Estimated Net Working Capital, an amount equal to such excess, (iii) plus the Share Adjustment Amount.

 

“Preliminary Net Working Capital Statement” shall have the meaning set forth in Section 2.3(b)(i).

 

“Preliminary Purchase Price” means, collectively, the Preliminary Cash Purchase Price and the Buyer Stock Consideration.

 

“Primary U.S. Asset Transfer Amount” shall have the meaning set forth in Section 6.3(c) of Seller’s Disclosure Letter.

 

“Privilege” shall mean all privileges that may be asserted under applicable Law including privileges arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges).

 

“Product” shall have the meaning set forth in Section 5.13(d)(i).

 

“Prohibited Activities” shall have the meaning set forth in Section 5.13(a).

 

“Purchase Price Allocation” shall have the meaning set forth in Section 2.4.

 

“Real Property” shall mean, collectively, the Leased Real Property and the Owned Real Property.

 

“Recipient” shall have the meaning set forth in Section 7.3(a).

 

“Reference Net Working Capital” shall mean $47,546,287.

“Reference Net Working Capital Statement” shall mean the statement of net working capital set forth on Section A(18) of the Seller’s Disclosure Letter.

 

“Regulatory Law” shall mean the Sherman Antitrust Act, the Clayton Antitrust Act of 1914, the HSR Act, the Federal Trade Commission Act of 1914, the EU Merger Regulations and all other federal, state or foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other Laws, including any antitrust, competition or trade regulation Laws, that are designed or intended to (a) prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition, or (b) protect the national security or the national economy of any nation.

 

“Release” shall mean any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, whether intentional or unintentional, including the movement of Hazardous Substances through, into, or upon, air, soil, surface water, groundwater or property.

 

“Remediation Standard” shall mean (i) a numerical standard that defines the concentrations of Hazardous Substances that may be permitted pursuant to Environmental Law to remain in any environmental media; or (ii) an approach (engineering, operational or otherwise) used to correct a non-compliant condition pursuant to Environmental Law.

 

“Representative” shall mean, with respect to any Person, each of such Person’s directors, officers, employees, representatives, attorneys, accountants, advisors and agents.

 

“Required Amount” shall have the meaning set forth in Section 4.6(b).

 

“Required Antitrust Approvals” shall mean (i) any required filings, consents and approvals pursuant to the HSR Act and (ii) any other filings, consents or approvals under the Regulatory Laws of the jurisdiction listed in Section A(16) of the Seller’s Disclosure Letter.

 

“Required Audited Financial Statements” shall have the meaning set forth in Section 5.25(a)(i).

 

“Required Financial Statements” shall have the meaning set forth in Section 5.25(a)(i).

 

“Required Information” shall have the meaning set forth in Section 5.19(e).

 

“Retained Asbestos Liabilities” means all Asbestos Liabilities to the extent arising from the actual or alleged presence of or exposure to asbestos contained in or forming part of any products manufactured, distributed or sold by Warren Pumps LLC and IMO Industries, Inc. and each of their predecessor companies.

 

“Retained Environmental Liabilities” shall mean Liability for any Environmental Claims involving any Legacy Site.

 

“Retained IP” shall mean (i) the Retained Names, (ii) all Intellectual Property other than FH IP, and (iii) all IP Contracts other than Transferred IP Contracts.

 

“Retained Liabilities” shall mean, except in each case as otherwise expressly provided in this Agreement, any and all Liabilities, whether arising before, on or after the Closing Date, of Seller or its Subsidiaries, the Transferred FH Companies or any of their respective predecessor companies or businesses or Closing Subsidiaries or any of their Affiliates or divisions, to the extent the same results from or arises out of the present, past or future operations or conduct of the Excluded Businesses or the use or ownership by Seller or its Subsidiaries of the Excluded Assets. “Retained Liabilities” shall also include the following: (i) all Liabilities assumed by, retained by or agreed to be performed by Seller or any of the Retained Subsidiaries, including pursuant to the Transition Services Agreement; (ii) all Liabilities for Taxes for which Seller is liable pursuant to applicable Law, except as provided otherwise in Article VII; (iii) all Liabilities in respect of Seller Benefit Plans unless such Liabilities are otherwise transferred to Buyer or one of its Affiliates pursuant to Article VI; (iv) the Retained Asbestos Liabilities; (v) the Retained Environmental Liabilities and other Liabilities relating to any Legacy Site; (vi) all Liabilities for any amounts drawn after the Closing by any Person (other than Buyer or its Affiliates) on any Seller LC or Seller Guarantee, to extent such draw relates to or arises out of facts, circumstances, events, acts or omissions that existed, occurred or failed to occur (in whole or in part) prior to the Closing; (vii) all Liabilities of Seller or any of its Affiliates for Indebtedness; (viii) Liabilities relating to the Pre-Closing Restructuring Transactions; (ix) all Liabilities with respect to equity or equity-based compensation issued by Seller or its Affiliates or payments made in lieu of, or in satisfaction of, any such equity or equity-based compensation; (x) all Liabilities related to Seller Transferred Employees; (xi) any Liabilities triggered in whole or in part by the termination of employment of any Employee or Former Employee by Seller prior to or upon Closing or any person covered by Section 6.1(c) who is not a Transferred Employee (including the employer portion of any related payroll Taxes and interest and penalties thereon); (xii) except as included in Assumed Liabilities, any compensation owed to any Employee or Former Employee engaged in the FH Business pursuant to any severance, change of control, retention, bonus or similar arrangement (other than arrangements put in place by Buyer or its Affiliates) payable in connection with the transactions contemplated by this Agreement (including the employer portion of any related payroll Taxes and interest or penalties thereon); and (xiii) all Liabilities related to the Specified Matter.

 

“Retained Names” shall mean the Trademarks set forth in Section 5.7 of the Seller’s Disclosure Letter, and any Trademarks related thereto or containing or comprising any of the foregoing, including any Trademarks derivative thereof or confusingly similar thereto, or any telephone numbers or other alphanumeric addresses or mnemonics containing any of the foregoing.

 

“Retained Subsidiary” shall mean any Subsidiary of Seller, other than the Transferred FH Companies and their Closing Subsidiaries.

 

“Reverse Termination Fee” shall have the meaning set forth in Section 9.2(b).

 

“Review Period” shall have the meaning set forth in Section 2.3(b)(ii).

 

“Sale” shall have the meaning set forth in Section 2.1 hereof.

 

“Sale Process” means all matters, whether occurring before or after the date of this Agreement, relating to the sale of the FH Business and all activities in connection therewith, including matters relating to (i) the solicitation of proposals from third parties in connection with the sale of the FH Business or (ii) the drafting, negotiation or interpretation of any of the provisions of this Agreement, the Transition Services Agreement or the Local Purchase Agreements, or the determination of the allocation of any Assets or Liabilities pursuant to the foregoing agreements or the transactions contemplated thereby.

 

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder.

 

“SEC” shall mean the United States Securities and Exchange Commission.

 

“SEC Reports” shall have the meaning set forth in Section 4.11(a).

 

“Section 338(h)(10) Election” shall have the meaning set forth in Section 7.9(a).

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Seller” shall have the meaning set forth in the preamble.

 

“Seller 401(k) Plan” has the meaning set forth in Section 6.4(a).

 

“Seller Action” shall have the meaning set forth in Section 5.22.

 

“Seller Benefit Plan” shall mean any Employee Benefit Plan other than a Transferred Benefit Plan.

 

“Seller Books and Records” shall mean the books and records, including all computerized books and records, of or owned by Seller and its Subsidiaries (including the Transferred FH Companies and their Closing Subsidiaries), other than the Transferred FH Books and Records.

 

“Seller Credit Agreement” means the Credit Agreement, dated as of June 5, 2015, among Seller, as the borrower, certain U.S. subsidiaries of Seller identified therein, as guarantors, each of the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent, swing line lender and global coordinator, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Seller FSA Plan” has the meaning set forth in Section 6.5.

 

“Seller Fundamental Representations” shall mean the representations and warranties in Section 3.1 (Organization, Etc.), Section 3.2 (Authority Relative to this Agreement, Etc.), Section 3.3 (Capitalization), Section 3.4(a) (Absence of Conflicts with Organizational Documents), Section 3.16(a) (Title to Assets) and Section 3.17 (Brokers and Finders).

 

“Seller Guarantees” shall mean all obligations of Seller or any of the Retained Subsidiaries under any Contract (other than the Seller LCs) or other obligation in existence as of the Closing Date relating to the FH Business for which Seller or any of the Retained Subsidiaries is or may be liable, as guarantor, original tenant, primary obligor, Person required to provide financial support in any form whatsoever or otherwise (including by reason of performance guarantees), including those obligations set forth on Section A(17) of the Seller’s Disclosure Letter.

 

“Seller Indemnified Parties” shall have the meaning set forth in Section 9.4(b).

 

“Seller LCs” shall have the meaning set forth in Section 5.8(c).

 

“Seller Lender Consent” means (a) the written consent of the Required Lenders and acknowledged by the Administrative Agent, each as defined in the Seller Credit Agreement, to the Sale and (b) the release by the Administrative Agent (as defined in the Seller Credit Agreement) of each applicable Transferred FH Company and their Closing Subsidiaries from its obligations as a guarantor under the Seller Credit Agreement and the other Loan Documents (as defined in the Seller Credit Agreement), in each case of the foregoing clauses (a) and (b) in form and substance reasonably satisfactory to Buyer.

 

“Seller Parties” shall have the meaning set forth in Section 10.17.

 

“Seller Pension Plan” shall mean any Seller Benefit Plan that is a defined benefit pension plan.

 

“Seller Transferred Employee” shall mean all individuals employed by Seller and its Affiliates who would have been within the definition of Employee but have ceased to be Employees and become employed by Seller and its Affiliates in a capacity that is not as an Employee.

 

“Seller U.S. DB Plan” shall have the meaning set forth in Section 6.3(c) of the Seller’s Disclosure Letter.

 

“Seller’s Disclosure Letter” shall mean the disclosure letter that Seller has delivered to Buyer as of the date of this Agreement.

 

“Services” shall have the meaning set forth in Section 5.13(d)(ii).

 

“Share Adjustment Amount” means (a) zero dollars or (b) only if the Buyer Stock Consideration is reduced as provided for in the definition of Buyer Stock Consideration, an amount equal to the Average Per Share Price multiplied by the number of shares (for purposes of this calculation, rounded up to the nearest whole share) of Buyer Common Stock reduced pursuant to such option.

 

“Share Cap” shall have the meaning set forth in the definition of Buyer Stock Consideration.

 

“Skadden” shall have the meaning set forth in Section 5.20.

 

“Solvent” shall mean, with respect to any Person, that (i) the fair saleable value of the property of such Person and its Subsidiaries is, on the date of determination, greater than the total amount of Liabilities of such Person and its Subsidiaries as of such date, (ii) such Person and its Subsidiaries are able to pay all Liabilities of such Person and its Subsidiaries as such Liabilities mature and (iii) such Person and its Subsidiaries do not have unreasonably small capital for conducting the business theretofore or proposed to be conducted by such Person and its Subsidiaries. In computing the amount of contingent or unliquidated Liabilities at any time, such Liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured Liability.

 

“Specified Matter” shall mean the matter described in Section 3.23 of the Seller’s Disclosure Letter.

 

“Stockholder Agreement” means the Stockholder Agreement, substantially in the form attached hereto as Exhibit D.

 

“Straddle Period” shall have the meaning set forth in Section 7.1(b).

 

“Subsidiary” of a Person shall mean a corporation, partnership, joint venture, association, limited liability company or other entity of which such Person owns, directly or indirectly, more than 50% of the outstanding voting stock or other ownership interests.

 

“Tax Audit” shall have the meaning set forth in Section 7.3(a) hereof.

 

“Tax Authority” shall mean a Governmental Authority or any subdivision, agency, commission or authority thereof, or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax.

 

“Tax Item” shall mean any item of income, gain, loss, deduction or credit, or other attribute that may have the effect of increasing or decreasing any Tax.

 

“Tax Return” shall mean any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, amended tax return, claim for refund or declaration of estimated tax) required or permitted to be supplied to, or filed with, a Tax Authority in connection with the determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax.

 

“Tax Sharing Agreement” shall mean any existing agreement or arrangement (whether or not written) binding any of the Transferred FH Companies or a Closing Subsidiary thereof that provide for the allocation, apportionment, sharing or assignment of any Tax liability or benefit.

 

“Taxes” shall mean any taxes, charges, fees, levies, imposts, duties, or other assessments of a similar nature, including income, alternative or add-on minimum, gross receipts, profits, lease, service, service use, wage, wage withholding, employment, workers compensation, business occupation, occupation, premiums, environmental, estimated, excise, employment, sales, use, transfer, license, payroll, franchise, severance, stamp, occupation, windfall profits, withholding, social security, unemployment, disability, ad valorem, estimated, highway use, commercial rent, capital stock, paid up capital, recording, registration, property, real property gains, real estate, value added, business license, or custom duties, imposed or required to be withheld by any Tax Authority including any interest, additions to tax, or penalties applicable or related thereto.

 

“Third Party Claim” shall mean any Action brought, asserted or commenced by any Person, other than by a Seller Indemnified Party or a Buyer Indemnified Party, against any Seller Indemnified Party or Buyer Indemnified Party.

 

“Trademarks” shall have the meaning set forth in the definition of Intellectual Property.

 

“Transaction Confidentiality Agreement” means any right or interest of Seller under any confidentiality agreement with another potential purchaser of all or any part of the FH Business.

 

“Transaction Documents” shall mean this Agreement, the Local Purchase Agreements, the Transition Services Agreement and any other agreement, instrument or document executed and delivered pursuant to this Agreement.

 

“Transaction Expenses” shall have the meaning set forth in Section 10.12.

 

“Transfer Regulations” shall mean the Acquired Rights Directive pursuant to EC Directive no. 2001/23 dated 12 March 2001, as amended from time to time, and domestic legislation implementing such directive into the national law of any country in the European Union or any similar legislation in any country outside the European Union, as amended from time to time.

 

“Transfer Taxes” shall have the meaning set forth in Section 7.4.

 

“Transferred Benefit Plan” shall mean an Employee Benefit Plan that is sponsored or maintained solely by a Transferred FH Company or a Closing Subsidiary or identified as a Transferred Benefit Plan in Section 3.11(a) of Seller’s Disclosure Letter.

 

“Transferred DB Plans” means any defined benefit pension plan identified as a Transferred Benefit Plan in Section 3.11(a) of Seller’s Disclosure Letter and the Seller U.S. DB Plan to the extent provided in Section 6.3 of this Agreement and Section 6.3(c) of the Seller’s Disclosure Letter.

 

“Transferred Employee” shall mean (x) each Offer Employee who accepts an offer of employment from Buyer or its Affiliate, (y) each Automatic Transfer Employee who does not object to the transfer of his or her employment to Buyer or its Affiliate pursuant to the Transfer Regulations and (z) each Transferred FH Company Employee, in the case of clauses (x) and (y), who commences employment with Buyer or its Affiliate on the Closing Date.

 

“Transferred FH Books and Records” shall mean the books and records of Seller or any of its Affiliates, including all computerized books and records, to the extent they relate to the FH Business, including (i) all such books and records to the extent relating to Transferred Employees (but excluding personnel records with respect to each Offer Employee), the purchase of materials, Taxes, supplies and services, the development, marketing, manufacture and sale of products by the FH Business or dealings with suppliers and customers of the FH Business, (ii) all files relating to any Action included in the Assumed Liabilities and (iii) all emails relating to the FH Business and dated no earlier than the date that is one month prior to the date of this Agreement. Notwithstanding the foregoing, “Transferred FH Books and Records” shall not include information, documents or materials to the extent relating to or constituting any Excluded Assets or Retained Liabilities.

 

“Transferred FH Companies” shall mean IMO AB, Imo Industries (Canada), Inc., Colfax Netherlands Holding BV, CLFX Sub Holding LLC, Allweiler GmbH, Colfax Fluid Handling Middle East Ltd., Allweiler India Private Limited (f/k/a Tushaco Pumps Private Limited), Colfax Fluid Handling Reliability Services Company (f/k/a Total Lubrication Management Company) and Colfax Pump (Weihai) Company Limited.

 

“Transferred FH Company Employee” shall mean each Employee employed by a Transferred FH Company.

 

“Transferred IP Contracts” shall mean any IP Contract to which Seller or any of its Subsidiaries is a party or to which any of the FH Assets is subject, in each case, that (i) with respect to IP Contracts that do not relate to computer software or databases, relates exclusively to the FH Business, and (ii) with respect to IP Contracts that relate to computer software or databases that are used in the operation of the FH Business, all such IP Contracts other than the Excluded FH Software Licenses.

 

“Transferred Pension Participants” means the participants in the Transferred DB Plans.

 

“Transition Services Agreement” means the Transition Services Agreement, substantially in the form attached hereto as Exhibit E.

 

“Treasury Regulations” shall mean the final, temporary and proposed regulations promulgated by the United States Department of Treasury under the Code.

 

“U.S. Pension Transfer Date” shall have the meaning set forth in Section 6.3(c) of Seller’s Disclosure Letter.

 

“U.S. Transferred Employee” shall mean each Transferred Employee primarily located in the United States.

 

“U.S. Transferred Pension Participants” shall have the meaning set forth in Section 6.3(c) of Seller’s Disclosure Letter.

 

“VAT” means any value added Tax, goods and services Tax or any other similar Tax.

 

“WARN Act” shall have the meaning set forth in Section 6.8.

 

“Wholly Owned Subsidiary” shall mean, with respect to any Person, any Subsidiary of such Person if all of the common stock or other similar equity ownership interests in such Subsidiary (other than any director’s qualifying shares or investments by foreign nationals mandated by applicable Law) is owned directly or indirectly by such Person.

 

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FORM OF BILL OF SALE AND ASSIGNMENT¹

THIS BILL OF SALE AND ASSIGNMENT, dated [●], 2017 (this “Bill of Sale”), is executed and delivered by and between [BUYER DESIGNEE], a [●] (“FH Asset Buyer”)², and [FH ASSET SELLER], a [●] (“FH Asset Seller”).³  All capitalized words and terms used in this Bill of Sale and not otherwise defined herein shall have the respective meanings ascribed to them in the Purchase Agreement, dated as of [●], 2017 (the “Agreement”), by and between [SELLER], a Delaware corporation (“Seller”), and [FH Asset Buyer]⁴[[BUYER], a Delaware corporation (“Buyer”)]⁵.

WHEREAS, pursuant to the Agreement, Seller has agreed to cause FH Asset Seller to sell, convey, assign, transfer and deliver to FH Asset Buyer all of FH Asset Seller’s right, title and interest in and to the Acquired FH Assets, free and clear of all Encumbrances (other than Permitted Encumbrances).

NOW, THEREFORE, in consideration of the mutual promises set forth in the Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

FH Asset Seller hereby sells, conveys, assigns, transfers and delivers to FH Asset Buyer, its successors and assigns, to have and to hold forever, and FH Asset Buyer hereby purchases, acquires and accepts from FH Asset Seller, all of FH Asset Seller’s right, title and interest in and to the Acquired FH Assets, free and clear of any Encumbrances (other than Permitted Encumbrances).

This Bill of Sale is an instrument of transfer and conveyance contemplated by, and is executed and delivered under and subject to, the Agreement, and nothing contained in this Bill of Sale shall be deemed to modify any of the provisions of the Agreement, nor shall anything in this Bill of Sale be deemed to modify, expand or enlarge any of the rights, remedies or obligations of the parties under the Agreement.

The terms and provisions of this Bill of Sale are intended solely for the benefit of the parties hereto and their respective successors and permitted assigns. Nothing expressed or implied in this Bill of Sale is intended or shall be construed to confer upon or give any Person, other than the parties, any right or remedies under or by reason of this Bill of Sale.

¹ NOTE TO DRAFT: This form of agreement assumes that the Acquired FH Assets do not include any intellectual property or real property.

² NOTE TO DRAFT:  FH Asset Buyer will either be Buyer or another entity designated by Buyer.

³ NOTE TO DRAFT:  Bill of Sale to be executed by each FH Asset Seller.

⁴ NOTE TO DRAFT:  Use this bracketed text if Buyer is FH Asset Buyer.

⁵ NOTE TO DRAFT:  Use this bracketed text if Buyer is not FH Asset Buyer.

The invalidity or unenforceability of any provision of this Bill of Sale shall not affect the validity or enforceability of any other provisions of this Bill of Sale, each of which shall remain in full force and effect.

This Bill of Sale shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

This Bill of Sale may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Bill of Sale shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto.  For the convenience of the parties, any number of counterparts hereof may be executed, each such executed counterpart shall be deemed an original and all such counterparts together shall constitute one and the same instrument.  Facsimile transmission (including the e-mail delivery of documents in Adobe PDF format) of any signed original counterpart and/or retransmission of any signed facsimile transmission shall be deemed the same as the delivery of an original.

No amendment or modification of this instrument or any provision hereof shall be valid or effective unless in writing and signed by each of FH Asset Seller and FH Asset Buyer.

[Remainder of page intentionally left blank. Signature page follows.]

IN WITNESS WHEREOF, FH Asset Seller and FH Asset Buyer have caused this Bill of Sale to be duly executed as of and on the date first above written.

 

 

[Signature Page to Bill of Sale and Assignment]

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INSTRUMENT OF ASSUMPTION (RETAINED LIABILITIES)

THIS INSTRUMENT OF ASSUMPTION (this “Instrument”) is made and effective as of [●], 2017, by and between [TRANSFERRED FH COMPANY/CLOSING SUBSIDIARY], a [●] (“Transferred FH Company/Closing Subsidiary”), and [●], a [●] (“Assignee”)¹.  All capitalized words and terms used in this Instrument and not otherwise defined herein shall have the respective meanings ascribed to them in the Agreement (as defined below).

WHEREAS, [Assignee]²[[SELLER], a Delaware corporation (“Seller”),]³ and [BUYER], a Delaware corporation, have entered into a Purchase Agreement, dated as of [●], 2017 (the “Agreement”), pursuant to which, among other things, [Assignee]⁴[Seller]⁵ (either through itself or one of its Affiliates) has agreed to assume the Retained Liabilities of any Transferred FH Company or its Closing Subsidiaries; and

WHEREAS, by execution and delivery of this Instrument, the parties hereto desire to effect the assumption of the Retained Liabilities of the Transferred FH Company/Closing Subsidiary by Assignee.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, upon the terms set forth herein and intending to be legally bound hereby, the parties hereto hereby agree that the Transferred FH Company/Closing Subsidiary hereby conveys, assigns, transfers and delivers to Assignee, its successors and assigns, forever, the Retained Liabilities of the Transferred FH Company/Closing Subsidiary, and Assignee hereby assumes and agrees to pay, perform and discharge, promptly when due, all of the terms, covenants and conditions of all such Retained Liabilities.

This Instrument (i) is made pursuant to, and is subject to the terms of, the Agreement and (ii) shall be binding upon Assignee and its respective successors and permitted assigns in accordance with the terms of this Instrument and shall inure to the benefit of the Transferred FH Company/Closing Subsidiary and its respective successors and permitted assigns.  Notwithstanding anything to the contrary contained in this Instrument, nothing contained herein shall be deemed to limit, restrict or modify in any manner the rights, remedies and obligations (including without limitation any liability) of the parties under the Agreement, and in the event of a conflict between the terms and provisions hereof and the terms and provisions of the Agreement, the terms and provisions of the Agreement shall control.

¹ NOTE TO DRAFT:  Assignee will either be Seller or one of its Affiliates.  There will be multiple Instruments of Assignment (one for each Transferred FH Company or Closing Subsidiary).

² NOTE TO DRAFT:  Use this bracketed text if Seller is Assignee.

³ NOTE TO DRAFT:  Use this bracketed text if Seller is not Assignee.

⁴ NOTE TO DRAFT:  Use this bracketed text if Seller is Assignee.

⁵ NOTE TO DRAFT:  Use this bracketed text if Seller is not Assignee.

This Instrument and the covenants and agreements contained herein shall survive the Closing.

Section 10.13 of the Agreement shall apply mutatis mutandis to this Instrument.

This Instrument may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Instrument shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto.  For the convenience of the parties, any number of counterparts hereof may be executed, each such executed counterpart shall be deemed an original and all such counterparts together shall constitute one and the same instrument.  Facsimile transmission (including the e-mail delivery of documents in Adobe PDF format) of any signed original counterpart and/or retransmission of any signed facsimile transmission shall be deemed the same as the delivery of an original.

This Instrument shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

No waiver, amendment, modification or change of this Instrument or any provision hereof shall be valid or effective unless in writing and signed by each of the parties set forth on the signature page hereto.

[Remainder of page intentionally left blank. Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Instrument to be executed as of the date first above written.

[Signature Pages to Instrument of Assumption]

INSTRUMENT OF ASSUMPTION (ASSUMED LIABILITIES)

THIS INSTRUMENT OF ASSUMPTION (this “Instrument”) is made and effective as of [●], 2017, by and between [●], a [●] (“Assignee”)¹, [SELLER], a Delaware corporation (“Seller”), and the FH Affiliates set forth on the signature page hereto.  All capitalized words and terms used in this Instrument and not otherwise defined herein shall have the respective meanings ascribed to them in the Agreement (as defined below).

WHEREAS, [Assignee]²[[BUYER], a Delaware corporation (“Buyer”),]³ and Seller have entered into a Purchase Agreement, dated as of [●], 2017 (the “Agreement”), pursuant to which, among other things, [Assignee]⁴[Buyer]⁵ (either through itself or one of its Subsidiaries) has agreed to assume the Assumed Liabilities; and

WHEREAS, by execution and delivery of this Instrument, the parties hereto desire to effect the assumption of the Assumed Liabilities by Assignee.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, upon the terms set forth herein and intending to be legally bound hereby, the parties hereto hereby agree that Seller and the FH Affiliates hereby convey, assign, transfer and deliver to Assignee and its successors and assigns, forever, the Assumed Liabilities, and Assignee hereby assumes and agrees to pay, perform and discharge, promptly when due, all of the terms, covenants and conditions of all Assumed Liabilities.

This Instrument (i) is made pursuant to, and is subject to the terms of, the Agreement and (ii) shall be binding upon Assignee and its successors and permitted assigns in accordance with the terms of this Instrument and shall inure to the benefit of Seller, the FH Affiliates and their respective successors and permitted assigns.  Notwithstanding anything to the contrary contained in this Instrument, nothing contained herein shall be deemed to limit, restrict or modify in any manner the rights, remedies and obligations (including without limitation any liability) of the parties under the Agreement, and in the event of a conflict between the terms and provisions hereof and the terms and provisions of the Agreement, the terms and provisions of the Agreement shall control.

¹ NOTE TO DRAFT:  Assignee will either be Buyer or one of its Subsidiaries.

² NOTE TO DRAFT:  Use this bracketed text if Buyer is Assignee.

³ NOTE TO DRAFT:  Use this bracketed text if Buyer is not Assignee.

⁴ NOTE TO DRAFT:  Use this bracketed text if Buyer is Assignee.

⁵ NOTE TO DRAFT:  Use this bracketed text if Buyer is not Assignee.

This Instrument and the covenants and agreements contained herein shall survive the Closing.

Section 10.13 of the Agreement shall apply mutatis mutandis to this Instrument.

This Instrument may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Instrument shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto.  For the convenience of the parties, any number of counterparts hereof may be executed, each such executed counterpart shall be deemed an original and all such counterparts together shall constitute one and the same instrument.  Facsimile transmission (including the e-mail delivery of documents in Adobe PDF format) of any signed original counterpart and/or retransmission of any signed facsimile transmission shall be deemed the same as the delivery of an original.

This Instrument shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

No waiver, amendment, modification or change of this Instrument or any provision hereof shall be valid or effective unless in writing and signed by each of the parties set forth on the signature page hereto.

[Remainder of page intentionally left blank. Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Instrument to be executed as of the date first above written.

 

---

		IMO INDUSTRIES INC.
		By:
			Authorized Signing Officer
		Date:

 

Form of Local Purchase Agreement

本地购股协议模板

by and between

由

Colfax Fluid Handling Holding BV

And

与

[●]

【●】

签署

Dated as of [●], 2017

2017年[●]月[●]日

Local Purchase Agreement

本地购股协议

THIS LOCAL PURCHASE AGREEMENT (this “Agreement”) is entered into as of [●], 2017, by and between:

本《本地购股协议》（本“协议”）于2017年[●]月[●]日由以下双方签订：

Colfax Fluid Handling Holding BV, a private company with limited liability duly established and validly existing under the laws of the Netherlands, with its corporate seat in Amsterdam and its place of business at (7556 BV) Hengelo, Hassinkweg 10 (the “Seller”); and

Colfax Fluid Handling Holding BV，一家根据荷兰法律正式成立并有效存续的私人有限责任公司，其公司注册地为阿姆斯特丹，其营业地点为（7556BV）Hengelo, Hassinkweg 10 (“卖方”)；及

[●], a company duly established and validly existing under the laws of the [●], with its registered address at [●] (the “Buyer”).

【●】，一家根据[●]法律正式成立并有效存续的公司，其注册地址为[●](“买方”)。

The Seller and the Buyer are hereinafter referred to collectively as the “Parties”, and individually as a “Party”.

在本协议中，“卖方”与“买方”合称为“双方”，单独称为“一方”。

WHEREAS,

鉴于：

(A)

Colfax Pump (Weihai) Company Limited (the “Company”) is a limited liability company incorporated under the laws of the PRC (as defined below).  As of the date of this Agreement, the Seller is the sole shareholder of the Company and holds 100% of the equity interests of the Company (the “Equity Interests”);

科尔法泵业（威海）有限公司（“公司”）是一家根据中国（定义见下文）法律成立的有限责任公司。截至本协议签署之日，卖方是公司的唯一股东，持有公司100%的股权（“目标股权”）；

(B)	Pursuant to a Purchase Agreement dated [●] (the “Master Purchase Agreement”), the parties thereunder have agreed to the sale and purchase of 100% of the equity interests of the Company and will procure their respective subsidiaries to execute a local purchase agreement; and

依据一份于[●]签署的购股协议（“主购股协议”），该协议项下的双方已就公司100%股权的出售和购买达成了一致意见，并将促使其各自的子公司签署本地购股协议；及

(C)	Subject to the terms and conditions set forth herein and in the Master Purchase Agreement, as applicable, the Seller desires to sell and transfer to the Buyer, and the Buyer desires to purchase and acquire from the Seller, the Equity Interests.

在遵守本协议以及主购股协议（视适用情形而定）的条款和条件的前提下，卖方有意向买方出售和转让、且买方有意从卖方购买和获得目标股权。

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the Parties agree as follows:

因此，考虑到本协议中所述的前提和相互约定，双方特此达成如下协议：

1.	Definitions

As used in this Agreement, the following terms shall have the following meanings:

在本协议中使用的以下词语应具有下列含义：

1.1	“Amended Business License” means the amended business license of the Company to be issued by the SAIC (as defined below) following the registration of the Equity Transfer (as defined below).

“变更后的营业执照”系指在股权转让（定义见下文）完成登记后由工商局（定义见下文）颁发的经变更的公司营业执照。

1.2	“Business Day” means each calendar day except Saturdays, Sundays, and any other day on which banks are generally closed for business in China and [the United States of America].

“工作日”系指除星期六、星期日以及中国【和美国】的银行一般不对外开展业务的任何其他日子以外的每一日历日。

1.3	“PRC” or “China” means the People’s Republic of China, which, for the purpose of this Agreement, shall exclude Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan.

“中国”系指中华人民共和国，为本协议之目的，不包括香港特别行政区、澳门特别行政区和台湾。

1.4	“SAIC” means the State Administration for Industry and Commerce of the PRC or the corresponding local authority.

“工商局” 是指中华人民共和国国家工商行政管理总局，或相应的地方分支机构。

2.	Purchase and Sale of the Equity Interests

2.1

Under the terms and subject to the conditions of this Agreement and of the Master Purchase Agreement, the Seller hereby agrees to sell and transfer to the Buyer, and the Buyer agrees to purchase and acquire from the Seller, all right, title and interest of the Seller in and to the Equity Interests (the “Equity Transfer”).

根据本协议以及主购股协议的条款并在符合本协议以及主购股协议的条件的前提下，卖方在此同意向买方出售并转让，且买方同意从卖方购买并获得卖方对目标股权所享有的所有权利、所有权和权益（“股权转让”）。

2.2	Upon the completion of the Equity Transfer, the Buyer will become the sole shareholder of the Company.

股权转让完成后，买方将成为公司的唯一股东。

3.	Purchase Price; Payment

3.1	The purchase price (the “Purchase Price”) for the Equity Interests shall be the [fixed] sum of [●].

目标股权的购买价款（“购买价款”）应为【固定】金额[●]。

3.2	Upon the payment of the Purchase Price, the Buyer will enjoy the shareholder’s rights of the Company and assume the liabilities and responsibilities of the shareholder of the Company.

购买价款支付完成后，买方将享有公司股东的权利，并承担公司股东的责任和义务。

4.	Representations and Warranties of the Seller

The Seller hereby represents and warrants to the Buyer on the date of this Agreement that:

卖方在本协议签署日向买方陈述和保证如下：

4.1	The Seller has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereunder;

卖方拥有签署本协议以及履行其在本协议项下的义务和完成本协议项下所述交易所需的公司权力和权限；

4.2	The execution, delivery and performance of this Agreement and the consummation of the transaction contemplated hereunder do not and will not violate the articles of association or any other organization document of the Seller;

本协议的签署、交付和履行以及本协议项下所述交易的完成没有且不会违反卖方的章程或任何其他组织文件；

4.3	This Agreement has been duly authorized, executed and delivered and shall constitute a valid and binding agreement of the Seller, enforceable against the Seller in accordance with the terms hereof; and

本协议已经正式授权、签署并交付，构成对卖方有效并有约束力的协议，可依据本协议条款对卖方强制执行；及

5.	Representations and Warranties of Buyer

The Buyer hereby represents and warrants to the Seller on the date of this Agreement that:

买方在本协议签署日向卖方陈述和保证如下：

5.1	The Buyer has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereunder;

买方拥有签署本协议以及履行其在本协议项下的义务和完成本协议项下所述交易所需的公司权力和权限；

5.2	The execution, delivery and performance of this Agreement and the consummation of the transaction contemplated hereunder do not and will not violate the articles of association or any other organization document of the Buyer;

本协议的签署、交付和履行以及本协议项下所述交易的完成没有且不会违反买方的章程或任何其他组织文件；

5.3	This Agreement has been duly authorized, executed and delivered and shall constitute a valid and binding agreement of the Buyer, enforceable against the Buyer in accordance with the terms hereof; and

本协议已经正式授权、签署并交付，构成对买方有效并有约束力的协议，可依据本协议条款对买方强制执行；及

6.	Co-operation

Upon the execution of this Agreement and subject to the full payment of the Purchase Price by the Buyer, the Seller shall use reasonable efforts to assist the Company and the Buyer in applying to SAIC for the Amended Business License of the Company registering the Buyer as the sole shareholder of the Company.

本协议签署后，在买方已经足额支付购买价款的前提下，卖方应尽其合理努力协助公司和买方向工商局申请公司变更后的营业执照，将买方登记为公司的唯一股东。

7.	Termination

7.1	This Agreement shall automatically terminate on the date when the Master Purchase Agreement is terminated in accordance with the terms thereof.

主购股协议根据其条款终止之日，本协议自动终止。

8.	Governing Law and Dispute Resolution

8.1	This Agreement, the rights and obligations of the Parties hereto, and all claims or disputes relating hereto, shall be governed by and construed in accordance with the laws of the PRC.

本协议、本协议双方的权利和义务以及与本协议有关的所有索赔或争议应适用中国法律并依照中国法律进行解释。

8.2	Any dispute arising out of or in connection with this Agreement shall be referred to and finally resolved by arbitration administered by [China International Economic and Trade Arbitration Commission (“CIETAC”)] under its arbitration rules in force at the date of applying for arbitration.

因本协议产生的或与本协议有关的任何争议应提交【中国国际经济贸易仲裁委员会（“贸仲”）】由其根据申请仲裁之日有效的贸仲仲裁规则通过仲裁最终解决。

8.3

The arbitration shall be conducted by a panel of three arbitrators (the “Tribunal”). Each of the Claimant and the Respondent shall appoint one arbitrator, and if one Party fails to appoint an arbitrator within thirty (30) days of receiving notice of the appointment of an arbitrator, that arbitrator shall be appointed by CIETAC. The third arbitrator, who shall act as the chairman of the Tribunal, shall be chosen by the two arbitrators appointed by the Seller and the Buyer. If the said two arbitrators are unable to agree upon the appointment of the third arbitrator within thirty (30) days after the appointment of the second arbitrator, then such third arbitrator shall be appointed by CIETAC.

仲裁应由三名仲裁员组成的仲裁庭（“仲裁庭”）进行。仲裁申请人和被申请人应各指定一名仲裁员，如一方未在收到指定仲裁员的通知后三十（30）日内指定仲裁员，该仲裁员应由贸仲指定。第三名仲裁员、即仲裁庭的首席仲裁员应由卖方和买方指定的两名仲裁员共同选定。如上述两名仲裁员无法在第二名仲裁员指定后三十（30）日内就第三名仲裁员的指定达成一致，则第三方仲裁员应由贸仲指定。

8.4

The arbitration award made by the Tribunal shall be final and binding on the Parties and each Party irrevocably waives any right of appeal to any court or any other institutions which might otherwise have jurisdiction over the dispute, however nothing in this Section 8.4 shall be deemed to preclude a Party from seeking to enforce any arbitration award made by the Tribunal in any court that it deems appropriate;

仲裁庭作出的仲裁裁决为终局性并对本协议双方均有约束力，每一方不可撤销地放弃向可能对争议有管辖权的任何法院或任何其他机构提出上诉的任何权利，但是，本第8.4条中的任何规定不应视为妨碍任一方在其认为适当的任何法院对仲裁庭作出的任何仲裁裁决申请强制执行。

8.5

Any arbitration expense shall be borne by the losing Party or as determined by the Tribunal.  The Parties agree that, if it becomes necessary for a Party to enforce the arbitration award by any legal action, the other Party shall pay all reasonable costs and expenses incurred by the Party seeking to enforce the award; and

任何仲裁费用应由败诉方承担或按照仲裁庭的决定承担。双方同意，如一方有必要通过任何法律行动强制执行仲裁裁决，另一方应承担该方为申请强制执行裁决而发生的所有合理费用和开支；及

8.6	The seat of arbitration shall be in [Beijing] and the arbitration proceedings shall be conducted in [English and in Chinese].

仲裁地点为【北京】，仲裁程序应以【中英文】进行。

9.	Miscellaneous

9.1

All notices, requests and other communications to either Party under this Agreement shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service (costs prepaid, return receipt requested) addressed to:

本协议项下向任何一方发出的所有通知、要求和其他通讯应以书面形式作出，并应通过预付邮费挂号信、传真或电子邮件，或由专人、信使或快递（邮资预付并要求回执），发送至以下地址：

To the Seller at:

Colfax Fluid Handling Holding BV

C/o Colfax Corporation

420 National Business Parkway

Annapolis Junction, MD 20701

United States of America

Attention: General Counsel

With a copy (which shall not constitute effective notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

United States of America

Attention: Ann Beth Stebbins, Esq.

给卖方：

Colfax Fluid Handling Holding BV

由Colfax Corporation转交

地址：420 National Business Parkway

Annapolis Junction, MD 20701

United States of America

收件人：法律总顾问

抄送（该抄送不构成有效通知）：

Skadden, Arps, Slate, Meagher & Flom LLP

地址：Four Times Square

New York, NY 10036

United States of America

收件人：Ann Beth Stebbins, Esq.

To the Buyer at:

[●]

Attention:[●]

With a copy (which shall not constitute effective notice) to:

[●]

Attention:[●]

给买方：

[●]

收件人：[●]

抄送（该抄送不构成有效通知）：

[●]

收件人：[●]

or such other address, facsimile number or email address as the Seller or the Buyer, as the case may be, may hereafter specify by notice to the other Party hereto.

或卖方或买方（视情形而定）之后可能通过通知告知另一方的其他地址、传真号码或电子邮件地址。

9.2	This Agreement is executed in both English and Chinese languages, and the two language versions shall have the same legal effect.

本协议以中文和英文两种语言签署，两种语言文本具有同等效力。

9.3	To the extent there is a conflict between any of the provisions of this Agreement and the Master Purchase Agreement, the provisions of the Master Purchase Agreement shall prevail.

如本协议任何条款与主购股协议存在冲突，以主购股协议的条款为准。

9.4	None of the Parties shall assign any rights or obligations hereunder without first obtaining the written consent of the other Party.

一方不得在未经另一方事先书面同意的情况下转让其在本协议项下的任何权利或任何义务。

9.5	The provisions of this Agreement may be amended or modified only upon the prior written consent of the Parties hereto.