EXECUTION COPY
STOCK PURCHASE AGREEMENT
by and among
UNITED PARCEL SERVICE OF AMERICA, INC.,
UNITED PARCEL SERVICE, INC.,
CNF INC.
and
MENLO WORLDWIDE, LLC
As of October 5, 2004
TABLE OF CONTENTS
Page
ARTICLE I CONSTRUCTION; DEFINITIONS 2
SECTION 1.1 CONSTRUCTION 2
SECTION 1.2 DEFINITIONS 2
SECTION 1.3 ACCOUNTING TERMS 2
ARTICLE II TRANSFER AND ASSUMPTION; PURCHASE AND SALE 2
SECTION 2.1 TRANSFER OF THE CONVEYED ASSETS AND THE
EXCLUDED ASSETS 2
SECTION 2.2 ASSUMPTION OF LIABILITIES; EXCLUDED
LIABILITIES. 2
SECTION 2.3 TRANSFER PROVISIONS 2
SECTION 2.4 AGREEMENT TO PURCHASE AND SELL 2
ARTICLE III PURCHASE PRICE; ADJUSTMENTS 2
SECTION 3.1 PURCHASE PRICE 2
SECTION 3.2 PAYMENT OF PURCHASE PRICE 2
SECTION 3.3 CASH 2
SECTION 3.4 WORKING CAPITAL ADJUSTMENT 2
SECTION 3.5 RELEASES OF LIABILITIES. 2
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS 2
SECTION 4.1 ORGANIZATION 2
SECTION 4.2 AUTHORIZATION 2
SECTION 4.3 CAPITAL STOCK 2
SECTION 4.4 SUBSIDIARIES 2
SECTION 4.5 ABSENCE OF RESTRICTIONS AND CONFLICTS 2
SECTION 4.6 REAL PROPERTY. 2
SECTION 4.7 TITLE TO ASSETS; RELATED MATTERS 2
SECTION 4.8 INVENTORY 2
SECTION 4.9 FINANCIAL STATEMENTS 2
SECTION 4.10NO UNDISCLOSED LIABILITIES 2
SECTION 4.11ABSENCE OF CERTAIN CHANGES 2
SECTION 4.12LEGAL PROCEEDINGS 2
SECTION 4.13COMPLIANCE WITH LAW 2
SECTION 4.14COMPANY CONTRACTS 2
SECTION 4.15TAX RETURNS; TAXES 2
SECTION 4.16OFFICERS, EMPLOYEES AND INDEPENDENT
CONTRACTORS 2
SECTION 4.17COMPANY BENEFIT PLANS 2
SECTION 4.18LABOR RELATIONS 2
SECTION 4.19INSURANCE POLICIES 2
SECTION 4.20ENVIRONMENTAL, HEALTH AND SAFETY MATTERS 2
SECTION 4.21INTELLECTUAL PROPERTY 2
SECTION 4.22SOFTWARE 2
SECTION 4.23NOTES AND ACCOUNTS RECEIVABLE 2
SECTION 4.24TRANSACTIONS WITH AFFILIATES 2
SECTION 4.25LICENSES 2
SECTION 4.26ETHICAL PRACTICES 2
SECTION 4.27BROKERS, FINDERS AND INVESTMENT BANKERS 2
SECTION 4.28CUSTOMS MATTERS 2
SECTION 4.29INDUSTRIAL REVENUE BONDS 2
ARTICLE V INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE
SELLERS 2
SECTION 5.1 AUTHORIZATION 2
SECTION 5.2 ABSENCE OF RESTRICTIONS AND CONFLICTS 2
SECTION 5.3 OWNERSHIP OF EQUITY 2
SECTION 5.4 LEGAL PROCEEDINGS 2
SECTION 5.5 AMOUNTS OWED TO SELLERS 2
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND
PARENT 2
SECTION 6.1 ORGANIZATION 2
SECTION 6.2 AUTHORIZATION 2
SECTION 6.3 ABSENCE OF RESTRICTIONS AND CONFLICTS 2
SECTION 6.4 AVAILABILITY OF FUNDS 2
SECTION 6.5 PURCHASE FOR INVESTMENT INTENT 2
SECTION 6.6 BROKERS, FINDERS AND INVESTMENT BANKERS 2
ARTICLE VII CERTAIN COVENANTS AND AGREEMENTS 2
SECTION 7.1 CONDUCT OF BUSINESS BY THE COMPANY AND THE
COMPANY SUBSIDIARIES PRIOR TO THE CLOSING 2
SECTION 7.2 INSPECTION AND ACCESS TO INFORMATION 2
SECTION 7.3 INTERIM FINANCIALS 2
SECTION 7.4 NO SOLICITATION OF TRANSACTIONS 2
SECTION 7.5 COMMERCIALLY REASONABLE EFFORTS; FURTHER
ASSURANCES; COOPERATION 2
SECTION 7.6 PUBLIC ANNOUNCEMENTS 2
SECTION 7.7 SUPPLEMENTS TO SCHEDULES; NOTICES OF CERTAIN
EVENTS 2
SECTION 7.8 EMPLOYEE AND BENEFIT MATTERS. 2
SECTION 7.9 INSURANCE 2
SECTION 7.10NONCOMPETITION AND RELATED MATTERS 2
SECTION 7.11TAX MATTERS 2
SECTION 7.12CERTAIN TRANSACTIONS. 2
SECTION 7.13MINIMUM NET WORTH. 2
SECTION 7.14CONSENTS; NOVATION OF GOVERNMENT CONTRACTS. 2
SECTION 7.15TRANSFER STRUCTURE; TRANSFER DOCUMENTATION. 2
SECTION 7.16CUSTOMER VISITS 2
SECTION 7.17RENEGOTIATION OF AGREEMENTS; RELEASE OF
GUARANTEES. 2
SECTION 7.18D&O INSURANCE 2
SECTION 7.19TRANSITION SERVICES AGREEMENT 2
SECTION 7.20SELLERS' ACCESS TO BOOKS AND RECORDS 2
SECTION 7.21VECTOR MENLO SHIPPER'S ASSOCIATION 2
SECTION 7.22SHARED LICENSES 2
ARTICLE VIII CONDITIONS TO CLOSING 2
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS 2
SECTION 8.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER 2
SECTION 8.3 CONDITIONS TO OBLIGATIONS OF THE SELLERS 2
ARTICLE IX CLOSING 2
SECTION 9.1 CLOSING.. 2
SECTION 9.2 SELLERS CLOSING DELIVERIES 2
SECTION 9.3 PURCHASER CLOSING DELIVERIES 2
ARTICLE X TERMINATION 2
SECTION 10.1TERMINATION 2
SECTION 10.2SPECIFIC PERFORMANCE AND OTHER REMEDIES 2
SECTION 10.3EFFECT OF TERMINATION 2
ARTICLE XI INDEMNIFICATION 2
SECTION 11.1INDEMNIFICATION OBLIGATIONS OF THE
SHAREHOLDER 2
SECTION 11.2INDEMNIFICATION OBLIGATIONS OF THE PURCHASER 2
SECTION 11.3INDEMNIFICATION PROCEDURE 2
SECTION 11.4CLAIMS PERIOD 2
SECTION 11.5LIABILITY LIMITS 2
SECTION 11.6INVESTIGATIONS; TAX TREATMENT 2
SECTION 11.7SELLERS' REPRESENTATIONS AND WARRANTIES 2
SECTION 11.8SUCCESSORS OR ASSIGNS 2
ARTICLE XII MISCELLANEOUS PROVISIONS 2
SECTION 12.1NOTICES 2
SECTION 12.2SCHEDULES AND EXHIBITS 2
SECTION 12.3ASSIGNMENT; SUCCESSORS IN INTEREST 2
SECTION 12.4CAPTIONS 2
SECTION 12.5CONTROLLING LAW; AMENDMENT 2
SECTION 12.6CONSENT TO JURISDICTION, ETC 2
SECTION 12.7SEVERABILITY 2
SECTION 12.8COUNTERPARTS 2
SECTION 12.9ENFORCEMENT OF CERTAIN RIGHTS 2
SECTION 12.10 WAIVER 2
SECTION 12.11 INTEGRATION 2
SECTION 12.12 COOPERATION FOLLOWING THE CLOSING 2
SECTION 12.13 TRANSACTION COSTS 2
SECTION 12.14 PARENT GUARANTEE. 2
LIST OF EXHIBITS
Exhibit 1.2(a) ACMI Leases
Exhibit 1.2(b) Assumed Liabilities
Exhibit 1.2(c) Assumed Liabilities - Insurance Plans
Exhibit 1.2(d) Assumed Liabilities - Environmental Laws
Exhibit 1.2(e) Collective Bargaining Agreements
Exhibit 1.2(f) Company Subsidiaries
Exhibit 1.2(g) Intellectual Property
Exhibit 1.2(h) Excluded Assets
Exhibit 1.2(i) Excluded Employees
Exhibit 1.2(j) Obligations Under Dayton Bonds
Exhibit 1.2(k) Identified Litigation
Exhibit 1.2(l) Key Employees
Exhibit 1.2(m) Persons with Knowledge
Exhibit 1.2(n) Severance Payments
Exhibit 3.1(a) Assumed Debt
Exhibit 3.1(b) Purchase Price Allocations
Exhibit 3.4(a) Working Capital
Exhibit 4.9(c) Accruals
Exhibit 4.28 Importer of Record Policy
Exhibit 5.5 Amounts Owed to Sellers
Exhibit 7.8(a) Transferred Employees
Exhibit 7.8(d) Company Retained Plans
Exhibit 7.8(g) Employee Information
Exhibit 7.8(l) Logistics Contract Employees
Exhibit 7.14(c) Other Third Party Consents
Exhibit 7.17 Wet and Dry Lease Agreements
Exhibit 7.19 Transition Services Agreement
Exhibit 7.22 Shared Usage Licenses
Exhibit 8.2(f) Form of Secretary Certificate (Sellers)
Exhibit 8.3(e) Form of Secretary Certificate (Purchaser)
Exhibit 11.1(i) Specific Indemnification Obligations of the
Shareholder
Exhibit 11.2 Specific Indemnification Obligations of the
Purchaser
LIST OF SCHEDULES
Schedule 4.1 Company and Company Subsidiaries
Schedule 4.3 Capital Stock
Schedule 4.4 Subsidiaries
Schedule 4.5 Absence of Restrictions and Conflicts
Schedule 4.6(a) Owned Real Property
Schedule 4.6(b) Leased Real Property
Schedule 4.6(c) Leasehold Exceptions
Schedule 4.6(d) Exceptions to Real Property Compliance with
Law
Schedule 4.6(e) Real Property Exceptions
Schedule 4.7 Title Exceptions; List of Assets
Schedule 4.8 Customer Inventory
Schedule 4.9(a) Shareholder Financial Statements; Exceptions
Schedule 4.9(b) Company Financial Statements
Schedule 4.10 Undisclosed Liabilities
Schedule 4.11 Certain Changes
Schedule 4.12 Legal Proceedings
Schedule 4.13 Exceptions to Compliance with Law
Schedule 4.14 Company Contracts
Schedule 4.15(a) Tax Exceptions
Schedule 4.15(b) Tax Returns Due
Schedule 4.15(d) Taxable Income
Schedule 4.16(a) Employment Agreements
Schedule 4.16(b) Officers and Employees
Schedule 4.17(a) List of Company Benefit Plans
Schedule 4.17(b) Exceptions to Company Benefit Plans;
Actuarial Assumptions
Schedule 4.17(c) Multiemployer Plans
Schedule 4.18 Labor Relations
Schedule 4.19 Insurance Policies
Schedule 4.20 Environmental, Health and Safety Matters
Schedule 4.21 Company Registered Intellectual Property
Schedule 4.21(a) Company Proprietary Intellectual Property
Schedule 4.21(b) Company Intellectual Property Exceptions
Schedule 4.21(c) Infringement Notices
Schedule 4.22 Company Software
Schedule 4.22(c) Company Software Exceptions
Schedule 4.23 Notes Receivable
Schedule 4.24 Transactions with Affiliates
Schedule 4.25 Licenses
Schedule 4.26 Ethical Practices
Schedule 4.28 Customs Brokerage
Schedule 4.29 Dayton Bonds
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as
of October 5, 2004, is made and entered into by and among UNITED
PARCEL SERVICE OF AMERICA, INC., a Delaware corporation (the
"Purchaser"), CNF INC., a Delaware corporation (the
"Shareholder"), MENLO WORLDWIDE, LLC, a Delaware limited
liability company and a wholly owned subsidiary of the
Shareholder ("Worldwide" and together with the Shareholder, the
"Sellers") and, solely for the purposes of Article VI and Section
12.14 of this Agreement, UNITED PARCEL SERVICE, INC., a Delaware
corporation ("Parent"). The Purchaser, Parent, the Shareholder
and Worldwide are sometimes individually referred to herein as a
"Party" and collectively as the "Parties."
W I T N E S S E T H:
WHEREAS, the Shareholder owns all of the issued and
outstanding membership interests of Worldwide;
WHEREAS, Worldwide owns all of the issued and outstanding
capital stock of Menlo Worldwide Forwarding, Inc., a Delaware
corporation (the "Company");
WHEREAS, the Company and its subsidiaries are engaged in the
Company Business (as hereinafter defined);
WHEREAS, the Parties desire to enter into this Agreement
pursuant to which the Shareholder will cause Worldwide to sell to
the Purchaser, and the Purchaser proposes to purchase from
Worldwide (the "Acquisition"), all of the issued and outstanding
capital stock of the Company; and
WHEREAS, the Parties desire to make certain representations,
warranties and agreements in connection with the Acquisition.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions hereinafter set forth, and intending to be legally
bound hereby, the Parties agree as follows:
ARTICLE I
CONSTRUCTION; DEFINITIONS
SECTION 1.1 Construction
.. Unless the context of this Agreement otherwise clearly
requires, (a) references to the plural include the singular, and
references to the singular include the plural, (b) references to
any gender include the other genders, (c) the words "include,"
"includes" and "including" do not limit the preceding terms or
words and shall be deemed to be followed by the words "without
limitation", (d) the terms "hereof", "herein", "hereunder",
"hereto" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this
Agreement, (e) the terms "day" and "days" mean and refer to
calendar day(s) and (f) the terms "year" and "years" mean and
refer to calendar year(s). Unless otherwise set forth herein,
references in this Agreement to (i) any document, instrument or
agreement (including this Agreement) (A) includes and
incorporates all exhibits, schedules and other attachments
thereto, (B) includes all documents, instruments or agreements
issued or executed in replacement thereof and (C) means such
document, instrument or agreement, or replacement or predecessor
thereto, as amended, modified or supplemented from time to time
in accordance with its terms and in effect at any given time, and
(ii) a particular Law (as hereinafter defined) means such Law as
amended, modified, supplemented or succeeded, from time to time
and in effect at any given time. All Article, Section,
Exhibit and Schedule references herein are to Articles, Sections,
Exhibits and Schedules of this Agreement, unless otherwise
specified. This Agreement shall not be construed as if prepared
by one of the Parties, but rather according to its fair meaning
as a whole, as if all Parties had prepared it.
Section 1.2 Definitions
.. The following terms, as used herein, have the following
meanings:
"Accruals" has the meaning set forth in Section 4.9(c).
"ACMI Leases" means the leases identified on Exhibit 1.2(a).
"Acquiror" has the meaning set forth in Section 7.4(b).
"Acquisition" has the meaning set forth in the recitals.
"Acquisition Transaction" has the meaning set forth in
7.10(a).
"Action of Divestiture" means making proposals, executing or
carrying out agreements or complying with Laws providing for the
license, sale or other disposition or holding separate (through
the establishment of a trust or otherwise) of any assets or
categories of assets that are material to the Purchaser or the
Company or the holding separate of the Company capital stock or
imposing or seeking to impose any material limitation on the
ability of the Purchaser, the Company or any of their respective
Subsidiaries, to conduct their respective businesses or own such
assets or to acquire, hold or exercise full rights of ownership
of the Company Business.
"ADA" means the United States Americans with Disabilities
Act and the rules and regulations promulgated thereunder.
"Additional Surviving Obligations" has the meaning set forth
in Section 11.4(b).
"ADEA" means the United States Age Discrimination in
Employment Act and the rules and regulations promulgated
thereunder.
"Affiliate" of any specified Person means any other Person
directly or indirectly Controlling or Controlled by or under
direct or indirect common Control with such specified Person.
"Agreement" has the meaning set forth in the preamble.
"Airfreight Forwarding" means the transportation of goods
via air transport on behalf of customers or arrangement for the
carrying of goods via air transport on behalf of customers, in
each case, issuing air waybills or similar documents to customers
and does not include the furnishing of logistical or other
services in which the air waybills or similar documents are
issued by a third party.
"ALPA" means the collective bargaining agent known as the
Air Line Pilots Association.
"ALPA Agreement" means that certain collective bargaining
agreement executed by and between EWA and ALPA dated September
19, 2000 inclusive of any other related agreements executed at
any time by EWA or any of its Affiliates (including but not
limited to the Subcontracting Letter Agreement) and ALPA at any
time since ALPA was certified as the collective bargaining
representative of EWA's pilots and flight engineers.
"Ancillary Documents" means the Shareholder Ancillary
Documents and the Company Ancillary Documents.
"Applicable Benefit Laws" means all Laws or other
legislative, administrative or judicial promulgations, other than
ERISA and the Code, including those of a jurisdiction outside the
United States of America, applicable to any Company Benefit Plan
or ERISA Affiliate Plan.
"Arbitrator" has the meaning set forth in Section 3.4(c).
"Assumed Debt" has the meaning set forth in Section 3.1.
"Assumed Liabilities" means the following liabilities and
obligations (whether or not fixed, contingent or absolute,
accrued or unaccrued, known or unknown) other than any Purchaser
Losses:
(i) those certain liabilities and obligations of the Shareholder
and/or its Subsidiaries which relate to the Company Business and
are listed on Exhibit 1.2(b);
(ii) liabilities and obligations relating to any Transferred
Employees and to any former employees, retired employees, and
employees on long term disability leave, of the Company or the
Company Subsidiaries whose principal employment was in the
Company Business during their tenure with the Company or any
Company Subsidiary, including under any Employment Agreement with
the Company or any Company Subsidiary and including the items
more specifically listed in clauses (iii)-(v), (vii) and (viii);
provided, however, that Assumed Liabilities shall not include any
liabilities or obligations arising out of or related to
litigation brought by or on behalf of any Transferred Employees
against any entity other than the Company or any Company
Subsidiary or any liabilities or obligations arising out of any
Company Benefit Plan (other than a Company Retained Plan) or an
ERISA Affiliate Plan or withdrawal liability under a
Multiemployer Plan (to the extent such withdrawal liability
arises from or with respect to actions of the Shareholder, the
Company, a Company Subsidiary or an ERISA Affiliate before the
Closing) except as otherwise specifically listed in clauses (iii)-
(v), (vii) and (viii);
(iii) funding obligations related to the Post-Retirement
Medical Liability, which funding shall be satisfied by Purchaser
in compliance with the provisions set forth in Section 7.8(i);
(iv) funding obligations related to the Long Term Disability
Liability, which funding shall be satisfied by Purchaser in
compliance with the provisions set forth in Section 7.8(j);
(v) liabilities and obligations from and after the Closing
relating to wages for services performed by the Transferred
Employees in the most recent pay period ending on or after the
Closing but due after Closing;
(vi) past, present and future liabilities and obligations assumed
under the plans and policies specifically listed on Exhibit
1.2(c) maintained by the Sellers or any of their respective
Subsidiaries for the benefit of the Company or any Company
Subsidiary; provided, however, Assumed Liabilities shall not
include any liabilities or obligations arising out of or related
to any Wrongful Acts, as defined in the current year directors
and officers liability insurance policies or fiduciary liability
insurance policies carried by or for the benefit of the Company,
the Company Subsidiaries or the Company Business as listed on
Schedule 4.19 (collectively, the "Plans"), which have been
committed by the Company, the Company Subsidiaries or any of its
directors, officers or Plans trustees or Plans fiduciaries either
prior to or arising out of the Acquisition;
(vii) Severance Payments;
(viii) funding obligations related to medical benefits payable
under the CNF Inc. Welfare Benefits Plan with respect to any
Transferred Employees or their dependants for claims incurred on
or before the Closing Date to the extent such claims are
submitted within twelve (12) months of the Closing Date or such
earlier date as is required under the terms of the CNF Inc.
Welfare Benefits Plan;
(ix) all liabilities and obligations under Environmental Laws to
the extent arising out of or relating to properties set forth on
Exhibit 1.2(d); and
(x) liabilities related to the Conveyed Assets other than
liabilities arising out of the conduct of business of the
Shareholder and its Subsidiaries (other than the Company
Business).
"Balance Sheet" means the balance sheet of the Company as of
June 30, 2004 included in the Company Financial Statements.
"Benefit Plans Administrator" has the meaning set forth in
Section 7.8(f).
"Business Day" means any day except Saturday, Sunday or any
day on which banks are generally not open for business in the
City of New York, New York.
"Cash Purchase Price" has the meaning set forth in
Section 3.1.
"CERCLA" means the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. 9601 et
seq., and the rules and regulations promulgated thereunder.
"CFCs" has the meaning set forth in Section 7.15(a).
"Claims Period" means the period during which a claim for
indemnification may be asserted hereunder by an Indemnified
Party.
"Closing" has the meaning set forth in Section 9.1.
"Closing Date" means the date on which the Closing occurs.
"Closing Date Cash Balance" means the cash and cash
equivalents as set forth on the consolidated general ledger of
the Company and each Company Subsidiary (which includes a
reconciliation for issued and outstanding checks and deposits in
transit) as of the opening of business on the Closing Date minus
(i) the "Drafts Payable" (such amount being calculated consistent
with past practice and, for reference purposes, which amount as
of June 30, 2004 is reflected on Exhibit 3.4(a) as $16,329,594),
minus (ii) all duties, fees, taxes, interest or similar amounts
held by the Company or any Company Subsidiary (whether in
dedicated accounts or otherwise) for the benefit of a Third
Person (which for these purposes shall include the Company or a
Company Subsidiary when it acts as an "importer of record" as the
term is defined in 19 U.S.C. Section 1484) for remittance to a
Governmental Entity for customs matters (e.g., amounts held for
remittance to Customs) that have not yet been remitted to such
Governmental Entity, plus (iii) all duties, fees, taxes, interest
or similar amounts paid by the Company or any Company Subsidiary
(whether in dedicated accounts or otherwise) for the benefit of a
Third Person to a Governmental Entity for customs matters (e.g.,
amounts paid to Customs) that have not yet been collected from
such Third Person).
"CNF Credit Agreement" has the meaning set forth in Section
7.17(a).
"COBRA Coverage" means continuation coverage required under
Section 4980B of the Code and Part 6 of Title I of ERISA.
"Code" means the United States Internal Revenue Code of
1986, as amended.
"Collective Bargaining Agreements" means any written
agreement, other than the ALPA Agreement, listed on Exhibit
1.2(e) currently in full force and effect or being renegotiated
between the Company or any Company Subsidiary and any labor
organization or labor union governing wages, hours, and other
terms and conditions of employment of Company employees or
employees of any Company Subsidiary and any such agreement that
is no longer current but as to which the Company or any Company
Subsidiary has continuing obligations pursuant to an agreement on
or after January 1, 2001 to settle any grievance, unfair labor
practice charge or complaint resulting from effects bargaining,
or otherwise.
"Company" has the meaning set forth in the recitals.
"Company Ancillary Documents" means any certificate,
agreement, document or other instrument, other than this
Agreement, to be executed and delivered by the Company or
Worldwide in connection with the transactions contemplated
hereby.
"Company Benefit Plan" means each Employee Benefit Plan,
other than a Multiemployer Plan, sponsored, administered or
maintained or required to be sponsored, administered or
maintained at any time by the Company or any Company Subsidiary
or to which the Company or any Company Subsidiary makes or has
made, or has or has had an obligation to make, contributions at
any time which provides or at any time provided benefits to
employees, former employees, directors, managers, officers,
consultants, independent contractors, contingent workers or
leased employees of the Company or any Company Subsidiary or the
dependents of any of them.
"Company Business" means the Forwarding Business as
performed by the Company, the Company Subsidiaries and/or the
Shareholder or any of its Subsidiaries. For the avoidance of
doubt, the Company Business does not include: (i) the furnishing
of logistical services of the type provided by Worldwide and its
Subsidiaries other than the Company and the Company Subsidiaries;
and (ii) the business or operations of EWA or any related airline
operations of the Sellers or any Affiliates thereof.
"Company Contracts" has the meaning set forth in
Section 4.14.
"Company Financial Statements" means the unaudited combined
balance sheet as at December 31, 2003 and statements of income,
stockholders' equity and cash flows of the Company Business for
the 12-month period then ended and the unaudited combined balance
sheet as at June 30, 2004 and the statements of income,
stockholders' equity and cash flows of the Company Business for
the six (6) month period ended June 30, 2004.
"Company Intellectual Property" means the Company
Proprietary Intellectual Property and the Company Licensed
Intellectual Property.
"Company International Benefit Plan" means those Company
Benefit Plans sponsored, administered or maintained or required
to be sponsored, administered or maintained at any time by the
Company or any Company Subsidiary for the exclusive benefit of
Transferred Employees, former employees, directors, managers,
officers, consultants, independent contractors, contingent
workers or leased employees whose employment is or was (or
services are or were) related to the Company Business or the
Conveyed Assets and who would be Transferred Employees if they
were employed by the Company or a Company Subsidiary at Closing
whose principal workplace is or, in the case of former employees
or other workers, was outside the United States of America,
Logistics Contract Employees or the spouses or the dependents of
any of them.
"Company Licensed Intellectual Property" means the
Intellectual Property used in the Company Business which is
licensed to the Company or any Company Subsidiary from a third
party or an Affiliate of the Company, including the Company
Licensed Software.
"Company Licensed Software" means all software used in the
Company Business which is licensed to the Company or any Company
Subsidiary.
"Company Proprietary Intellectual Property" means the
Intellectual Property used in the Company Business which is owned
by the Company or any Company Subsidiary, including the Company
Proprietary Software, and the Company Registered Intellectual
Property.
"Company Proprietary Software" means all software used in
the Company Business which is owned by the Company or any Company
Subsidiary.
"Company Registered Intellectual Property" means all of the
Registered Intellectual Property owned by and filed in the name
of the Company or any Company Subsidiary and used in the Company
Business.
"Company Retained Plan" has the meaning set forth in Section
7.8(d).
"Company Software" means the Company Licensed Software and
the Company Proprietary Software.
"Company Subsidiary" means each entity engaged in the
Company Business and set forth on Exhibit 1.2(f).
"Confidential Information" means any data or information of
the Company or any Company Subsidiary (including trade secrets)
that is valuable to the operation of the Company's or any Company
Subsidiaries' business and not generally known to the public or
competitors; provided that Confidential Information shall not
include information which (i) is or becomes publicly available
other than as a result of a disclosure by any Seller or any of
their respective directors, officers, employees, Affiliates,
representatives (including without limitation, financial
advisors, attorneys and accountants) or agents (for purposes of
this definition, the "Representatives") or (ii) is or becomes
available to any Seller or any of their respective
Representatives on a nonconfidential basis from a source (other
than the disclosing party or the disclosing party's
Representatives) which, to the best of the Shareholder's
Knowledge is not prohibited from disclosing such information to
such Seller by a legal, contractual for fiduciary obligation to
the disclosing party.
"Consent" means any consent, approval or authorization.
"Consolidated Net Worth" means, at any date, the amount by
which Consolidated Total Assets exceed Consolidated Total
Liabilities.
"Consolidated Total Assets" means, at any date, all amounts
that would, in conformity with GAAP, be included as assets on a
consolidated balance sheet of the Shareholder and its
Subsidiaries.
"Consolidated Total Liabilities" means, at any date, all
amounts that would, in conformity with GAAP, be included as
liabilities on a consolidated balance sheet of the Shareholder
and its Subsidiaries.
"Contest" has the meaning set forth in Section 7.11(k).
"Control" means, when used with respect to any specified
Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of
such Person whether through the ownership of voting securities or
as trustee or executor, by contract or credit arrangement or
otherwise.
"Conveyed Assets" means those certain rights and assets
(other than the Excluded Assets) relating to the Company Business
and not owned by the Company or any Company Subsidiary as
follows:
(i) the Intellectual Property and other assets specified on
Exhibit 1.2(g), and the Intellectual Property not listed on
Exhibit 1.2(g) that is used exclusively in the Company Business;
and
(ii) all equity and other interests of any Company Subsidiary
that is not a wholly owned Subsidiary of the Company.
"Costs" has the meaning set forth in Section 7.15(a).
"Current Company Benefit Plan" has the meaning set forth in
Section 4.17(a).
"Customs Brokerage" means any services that constitute the
transaction of "customs business," as defined under 19 U.S.C.
1641(a)(2) and 19 C.F.R. Part 111.1, and which services require a
"customs broker" License and Permit or Permits in accordance with
19 U.S.C. 1641(b) and (c) and 19 C.F.R. 111.2.
"Customer Inventory" has the meaning set forth in
Section 4.8.
"Customers" means the top 100 customers (by revenue) of the
Company Business for the period from January 1, 2004 through July
31, 2004.
"Customs" has the meaning set forth in Section 4.28.
"Dayton Bonds" means any and all bonds or similar debt
securities issued by the City of Dayton, Ohio with respect to the
Dayton Hub or the Dayton Leases.
"Dayton Hub" means the air cargo business, facilities and
operations of the Company and the Company Subsidiaries located in
the City of Dayton, Ohio.
"Dayton Leases" means collectively, (i) that certain
Specialty Facility Ground Lease and Use Agreement dated as of
April 1, 1981 between the City of Dayton, Ohio, as lessor and
Emery Air Freight Corporation, as lessee, as amended to date, and
(ii) that certain Amended, Supplemented and Restated Lease
Agreement dated as of November 1, 1988 between the City of
Dayton, Ohio, as lessor and Menlo Worldwide Forwarding, Inc.
f/k/a Emery Air Freight Corporation, as lessee, as amended to
date.
"De Minimis International Employment Agreement" means an
Employment Agreement for the benefit of an employee of the
Company or a Company Subsidiary whose principal workplace is
outside the United States of America and the payments under which
(either individually or when aggregated with other remuneration
to the employee) would not exceed $100,000 in any year.
"EC Merger Regulation" means Council Regulation (EC) No
139/2004 of 20 January 2004 on the control of concentrations
between undertakings.
"Employee Benefit Plan" means, with respect to any Person,
(a) each plan, fund, program, agreement, arrangement or scheme,
including each plan, fund, program, agreement, arrangement or
scheme maintained or required to be maintained under the Laws of
a jurisdiction outside the United States of America, in each
case, that is at any time sponsored or maintained or required to
be sponsored or maintained by such Person or to which such Person
makes or has made, or has or has had an obligation to make,
contributions providing for employee benefits or for the
remuneration, direct or indirect, of the employees, former
employees, directors, managers, officers, consultants,
independent contractors, contingent workers or leased employees
of such Person or the spouses or the dependents of any of them
(whether written or oral), including each deferred compensation,
bonus, incentive compensation, pension, retirement, stock
purchase, stock option and other equity compensation plan,
"welfare" plan (within the meaning of Section 3(1) of ERISA,
determined without regard to whether such plan is subject to
ERISA), (b) each "pension" plan (within the meaning of
Section 3(2) of ERISA, determined without regard to whether such
plan is subject to ERISA), (c) each severance plan or agreement,
health, vacation, summer hours, supplemental unemployment
benefit, hospitalization insurance, medical, dental, legal and
(d) each other employee benefit plan, fund, program, agreement,
arrangement or scheme.
"Employment Agreement" means any employment contracts,
consulting agreements, termination or severance agreements,
change of control agreements or any other agreement, whether oral
or written, respecting the terms and conditions of employment or
of a consulting or independent contractor relationship in respect
of any current or former officer, employee, consultant or
independent contractor, but shall exclude any Collective
Bargaining Agreement.
"Environmental Laws" means all local, state and federal Laws
governing the protection of the environment, health and safety,
including surface or ground water, drinking water supply, soil,
surface or subsurface strata or medium, or ambient air, pollution
control, humans, animals and plants, product registration for
Hazardous Materials and Hazardous Materials.
"ERISA" means the United States Employee Retirement Income
Security Act of 1974 as amended and the rules and regulations
promulgated thereunder.
"ERISA Affiliate" means any Person (whether incorporated or
unincorporated) that together with the Company would be deemed a
"single employer" within the meaning of Section 414 of the Code.
"ERISA Affiliate Plan" means each Employee Benefit Plan,
other than a Multiemployer Plan, sponsored, administered or
maintained or required to be sponsored, administered or
maintained at any time by any ERISA Affiliate, or to which such
ERISA Affiliate makes or has made, or has or has had an
obligation to make, contributions at any time.
"Estimated Incremental Cost" has the meaning set forth in
Section 7.15(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" means the following:
(i) assets of the Company or a Company Subsidiary listed on
Exhibit 1.2(h) hereto; and
(ii) all rights, claims and credits, including all guarantees,
warranties, indemnities and similar rights in favor of the
Shareholder or any of its Affiliates to the extent relating to
(A) any other Excluded Asset or (B) any Excluded Liability.
"Excluded Employees" means all employees set forth on
Exhibit 1.2(i) and any employee of the Company or any Company
Subsidiary on long term disability leave as of the Closing Date.
"Excluded Liabilities" means, regardless of any disclosure
to the Purchaser, the following liabilities and obligations
(whether or not fixed, contingent or absolute, accrued or
unaccrued, known or unknown) of the Company and the Company
Subsidiaries, all of which shall be retained by the Shareholder
or its Subsidiaries:
(i) under or relating to any Company Benefit Plan (other than a
Company Retained Plan) or an ERISA Affiliate Plan (except to the
extent specifically listed as Assumed Liabilities), withdrawal
liability under a Multiemployer Plan (but only to the extent such
withdrawal liability arises from or with respect to the actions
of the Shareholder, the Company, a Company Subsidiary or an ERISA
Affiliate before the Closing) or that are the responsibility of
the Sellers under Section 7.8;
(ii) for the avoidance of doubt, regardless of where located,
relating to, resulting from or arising out of EWA or any current
and former EWA employee-related liabilities (including benefit
plans and obligations under any Collective Bargaining Agreement
or Multiemployer Plan with or for the benefit of such employees)
labor or other agreements, arrangements or obligations relating
to such employees, business or operations, other than EWA's
guarantee obligation under the Dayton Bonds as set forth on
Exhibit 1.2(j);
(iii) in connection with any Excluded Employee;
(iv) for the avoidance of doubt, regardless of where located,
relating to, resulting from or arising out of claims made in
pending or future suits, actions, investigations or other legal,
governmental or administrative proceedings by or related to
(A) ALPA, current or former EWA employees, including current or
former pilots, flight engineers, mechanics or other flight-
related employees, of EWA or in connection with the ALPA
Agreement (excluding the Subcontracting Letter Agreement),
(B) any claim that EWA, on the one hand and the Company, any of
the Company Subsidiaries or the Shareholder on the other hand
have been at any time an "alter ego" of the other, (C) any claim
that any employment relationship exists or existed between the
Company or any Company Subsidiary and any employee who performs
or performed work for the Company or any Company Subsidiary
pursuant to any ACMI Lease and (D) the Identified Litigation;
(v) relating to any Excluded Asset; and
(vi) costs relating to the Transfers.
"Expiration Date" has the meaning set forth in
Section 10.1(d).
"Existing Policies" has the meaning set forth in
Section 7.18.
"EWA" means Emery Worldwide Airlines, Inc.
"FCPA" has the meaning set forth in Section 4.26.
"Final Working Capital Statement" has the meaning set forth
in Section 3.4(b).
"FLSA" means the United States Fair Labor Standards Act and
the rules and regulations promulgated thereunder.
"FMLA" means the United States Family and Medical Leave Act
and similar state, local and foreign Laws and, in each such case,
the rules and regulations promulgated thereunder.
"Foreign Antitrust Laws" means all non-U.S. Laws (including
without limitation Laws in Canada and Brazil and the EC Merger
Regulation) intended to prohibit, restrict or regulate activities
or transactions having the purpose or effect of monopolization,
restraint of trade or harm to competition (and, in the case of
Canada, foreign investment Laws).
"Forwarding Business" means transportation services for
shippers of heavyweight cargo utilizing domestic and
international air, ground and ocean freight transportation,
logistics management and customshouse brokerage services.
"GAAP" means generally accepted accounting principles as
applied in the United States of America.
"Governmental Entity" means any federal, state, local or
foreign government, including any municipality, any political
subdivision thereof or any court, administrative or regulatory
agency, department, instrumentality, body or commission or other
governmental authority or agency, domestic or foreign.
"Hazardous Materials" means any waste, pollutant,
contaminant or toxic or hazardous substance, including any
ignitable, reactive or corrosive substance, hazardous waste,
special waste, industrial substance, by-product, process-
intermediate product or waste, petroleum or petroleum-derived
substance or waste, chemical liquids or solids, liquid or gaseous
products, or any constituent of any such substance or waste,
which is in any way governed by or subject to any applicable
Environmental Law.
"HSR Act" means the United States Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"Incremental Cost" has the meaning set forth in Section
7.15(a).
"Identified Business" means the provision of Airfreight
Forwarding, Ocean Forwarding and/or Customs Brokerage services.
"Identified Litigation" means the claims set forth on
Exhibit 1.2(k).
"Indemnified Party" means a Purchaser Indemnified Party or a
Shareholder Indemnified Party.
"Indemnifying Party" has the meaning set forth in
Section 11.3(a).
"Independent Actuary" has the meaning set forth in Section
7.8(i).
"Infringement Notice" has the meaning set forth in Section
4.21(c).
"Intellectual Property" means any or all of the following
and all rights, arising out of or associated therewith:
(i) United States of America, international and foreign patents
and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part
thereof; (ii) trade secrets, proprietary information and
databases; (iii) copyrights, copyright registrations and
applications therefor, and all other rights corresponding thereto
throughout the world; (iv) industrial designs and any
registrations and applications therefor throughout the world;
(v) internet uniform resource locators, domain names, trade
names, logos, slogans, designs, common law trademarks and service
marks, trademark and service mark registrations and applications
therefor throughout the world; and (vi) any similar or equivalent
rights to any of the foregoing anywhere in the world.
"Key Employees" means the employees of the Company or a
Company Subsidiary set forth on Exhibit 1.2(l).
"Knowledge" means the actual knowledge of those individuals
listed on Exhibit 1.2(m) after due inquiry and diligence with
respect to the matters at hand.
"Labor Laws" means all Laws and all contracts or collective
bargaining agreements, including Laws of or contracts or
collective bargaining agreements governed by a jurisdiction
outside the United States of America, in each case governing or
concerning labor relations, unions and collective bargaining,
conditions of employment, employment discrimination and
harassment, wages, hours or occupational safety and health,
including, without limitation, the United States Immigration
Reform and Control Act of 1986, the United States National Labor
Relations Act, the United States Civil Rights Acts of 1866 and
1964, the United States Equal Pay Act, ADEA, ADA, FMLA, WARN,
OSHA, the United States Davis Bacon Act, the United States Walsh-
Healy Act, the United States Service Contract Act, United States
Executive Order 11246, FLSA and the United States Rehabilitation
Act of 1973 and all rules and regulations promulgated under such
acts.
"Laws" means all statutes, rules, codes, regulations,
restrictions, ordinances, orders, approvals, directives,
judgments, injunctions, writs, awards and decrees of, or issued
by, any Governmental Entity.
"Leased Real Property" means the parcels of real property
having an annual base rent of $100,000 or more of which the
Company or any Company Subsidiary, after giving effect to the
Transfers, is the lessee (together with all fixtures and
improvements thereon).
"Legal Dispute" means any action, suit or proceeding between
or among the Parties and their respective Affiliates arising in
connection with any disagreement, dispute, controversy or claim
arising out of or relating to this Agreement or any related
document.
"Licenses" means all notifications, licenses, permits
(including construction and operation permits), franchises,
certificates, approvals, exemptions, classifications,
registrations and other similar documents and authorizations
issued by any Governmental Entity, and applications therefor.
"Liens" mean all mortgages, liens, pledges, security
interests, hypothecations, charges, claims, options, restrictions
and other encumbrances of any kind or nature whatsoever including
leases, chattel mortgages, deeds of trust, conditional sales
contracts, collateral security arrangements and other title or
interest retention arrangements.
"Logistics Contract Employee(s)" has the meaning set forth
in Section 7.8(l).
"Logistics Contracts" means the contracts and other customer
arrangements set forth in Section 2 (MWL Customer Contracts) of
Exhibit 1.2(h).
"Long Term Disability Liability" has the meaning set forth
in Section 7.8(j).
"Loss Threshold" has the meaning set forth in Section
11.5(a).
"Material Adverse Effect" means any state of facts, change,
event, effect or occurrence (when taken together with all other
states of fact, changes, events, effects or occurrences) that is
or would reasonably be expected to be materially adverse to the
Company Business after giving effect to the Transfers, other than
any state of fact, change, event, effect or occurrence relating
to (a) the economy in general and not specifically related to or
otherwise specifically affecting the Company Business, (b) the
freight forwarding or customs brokerage industry generally and
not specifically related to or otherwise specifically affecting
the Company Business, (c) actions taken pursuant to and in
compliance with this Agreement, (d) changes in Law or GAAP, (e)
acts of war or acts of terrorism or (f) the announcement or
consummation, actual or prospective, of this Agreement or the
transactions contemplated hereby. A Material Adverse Effect
shall also include any state of facts, change, event or
occurrence that shall have occurred or been threatened that (when
taken together with all other states of fact, changes, events,
effects or occurrences that have occurred or been threatened) is
or would reasonably be expected to prevent or materially delay
the performance by the Shareholder, Worldwide or the Company of
any of its obligations hereunder or the consummation of the
transactions contemplated hereby.
"Material Interim Event" has the meaning set forth in
Section 7.7.
"Maximum Premiums" has the meaning set forth in Section
7.18.
"Minimum Consolidated Net Worth" has the meaning set forth
in Section 7.13.
"MSA" has the meaning set forth in Section 7.21.
"Multiemployer Plan" means each Employee Benefit Plan that
is a multiemployer plan, as defined in Section 3(37) of ERISA, to
which the Company or any Company Subsidiary contributes or has or
has had an obligation to make contributions, or to which an ERISA
Affiliate contributes or has or has had an obligation to make
contributions.
"NLRB" means the United States National Labor Relations
Board.
"Noncompete Period" means the period beginning on the
Closing Date and continuing for a period of three (3) years after
the Closing Date.
"Obligations" has the meaning set forth in Section 12.14(a).
"Ocean Forwarding" means the transportation of goods via
ocean transport on behalf of customers or arrangement for the
carrying of goods via ocean transport on behalf of customers, in
each case, issuing sea waybills or similar documents to customers
and does not include the furnishing of logistical or other
services in which the sea waybills or similar documents are
issued by a third party.
"OSHA" means the United States Occupational Safety and
Health Administration.
"Owned Real Property" means the parcels of real property
owned by the Company or any Company Subsidiary, after giving
effect to the Transfers, that are primarily used in the Company
Business, together with all fixtures and improvements thereon.
"Parent" has the meaning set forth in the preamble.
"Parties" has the meaning set forth in the preamble.
"Party" has the meaning set forth in the preamble.
"Permitted Liens" means (i) Liens for Taxes not yet due and
payable or being contested in good faith; (ii) statutory and
contractual Liens of landlords; (iii) Liens of carriers,
warehousemen, mechanics, materialmen and repairmen incurred in
the ordinary course of business and (x) not yet delinquent or (y)
being contested in good faith; (iv) zoning, building codes and
other land use Laws regulating the use or occupancy of any
portion of the Real Property; and (v) restrictions, variances,
covenants, rights of way, encumbrances, easements, other similar
matters of record affecting title to any portion of the Real
Property and other minor irregularities in title, none of which,
individually or in the aggregate, interfere in any material
respect with the conduct of the Company Business.
"Person" means any individual, group, corporation,
partnership, joint venture, limited liability company, trust,
unincorporated organization or Governmental Entity or other
organization or entity.
"Plans" has the meaning set forth in the definition of
"Assumed Liabilities" in Section 1.2.
"Post-Retirement Medical Liability" has the meaning set
forth in Section 7.8(i).
"Preliminary Working Capital Statement" has the meaning set
forth in Section 3.4(a).
"Purchase Price" has the meaning set forth in Section 3.1.
"Purchaser" has the meaning set forth in the preamble.
"Purchaser Ancillary Documents" means any certificate,
agreement, document or other instrument, other than this
Agreement, to be executed and delivered by the Purchaser in
connection with the transactions contemplated hereby.
"Purchaser Basket" has the meaning set forth in Section
11.5(a).
"Purchaser Cap" has the meaning set forth in
Section 11.5(a).
"Purchaser Deductible" has the meaning set forth in
Section 11.5(a).
"Purchaser Indemnified Parties" means the Purchaser and its
Affiliates, each of their respective officers, directors,
employees, agents and representatives and each of the heirs,
executors, successors and assigns of any of the foregoing.
"Purchaser Losses" has the meaning set forth in
Section 11.1.
"Purchaser Material Adverse Effect" has the meaning set
forth in Section 6.3.
"Purchaser Transition Team" means David Birkmeyer, Anthony
Lenhart, Scott Goldfuss, Michael O'Farrell and John Sutthoff; any
member may be replaced in the Purchaser's sole discretion at any
time and from time to time by another person appointed by the
Purchaser upon notice to Sellers.
"Purchaser's Proposal" has the meaning set forth in 7.8(i)
"Purolator" means Purolator Courier Corporation and its
subsidiaries and related companies that were acquired by Emery
Air Freight Corporation in 1987.
"Real Property" means the Owned Real Property and the Leased
Real Property.
"Registered Intellectual Property" means all United States
of America, international and foreign: (i) patents and patent
applications (including provisional applications),
(ii) registered trademarks and service marks, applications to
register trademarks and service marks, intent-to-use
applications, or other registrations or applications related to
trademarks and service marks, (iii) registered copyrights and
applications for copyright registration, (iv) domain name
registrations and (v) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or
other document issued, filed with, or recorded with any federal,
state, local or foreign Governmental Entity or other public body.
"Release" means, with respect to any Hazardous Material, any
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing
into any surface or ground water, drinking water supply, soil,
surface or subsurface strata or medium, or the ambient air.
"Repatriation Plan" has the meaning set forth in Section
7.15(a).
"Selected Contracts" has the meaning set forth in Section
7.21.
"Sellers" has the meaning set forth in the preamble.
"Seller Transition Team" means John Rocheleau, Jennifer
Pileggi and Eric Kirchner; any member may be replaced in Sellers'
sole discretion at any time and from time to time by another
person appointed by Sellers upon notice to the Purchaser.
"Service Contracts" has the meaning set forth in
Section 4.14(o).
"Severance Payments" means those severance payments due the
Transferred Employees under the Employment Agreements and Company
Benefit Plans described on Exhibit 1.2(n) or under any De Minimis
International Employment Agreement as a result of the
transactions contemplated by this Agreement.
"Shared Usage Licenses" has the meaning set forth in Section
7.22.
"Shareholder" has the meaning set forth in the preamble.
"Shareholder Acquisition" has the meaning set forth in
Section 7.4(b).
"Shareholder Ancillary Documents" means any certificate,
agreement, document or other instrument, other than this
Agreement, to be executed and delivered by the Shareholder,
Worldwide or any other Affiliate of the Shareholder in connection
with the transactions contemplated hereby.
"Shareholder Financial Statements" means the audited balance
sheet of the Shareholder as at December 31, 2003 and the audited
statements of income, stockholders' equity and cash flows of the
Shareholder for the 12-month period then ended and the unaudited
balance sheet of the Shareholder as at June 30, 2004 and the
unaudited statements of income, stockholders' equity and cash
flows of the Shareholder for the three (3) and six (6) month
periods ended June 30, 2004.
"Shareholder Group" means the affiliated group, within the
meaning of Section 1504 of the Code (and any similar group
defined under a similar provision of state, local or foreign
law), that includes the Company and the common parent of which is
the Shareholder.
"Shareholder Indemnified Parties" means the Shareholder,
Worldwide and their respective Affiliates, each of their
respective officers, directors, employees, agents and
representatives and each of the heirs, executors, successors and
assigns of any of the foregoing.
"Shareholder Losses" has the meaning set forth in
Section 11.2.
"Shareholder's Proposal" has the meaning set forth in
Section 7.8(i).
"Shares" has the meaning set forth in Section 2.4.
"Special Losses" means all Purchaser Losses arising under
Section 11.1(i).
"Straddle Period" has the meaning set forth in Section
7.11(b).
"Subcontracting Letter Agreement" means that certain letter
of agreement between EWA, the Company, the pilots employed by EWA
and ALPA regarding subcontracting, dated September 28, 2000.
"Subsidiary" of any Person means any corporation,
partnership, limited liability company, joint venture or other
legal entity of which such Person owns, directly or indirectly, a
majority of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or
other legal entity, or of which such Person is a general partner
or managing partner.
"Surviving Obligations" has the meaning set forth in
Section 11.4(a).
"Surviving Representations" has the meaning set forth in
Section 11.4(a).
"Tax Reserves" has the meaning set forth in Section 7.11(c).
"Tax Return" means any report, return, declaration or other
information required to be supplied to a Governmental Entity in
connection with Taxes, including estimated returns and reports of
every kind with respect to Taxes.
"Taxes" means all taxes, assessments, charges, duties, fees,
levies and other governmental charges, including income,
franchise, capital stock, real property, personal property,
tangible, withholding, employment, payroll, social security,
social contribution, unemployment compensation, disability,
transfer, sales, use, excise, gross receipts, value-added and all
other taxes of any kind for which the Company or any Company
Subsidiary may have any liability imposed by any Governmental
Entity, whether disputed or not, and any charges, interest or
penalties imposed by any Governmental Entity.
"Termination Date" means the date prior to the Closing when
this Agreement is terminated in accordance with Article X.
"Territory" means worldwide, such area being where any
customer or actively sought prospective customer of the Company
or any Company Subsidiary is located.
"Third Person" means any Person who is not an Affiliate of
the Shareholder on or prior to the closing of an Acquisition
Transaction.
"Transaction Taxes" has the meaning set forth in
Section 7.11(f)
"Transfer Documentation" has the meaning set forth in
Section 7.15(c).
"Transferred Employees" has the meaning set forth in
Section 7.8(a).
"Transfers" mean the transfers and assumptions described in
Section 2.1 and Section 2.2.
"Transition Access" has the meaning set forth in Section
7.2.
"Transition Team" means the Seller Transition Team and the
Purchaser Transition Team.
"Transition Services Agreement" has the meaning set forth in
Section 7.19.
"Treasury Regulations" means the Income Tax Regulations,
promulgated under the Code.
"VMSA" has the meaning set forth in Section 7.21.
"WARN" means the United States Worker Adjustment and
Retraining Notification Act and the rules and regulations
promulgated thereunder.
"Working Capital" means the working capital of the Company
and the Company Subsidiaries as of the Closing Date calculated in
accordance with the methodologies and principles set forth on
Exhibit 3.4(a). Working Capital shall not include any amounts
for which the Purchaser is entitled to indemnification pursuant
to Article XI.
"Working Capital Ceiling" means an amount equal to $212
million.
"Working Capital Deficit" means the amount by which the
Working Capital calculated in accordance with Section 3.4 and set
forth on the Final Working Capital Statement is less than the
Working Capital Floor.
"Working Capital Floor" means an amount equal to $112
million.
"Working Capital Surplus" means the amount by which the
Working Capital calculated in accordance with Section 3.4 and set
forth on the Final Working Capital Statement exceeds the Working
Capital Ceiling.
"Worldwide" has the meaning set forth in the preamble.
Section 1.3 Accounting Terms
.. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
ARTICLE II
TRANSFER AND ASSUMPTION; PURCHASE AND SALE
SECTION 2.1 Transfer of the Conveyed Assets and the Excluded
Assets
..
(a) Subject to the terms and conditions of this Agreement, prior
to the Closing Date, the Shareholder shall, and shall cause its
Subsidiaries to, transfer, convey, assign and deliver to the
Company and the Company Subsidiaries, as appropriate, and the
Company and the Company Subsidiaries, shall accept from the
Shareholder and such transferring Subsidiaries all of the
Shareholder's and such Subsidiaries' right, title and interest in
and to all the Conveyed Assets.
(b) Subject to the terms and conditions of this Agreement, prior
to the Closing Date, the Shareholder shall, and shall cause the
Company and the Company Subsidiaries to transfer to the
Shareholder or its Subsidiaries (other than the Company and the
Company Subsidiaries), including newly formed Subsidiaries, all
of the Company's and the Company Subsidiaries' right, title and
interest in and to the Excluded Assets, and the Shareholder or
such Subsidiaries shall accept from the Company or the Company
Subsidiaries, as the case may be, all of the Company's and the
Company Subsidiaries' right, title and interest in and to all the
Excluded Assets.
Section 2.2 Assumption of Liabilities; Excluded Liabilities.
(a) Subject to the terms and conditions of this Agreement, prior
to the Closing Date, the Shareholder shall cause the Company and
the Company Subsidiaries, as appropriate, in partial
consideration for the transfers described in Section 2.1, to
assume or satisfy all Assumed Liabilities to the extent the
Assumed Liabilities are not liabilities of the Company or the
Company Subsidiaries as of such date.
(b) Subject to the terms and conditions of this Agreement, prior
to the Closing Date, the Shareholder shall, or shall cause any of
its Subsidiaries (other than the Company or the Company
Subsidiaries) to, assume or satisfy all Excluded Liabilities of
the Company and the Company Subsidiaries.
(c) For purposes of this Section 2.2, such assumption or
satisfaction of liabilities can also be accomplished via payment,
offset, discharge, contribution to capital, distribution,
cancellation or otherwise.
Section 2.3 Transfer Provisions
..
(a) The Transfers shall be effected in accordance with the terms
and conditions of Section 7.15.
(b) Except for the Assumed Liabilities, none of the Company or
the Company Subsidiaries is assuming or retaining and none of
them shall be deemed to have assumed or retained any Excluded
Liabilities.
Section 2.4 Agreement to Purchase and Sell
.. Subject to the terms and conditions of this Agreement, at the
Closing (as hereinafter defined), the Shareholder shall cause
Worldwide to, and Worldwide will, sell, transfer and deliver to
the Purchaser, and the Purchaser will purchase and acquire from
Worldwide, all of the issued and outstanding capital stock of the
Company (the "Shares"), free and clear of all Liens (except for
restrictions on transfer under the Securities Act and comparable
securities Laws).
ARTICLE III
PURCHASE PRICE; ADJUSTMENTS
SECTION 3.1 Purchase Price
.. Subject to adjustment pursuant to Section 3.3 (Cash) and
Section 3.4 (Working Capital Adjustment), the aggregate amount to
be paid for the Shares (the "Purchase Price") shall be (i) $150
million in cash (the "Cash Purchase Price") and (ii) the
assumption by the Purchaser of the indebtedness associated with
the Company Business as set forth on Exhibit 3.1(a) (the "Assumed
Debt"), in each case as set forth in Section 3.2(a). The
Purchase Price shall be allocated as set forth on Exhibit 3.1(b)
between the Shares and certain agreements set forth herein for
Tax purposes.
Section 3.2 Payment of Purchase Price
..
(a) On the Closing Date, the Purchaser shall:
(i) deliver to Worldwide an amount equal to the Cash Purchase
Price; and
(ii) on the terms and subject to the conditions of this
Agreement, assume and pay, honor, perform and discharge (or cause
to be assumed, paid honored, performed and discharged) when due
all the Assumed Debt.
(b) All cash payments required under this Section 3.2,
Section 3.3, Section 3.4 or any other provision of this Agreement
shall be made in cash by wire transfer of immediately available
funds to such bank account(s) as shall be designated in writing
by the Shareholder or the Purchaser, as applicable, at least
three (3) Business Days prior to the applicable payment date.
Section 3.3 Cash
.. Within twenty (20) days after the Closing Date, the Purchaser
shall prepare and deliver to the Shareholder a certificate
executed by an officer or authorized representative of the
Purchaser which sets forth the Closing Date Cash Balance,
together with reasonable supporting documentation. The
Shareholder shall have fifteen (15) days after delivery of the
Closing Date Cash Balance during which to notify the Purchaser in
writing of any dispute of any item contained in the Closing Date
Cash Balance, which notice shall set forth in reasonable detail
the basis for such dispute. The Purchaser and the Shareholder
shall cooperate in good faith to resolve any such dispute as
promptly as possible, and upon such resolution, the Purchaser
shall pay the Shareholder the Closing Date Cash Balance, as
adjusted pursuant to the mutual agreement of the Purchaser and
the Shareholder. In the event the Shareholder disputes the
Closing Date Cash Balance and the Parties do not resolve such
dispute within five (5) Business Days after the delivery by the
Shareholder of such dispute (or such time as mutually extended by
the Parties), such dispute shall be resolved in accordance with
the dispute resolution procedures set forth in Section 3.4(c).
In the event the Shareholder does not notify the Purchaser of any
such dispute in writing within such five (5) Business Day period,
or if the Shareholder agrees with the items contained in the
Closing Date Cash Balance, the Closing Date Cash Balance shall be
final and binding on all parties and the Purchaser shall make a
payment in cash to the Shareholder in an amount equal to the
Closing Date Cash Balance.
Section 3.4 Working Capital Adjustment
..
(a) As promptly as practicable following the Closing Date (but
in any event within thirty (30) days after the Closing Date), the
Purchaser shall prepare and deliver to the Shareholder a
statement (the "Preliminary Working Capital Statement") setting
forth the Working Capital as of the close of business on the
Closing Date; provided, however, that the methodology and
principles set forth on Exhibit 3.4(a) hereto shall govern the
preparation of the Preliminary Working Capital Statement. During
such 30-day period, the Purchaser will provide to the Shareholder
and its representatives copies of the consolidating balance
sheets generated in connection with the preparation of the
Preliminary Working Capital Statement and will permit the
Shareholder and its representatives to meet with and ask
questions of the individuals preparing the Preliminary Working
Capital Statement. The Shareholder shall and shall cause its
Subsidiaries, Affiliates, directors, officers, employees, agents
and representatives to cooperate fully with the Purchaser and its
representatives in the preparation of the Preliminary Working
Capital Statement.
(b) Upon receipt of the Preliminary Working Capital Statement,
the Shareholder and its independent certified public accountants
or other advisors shall have the right during the succeeding 30-
day period to audit, at the Shareholder's expense, the accounts
represented by the line items set forth on the Preliminary
Working Capital Statement and to examine and review all records
and work papers and other supporting documents used to prepare
such Preliminary Working Capital Statement. During the 30-day
period, the Purchaser shall and shall cause its Subsidiaries,
officers, employees, agents and representatives to cooperate
fully with the Shareholder and its representatives in its audit,
examination and review of the Preliminary Working Capital
Statement. The Shareholder shall have thirty (30) days following
receipt of the Preliminary Working Capital Statement during which
to notify the Purchaser in writing of any dispute of any item
contained in the Preliminary Working Capital Statement, which
notice shall set forth in reasonable detail the basis for such
dispute. If the Shareholder does not notify the Purchaser of any
such dispute in writing within such 30-day period or if the
Shareholder shall agree to the Preliminary Working Capital
Statement, the Preliminary Working Capital Statement shall be
final and binding on all parties (the "Final Working Capital
Statement"). The Purchaser and the Shareholder shall cooperate
in good faith to resolve any such dispute as promptly as
possible, and upon such resolution, the Final Working Capital
Statement shall be prepared in accordance with the agreement of
the Purchaser and the Shareholder.
(c) If the Purchaser and the Shareholder are unable to resolve
any dispute regarding the Preliminary Working Capital Statement
within fifteen (15) days (or such longer period as the Purchaser
and the Shareholder shall mutually agree in writing) following
the Purchaser's receipt of written notice of such dispute, such
dispute shall be submitted to, and all issues having a bearing on
such dispute shall be resolved by, (x) the San Jose, California
office of PricewaterhouseCoopers LLP or (y) in the event such
accounting firm is unable or unwilling to take such assignment, a
"Big Four" or other accounting firm mutually agreed upon by the
Purchaser and the Shareholder (such identified accounting firm
or, if applicable, the firm so selected, the "Arbitrator"). The
resolution of the Arbitrator shall be final and binding on the
Parties and shall be made applying the methodology and principles
set forth on Exhibit 3.4(a). The Arbitrator shall be instructed
to use its best efforts to complete its work within thirty (30)
days following its engagement. The expenses of the Arbitrator
shall be borne as the Arbitrator shall determine after
considering the positions asserted by the Parties in light of its
final decision.
(d) Within three (3) Business Days following the determination
of the Final Working Capital Statement in accordance with this
Section 3.4, (i) if there exists a Working Capital Surplus, the
Purchaser shall pay to the Shareholder an amount in cash equal to
the Working Capital Surplus and (ii) if there exists a Working
Capital Deficit, the Shareholder shall pay to the Purchaser an
amount in cash equal to the Working Capital Deficit.
Notwithstanding anything to the contrary contained herein, (i) if
a dispute exists between the Parties regarding the amount of
Working Capital Surplus, the Purchaser shall pay to the
Shareholder the uncontested amount, if any, prior to the
determination of the disputed amount and (ii) if a dispute exists
between the Parties regarding the amount of Working Capital
Deficit, the Shareholder shall pay to the Purchaser the
uncontested amount, if any, prior to the determination of the
disputed amount. If there is not a Working Capital Surplus or a
Working Capital Deficit, there shall be no adjustment or payment
pursuant to this Section 3.4.
Section 3.5 Releases of Liabilities.
(a) In consideration for the Purchase Price, as of and following
the Closing Date, the Sellers knowingly, voluntarily and
unconditionally release, forever discharge, and covenant not to
sue the Purchaser, the Company, the Company Subsidiaries, their
respective predecessors, successors, parents, Subsidiaries and
other Affiliates, and all of their respective current and former
officers, directors, employees, agents and representatives from
and for any and all claims, causes of action, demands, suits,
debts, obligations, liabilities, damages, losses, costs and
expenses (including attorneys' fees) of every kind or nature
whatsoever, known or unknown, actual or potential, suspected or
unsuspected, fixed or contingent, that either of the Sellers has
or may have, now or in the future, arising out of, relating to,
or resulting from any act of commission or omission, errors,
negligence, strict liability, breach of contract, tort,
violations of law, matter or cause whatsoever from the beginning
of time to the Closing Date; provided, however, that such release
shall not cover: (i) any claims against the Purchaser, its
predecessors, successors, parents, Subsidiaries and other
Affiliates unrelated in any way to this Agreement or the
transaction contemplated by this Agreement, (ii) any claims
against the Purchaser arising under this Agreement, including any
Exhibits, or Ancillary Documents or (iii) any claims against the
Purchaser or such Subsidiaries in respect of any intercompany
account receivable or payable between the Purchaser or such
Subsidiaries, on the one hand, and the Company, on the other,
which in any such case remains in effect after the Closing and
was reflected on the Final Working Capital Statement.
(b) In consideration for the Shares, as of and following the
Closing Date, the Purchaser knowingly, voluntarily and
unconditionally releases, forever discharges, and covenants not
to sue the Sellers and their predecessors, successors, parents,
Subsidiaries and other Affiliates and all of their current and
former officers, directors, employees, agents and representatives
from and for any and all claims, causes of action, demands,
suits, debts, obligations, liabilities, damages, losses, costs
and expenses (including attorney's fees) of every kind or nature
whatsoever, known or unknown, actual or potential, suspected or
unsuspected, fixed or contingent, that the Purchaser has or may
have, now or in the future, arising out of, relating to, or
resulting from any act of commission or omission, errors,
negligence, strict liability, breach of contract, tort,
violations of Laws, matter or cause whatsoever from the beginning
of time to the Closing Date; provided, however, that such release
shall not cover (i) any claims against either of the Sellers,
their predecessors, successors, parents, Subsidiaries and other
Affiliates unrelated in any way to this Agreement or the
transactions contemplated by this Agreement; (ii) any claims
against either of the Sellers arising under this Agreement,
including any Exhibits or Ancillary Documents or (iii) any claims
against the Sellers or such Subsidiaries in respect of any
intercompany account receivable or payable between the Sellers or
such Subsidiaries, on the one hand, and the Company, on the
other, which in any such case remains in effect after the Closing
and was reflected on the Final Working Capital Statement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, hereby represent and
warrant to the Purchaser as follows as of the date hereof and as
of the Closing Date:
Section 4.1 Organization
.. Schedule 4.1 contains a true, correct and complete list of the
Company and each of the Company Subsidiaries, all formal legal
names of the Company and each of the Company Subsidiaries, its
type of entity, its jurisdiction of incorporation or formation,
as the case may be, its directors and officers and other
jurisdictions in which the Company or any Company Subsidiary is
authorized to do business. The Company and each Company
Subsidiary is duly formed, validly existing and in good standing
under the Laws of its jurisdiction of incorporation or formation,
as the case may be, and has all requisite power and authority to
own, lease and operate its properties and assets and to carry on
its business as now being conducted including the Company
Business. The Company and each Company Subsidiary is duly
qualified or licensed as a foreign corporation or organization in
good standing to transact business under the Laws of each
jurisdiction where the character of its activities or the
location of the properties or assets owned or leased by it
requires such qualification or licensing, except where the
failure to be so qualified or licensed or in good standing would
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company has heretofore made
available to the Purchaser true, correct and complete copies of
the charter documents as currently in effect and the corporate
record books with respect to actions taken by the shareholders
and board of directors of the Company and each Company
Subsidiary.
Section 4.2 Authorization
.. The Company has the requisite power and authority to execute
and deliver each Company Ancillary Document, to perform its
obligations thereunder and to consummate the transactions
contemplated thereby. Each Company Ancillary Document has been
(or when executed will be) duly executed and delivered by the
Company and shall constitute the legal, valid and binding
obligation of the Company, enforceable against it in accordance
with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting creditors' rights generally and general
principles of equity (regardless of whether considered in a
proceeding at law or in equity).
Section 4.3 Capital Stock
.. Schedule 4.3 accurately and completely sets forth the capital
structure of the Company and each Company Subsidiary by listing
thereon the number of shares of capital stock of the Company and
each Company Subsidiary which are authorized and which are issued
and outstanding. All of the issued and outstanding shares of
capital stock of the Company and each Company Subsidiary (a) are
duly authorized, validly issued, and, in jurisdictions which
recognize such concepts under Law with respect to such capital
stock, fully paid and nonassessable, (b) are held of record by
the Persons and in the amounts set forth on Schedule 4.3, (c)
were not issued in violation of the preemptive rights of any
Person under any agreement to which the Shareholder or any of its
Subsidiaries is a party, the certificate or articles of
incorporation, bylaws or other organizational documents of the
Shareholder or any Subsidiary of the Shareholder or any agreement
or Laws, and (d) are free and clear of all Liens. Except as set
forth on Schedule 4.3, there are no (i) shares of capital stock
of the Company or any Company Subsidiary are reserved for
issuance or are held as treasury shares, (ii) outstanding
options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, subscriptions, agreements, obligations,
convertible or exchangeable securities or other commitments,
contingent or otherwise, relating to the capital stock of the
Company or any Company Subsidiary other than as contemplated by
this Agreement and the Ancillary Documents, (iii) outstanding
contracts or other agreements to which the Company, either of the
Sellers or any Company Subsidiary is a party to purchase, redeem
or otherwise acquire any outstanding shares of capital stock of
the Company or any Company Subsidiary, or securities or
obligations of any kind convertible into any shares of the
capital stock of the Company or any Company Subsidiary, (iv)
dividends which have accrued or been declared but are unpaid on
the capital stock of the Company or any Company Subsidiary and
(v) outstanding or authorized stock appreciation, phantom stock,
stock plans or similar rights with respect to the Company or any
Company Subsidiary. Except as set forth on Schedule 4.3, since
January 1, 2001 the Company has not purchased, redeemed or
otherwise acquired any shares of capital stock of the Company.
Schedule 4.3 also lists all dividends or distributions made by
the Company since January 1, 2001.
Section 4.4 Subsidiaries
.. Except as set forth on Schedule 4.4, neither the Company nor
any Company Subsidiary currently owns, directly or indirectly,
any capital stock or other equity securities of or interests in
any other Person.
Section 4.5 Absence of Restrictions and Conflicts
.. Except for the filings, permits and Consents as may be
required under, and other applicable requirements of, the HSR
Act, Foreign Antitrust Laws and the Exchange Act and as set forth
on Schedule 4.5, the execution, delivery and performance of this
Agreement, the Shareholder Ancillary Documents and the Company
Ancillary Documents, the consummation of the transactions
contemplated hereby and thereby and the fulfillment of and
compliance with the terms and conditions hereof and thereof do
not or shall not (as the case may be), with the passing of time
or the giving of notice or both, violate or conflict with,
constitute a breach of or default under, result in the loss of
any benefit under, permit the acceleration of any obligation
under or create in any party the right to terminate, modify or
cancel, or result in the creation of any Lien upon any of the
properties or assets of the Company or any Company Subsidiary,
including the Conveyed Assets, under, (a) any term or provision
of the charter documents of the Company or any Company
Subsidiary, (b) except as indicated on Schedule 4.14, Section
7.14(c) or Section 7.22, any Company Contract or any other
contract, agreement, permit, franchise, License or other
instrument applicable to the Company or any Company Subsidiary,
(c) any judgment, decree or order of any Governmental Entity to
which the Company or any Company Subsidiary is a party or by
which the Company or any Company Subsidiary or any of their
respective properties are bound or (d) any Law or arbitration
award applicable to the Company or any Company Subsidiary,
except, with respect to clauses (b), (c) and (d) for any such
conflicts, violations, breaches, defaults, losses, Liens or other
encumbrances which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except
as set forth on Schedule 4.5, no Consent or order of, or
registration, declaration or filing with, any Governmental Entity
or other Person is required with respect to the Company or any
Company Subsidiary in connection with the execution, delivery or
performance of this Agreement, the Shareholder Ancillary
Documents or the Company Ancillary Documents or the consummation
of the transactions contemplated hereby or thereby except for
filings under and compliance with the HSR Act, Foreign Antitrust
Laws and the Exchange Act and such Consents or orders which would
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
Section 4.6 Real Property.
(a) Schedule 4.6(a) sets forth a true, correct and complete list
of the Owned Real Property, including the street address, city
and state thereof and identifies the owner of each such parcel of
Owned Real Property. The Company, or the applicable Company
Subsidiary identified on Schedule 4.6(a), has good and
marketable title to each parcel of the Owned Real Property, free
and clear of all Liens other than Permitted Liens.
(b) Schedule 4.6(b) sets forth a true, correct and complete list
of the Leased Real Property leased by the Company and each
Company Subsidiary.
(c) Except as set forth on Schedule 4.6(c), the Company or the
applicable Company Subsidiary, as the case may be, has a valid
leasehold interest in the Leased Real Property, and the leases
granting such interests are in full force and effect, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws
affecting the creditors' rights generally and general principles
of equity (regardless of whether considered in a proceeding at
law or in equity).
(d) Except as set forth on Schedule 4.6(d), no portion of the
Real Property violates any Law relating to zoning, building, land
use, fire, and noise control except for such violations that
would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth
on Schedule 4.6(d) and except for the Permitted Liens, no Real
Property is subject to (i) any governmental decree or order or,
to the Knowledge of the Shareholder, threatened or proposed order
or (ii) any rights of way, building use restrictions, exceptions,
variances, reservations or limitations of any nature whatsoever
in any such case except where such decree, order or other
limitation would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(e) The improvements and fixtures on the Real Property, taken as
a whole, are in all material respects in reasonable operating
condition and repair, ordinary wear and tear excepted, are
reasonably adequate for the purposes for which they are presently
being used. Except as set forth on Schedule 4.6(e), there is no
condemnation, expropriation or similar proceeding pending or, to
the Knowledge of the Shareholder, threatened against any of the
Real Property or any improvement thereon. As of the date hereof,
the Real Property constitutes all of the real property utilized
by the Company or any Company Subsidiary in the operation of the
Company Business (other than Real Property leased or acquired
after the date hereof in accordance with the terms hereof).
Section 4.7 Title to Assets; Related Matters
.. The assets of the Company and the Company Subsidiaries after
giving effect to the Transfers constitute all of the assets
reasonably necessary to conduct the operations of the Company
Business as is currently being conducted, except for assets used,
or licensed to Purchaser, by the Shareholder or its Affiliates in
the provision of services to be provided pursuant to the
Transition Services Agreement and except for those Licenses
listed on Schedule 4.21(b) and the Shared Usage Licenses listed
on Exhibit 7.22. Except as set forth on Schedule 4.7, the
Company and each Company Subsidiary has good and marketable title
to its material assets and will have good and marketable title to
the Conveyed Assets following the Transfers, in each case free
and clear of all Liens other than Permitted Liens. The equipment
and other items of tangible personal property of the Company and
the Company Subsidiaries that are in use are, when construed as a
whole and not individually, in all material respects (a) in
reasonable operating condition and in a state of reasonable
maintenance and repair, ordinary wear and tear excepted, (b)
usable in the regular and ordinary course of business and (c)
conform to all applicable Laws, ordinances, codes, rules and
regulations applicable thereto, and the Shareholder has no
Knowledge of any defects or problems with any of such assets
that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect. Except as disclosed
on Schedule 4.7 and except in connection with the transactions
contemplated hereby or as permitted by Section 7.1(k)(i), since
December 31, 2003 neither the Company nor any Company Subsidiary
has sold, transferred or disposed of any assets having a fair
market value in excess of $250,000, other than sales of inventory
or obsolete equipment in the ordinary course of business.
Schedule 4.7 sets forth a true, correct and complete list and
general description of each item of tangible personal property of
the Company and each Company Subsidiary having a book value of
more than $250,000 as of the date hereof.
Section 4.8 Inventory
.. Schedule 4.8 sets forth a true and correct list of (i) the
customers of the Company and each Company Subsidiary for which
the Company and each Company Subsidiary held and managed as of
the date hereof, or will hold and manage as of the Closing Date,
any inventory (including raw materials, supplies, work-in-
progress and finished goods) for the account of any such customer
other than any such inventory that is merely being shipped or
transported by or at the direction of the Company or the Company
Subsidiaries or is merely in Customs Brokerage merely for the
purpose of gaining entry or establishing admissibility of such
inventory into any jurisdiction ("Customer Inventory"); (ii) the
respective locations at which all Customer Inventory is held as
of the date hereof, or will be held as of the Closing Date; and
(iii) a list of the Customer Inventory as of the most recent
practicable date. The Company and each Company Subsidiary has on
hand the items of Customer Inventory it is required to have on
hand pursuant to the terms and conditions of the applicable
agreements between the Company, each Company Subsidiary and its
customers subject to immaterial shrinkage allowable under the
terms of customer contracts. Except as set forth on Schedule
4.8, to the Knowledge of the Shareholder, the Customer Inventory
does not include any pharmaceutical products, including
pharmaceutical products regulated as controlled substances.
Section 4.9 Financial Statements
(a) .
(a) The Shareholder has delivered to the Purchaser the
Shareholder Financial Statements, copies of which are attached
hereto as Schedule 4.9(a). The Shareholder Financial Statements
have been prepared from, and are in accordance with, the books
and records of the Shareholder, which books and records are
maintained in accordance with GAAP (except as expressly noted on
Schedule 4.9(a)) consistently applied throughout the periods
indicated, and such books and records have been maintained on a
basis consistent with the past practice of the Shareholder. Each
balance sheet included in the Shareholder Financial Statements
(including the related notes and schedules) fairly presents the
financial position of the Shareholder as of the date of such
balance sheet, and each statement of income and cash flows
included in the Shareholder Financial Statements (including the
related notes and schedules) fairly presents the results of
operations and changes in cash flows, as the case may be, of the
Company for the periods set forth therein, in each case in
accordance with GAAP (except as expressly noted therein or on
Schedule 4.9(a)) consistently applied during the periods
involved.
(b) The Shareholder has delivered to the Purchaser the Company
Financial Statements, copies of which are attached hereto as
Schedule 4.9(b). The Company Financial Statements have been
prepared from, and are in accordance with the books and records
of the Company and the Company Subsidiaries, which books and
records have been maintained on a basis consistent with the past
practice of the Company. Each balance sheet included in the
Company Financial Statements (including the related notes and
schedules) fairly presents, in all material respects, the
combined financial position of the Company and the Company
Subsidiaries as of such balance sheet date and each statement of
income and cash flows included in the Company Financial
Statements (including the related notes and schedules) fairly
presents, in all material respects, the combined results of
operations and changes in cash flows, as the case may be, of the
Company and the Company Subsidiaries for the periods set forth
therein, in each case in accordance with GAAP (except as
expressly set forth therein or on Schedule 4.9(b)) consistently
applied during the periods involved. Since December 31, 2003
there has been no change in any accounting (or tax accounting)
policy, practice or procedure of the Company, except as required
by GAAP or comparable rules, regulations or Laws or as expressly
set forth on Schedule 4.9(b).
(c) The accruals established on the Company Financial Statements
for the Assumed Liabilities that are subject to subsections (ii),
(iii), (iv), (v), (vi) and (viii) of the definition of "Assumed
Liabilities" set forth in Article I hereof are reflected on
Exhibit 4.9(c) hereto (the "Accruals"). The Accruals have been
(i) established in accordance with GAAP and (ii) have been
derived from the underlying books, records and accounts of the
Company and the Company Subsidiaries and, to the extent
applicable and referenced on Exhibit 4.9(c), the actual history
and experience of the Company and the Company Subsidiaries with
respect to such history and experience.
Section 4.10 No Undisclosed Liabilities
.. Except as disclosed in the Company Financial Statements or as
disclosed on Schedule 4.10, neither the Company nor any Company
Subsidiary, after giving effect to the Transfers, has any
liabilities or obligations (whether absolute, accrued, contingent
or otherwise) that are not adequately reflected or provided for
in the Balance Sheet, except liabilities and obligations that (i)
are not required by GAAP to be reflected on the Balance Sheet or
(ii) have been incurred since the date of such balance sheet in
the ordinary course of business, consistent with the past
practice of the Company, and would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
Section 4.11 Absence of Certain Changes
.. Since December 31, 2003 and except as set forth on
Schedule 4.11, there has not been (i) any Material Adverse
Effect, (ii) any uninsured damage, destruction, loss or casualty
to property or assets of the Company or any Company Subsidiary
with a value in excess of $250,000 or (iii) any action taken of
the type described in Section 7.1 (e), (g), (h), (i), (l), (m)
and (n) that, had such action occurred following the date hereof
without the Purchaser's prior approval, would be in violation of
Section 7.1.
Section 4.12 Legal Proceedings
.. Except as set forth on Schedule 4.12, there is no suit,
action, claim, arbitration, proceeding or investigation pending,
or, to the Knowledge of the Shareholder, threatened against,
relating to or involving, the Company Business, the Conveyed
Assets, the Company, any Company Subsidiary or the real or
personal property of the Company or any Company Subsidiary before
any Governmental Entity which (i) involves any allegations of
criminal violations of any Law or (ii) if finally adversely
determined could reasonably be expected to result in a payment to
the claimant in excess of $250,000. No suit, action, claim,
proceeding or investigation pending or, to the Knowledge of the
Shareholder, threatened against, relating to or involving the
Company Business, the Conveyed Assets, the Company, any Company
Subsidiary or the real or personal property of the Company or any
Company Subsidiary before any Governmental Entity (including any
of those set forth on Schedule 4.12), if finally determined
adversely, would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth
on Schedule 4.12, neither the Company nor any Company Subsidiary
is specifically subject to any judgment, decree, injunction, rule
or order of any court or arbitration panel that would,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Except as set forth on Schedule 4.12,
neither the Company nor any Company Subsidiary has any material
claim currently pending against any Governmental Entity.
Section 4.13 Compliance with Law
..
(a) Except as set forth on Schedule 4.13, the Company and each
Company Subsidiary is (and has been at all times during the past
three (3) years) in compliance with all applicable Laws,
including, without limitation, applicable Laws relating to
customs and occupational, safety and health matters, except for
instances of non-compliance as, individually or in the aggregate,
have not had and would not reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule 4.13,
(i) neither the Company nor any Company Subsidiary has been
charged with, has received written notice that it is under
investigation with respect to a material violation of any
applicable Law, (ii) neither the Company nor any Company
Subsidiary is a party to, or is named in and bound by, any
material order, judgment or injunction of any Governmental
Entity, (iii) the Company and each Company Subsidiary has filed
all material reports and has all material licenses and permits
required to be filed with or obtained from any Governmental
Entity from the date three (3) years before the date hereof
through the date hereof, and (iv) other than routine contract
audits by the Defense Contract Audit Agency, neither the Company
nor any Company Subsidiary is, nor has been in the past three (3)
years, audited by any Governmental Entity and to the Knowledge of
the Shareholder, nor is any such audit threatened. Nothing set
forth in this Section is intended to address any liability that
is related to the matters described in Section 4.6 (Real
Property), Section 4.15 (Tax Returns; Taxes), Section 4.17
(Company Benefit Plans), Section 4.18 (Labor Relations), Section
4.20 (Environmental, Health and Safety Matters) or Section 4.26
(Ethical Practices).
(b) The Company and each Company Subsidiary have not been
suspended or debarred from bidding on contracts or subcontracts
for any Governmental Entity, nor, to the Knowledge of the
Shareholder, has any suspensions or debarment action been
commenced. There is no valid basis for the Company and each
Company Subsidiary's suspension or debarment from bidding on
contracts or subcontracts for any Governmental Entity.
(c) No material cost incurred by the Company and each Company
Subsidiary pertaining to any contracts or subcontracts for any
Governmental Entity has been questioned or challenged by
representatives of a Governmental Entity, or has been disallowed
by any Governmental Entity, and no amount of money due to the
Company or any Company Subsidiary pertaining to any contracts or
subcontracts for any Governmental Entity has been withheld or set
off nor has any claim been made to withhold or set off money, in
each case other than in the ordinary course of business; and the
Company is entitled to all progress payments received with
respect thereto; and, to the Knowledge of the Shareholder, all
amounts previously charged or at present carried as chargeable by
the Company or any Company Subsidiary to any contracts or
subcontracts for any Governmental Entity have been or will be
reasonably, allowable and allocable to each such contracts or
subcontracts for any Governmental Entity.
(d) The Company and each Company Subsidiary has not, with
respect to any contracts or subcontracts with a Government Entity
within the preceding three (3) years, received a material cure
notice or material show cause notice advising the Company or any
Company Subsidiary that it was in default or would, if it failed
to take remedial action, be in default under such contract or
subcontract.
Section 4.14 Company Contracts
.. Schedule 4.14 sets forth a true, correct and complete list of
the following contracts to which the Company or any Company
Subsidiary is a party that are in effect on the date hereof
(other than the Employment Agreements set forth on Schedule
4.16(a) (other than as set forth in subsection (e) below), the
Company Benefit Plans set forth on Schedule 4.17(a) (other than
as set forth in subsection (e) below), insurance policies on
Schedule 4.19, and the Collective Bargaining Agreements listed on
Exhibit 1.2(e) (the "Company Contracts"):
(a) all bonds, debentures, notes, loans, credit or loan
agreements or loan commitments, mortgages, indentures, guarantees
or other contracts relating to the borrowing of money or
industrial development bonds or similar instruments
(collectively, the "debt agreements"), except any such debt
agreement with an aggregate outstanding principal amount as of
the date hereof not exceeding $250,000;
(b) all leases relating to the Leased Real Property or other
leases or licenses involving any properties or assets (whether
real, personal or mixed, tangible or intangible) involving an
annual base rent of more than $100,000;
(c) all contracts and agreements that limit or restrict the
Company or any Company Subsidiary or any of their respective
officers or key employees from engaging in any business in any
jurisdiction;
(d) all contracts and agreements for capital expenditures or the
acquisition or construction of fixed assets requiring the payment
by the Company or any Company Subsidiary of an annual amount in
excess of $250,000;
(e) all contracts with Customers, the contracts otherwise
required to be listed on Schedule 4.14, written Employment
Agreements or other employment-related agreements that provide
for an increased payment or benefit, or accelerated vesting, upon
the execution hereof or the Closing or in connection with the
transactions contemplated hereby where the value of such increase
or acceleration exceeds $100,000;
(f) all contracts and agreements granting any Person a Lien
other than a Permitted Lien on all or any part of any property or
asset owned by the Company or any Company Subsidiary where the
aggregate fair market value of property subject to such Lien
exceeds $100,000;
(g) all contracts and agreements for the management, cleanup,
remediation or abatement of any Hazardous Materials or for the
performance of any environmental audit or study;
(h) other than leases for Leased Real Property or leases for
tangible personal property, all contracts and agreements granting
to any Person an option or a first refusal, first-offer or
similar preferential right to purchase or acquire any assets or
properties;
(i) all contracts and agreements with any agent, distributor or
representative hired in connection with the Company Business that
is not terminable without penalty on thirty (30) days' or less
notice involving an annual commitment or payment of more than
$100,000;
(j) all contracts, licenses and agreements to which the Company
or any Company Subsidiary is a party (i) with respect to Company
Intellectual Property licensed to any third party or any
Affiliate of the Company (other than end-user licenses under
which license and service fees in the aggregate do not exceed
$100,000) or (ii) pursuant to which a third party has licensed or
transferred any Company Intellectual Property to the Company or
any Company Subsidiary (other than software that is generally
available on nondiscriminatory pricing terms and has an
acquisition cost of $100,000 or less);
(k) all contracts providing for the indemnification or holding
harmless of any officer, director or employee;
(l) all joint venture or partnership contracts and all other
contracts providing for the sharing of any profits;
(m) each contract with the Customers (excluding government
contracts);
(n) all outstanding powers of attorney empowering any Person to
act on behalf of the Company or any Company Subsidiary other than
powers of attorney granted in the ordinary course of business to
employees employed outside the United States and powers of
attorney granted in connection with Taxes for taxable periods
ending on or before the Closing Date, other than powers of
attorney granted to non-U.S. attorneys solely for ministerial or
other de minimis purposes;
(o) all service contracts calling for annual payments over
$250,000 per year with any "ocean common carrier" within the
meaning of Sections 3(19) and 8(c) of the Shipping Act of 1984,
46 U.S.C. app. 1709(19) and 1707(c) ("Service Contracts");
(p) all existing contracts and commitments (other than those
described in subsections (a) through (o) and (q) and (r) of this
Section 4.14 and other than any contract with a customer of the
Company or any Company Subsidiary) to which the Company or any
Company Subsidiary is a party or by which its properties or
assets are bound involving an annual commitment or annual payment
to or from the Company or any Company Subsidiary of more than
$1,000,000 individually;
(q) all settlement agreements as to which the Company or a
Company Subsidiary has continuing obligations individually and
which involve a payment in excess of $250,000 annually; and
(r) all contracts where the Company or a Company Subsidiary is
acting as a federal or state contractor or subcontractor.
True, correct and complete copies of all Company Contracts have
been made available to the Purchaser. The Company Contracts are
legal, valid, binding, and, assuming due and valid authorization,
execution and delivery thereof by the other parties to each such
Company Contract, enforceable in accordance with their respective
terms with respect to the Company or the applicable Company
Subsidiary, as the case may be, and each other party to such
Company Contracts, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting creditors' rights generally and
general principles of equity (regardless of whether considered in
a proceeding at law or in equity). There is no existing material
default or material breach of the Company or any Company
Subsidiary under any Company Contract (or event or condition
that, with notice or lapse of time or both would constitute a
material default or material breach) and, to the Knowledge of the
Sellers, there is no such default (or event or condition that,
with notice or lapse of time or both, would constitute such a
default or breach) with respect to any third party to any Company
Contract. As of the date hereof, neither Company nor any Company
Subsidiary is participating in any discussions or negotiations
regarding modification of or material amendment to any Company
Contract. Schedule 4.14 identifies with an asterisk each Company
Contract set forth therein that (i) requires the Consent of or
notice to the other party thereto to avoid any breach, default or
violation of such contract, agreement or other instrument or (ii)
may require novation pursuant to Section 7.14(d), in each case,
in connection with the execution and delivery of this Agreement
or any Ancillary Document or the consummation transactions
contemplated hereby or thereby.
Section 4.15 Tax Returns; Taxes
..
(a) Except as otherwise disclosed on Schedule 4.15(a):
(i) all Tax Returns of the Company and any Company Subsidiary
due to have been filed through the date hereof in accordance with
any applicable Law have been timely filed and are correct and
complete in all respects;
(ii) all Taxes for which the Company or any Company Subsidiary is
liable (either directly or indirectly) through the date hereof
(whether or not shown on any Tax Return), have been paid in full
or is being contested in good faith by appropriate proceedings;
(iii) there are not now any extensions of time in effect with
respect to the dates on which any income Tax Returns of the
Company or any Company Subsidiary were or are due to be filed;
(iv) all deficiencies asserted as a result of any examination of
any Tax Returns of the Company or any Company Subsidiary have
been paid in full, accrued on the books of the Company or any
Company Subsidiary, or finally settled;
(v) to the Knowledge of the Shareholder, no proposals or
deficiencies for any Taxes of the Company or any Company
Subsidiary are being asserted, proposed or threatened (in each
case in writing), and no audit or investigation of any return or
report of Taxes of the Company or any Company Subsidiary is
currently underway, pending or threatened (in each case in
writing);
(vi) no claim has been made in writing by an authority in a
jurisdiction in which the Company or any Company Subsidiary does
not file Tax Returns that it is or may be subject to taxation by
that jurisdiction;
(vii) the Company and all Company Subsidiaries have withheld
and paid all Taxes required to have been withheld and paid or for
which they could be held liable in connection with amounts paid
or owing to any employee, independent contractor, creditor,
stockholder or other third party;
(viii) there are no outstanding waivers or agreements by or on
behalf of or affecting the Company or any Company Subsidiary for
the extension of time for the assessment of any Taxes or
deficiency thereof, nor are there any requests for rulings,
outstanding subpoenas or requests for information, or any other
matter pending between or potentially affecting the Company or
any Company Subsidiary and any taxing authority;
(ix) neither the Company nor any Company Subsidiary has been a
"United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code;
(x) neither the Company nor any Company Subsidiary is a party
to any Tax allocation or sharing agreement;
(xi) neither the Company nor any Company Subsidiary has been a
member of an affiliated group filing a consolidated U.S. federal
income tax return (other than the Shareholder Group);
(xii) neither the Company nor any Company Subsidiary has any
liability for the Taxes of any Person (other than the Company)
under U.S. Treasury Regulation section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise;
(xiii) neither the Company nor any Company Subsidiary has
participated in any reportable or listed transaction as defined
under Treasury Regulation Section 1.6011-4 other than reportable
or listed transactions that have been debated with the IRS and
finally resolved;
(xiv) if the Company or any Company Subsidiary has
participated in a reportable or listed transaction, it has
properly disclosed such transaction in accordance with the Tax
regulations or finally settled the issue with the IRS.
(b) Except as set forth on Schedule 4.15(b), the Shareholder and
the Company have made available to the Purchaser complete copies
of all open income Tax Returns (together with any agent's reports
and any accountants' work papers) relating to their operations
for the years for which Tax Returns are due to have been filed.
(c) Notwithstanding anything to the contrary contained herein,
all representations and warranties made in this Section 4.15
shall be deemed to be true and correct so long as any failure of
such representation or warranty to be true and correct would not
have a Material Adverse Effect or such failure is not due to a
knowing failure to disclose a matter on Schedule 4.15(a), (b) or
(d).
(d) Except as set forth on Schedule 4.15(d), the Company will
not 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
as a result of any (i) "closing agreement" as described in Code
Section 7121 (or any corresponding or similar provision of state,
local, or foreign income Tax law) executed on or prior to the
Closing; (ii) intercompany transactions or any excess loss amount
described in Treasury Regulations under Code Section 1502 (or any
corresponding or similar provision of state, local or foreign
income Tax law); (iii) installment sale or open transaction
disposition made on or prior to the Closing; or (iv) prepaid
amount received on or prior to the Closing.
Section 4.16 Officers, Employees and Independent Contractors
..
(a) Except as set forth on Schedule 4.16(a), neither the Company
nor any Company Subsidiary is a party to or bound by any formal
written employment agreement or material verbal employment
agreement (other than De Minimis International Employment
Agreements) or any agreements or arrangements with third party
vendors to provide workers to the Company or any Company
Subsidiary on a contingent or temporary basis. The Company has
provided to the Purchaser true, correct and complete copies of
each such formal written employment agreement and a summary of
each material verbal employment agreement (other than a
De Minimis International Employment Agreement). None of the
Company, the Shareholder or any Company Subsidiary has received a
claim from any Governmental Entity to the effect that the Company
or any Company Subsidiary has improperly classified a person as
an independent contractor. None of the Company, the Sellers or
any Company Subsidiary has made any binding commitments to any
such officers, employees or former employees, consultants or
independent contractors with respect to compensation, promotion,
retention, termination, severance or similar matters specifically
with reference to this Agreement or otherwise.
(b) Schedule 4.16(b) sets forth all officers,
employees and independent contractors of the Company or any
Company Subsidiary employed in connection with the Company
Business that have, since December 31, 2003, been transferred
(i) from the Company or any Company Subsidiary to the Shareholder
or a Subsidiary of the Shareholder other than the Company or a
Company Subsidiary or (ii) from the Shareholder or a Subsidiary
of the Shareholder, other than the Company or a Company
Subsidiary, to the Company or any Company Subsidiary. Except as
indicated on Schedule 4.16(b), all officers, employees and
independent contractors are active on the date hereof.
Section 4.17 Company Benefit Plans
..
(a) Schedule 4.17(a) contains a true and complete list of the
Company Benefit Plans currently sponsored, maintained or
contributed to by the Company or any Company Subsidiary or
currently providing benefits to any employee, former employee,
director, manager, officer, consultant, independent contractor,
contingent workers or leased employee of the Company or any
Company Subsidiary or the dependents of any of them (a "Current
Company Benefit Plan").
(b) Except as set forth on Schedule 4.17(b):
(i) With respect to each Current Company Benefit Plan
identified on Schedule 4.17(a), the Company has heretofore delivered or
made available to the Purchaser (A) a true and complete copy of the
summary plan description for such plan, or, if such plan is not
subject to ERISA, a written summary of the benefits available
under that plan to employees of the Company, (B) with respect to
any Current Company Benefit Plan that is a source of the Post-
Retirement Medical Liability or the Long Term Disability
Liability being assumed by the Purchaser, a true and complete
copy of the plan documents and any amendments thereto, and any
related trust or other funding vehicle, and any reports or
summaries required under ERISA or the Code and (C) such other
documentation with respect to any Company Benefit Plan (whether
current or not) as is reasonably requested by the Purchaser.
(ii) The records of the Company or the Company Subsidiaries
accurately reflect the employment or service histories of their
employees and leased employees, including their hours of service
(for all employees who are non-exempt for purposes of federal and
state wage and hour laws), and all such records are maintained in
a usable form.
(iii) No Company Benefit Plan or ERISA Affiliate Plan is or
was subject to Title IV of ERISA or Section 412 of the Code, and
no Company Benefit Plan or ERISA Affiliate Plan is or was a
Multiemployer Plan or subject to Section 302 of ERISA. Neither
the Company nor any Company Subsidiary has terminated or
withdrawn from or sought a funding waiver with respect to, and no
fact exists that could reasonably be expected to result in a
termination or withdrawal from or seeking a funding waiver with
respect to, a Company Benefit Plan that is subject to Title IV of
ERISA. Neither the Company nor any Company Subsidiary has
incurred, and no fact exists that reasonably could be expected to
result in, liability to the Company or any Company Subsidiary as
a result of a termination, withdrawal or funding waiver with
respect to an ERISA Affiliate Plan.
(iv) Each Company Benefit Plan has been established, registered,
qualified, invested, operated and administered in all material
respects in accordance with its terms and in compliance with
ERISA, the Code and all Applicable Benefit Laws. Neither the
Company nor any Company Subsidiary has incurred, and no fact
exists that reasonably could be expected to result in any
material liability to the Company or any Company Subsidiary with
respect to any Company Benefit Plan or any ERISA Affiliate Plan,
including any liability, Tax, penalty or fee under ERISA, the
Code or any Applicable Benefit Law (other than to pay premiums,
contributions or benefits in the ordinary course).
(v) Each Company Benefit Plan intended to be "qualified" within
the meaning of Section 401(a) of the Code and the trusts
maintained thereunder that are intended to be exempt from
taxation under Section 501(a) of the Code has received a
favorable determination or other letter indicating that it is so
qualified and the plan sponsor of each such Company Benefit Plan
is the Shareholder.
(vi) There is no pending or threatened complaint, claim (other
than a routine claim for benefits), proceeding, examination,
audit, investigation or other proceeding or action of any kind in
or before any Governmental Entity with respect to any Company
Benefit Plan and there exists no state of facts that after notice
or lapse of time or both reasonably could be expected to give
rise to any such claim, investigation, examination, audit or
other proceeding or to affect the registration of any Company
Benefit Plan required to be registered.
(vii) All material contributions or premiums required to be
made by the Company or any Company Subsidiary prior to the
Closing Date under the terms of each Company Benefit Plan or by
Applicable Benefit Law have been made in a timely fashion in
accordance with Applicable Benefit Law and the terms of the
Company Benefit Plan.
(viii) The execution, delivery and performance of, and
consummation of the transactions contemplated by, this Agreement
will not (1) entitle any current or former employee, director,
officer, consultant, independent contractors, contingent worker
or leased employee (or any of their dependents, spouses or
beneficiaries) of the Company or any Company Subsidiary to
severance pay, unemployment compensation or any other payment
from the Company or any Company Subsidiary, (2) accelerate the
time of payment or vesting, or increase the amount of
compensation due any such individual under a Company Benefit Plan
or (3) result in any payments that will not be deductible for
federal income tax purposes by reason of Section 280G of the
Code. Notwithstanding the foregoing, the Sellers shall have no
obligation to disclose severance payments under any De Minimis
International Employment Agreement.
(ix) Each Company International Benefit Plan is fully insured,
fully funded by assets held in a segregated account or fully
reserved as a liability on the books of the Company or a Company
Subsidiary in accordance with GAAP and each such plan shall be
treated as material for purposes of applying GAAP reserve
requirements.
(c) Schedule 4.17(c) contains a true and complete list of the
Multiemployer Plans to which the Company or any Company
Subsidiary contributes or has an obligation to contribute and all
contributions required to be made by the Company or any Company
Subsidiary to each Multiemployer Plan have been made in a timely
fashion. Neither the Company nor any ERISA Affiliate has
withdrawn from a Multiemployer Plan in an action that could
reasonably be expected to result in the imposition of withdrawal
liability against the Company under Title IV of ERISA.
Section 4.18 Labor Relations
.. Except as set forth on Schedule 4.18:
(a) since January 1, 2001, none of the Company's employees, the
Company's Subsidiaries' employees, the Transferred Employees nor
the Logistics Contract Employees have been or currently are
represented by a labor organization that was certified by any
labor relations board (including the NLRB) or voluntarily
recognized;
(b) since January 1, 2001, none of the Company's employees, the
Company's Subsidiaries' employees, the Transferred Employees nor
the Logistics Contract Employees have been, or currently are, a
signatory to, or have had, or currently have, the terms of their
employment set by a Collective Bargaining Agreement;
(c) each Collective Bargaining Agreement is in full force and
effect and, to the Knowledge of the Shareholder, no such
Collective Bargaining Agreement is being renegotiated except as
noted on Exhibit 1.2(e) as being re-negotiated;
(d) since January 1, 2001, no representation election petition
or application for certification has been filed by employees of
the Company, employees of any Company Subsidiary, any Transferred
Employee or any Logistics Contract Employees or is pending with
the NLRB or any other Governmental Entity and no union organizing
campaign or other attempt to organize or establish a labor union
or labor organization involving employees of the Company, any
Company Subsidiary, any Transferred Employee or any Logistics
Contract Employee has occurred since January 1, 2001, or is in
progress;
(e) no unfair labor practice charge or complaint filed with or
by the NLRB or its General Counsel's Office or with or by any
other Governmental Entity against any Company or any Company
Subsidiary is pending, or has been threatened in writing to the
Knowledge of the Shareholder;
(f) no strike, work stoppage, hand billing or picketing
involving the employees of the Company, employees of any Company
Subsidiary, any Transferred Employee or any Logistics Contract
Employee has occurred since January 1, 2001, or is in progress;
(g) no wrongful discharge, discrimination, retaliation, libel,
slander or other claim, complaint or charge, nor any
investigation by any Governmental Entity, that arises out of any
applicable Labor Laws or the employment relationship between the
Company and its employees or any Company Subsidiary and any of
its employees or brought by or on behalf of any of the
Transferred Employees or Logistics Contract Employees, is pending
or threatened in writing against the Company or any Company
Subsidiary to the Knowledge of the Shareholder (other than
worker's compensation claims if finally adversely determined
could not reasonably be expected to result in a payment to the
claimant in excess of $250,000);
(h) neither the Company nor any Company Subsidiary has taken any
action that could constitute a "mass layoff", "mass termination"
or "plant closing" within the meaning of WARN or otherwise
trigger notice requirements or liability under any federal,
local, state or foreign plant closing notice or collective
dismissal law
(i) neither the Company nor any Company Subsidiary is, or at any
time since September 28, 2000, has been, an alter ego of EWA;
(j) neither of the Company nor any Company Subsidiary is, or has
at any time been, a party to an agreement with ALPA other than
the Subcontracting Letter Agreement.
(k) no arbitration demand, proceeding or written grievance under
a Collective Bargaining Agreement identified on Exhibit 1.2(e)
has been filed or is pending to the Knowledge of the Shareholder;
(l) neither the Company nor any Company Subsidiary is in
violation of its obligations as a federal or state contractor or
subcontractor nor has a claim pending against it that alleges it
is in violation of its obligations as a federal or state
contractor or subcontractor; and
(m) neither the Company nor any Company Subsidiary has violated
any Labor Laws which, individually or collectively, would
reasonably be expected to have a Material Adverse Effect.
Section 4.19 Insurance Policies
.. Schedule 4.19 contains a true, correct and complete list of
all insurance and bond policies carried by or for the benefit of
the Company, the Company Subsidiaries or the Company Business, as
of the date hereof. All insurance policies and bonds with
respect to the business and assets of the Company, the Company
Subsidiaries and the Company Business are in full force and
neither the Company nor the Company Subsidiary has reached or
exceeded its policy limits for any insurance policy in effect at
any time during the past three (3) years.
Section 4.20 Environmental, Health and Safety Matters
.. Except as set forth on Schedule 4.20:
(a) the Company and each Company Subsidiary possesses all
permits and approvals required under, and is in compliance with,
all applicable Environmental Laws, and to the Knowledge of the
Shareholder, the Company and each Company Subsidiary is in
compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such permits and approvals;
(b) neither the Company nor any Company Subsidiary has received
written notice of actual or threatened liability under CERCLA or
any similar foreign, state or local Environmental Law from any
Governmental Entity or any third party and there is no fact known
to the Company or any Company Subsidiary that could reasonably be
expected to result in a claim against the Company or any Company
Subsidiary under CERCLA or any similar foreign, state or local
Environmental Law with respect to any on-site or off-site
location;
(c) neither the Company nor any Company Subsidiary has entered
into or agreed to enter into, any consent decree or order, nor is
any consent decree or order threatened or pending and neither the
Company nor any Company Subsidiary is subject to any judgment,
decree or judicial or administrative order against it for
compliance with, or the cleanup of Hazardous Materials under, any
applicable Environmental Law;
(d) neither the Company nor any Company Subsidiary has received
written notice alleging it to be in violation of, and neither the
Company nor any Company Subsidiary has been subject to, any
administrative or judicial proceeding regarding any allegations
against the Company or any Company Subsidiary pursuant to
applicable Environmental Laws either now or any time during the
past five (5) years, which such alleged violations or allegations
therefor, remain outstanding;
(e) the Shareholder has heretofore made available to the
Purchaser true, correct and complete copies of all unprivileged
reports, correspondence and memoranda in its possession
pertaining to environmental investigations, violations or
compliance by the Company or any Company Subsidiary; and neither
the Company nor any Company Subsidiary has paid any fine, penalty
or assessment in excess of $50,000 within the prior five (5)
years with respect to environmental violations;
(f) to the Knowledge of the Shareholder, no Real Property,
improvement or equipment of the Company or any Company Subsidiary
contains any asbestos, polychlorinated biphenyls, underground
storage tanks, open or closed pits, or sumps or other similar
structure on or under any Real Property;
(g) to the Knowledge of the Shareholder, neither the Company nor
any Company Subsidiary has imported, manufactured, stored, used,
operated, transported, treated, disposed of or managed any
Hazardous Material other than in compliance with all
Environmental Laws; and
(h) there are no present or past actions or activities,
conditions, events or incidents, including Releases of Hazardous
Materials known to the Company or any Company Subsidiary that
could reasonably be expected to result in a claim under any
Environmental Law against the Company or any Company Subsidiary.
Section 4.21 Intellectual Property
.. Schedule 4.21 contains a list of all Company Registered
Intellectual Property.
(a) Except as set forth on Schedule 4.21(a), no Company
Proprietary Intellectual Property is subject to any proceeding or
outstanding decree, order, judgment or stipulation (i)
restricting the use, transfer or licensing thereof by the Company
or any Company Subsidiary or (ii) that may affect the validity,
use or enforceability of the Company Proprietary Intellectual
Property. To the Knowledge of the Shareholder, each item of
Company Registered Intellectual Property is valid and subsisting.
To the Knowledge of the Shareholder, all necessary registration,
maintenance and renewal fees currently due in connection with
Company Registered Intellectual Property have been made and all
necessary documents, recordations and certifications in
connection with the Company Registered Intellectual Property have
been filed with the relevant patent, copyright, trademark or
other authorities in the United States of America or foreign
jurisdictions, as the case may be, for the purpose of maintaining
such Company Registered Intellectual Property.
(b) The Company and the Company Subsidiaries own each item of
Company Proprietary Intellectual Property, free and clear of any
Lien (excluding licenses and restrictions associated with
licenses) and have licenses to use each item of Company Licensed
Intellectual Property. The execution and delivery of this
Agreement, the Closing and the consummation of the transactions
contemplated hereby shall not adversely affect the Company's or
the Company Subsidiaries' title to the Company Proprietary
Intellectual Property or, to the Knowledge of the Shareholder,
the Company's or the Company Subsidiaries' licenses and rights to
use the Company Licensed Intellectual Property, except (i) as
provided on Schedule 4.21(b) or (ii) as would not have a Material
Adverse Effect.
(c) To the Knowledge of the Shareholder, the Company Proprietary
Intellectual Property, the use thereof and the operations of the
Company and each Company Subsidiary as currently conducted
including the Company's and the Company's Subsidiaries' design,
development, marketing and sale of the products or services of
the Company and each Company Subsidiary (including with respect
to products currently under development), has not and does not
infringe or misappropriate in any manner the Intellectual
Property of any third party or, to the Knowledge of the
Shareholder, constitute unfair competition or trade practices
under the Laws of any jurisdiction; and except as set forth on
Schedule 4.21(c), neither the Shareholder, the Company nor any
Company Subsidiary has received any written notice alleging such
infringement, misappropriation or violation of Laws (each, an
"Infringement Notice"), except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect. Schedule 4.21(c) identifies all Infringement Notices of
which the Shareholder has Knowledge. To the Knowledge of the
Shareholder, no Person has or is infringing or misappropriating
any Company Proprietary Intellectual Property.
(d) The Company and the Company Subsidiaries have taken
reasonable steps to protect the rights of the Company and the
Company Subsidiaries in the Confidential Information and any
trade secret or confidential information of third parties used by
the Company and the Company Subsidiaries, and, without limiting
the generality of the foregoing, the Company and the Company
Subsidiaries have a written policy requiring employees to refrain
from using or disclosing the confidential information of the
Company and the Company Subsidiaries, except as necessary for the
performance of the role of such employee in the Company Business.
A copy of the current policy has been previously provided to
Purchaser. To the Knowledge of the Shareholder, except under
confidentiality obligations, there has not been any disclosure by
the Company or the Company Subsidiaries of any Confidential
Information or any such trade secret or confidential information
of third parties.
Section 4.22 Software
.. Schedule 4.22 sets forth a true, correct and complete list of:
(i) the material Company Proprietary Software and (ii) the
material Company Licensed Software (excluding software that is
generally available on nondiscriminatory pricing terms and which
has an acquisition cost of $100,000 or less).
(a) The Company and the Company Subsidiaries own each item of
Company Proprietary Software, and have sufficient rights to use
the Company Licensed Software in the Company Business as
presently conducted. The Company Proprietary Software is free
and clear of all Liens (excluding licenses and restrictions
associated with licenses). To the Knowledge of the Shareholder,
the Company's and the Company Subsidiaries' use of the Company
Software does not breach any term of any license or other
contract between the Company or any Company Subsidiary and any
third party. To the Knowledge of the Shareholder, the Company
and each Company Subsidiary is in compliance with the terms and
conditions of all license agreements in favor of the Company and
each Company Subsidiary relating to the Company Licensed
Software. The Company and each Company Subsidiary has used
reasonable means to maintain the source code for the Company
Proprietary Software in confidence.
(b) The Company Proprietary Software was: (i) developed by the
Company's or the Company Subsidiaries' employees working within
the scope of their employment at the time of such development;
(ii) developed by agents, consultants, contractors or other
Persons who have executed appropriate instruments of assignment
in favor of the Company or the Company Subsidiaries; or (iii)
acquired by the Company or the Company Subsidiaries in connection
with acquisitions. Neither the Company nor any Company
Subsidiary has received written notice from any third party
claiming any right, title or interest in the Company Proprietary
Software.
(c) The execution and delivery of this Agreement, the Closing
and the consummation of the transactions contemplated hereby
shall not adversely affect the Company's or any Company
Subsidiaries' title to the Company Proprietary Software or, to
the Knowledge of the Shareholder, the Company's or the Company
Subsidiaries' license or right to use the Company Licensed
Software, except (i) as provided on Schedule 4.22(c) or (ii) as
would not have a Material Adverse Effect. To the Knowledge of
the Shareholder, other than the software programs or program
portions listed on Schedule 4.22(c), none of the Company Software
is subject to open source software licenses.
Section 4.23 Notes and Accounts Receivable
.. Except as provided on Schedule 4.23, there are no notes
receivable of the Company of any Company Subsidiary owing by any
director, officer or employee of the Company or any Company
Subsidiary or by the Shareholder or any Affiliate of the
Shareholder.
Section 4.24 Transactions with Affiliates
.. Schedule 4.24 sets forth a true, correct and complete list, as
of the date hereof, of all written contracts, agreements or other
arrangements between the Shareholder and its Subsidiaries (other
than the Company or any Company Subsidiary) or any of the
Shareholder's or any of the Shareholder's Subsidiaries' directors
or officers or to the Knowledge of the Shareholder, employees or
spouses, parents, siblings or children of any of the foregoing,
on the one hand, and any of the Company or any Company
Subsidiary, on the other hand, pursuant to which payments of at
least $250,000 per calendar year are made or reasonably expected
to be made (other than pursuant to any Employment Agreement,
Company Benefit Plan or ERISA Affiliate Plan or any employment
agreement).
Section 4.25 Licenses
.. To the Knowledge of the Shareholder, Schedule 4.25 is a true
and complete list of all material Licenses held by the Company
and any Company Subsidiary. The Company and the Company
Subsidiaries owns or possesses all material Licenses that are
necessary to enable it to carry on the Company Business as
presently conducted. Except as set forth on Schedule 4.25, all
such Licenses are valid, binding and in full force and effect
except where failure to be valid, binding or in full force and
effect would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company and each
Company Subsidiary has taken all necessary action to maintain
each such License, except where the failure to so act would not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Except as set forth on Schedule 4.25,
no loss or expiration of any material License is pending or, to
the Knowledge of the Shareholder, threatened (other than
expiration upon the end of any term).
Section 4.26 Ethical Practices
.. Except as set forth on Schedule 4.26, neither the Company nor
any Company Subsidiary has committed any act or made any omission
prohibited by the Foreign Corrupt Practices Act (15 U.S.C.
78dd-1, -1 and -3) (the "FCPA") during the past five (5)
years. Except as set forth on Schedule 4.26, or as permissible
under the FCPA, none of the Company, any Company Subsidiary or
any representative thereof has offered or given, nor has any
Person offered or given on the Shareholder's behalf, anything of
value to: (i) any foreign official, any foreign political party
or official thereof or any candidate for political office; or
(ii) any Person, while knowing that all or a portion of such
thing of value will be offered, given, or promised, directly or
indirectly, to any foreign official, to any foreign political
party or official thereof, or to any candidate for foreign
political office for the purpose of the following: (x)
influencing any act or decision of such foreign official,
political party, party official, or candidate in his or its
official capacity, inducing such foreign official, political
party, party official, or candidate to do or omit to do any act
in violation of the lawful duty of such foreign official,
political party, party official, or candidate, or securing any
improper advantage or (y) inducing such foreign official,
political party, party official, or candidate to use his or its
influence with a foreign government or instrumentality thereof to
affect or influence any act or decision of such government or
instrumentality, in order to assist the Shareholder, the Company
or any Company Subsidiary in obtaining or retaining business for
or with, or directing business to, any Person.
Section 4.27 Brokers, Finders and Investment Bankers
.. Except for Morgan Stanley & Co. Incorporated, whose fees and
expenses shall be borne solely by the Shareholder, neither the
Shareholder nor any of its Affiliates, nor any officer, member,
director or employee of the Shareholder nor any Affiliate of the
Shareholder, has employed any broker, finder or investment banker
or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders' fees in
connection with the transactions contemplated hereby.
Section 4.28 Customs Matters
.. At all times during the past five (5) years, the Company and
the Company Subsidiaries set forth on Schedule 4.28 have
(a) acted as an "importer of record," as that term is defined in
19 U.S.C. 1484, on import entry documentation required by the
U.S. Bureau of Customs and Border Protection ("Customs"),
(b) deposited with Customs the estimated duties, fees, Taxes and
interest due at the time of entry and upon liquidation (as the
case may be) in accordance with the Laws enforced by Customs,
including 19 U.S.C. 1202, 1401a, and 1505, and (c) collected
such duties, fees, Taxes and interest due at the time of entry
and upon liquidation (as the case may be) from the applicable
customer of the Company. The Company and each Company Subsidiary
is, and has at all times during the past five (5) years been, in
compliance with the Company's Importer of Record Policy, a copy
of which is attached hereto as Exhibit 4.28. The Company and
each Company Subsidiary possesses all Licenses required to
conduct the Company Business in accordance with the Laws enforced
by Customs, including 19 U.S.C. 1623, 19 U.S.C. 1641 and 19
C.F.R. 111. All such Licenses are currently in full force and
effect and no misrepresentations were made by the Company or any
Company Subsidiary of any material fact in obtaining them. No
administrative or judicial proceedings have been instituted or,
to the Shareholder's Knowledge, threatened or are contemplated by
Customs against the Company or any Company Subsidiary seeking
fines, forfeitures, liquidated damages, or penalties or the
modification, revocation, or suspension of any License required
to conduct the Company Business in accordance with the Laws
enforced by Customs. The Company and each Company Subsidiary is
in material compliance with all Laws enforced by Customs.
Section 4.29 Industrial Revenue Bonds
.. Schedule 4.29 sets forth a list of the Dayton Bonds showing
each series and the principal amount, maturity date, and interest
rate for each series of Dayton Bonds. None of the Shareholder,
the Company or any Company Subsidiary has received any written
notice of, or other communication from, any Governmental Entity
or other Person alleging that the interest payable on the Dayton
Bonds is subject to federal income taxation. Not less than
ninety-five percent (95%) of the net proceeds of each series of
the Dayton Bonds was applied to finance or refinance the cost of
facilities which qualify as "airport" facilities within the
meaning of Section 142 of the Code (or, if applicable, Section
103(b)(4) of the Internal Revenue Code of 1954, as amended), and
the Company and the Company Subsidiaries have complied with
Sections 147 and 148 of the Code with respect to the tax-exempt
status of the Dayton Bonds. No other representation is being
made in this Agreement with respect to the Dayton Bonds.
ARTICLE V
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, hereby represent and
warrant to the Purchaser as follows as of the date hereof and the
Closing Date:
Section 5.1 Authorization
.. The Shareholder is a corporation duly formed and validly
existing and in good standing, and Worldwide is a limited
liability company duly formed, validly existing and in good
standing, in each case under the Laws of the jurisdiction set
forth in the preamble to this Agreement. Each Seller has the
requisite power and authority to execute and deliver this
Agreement and each Shareholder Ancillary Document, to perform its
obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution,
delivery and performance by each Seller of this Agreement and the
Shareholder Ancillary Documents have been, and the consummation
of the transactions contemplated hereby and thereby have been,
duly authorized by all requisite corporate or other (as the case
may be) action on the part of such Seller and no other
authorization of such Seller is required to authorize the
execution and delivery of this Agreement or the Shareholder
Ancillary Documents or the consummation of the transactions
contemplated hereby or thereby. This Agreement and each
Shareholder Ancillary Document has been (or when executed will
be) validly executed and delivered by each Seller party thereto
and constitutes (or when executed will constitute) legal, valid
and binding obligations of such Seller, enforceable against such
Seller in accordance with their respective terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting the creditors' rights
generally and general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
Section 5.2 Absence of Restrictions and Conflicts
.. Except for the filings, permits and Consents as may be
required under, and other applicable requirements of the HSR Act,
Foreign Antitrust Laws and the Exchange Act, the execution,
delivery and performance by each of the Sellers of this Agreement
and the Shareholder Ancillary Documents to which such Seller is a
party, the consummation of the transactions contemplated hereby
and thereby and the fulfillment of, and compliance with, the
terms and conditions hereof and thereof by the Sellers do not or
shall not (as the case may be), with the passing of time or the
giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any benefit
under, permit the acceleration of any obligation under or create
in any party the right to terminate, modify or cancel, or result
in the creation of any Lien upon any of the properties or assets
of any Seller under (a) any contract, agreement, permit,
franchise, license or other instrument applicable to any Seller,
(b) any judgment, decree or order of any Governmental Entity to
which any Seller is a party or by which any Seller or any of its
properties are bound or (c) any Law or arbitration award
applicable to any Seller, in each case, except for such
violations, conflicts, breaches or defaults, losses or Liens
that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
Section 5.3 Ownership of Equity
..
(a) The Shareholder indirectly, and Worldwide directly, has good
and valid title to and beneficial ownership of the number and
classes of all the issued and outstanding Shares as set forth on
Schedule 4.3, and such Shares are (i) validly issued, fully paid
and nonassessable, and (ii) free and clear of all Liens.
(b) Other than the Shares listed on Schedule 4.3, neither the
Shareholder nor Worldwide owns any shares of capital stock of the
Company or any other equity security of the Company, or any
option, warrant, right, call, commitment or right of any kind to
have any such equity security issued.
Section 5.4 Legal Proceedings
.. There are no suits, actions, claims, proceedings or
investigations pending or, to the Knowledge of the Shareholder,
threatened, against, relating to or involving the Sellers which
could reasonably be expected to prevent the Sellers' from
consummating the transactions contemplated by this Agreement or
the Shareholder Ancillary Documents and to perform their
obligations hereunder or thereunder.
Section 5.5 Amounts Owed to Sellers
.. Except as set forth on Exhibit 5.5, or for debt (i) to be
extinguished before Closing or (ii) that is accounted for in the
Final Working Capital Statement, the Company does not owe and is
not obligated to pay the Sellers or any of their Affiliates any
amount.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PARENT
The Purchaser and Parent (with respect to Sections 6.1, 6.2
and 6.3) hereby represent and warrant to the Sellers as follows:
Section 6.1 Organization
..
(a) The Purchaser is a corporation duly formed, validly existing
and in good standing under the Laws of the jurisdiction set forth
in the preamble to this Agreement and has all requisite corporate
power and authority to own, lease and operate its properties and
to carry on its business as now being conducted.
(b) Parent is a corporation duly formed, validly existing and in
good standing under the Laws of the jurisdiction set forth in the
preamble to this Agreement.
Section 6.2 Authorization
.. Each of the Purchaser and Parent has the requisite corporate
power and authority to execute and deliver this Agreement and
each Purchaser Ancillary Document to which it is a party, to
perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery and performance of this Agreement and the
Purchaser Ancillary Documents by each of the Purchaser and
Parent, has been and the consummation of the transactions
contemplated hereby and thereby have been, duly authorized by all
requisite corporate action on the part of each of the Purchaser
and Parent. This Agreement has been validly executed and
delivered by the Purchaser and Parent and constitutes, and each
Purchaser Ancillary Document will constitute when validly
executed and delivered on the Closing Date by the Purchaser
and/or Parent, as applicable, valid and binding obligations of
each of the Purchaser and Parent, enforceable against each of the
Purchaser and Parent in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting
creditors' rights generally and general principles of equity
(regardless of whether considered in a proceeding at law or in
equity).
Section 6.3 Absence of Restrictions and Conflicts
.. The execution, delivery and performance of this Agreement and
the Purchaser Ancillary Documents, the consummation of the
transactions contemplated hereby and thereby and the fulfillment
of, and compliance with, the terms and conditions hereof and
thereof do not or shall not (as the case may be), with the
passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in
the loss of any benefit under, or permit the acceleration of any
obligation under, (a) any term or provision of the charter
documents of the Purchaser or Parent, (b) any contract,
agreement, permit, franchise, license or other instrument
applicable to the Purchaser, Parent or their respective
Subsidiaries, (c) any judgment, decree or order of any
Governmental Entity to which the Purchaser or Parent is a party
or by which the Purchaser, Parent or any of their respective
Subsidiaries or any of their respective properties is bound or
(d) any statute, Law, rule, arbitration, award or regulation
applicable to the Purchaser or Parent, except for compliance with
the applicable requirements of the HSR Act and any Foreign
Antitrust Laws and in each case, except for such violations,
conflicts, breaches, defaults or losses that individually or in
the aggregate would not reasonably be expected to have a material
adverse effect on the Purchaser's or Parent's ability to
consummate the transactions or perform their respective
obligations under this Agreement (a "Purchaser Material Adverse
Effect"). No Consent or order of, or registration, declaration
or filing with, any Governmental Entity or other Person is
required with respect to the Purchaser, Parent or any of their
respective Subsidiaries in connection with the execution,
delivery or performance of this Agreement or the Purchaser
Ancillary Documents or the consummation of the transactions
contemplated hereby or thereby except for filings under and
compliance with the HSR Act, Foreign Antitrust Laws and the
Exchange Act and such Consents or orders which would not,
individually or in the aggregate, reasonably be expected to have
a Purchaser Material Adverse Effect.
Section 6.4 Availability of Funds
. The Purchaser has as of the date hereof sufficient
immediately available funds in cash or cash equivalents, and will
at the Closing have sufficient immediately available funds in
cash, to pay the Purchase Price and to pay any other amounts
(including all costs and expenses) payable by the Purchaser in
connection with this Agreement, the Ancillary Documents and the
transactions contemplated hereby and thereby.
Section 6.5 Purchase for Investment Intent
. The Purchaser is acquiring the Shares solely for its own
account for investment, and not with the view to, or for resale
in connection with, any distribution thereof in violation of the
Securities Act or any other securities Law. The Purchaser
acknowledges that none of the Shares is registered under the
Securities Act and may not be transferred or sold except pursuant
to an applicable exemption therefrom.
Section 6.6 Brokers, Finders and Investment Bankers
. Except for Goldman, Sachs & Co., whose fees and expenses
shall be borne solely by the Purchaser, neither the Purchaser nor
any of its Affiliates has employed any broker, finder or
investment banker, or incurred any liability for any investment
banking fees, financial advisory fees, brokerage fees or finders'
fees, in connection with the transactions contemplated hereby.
ARTICLE VII
CERTAIN COVENANTS AND AGREEMENTS
SECTION 7.1 Conduct of Business by the Company and the Company
Subsidiaries prior to the Closing
.. For the period commencing on the date hereof and ending on the
Closing Date, the Sellers will cause the Company and each Company
Subsidiary to, except as expressly required or expressly
permitted hereby or except as otherwise consented to in advance
in writing by the Purchaser:
(a) conduct its businesses in the ordinary course in
substantially the same manner as presently conducted and not
engage in any new line of business;
(b) use its commercially reasonable efforts to preserve intact
the goodwill and business organization of the Company and the
Company Subsidiaries, and preserve the relationships and goodwill
of the Company and the Company Subsidiaries with customers,
distributors, suppliers, employees and other Persons having
business relations with the Company and the Company Subsidiaries;
(c) maintain its existence and good standing in its jurisdiction
of organization and in each jurisdiction in which the ownership
or leasing of its property or assets or the Conveyed Assets or
the conduct of its business, including the Company Business,
requires such qualification;
(d) duly and timely file or cause to be filed all material
reports and returns required to be filed with any Governmental
Entity and promptly pay or cause to be paid when due all material
Taxes, assessments and governmental charges, including interest,
fines and penalties levied or assessed, unless diligently
contested in good faith by appropriate proceedings;
(e) not authorize for issuance or issue and deliver any
additional shares of its capital stock or securities convertible
into or exchangeable for shares of its capital stock, or issue or
grant any right, option or other commitment for the issuance of
shares of its capital stock or of such securities, or split,
combine or reclassify any shares of its capital stock;
(f) not amend or modify its charter documents;
(g) not declare any dividend, pay or set aside for payment any
dividend or other distribution or make any payment to any related
parties other than (i) the payment of salaries in the ordinary
course of business or (ii) dividends or distributions from any
Company Subsidiary to any other Company Subsidiary or to the
Company;
(h) not redeem or otherwise acquire any shares of its capital
stock, partnership interests or similar ownership interests or
issue any capital stock, partnership interests or similar
ownership interests or any option, warrant or right relating
thereto or any securities convertible into or exchangeable
therefor;
(i) not create, dissolve or liquidate any Subsidiary, acquire
any capital stock or other equity securities of any corporation
or acquire any equity or ownership interest in any business or
entity;
(j) not dispose of or permit to lapse any material Company
Proprietary Intellectual Property, materially breach any license
from a third party with respect to any material Company Licensed
Intellectual Property, or dispose of or disclose to any Person,
any trade secret, formula, process, technology or know-how of the
Company or any Company Subsidiary not heretofore a matter of
public knowledge, in any such case, which is material to the
Company Business;
(k) not (i) sell, transfer, lease or otherwise dispose of any
asset having a fair market value in excess of $500,000 except the
sale or disposal of obsolete equipment or inventory in the
ordinary course of business, (ii) create, incur or assume any
material indebtedness secured by any asset of the Company or any
Company Subsidiary, including with respect to any Conveyed
Assets, (iii) grant, create, incur or suffer to exist any Lien
(other than Permitted Liens) on any material asset of the Company
or any Company Subsidiary, including with respect to any Conveyed
Assets, that did not exist on the date hereof, (iv) incur any
material liability or obligation relating to the incurrence or
assumption of any indebtedness for borrowed money or grant any
guarantee thereof, except in the ordinary course of business
consistent with past practice; provided that in no event shall
the Company or any Company Subsidiary incur or guarantee any
long-term indebtedness for borrowed money, (v) cancel any
material debt or waive any claim or right, except in the ordinary
course of business consistent with past practice, or (vi) make
any commitment for any capital expenditure to be made on or
following the date hereof in excess of the capital expenditures
budget provided to the Purchaser prior to the date hereof;
(l) not increase in any manner the base compensation of, or
enter into any new bonus or incentive agreement or arrangement
with, any of its employees, officers, directors or consultants
other than, (i) with respect to employees other than officers and
directors, in the ordinary course of business, consistent with
past practice or (ii) with respect to newly hired officers,
substantially consistent with the compensation currently provided
to similarly situated officers;
(m) not (A) establish, adopt, amend or terminate any Employee
Benefit Plan or materially increase the benefits provided under
any Employee Benefit Plan, except as provided in Section 7.8 or
(B) promise, grant or establish any new entitlement to receive
severance or termination pay to any of its employees, officers,
directors or consultants, commit to undertake any of the
foregoing in the future for any of its employees, officers,
directors or consultants or (C) enter into, amend or terminate
any Employment Agreement for any of its employees, officers,
directors or consultants other than with respect to employees
whose annual compensation, including base and incentive pay, does
not exceed $100,000 in the aggregate or (D) except as required by
Law, establish, adopt or amend any Collective Bargaining
Agreement covering any of its employees and to the extent any
such action is required by Law, the Sellers shall cause the
Company or any Company Subsidiary to provide the Purchaser
advance notice before any Collective Bargaining Agreement is
established, adopted or amended.
(n) not acquire by merging or consolidating with, or by
purchasing all or substantially all the assets of, or by any
other manner, any business or any corporation, partnership or
other organization or division thereof.
(o) not enter into any lease regarding Leased Real Property,
except renewals of existing leases in the ordinary course of
business or modify, amend, terminate or permit the lapse of any
lease regarding Leased Real Property (except modifications or
amendments associated with renewals of existing leases in the
ordinary course of business).
(p) maintain supplies and inventory at levels that are in the
ordinary course of business and consistent with past practice;
(q) perform in all material respects under, and not materially
default or suffer to exist any event or condition that with
notice or lapse of time or both could constitute a material
default under, any Company Contract (except those being contested
in good faith) and not enter into, assume or amend any contract
or commitment that is or would be a Company Contract other than
in the ordinary course of business;
(r) maintain in full force and effect and in substantially the
same amounts policies of insurance comparable in amount and scope
of coverage to that now maintained by or on behalf of the Company
or any Company Subsidiary;
(s) continue to maintain its books and records in accordance
with GAAP consistently applied and on a basis consistent with the
Company's past practice;
(t) not make any change in any method of accounting or
accounting practice or policy other than those required by GAAP
or required by applicable Law;
(u) not transfer any Transferred Employees to the Shareholder or
any direct or indirect Subsidiary thereof other than the Company
or any Company Subsidiary;
(v) comply with that certain Plea Agreement between the United
States of America and EWA, filed September 30, 2003 in the United
States District Court, Southern District of Ohio, Western
Division, and the related Hazardous Material Compliance Program
of EWA and Emery Air Freight Corporation dated as of April 15,
2004;
(w) not authorize, or commit or agree to take, any of the
foregoing actions; and
(x) not enter into any agreement or other arrangement which if
existing on or prior to the date hereof would be required to be
set forth on Schedule 4.24 hereto.
Notwithstanding anything to the contrary in this
Section 7.1, prior to the Closing, the Shareholder, the Company
and the Company Subsidiaries may (i) sell, exchange or otherwise
transfer any asset, including stock, between the Company or any
Company Subsidiary or newly formed Subsidiary of the Company or a
Company Subsidiary; (ii) liquidate or dissolve for Tax purposes,
actually or via a deemed liquidation; (iii) eliminate debt via
payment, offset, discharge, contribution to capital,
distribution, cancellation or otherwise; or (iv) otherwise
restructure their operations to (x) minimize Transaction Taxes or
any other Taxes or (y) transfer Excluded Assets from the Company
or the Company Subsidiaries.
Section 7.2 Inspection and Access to Information
.. The Parties acknowledge that the Purchaser will continue to
conduct due diligence and integration planning with respect to
the Company, the Company Subsidiaries and the Company Business
from the date hereof to the Closing Date. In that regard, the
Shareholder agrees to cooperate with, and provide its reasonable
assistance to, the Purchaser with respect to such due diligence
investigation and integration planning. During the period
commencing on the date hereof and ending on the Closing Date, the
Shareholder will, and will cause the Company and the Company
Subsidiaries and executive officers and other designated
personnel (which personnel shall be sufficient to provide such
cooperation and assistance) to provide the Purchaser and its
accountants, investment bankers, counsel, environmental
consultants and other authorized representatives reasonable
access, during reasonable hours and under reasonable
circumstances, to any and all of its premises, employees,
properties, contracts, commitments, books, records and other
information (including Tax Returns filed and those in
preparation, to the extent related to the Company or its
Subsidiaries or the Conveyed Assets), and shall cause the
Company's and the Company Subsidiaries' officers to furnish to
the Purchaser and its authorized representatives, promptly upon
request therefor, any and all existing, non-privileged financial,
technical and operating data and other information pertaining to
the Company, the Company Subsidiaries and the Conveyed Assets and
otherwise reasonably cooperate with the conduct of due diligence
and integration planning by the Purchaser and its representatives
(collectively, "Transition Access"), provided, however, that the
Purchaser shall not have the right and shall not conduct any
environmental testing or on-site inspection and shall not conduct
any subsurface, soil, water, ground water or other testing or on-
site investigation, without receiving the Shareholder's express
prior written Consent therefor (to be given or withheld in the
Shareholder's sole discretion for any or no reason). Without
limiting the foregoing, the Shareholder shall make available to
the Purchaser, upon request, personnel capable of reporting on
the Shareholder's compliance with its covenants hereunder, the
status of outstanding environmental issues, the status of the
compliance program required under the 2003 settlement with the
Department of Justice regarding transportation requirements, to
the extent relevant to this transaction, and on the current
status or relations with Customers, and shall cause such
personnel to provide all information reasonably requested by the
Shareholder regarding such compliance and relations. The
Transition Team shall be responsible for coordinating, organizing
and facilitating Transition Access. Each instance of Transition
Access is subject to the prior approval of the Transition Team,
which approval shall not be unreasonably withheld, conditioned or
delayed. Approval of the Transition Team shall be deemed to have
been granted upon agreement of at least one member of the
Purchaser Transition Team and at least one member of the Seller
Transition Team. Notwithstanding anything contained in this
Agreement or the Ancillary Documents, neither the Sellers, the
Company, nor any of their respective Subsidiaries, nor any of
their respective officers, directors, employees, representatives,
auditors and agents, shall have any obligation to disclose any
information to the Purchaser if such disclosure would violate any
applicable Laws, fiduciary duty or binding agreement entered into
prior to the date hereof (including any confidentiality agreement
to which either of the Sellers, the Company or any of their
Affiliates is a party).
Section 7.3 Interim Financials
.. Promptly following each regular accounting period subsequent
to the end of the most recent fiscal year and prior to the
Closing Date, the Shareholder shall cause the Company to, deliver
to the Purchaser periodic financial reports in the form that it
customarily prepares for its internal purposes concerning the
Company and, if available, unaudited statements of the financial
position of the Company as of the last day of each accounting
period and statements of income and changes in financial position
of such entity for the period then ended. The Shareholder
covenants that such interim statements shall be prepared on a
basis consistent with prior interim periods.
Section 7.4 No Solicitation of Transactions
..
(a) The Shareholder will not, and shall cause the Company, the
Company Subsidiaries and their respective Affiliates not to,
directly or indirectly, through any officer, director, manager or
agent of any of them or otherwise, initiate, solicit or encourage
(including by way of furnishing non-public information or
assistance), or enter into negotiations of any type, directly or
indirectly, or enter into a confidentiality agreement, letter of
intent or purchase agreement, merger agreement or other similar
agreement with any Person other than the Purchaser with respect
to a sale of all or any portion of the assets of the Company or
any Company Subsidiary, or a merger, consolidation, business
combination, sale of all or any portion of the capital stock of
the Company or any Company Subsidiary, or the liquidation or
similar extraordinary transaction with respect to the Company or
any Company Subsidiary. The Shareholder shall notify the
Purchaser orally (within one Business Day) and in writing (as
promptly as practicable) of all relevant terms of (i) any inquiry
or proposal by a third party to do any of the foregoing or (ii)
any inquiry or proposal by a third party with respect to a sale
of all or any substantial portion of the assets of the
Shareholder, or a merger, consolidation, business combination,
sale of all or any substantial portion of the capital stock of
the Shareholder or the liquidation or similar extraordinary
transaction with respect to the Shareholder, that in each case
the Shareholder or the Company or any Company Subsidiary or any
of their respective Affiliates or any of their respective
officers, directors, partners, managers, employees, investment
bankers, financial advisors, attorneys, accountants or other
representatives may receive relating to any of such matters. In
the event such inquiry or proposal is in writing, the Shareholder
shall deliver to the Purchaser a copy of such inquiry or proposal
together with such written notice.
(b) Nothing in this Section 7.4 shall prohibit the Shareholder
from entering into any negotiations with respect to, or any
confidentiality agreement, letter of intent or purchase
agreement, merger agreement or other similar agreement with any
Person (an "Acquiror") with respect to a sale of all or any
portion of the assets of the Shareholder, or a merger,
consolidation, business combination, sale of all or any
substantial portion of the capital stock of the Shareholder or
the liquidation or similar extraordinary transaction with respect
to the Shareholder (any such transaction, a "Shareholder
Acquisition") provided that, as a condition to the consummation
of any such Shareholder Acquisition, all the obligations of the
Shareholder under this Agreement or any Ancillary Document shall
be expressly assumed by such Acquiror in accordance with Section
7.12; provided further, that the Shareholder shall not enter into
any agreement with respect to a Shareholder Acquisition the terms
of which would reasonably be expected to prevent or materially
delay the ability of the Sellers to consummate the transactions
contemplated by this Agreement and the Ancillary Documents in
accordance with their terms; provided, further, that a
Shareholder Acquisition shall in no event include any
negotiations with respect to, or any confidentiality agreement,
letter of intent or purchase agreement, merger agreement or other
similar agreement with any Person other than the Purchaser with
respect to the assets of the Company or any Company Subsidiary or
the Conveyed Assets, or a merger, consolidation, business
combination, sale of all or any portion of the capital stock of
the Company or any Company Subsidiary, or the liquidation or
similar extraordinary transaction with respect to the Company or
any Company Subsidiary or the Conveyed Assets.
Section 7.5 Commercially Reasonable Efforts; Further
Assurances; Cooperation
.. Subject to the other provisions hereof, each Party shall use
its commercially reasonable, good faith efforts to perform its
obligations hereunder and to take, or cause to be taken, and do,
or cause to be done, all things necessary, proper or advisable
under applicable Law to obtain all Consents required as described
on Schedule 4.5, Schedule 4.14 and Section 7.14(c) (all costs of
securing such Consents shall be the responsibility of the
Shareholder) and all regulatory approvals and to satisfy all
conditions to its obligations hereunder and to cause the
transactions contemplated herein to be effected as soon as
practicable, but in any event on or prior to the Expiration Date
(as hereinafter defined), in accordance with the terms hereof and
shall cooperate fully with each other Party and its officers,
directors, employees, agents, counsel, accountants and other
designees in connection with any step required to be taken as a
part of its obligations hereunder, including the following:
(a) Each Party promptly shall make its filings and submissions
and shall use its reasonable best efforts to take all actions
necessary, proper or advisable under applicable Laws to obtain
any required approval of any Governmental Entity with
jurisdiction over the transactions contemplated hereby as
promptly as practicable and, in any event, (i) within seven (7)
Business Days after the date of this Agreement in the case of all
filings required under the HSR Act, (ii) within fifteen (15)
Business Days after the date of this Agreement (or such shorter
time period if required by Foreign Antitrust Laws) in the case of
any filings required by Foreign Antitrust Laws, other than
filings required by the EC Merger Regulation, and (iii) within
twenty-one (21) Business Days after the date of this Agreement in
the case of filings required by the EC Merger Regulation, except
that, in each case, the Purchaser shall have no obligation to
take or consent to the taking of any Action of Divestiture or any
other action that would have or is reasonably likely to have a
Purchaser Material Adverse Effect or a Material Adverse Effect.
Each Party shall furnish all information required for any
application or other filing to be made pursuant to any applicable
Law in connection with the transactions contemplated hereby.
(b) In the event any claim, action, suit, investigation or other
proceeding by any Governmental Entity or other Person is
commenced that questions the validity or legality of the
Acquisition or any other transaction contemplated hereby or seeks
damages in connection therewith, the Parties shall (i) cooperate
and use all commercially reasonable efforts to defend against
such claim, action, suit, investigation or other proceeding, (ii)
in the event an injunction or other order is issued in any such
action, suit or other proceeding, use all commercially reasonable
efforts to have such injunction or other order lifted, and (iii)
cooperate reasonably regarding any other impediment to the
consummation of the transactions contemplated hereby.
(c) The Company shall, and shall cause the Company Subsidiaries
to, give all notices to third parties and use its commercially
reasonable efforts (in consultation with the Purchaser) to obtain
all third party Consents (i) necessary, proper or advisable to
consummate the transactions contemplated hereby, (ii) required to
be given or obtained, including those required to be given or
obtained on Schedule 4.5, Schedule 4.14 or Section 7.14(c) and
the other Schedules; (iii) required to avoid a breach of or
default under any Company Contract in connection with the
consummation of the transactions contemplated hereby or (iv)
required to prevent a Material Adverse Effect, whether prior to,
on or following the Closing Date, in each case, all costs of
securing such Consents shall be the responsibility of the
Shareholder.
(d) The Shareholder shall, promptly upon obtaining Knowledge of
same, give notice to the Purchaser of the occurrence, or failure
to occur, of any event the occurrence or failure of which will or
is reasonably expected to result in the failure to satisfy any
conditions specified in Sections 8.1 or 8.2 hereof. The
Shareholder hereby acknowledges that the Purchaser does not and
shall not waive any right it may have hereunder as a result of
such notifications. The Purchaser shall, promptly upon obtaining
knowledge of same, give notice to the Shareholder of the
occurrence, or failure to occur, of any event the occurrence or
failure of which will or is reasonably expected to result in the
failure to satisfy any of the conditions set forth in
Sections 8.1 or 8.3 hereof.
Section 7.6 Public Announcements
.. Subject to its legal obligations (including requirements of
stock exchanges and other similar regulatory bodies), each Party
shall consult with the other Parties with respect to the timing
and content of all announcements regarding this Agreement or the
transactions contemplated hereby to the financial community,
Governmental Entities, employees, customers or the general public
and shall use reasonable efforts to agree upon the text of any
such announcement prior to its release.
Section 7.7 Supplements to Schedules; Notices of Certain
Events
.. From time to time up to the Closing, the Shareholder shall
promptly after obtaining Knowledge thereof (i) supplement or
amend the Schedules that it has delivered with respect to any
matter or event that invokes or is likely to invoke a payment,
loss or obligation of $100,000 or more ("Material Interim Event")
that (x) if existing or occurring at or prior to the date hereof,
would have been required to be set forth or described in the
Schedules or (y) is necessary to correct any information in the
Schedules that has been rendered inaccurate thereby and (ii)
notify the Purchaser of (A) any change or event that,
individually or in the aggregate, has had a Material Adverse
Effect, (B) any written notice from any Governmental Entity in
connection with the transactions contemplated hereby that could
reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated hereby, (C) any
action, suit, claim, investigation or proceeding commenced or
threatened against the Company or any Company Subsidiary that, if
finally adversely determined could reasonably be expected to (1)
result in a payment to the claimant in excess of $250,000 or (2)
prevent or materially delay the consummation of the transactions
contemplated hereby, (D) any uninsured damage, destruction, loss
or casualty to property or assets, after giving effect to the
Transfers, of the Company or any Company Subsidiary with a value
in excess of $250,000, or (E) any condemnation, expropriation or
similar proceeding pending or threatened against any of the Real
Property or any improvement thereon; provided, that the
Shareholder acknowledges that the Purchaser does not and shall
not waive any right it may have hereunder as a result of such
notifications. No supplement or amendment to any Schedule
involving a Material Interim Event that constitutes or involves a
development likely to constitute a Material Adverse Effect shall
have any effect for the purpose of determining satisfaction of
the conditions set forth in Section 8.2, unless and until such
supplement or amendment has been accepted in writing by the
Purchaser in its absolute and sole discretion, in which case such
supplement or amendment shall only affect the satisfaction of the
conditions set forth in Section 8.2. With respect to any
Material Interim Event that does not constitute or involve a
development likely to constitute a Material Adverse Effect, then
such supplement or amendment shall be effective for the purpose
of determining satisfaction of the conditions set forth in
Section 8.2. For the avoidance of doubt, no amendment or
supplement (whether or not involving a Material Adverse Effect
and whether or not accepted by the Purchaser) shall have any
effect for the purpose of determining the Shareholder's
obligations pursuant to Article XI or the Purchaser's right to
indemnification for any Purchaser Loss pursuant to Article XI
relating to such supplement or amendment, and the Purchaser shall
be entitled to claim indemnification pursuant to Article XI with
respect to any Material Interim Event so supplemented or amended
if indemnification would otherwise be available for such Material
Interim Event pursuant to Article XI. The Shareholder hereby
acknowledges that the Purchaser does not and shall not waive any
right it may have hereunder as a result of any such supplement or
amendment.
Section 7.8 Employee and Benefit Matters.
(a) Transferred Employees. In connection with the Transfers,
on or prior to the Closing Date, the Sellers shall cause all
employees of the Shareholder or any of its Subsidiaries (other
than the Company and the Company Subsidiaries) whose employment
is related to the Company Business or the Conveyed Assets
(whether active, on leave, or on short term disability) to be
employed by the Company or the Company Subsidiaries, as
applicable at the Closing (such employees together with the other
employees of the Company or any Company Subsidiary at the Closing
other than the Excluded Employees and the Logistics Contract
Employees, the "Transferred Employees") and shall cause any
employees of the Company or any Company Subsidiary who are
Excluded Employees to be employed by the Shareholder or a
Subsidiary of the Shareholder other than the Company or a Company
Subsidiary so that the Transferred Employees shall not in any
case include the Excluded Employees or the Logistics Contract
Employees. The Sellers will provide a list of the Transferred
Employees and the Excluded Employees to the Purchaser as soon as
practicable and in no event later than fifteen (15) days after
the date of this Agreement and such lists will be updated by the
Sellers at the Closing on Exhibit 7.8(a) with respect to the
Transferred Employees and on Exhibit 1.2(i) with respect to the
Excluded Employees. The Sellers will provide reasonable
cooperation in the transition of the Transferred Employees and
the Logistics Contract Employees to the Purchaser's payroll
accounting system.
(b) Service Provider Contracts. The Sellers shall before
Closing exercise reasonable efforts to (i) identify for the
Purchaser those service providers in relation to the Company
Business who qualify as independent contractors and any temporary
agency agreements covering material services related to the
Company Business and (ii) at the option of the Purchaser, assign
such contracts to the Company or any Company Subsidiary to the
extent necessary or assist the Purchaser in retaining the
services provided by such contractors and under such agreements.
(c) Company Benefit Plan Contributions. Prior to the Closing
Date, the Company shall make all contributions, including any
employer matching and profit sharing contributions, and pay all
premiums that are required to be made prior to the Closing Date
under any Current Company Benefit Plan on behalf of the
Transferred Employees and the Logistics Contract Employees. The
Company shall make all other required contributions and pay all
other premiums required under any other Current Company Benefit
Plan on behalf of the Transferred Employees and the Logistics
Contract Employees with respect to periods ending on or prior to
the Closing Date on or before the time that they are required to
be made. The Company shall fully accrue all liabilities for
benefits accrued as of the Closing Date under any Current Company
Benefit Plan to the extent that such liabilities have not been
insured or funded.
(d) Amendment or Termination of Company Benefit Plans. Neither
the Company nor any Company Subsidiary shall sponsor a Company
Benefit Plan after the Closing except for the Company
International Benefit Plans, any Company Benefit Plan described
on Exhibit 1.2(n) and any Company Benefit Plan that is an
employment policy or practice that is limited to the employees of
the Company or a Company Subsidiary, for example, a vacation or
leave policy, and is not a severance policy (each, a "Company
Retained Plan" and together, the "Company Retained Plans"). The
Company Retained Plans are set forth in Exhibit 7.8(d). With
respect to any Current Company Benefit Plan that would be a
Company International Benefit Plan but for the fact that such
plan covers individuals other than the individuals permitted to
be covered by the definition of Company International Benefit
Plan, the Parties will cooperate and work together to separate
the assets and liabilities of such plan into two plans on or
prior to the Closing, one attributable to individuals who are not
permitted to be covered under a Company International Benefit
Plan and one attributable to individuals who are permitted to be
covered under a Company International Benefit Plan. The Sellers
shall be responsible for the resulting plan attributable to
individuals who are not permitted to be covered under a Company
International Benefit Plan and the Purchaser shall be responsible
for the resulting plan that is a Company International Benefit
Plan. With respect to each Current Company Benefit Plan that is
not a Company Retained Plan, the Sellers shall take all actions
or shall cause the Company or a Company Subsidiary to take all
actions to amend such plans prior to the Closing to (i) transfer
such plan to the Shareholder or a Subsidiary of the Shareholder
other than the Company or a Company Subsidiary if such plan is at
the Company or Company Subsidiary level, (ii) remove the Company
and any Company Subsidiary as an adopting or participating
employer under such plan and (iii) provide that neither the
Company nor any Company Subsidiary shall have any liability
whatsoever with respect to such plan after the Closing Date. In
addition, prior to the Closing, the Sellers shall terminate or
cause the Company and any Company Subsidiary to terminate, in a
method reasonably satisfactory to the Purchaser, any severance
policy or practice other than a Company Retained Plan. The
Sellers shall bear all fees, costs, and expenses of any kind
whatsoever, both before and after the Closing, for any Company
Benefit Plans other than the Company Retained Plans. The fees,
costs and expenses of the Company Retained Plans shall be borne
by the Purchasers after the Closing other than the fees, costs
and expenses of such plans in respect of Logistics Contract
Employees which shall be borne by the Sellers.
(e) FMLA Information. On or prior to the Closing Date, the
Sellers shall cause to be delivered to the Purchaser a schedule
setting forth each employee who is eligible to request FMLA leave
as of the Closing Date and the amount of FMLA leave utilized by
each such employee during the current leave year; each employee
who will be on FMLA leave at the Closing Date and his or her job
title and description, salary and benefits; each employee who has
requested FMLA leave to begin after the Closing Date; a
description of the leave requested; and a copy of all notices
provided to such employees regarding that leave.
(f) Company Benefit Plan Administration. Prior to the Closing
Date, (i) the Sellers shall designate (in a manner acceptable to
the Purchaser) an individual or individuals responsible for
administering the Company Benefit Plans after the Closing Date
and to whom the Transferred Employees and the Logistics Contract
Employees may direct any questions about benefits due them under
the Company Benefit Plans after the Closing ("Benefit Plans
Administrator").
(g) Employee Information. Exhibit 7.8(g) contains a true and
complete list of (a) all of the officers of the Company and each
Company Subsidiary as of the date hereof, specifying their
position, annual rate of compensation, date of birth, date of
hire, social security number, home address, work location, length
of service, vacation days, employee benefit coverages selected
and such other information as is reasonably requested by the
Purchaser for each of them, (b) all of the employees (whether
full-time, part-time or otherwise) of the Company and each
Company Subsidiary as of the date hereof, specifying their
position, status, annual salary, hourly wages, date of birth,
date of hire, social security number, home address, work
location, length of service, vacation days, employee benefit
coverages selected and such other information as is reasonably
requested by the Purchaser for each of them and (c) all
individuals who provide services exclusively to the Company or
any Company Subsidiary as consultants or independent contractors
as of the date hereof, specifying the nature of the services
performed and the consulting or other independent contractor fees
and any other information reasonably requested by the Purchaser.
The Sellers will provide the Purchaser with the tax withholding
status of each officer described in (a) and employee described in
(b) as soon as practicable and in no event later than fifteen
(15) days after the date of this Agreement. The Sellers shall
update all information requested in this Section 7.8(g) as of the
Closing.
(h) COBRA Coverage. The Sellers shall be solely responsible for
offering and providing any COBRA Coverage with respect to any
"qualified beneficiary" who is covered by a Company Benefit Plan
that is a "group health plan" (as defined under COBRA) and who
experiences a qualifying event on or prior to the Closing Date.
The Purchaser shall be solely responsible for offering and
providing any COBRA Coverage required with respect to any
Transferred Employees and any Logistics Contract Employees (or
other "qualified beneficiaries") who become covered by a group
health plan sponsored or contributed to by the Purchaser and who
experience a "qualifying event" after the Closing Date.
"Qualified beneficiary," "group health plan" and "qualifying
event" are as defined in Section 4980B of the Code.
(i) Post-Retirement Medical Liability. "Post-Retirement Medical
Liability" shall mean the present value of the Sellers' ongoing
financial obligation to provide post-retirement medical benefits
to employees of the Company, the Company Subsidiaries and their
predecessors (including Purolator) who have retired on or before
the Closing Date (including employees who elect within sixty (60)
days after the Closing Date to start receiving retirement
benefits on the first day of the month following the Closing
Date) and their eligible spouses and dependants under the CNF
Inc. Welfare Benefits Plan determined in accordance with this
Section 7.8(i). The Post-Retirement Medical Liability shall be
determined (A) under the Company Benefit Plans on the assumption
that they are not amended or terminated, (B) including internal
and external administration costs, and (C) without regard to tax
effects. Prior to the Closing, the Shareholder and the Purchaser
each shall designate an actuary for the purpose of making the
determinations under this Section 7.8(i) and Section 7.8(j) and
the Shareholder shall provide to the Purchaser's actuary such
retiree, dependent and plan data as is reasonably requested by
the Purchaser's actuary pursuant to either such Section. As soon
as practicable but in no event more than twenty-one (21) days
after the Closing Date, the Shareholder's actuary shall present
to the Purchaser and the Purchaser's actuary its proposed Post-
Retirement Medical Liability and such proposal shall set forth in
reasonable detail the assumptions underlying such proposal and
the retiree, dependent and plan data and such other information
upon which the proposal is based ("Shareholder's Proposal").
Within thirty (30) days after receipt of Shareholder's Proposal
and the receipt of any additional information reasonably
requested by the Purchaser's actuary, the Purchaser's actuary
shall certify its agreement in writing to Shareholder's Proposal,
in which case, Shareholder's Proposal shall be the Post-
Retirement Medical Liability, or, alternatively, present to the
Shareholder and the Shareholder's actuary the Purchaser's
proposed Post-Retirement Medical Liability, setting forth in
reasonable detail the assumptions underlying such proposal and
the information upon which the proposal is based ("Purchaser's
Proposal"). Within fourteen (14) days after receipt of
Purchaser's Proposal, the Shareholder's actuary shall either
certify its agreement in writing to Purchaser's Proposal, in
which case, Purchaser's Proposal shall be the Post-Retirement
Medical Liability. If after fourteen (14) days, the
Shareholder's actuary does not agree to Purchaser's Proposal,
then the Shareholder's actuary and the Purchaser's actuary shall
select an independent nationally recognized actuarial firm
("Independent Actuary") to determine the Post-Retirement Medical
Liability. The cost of retaining the Independent Actuary shall
be borne equally by the Shareholder and the Purchaser. The
Independent Actuary's determination of the Post-Retirement
Medical Liability shall be determinative. Once the Post-
Retirement Medical Liability is determined (whether by written
agreement or by written notice from the Independent Fiduciary),
the Purchaser shall pay such amount to the Shareholder within
five (5) Business Days of such agreement or notice.
(j) Long Term Disability Liability. "Long Term Disability
Liability" shall mean the present value of the Sellers' financial
obligation to provide employees of the Company, the Company
Subsidiaries and their predecessors (including Purolator) who are
on long term disability leave on the Closing Date and, in the
case of medical benefits, their eligible spouses and dependants
(i) long term disability benefits, continuing medical benefits
and life insurance benefits under the CNF Inc. Welfare Benefits
Plan, and (ii) benefit accrual for the period of the long term
disability leave under the Shareholder's pension plans, all
determined in accordance with this Section 7.8(j). The Long Term
Disability Liability shall be determined (A) under the Company
Benefit Plans on the assumption that they are not amended or
terminated, (B) on the assumption that the disabled employees
will not return to work, (C) including internal and external
administration costs, and (D) without regard to tax effects. The
Long Term Disability Liability shall be determined using the same
procedures set forth in Section 7.8(i) to determine the Post-
Retirement Medical Liability. Once the Long Term Disability
Liability is determined (whether by written agreement or by
written notice from the Independent Actuary), the Purchaser shall
pay such amount to the Shareholder within five (5) Business Days
of such agreement or notice.
(k) Collective Bargaining Agreements. To the extent the Company
or any Company Subsidiary has obligations to engage in collective
bargaining negotiations after the announcement of the Acquisition
and prior to the Closing Date, the Purchaser will not take any
actions to impede the Company's or such Company Subsidiary's
collective bargaining obligations. The Purchaser will cause the
Company or any Company Subsidiary to assume and perform all of
its obligations under the Collective Bargaining Agreements listed
in Exhibit 1.2(e) on or after the Closing Date (including the
provisions of benefit coverage at a level equivalent to coverage
provided prior to the Closing for those employees whose benefit
coverage must change as a result of the Acquisition).
(l) Exhibit 7.8(l) sets forth a true and complete list of each
employee of the Company or a Company Subsidiary whose principal
employment as of the date hereof is in connection with the
servicing of one or more Logistics Contracts (individually, a
"Logistics Contract Employee" and collectively, the "Logistics
Contract Employees"). The Sellers shall update all information
requested in this Section 7.8(l) as of the Closing. The Company
or the applicable Company Subsidiary who employs a Logistics
Contract Employee shall be under no obligation whatsoever to
continue to employ such employee after the Company or applicable
Company Subsidiary ceases to have an obligation to service the
Logistics Contracts to which his or her employment relates and
nothing shall prevent the Company or the applicable Company
Subsidiary from terminating a Logistics Contract Employee at any
time for cause. As soon as the Shareholder or a Subsidiary of
the Shareholder (other than the Company or a Company Subsidiary)
obtains the appropriate operating or other licenses to service a
Logistics Contract, the Shareholder shall promptly provide notice
of receipt of such operating or other licenses to the Purchaser
and the Purchaser shall cause the Company or the applicable
Company Subsidiary to terminate the employment of each Logistics
Contract Employee associated with such Logistics Contract (but
not with any other Logistics Contract for which all required
operating or other licenses has not yet been obtained) as soon as
practicable after receipt of such notice. If a Logistics
Contract Employee is associated with more than one Logistics
Contract, his or her employment shall continue until the
appropriate operating or other licenses have been obtained with
respect to all such contracts. The Sellers shall reimburse the
Purchaser for any and all costs associated with the employment or
termination of and the provision of employee benefits (including
the provision of COBRA Coverage) to the Logistics Contract
Employees in accordance with the reimbursement procedures
established in the Transfer Services Agreement.
Section 7.9 Insurance
..
(a) If requested by the Purchaser, the Shareholder shall in good
faith cooperate with the Purchaser and take all actions
reasonably requested by the Purchaser that are necessary or
desirable to permit the Purchaser to have available to it
following the Closing the benefits (whether direct or indirect)
of the insurance policies maintained by or on behalf of the
Company or any Company Subsidiary that are currently in force.
All costs relating to the actions described in this Section 7.9
shall be borne by the Purchaser. All insurance policies and
bonds with respect to the business and assets of the Company, the
Company Subsidiaries and the Company Business shall be maintained
by the Company and the Company Subsidiaries in full force and
effect as they apply to any matter, action or event relating to
the Company or any Company Subsidiary occurring through the
Closing Date.
(b) From and after the Closing, recoveries or other payments
received from insurance companies (other than insurance companies
that are Subsidiaries of the Shareholder) by the Shareholder or
its Affiliates or by the Company or their respective Affiliates
(or by the Purchaser or their Affiliates on behalf of the Company
or its Affiliates) with respect to the Company Business prior to
the Closing shall be paid to the Shareholder; provided that, if
any such payment was made in respect of a casualty event
occurring prior to Closing in the Company Business or with
respect to the assets of a company used in the Company Business,
then the Shareholder shall pay to the Purchaser (or the Purchaser
or its Affiliates shall retain, as the case may be) such payment
less amounts actually expended by the Shareholder and its
Affiliates to remedy such casualty event. As used in this
subparagraph, the term "amounts actually expended" shall include
amounts paid for the benefit of the Company Business or the
Company and amounts spent in order to obtain such reimbursements
from insurance companies.
(c) The Shareholder and its Affiliates shall not be obligated to
maintain any insurance coverage (including self-insurance) with
respect to the Company Business or the Company or its assets
following Closing, and the Purchaser shall become solely
responsible for all insurance coverage (including self-insurance)
and related risk of loss with respect to the Company Business and
the Company and their assets at and after Closing, including for
events or occurrences occurring before Closing.
Section 7.10 Noncompetition and Related Matters
..
(a) Confidential Information. The Sellers shall hold in
confidence (i) at all times following the date hereof to the date
that is three (3) years following the Closing Date all
Confidential Information (other than trade secrets) and (ii) at
all times following the date hereof all Confidential Information
that constitutes trade secrets and, in the case of Confidential
Information (other than trade secrets) shall not disclose,
publish or make use of such Confidential Information at any time
following the date hereof to the date that is three (3) years
following the Closing Date and in the case of Confidential
Information that constitutes trade secrets, shall not disclose,
publish or make use of such Confidential Information at any time
following the date hereof, in each case without the prior written
Consent of the Purchaser; provided, however, that nothing in this
Section 7.10(a) shall restrict or prohibit the actions or conduct
of, or otherwise apply to, any Third Person that consummates a
merger, consolidation, business combination, acquisition of
assets or purchase of capital stock (an "Acquisition
Transaction") with respect to the Shareholder or any of its
Subsidiaries (or any Affiliate of such Third Person), including
without limitation Worldwide as long as the Third Person does not
engage in any of the Identified Business under the name of
Worldwide or any of its Subsidiaries.
(b) Noncompetition.
(i) The Shareholder hereby acknowledges that (A) the Company
and the Company Subsidiaries conduct the Company Business throughout
the Territory, (B) the Shareholder conducts the Forwarding
Business through certain of its Subsidiaries other than the
Company and the Company Subsidiaries, including Con-Way Air
Express, Inc. and Menlo Logistics, Inc. and (C) to protect
adequately the interest of the Purchaser in the Company, the
Company Subsidiaries and the Company Business, it is essential
that any noncompete covenant with respect thereto cover all of
the Identified Business and the entire Territory.
(ii) The Shareholder and its Subsidiaries (other than the Company
and the Company Subsidiaries) shall not, during the Noncompete
Period, in any manner, engage in any of the Identified Business
in the Territory, except to the extent that the Shareholder's and
its Subsidiaries' (other than the Company and the Company
Subsidiaries) gross revenues generated through engaging in the
Identified Business do not exceed $175 million, in the aggregate,
in any calendar year; provided, however, nothing in this Section
7.10(b) shall restrict or prohibit the Shareholder or any of its
Subsidiaries or Affiliates in the conduct of the Customs
Brokerage business in so far as it relates to ground transport;
provided further, that nothing in this Section 7.10(b) shall
restrict or prohibit the actions or conduct of, or otherwise
apply to, any Third Person that consummates an Acquisition
Transaction with respect to the Shareholder or any of its
Subsidiaries, including without limitation Worldwide as long as
the Third Person does not engage in any of the Identified
Business under the name of Worldwide or any of its Subsidiaries
except as otherwise permitted herein; provided further that in
the event a Third Person consummates an Acquisition Transaction
involving either of the Sellers, then such Third Person (or any
Affiliate of such Third Person) shall be permitted to use the
name of Worldwide or any of its Subsidiaries for a transition
period not to exceed twelve (12) months.
(c) Nonsolicitation. The Shareholder shall not, prior to the
second anniversary of the Closing Date, in any manner, directly
or indirectly or by assisting any other Person, recruit or hire
away or attempt to recruit or hire away, on its behalf or on
behalf of any other Person, any Key Employee of the Company or
any Company Subsidiary; provided that the foregoing shall not
apply to Key Employees who leave the employ of the Company or any
Company Subsidiary under circumstances not involving initial
solicitation by the Shareholder or any Affiliate thereof or Key
Employees who respond to general advertisements of the
Shareholder or any Affiliate thereof that are not specifically
targeted at employees of the Company or any Company Subsidiary.
(d) Severability. In the event a judicial or arbitral
determination is made that any provision of this Section 7.10
constitutes an unreasonable or otherwise unenforceable
restriction against the Shareholder or any of its Subsidiaries,
the provisions of this Section 7.10 shall be rendered void only
to the extent that such judicial or arbitral determination finds
such provisions to be unreasonable or otherwise unenforceable
with respect to the Shareholder or any of its Subsidiaries. In
this regard, any judicial authority construing this Agreement
shall be empowered to sever any portion of the Territory, any
prohibited business activity or any time period from the coverage
of this Section 7.10 and to apply the provisions of this
Section 7.10 to the remaining portion of the Territory, the
remaining business activities and the remaining time period not
so severed by such judicial or arbitral authority. Moreover,
notwithstanding the fact that any provision of this Section 7.10
is determined not to be specifically enforceable, the Purchaser
shall nevertheless be entitled to recover monetary damages as a
result of the breach of such provision by the Shareholder or any
of its Subsidiaries. The time period during which the
prohibitions set forth in this Section 7.10 shall apply shall be
tolled and suspended for a period equal to the aggregate time
during which the Purchaser is seeking to enforce any such
prohibitions through successful litigation or arbitration.
(e) Injunctive Relief. Any remedy at law for any breach of the
provisions contained in this Section 7.10 shall be inadequate and
the Purchaser shall be entitled to injunctive relief in addition
to any other remedy the Purchaser might have hereunder.
Section 7.11 Tax Matters
..
(a) Tax Periods Ending on or Before the Closing Date. The
Purchaser shall prepare or cause to be prepared, consistent with
the Shareholder's past practices, and file or cause to be filed
all Tax Returns of the Company and all Company Subsidiaries for
all periods ending on or prior to the Closing Date which are
properly filed after the Closing Date, other than Tax Returns
with respect to periods for which a consolidated, unitary or
combined Tax Return of the Shareholder includes the operations of
the Company. The Purchaser shall provide the Shareholder, at
least forty-five (45) days before filing such Tax Returns
(including any amended returns), copies of all such Tax Returns
for the Shareholder's review and comment, along with a statement
certifying the amount of Tax shown on such Tax Return for which
the Purchaser will seek reimbursement from the Shareholder
pursuant to this Section 7.11(a), together with appropriate
supporting information and schedules. Any disagreement over the
preparation of such Tax Return shall be resolved pursuant to
Section 7.11(m). Subject to the preceding sentences, the
Shareholder shall reimburse the Purchaser for Taxes of the
Company and the Company Subsidiaries with respect to periods on
or before the Closing Date within fifteen (15) days after payment
by the Purchaser or the Company of such Taxes to the extent such
Taxes are not reflected as a liability on the Final Working
Capital Statement.
(b) Tax Periods Beginning Before and Ending After the Closing
Date. The Purchaser shall prepare or cause to be prepared,
consistent with past practices of the Shareholder, the Company
and Company Subsidiaries, and file or cause to be filed any Tax
Returns of the Company for Tax periods that begin before the
Closing Date and end after the Closing Date (a "Straddle
Period"). The Purchaser shall provide the Shareholder with a
copy of each such completed Tax Return (including any amended
returns) along with a statement certifying the amount of Tax
shown on such Tax Return that is allocable to the Shareholder
pursuant to this Section 7.11(b), together with appropriate
supporting information and schedules, at least forty-five (45)
days prior to the due date (including any extension thereof) for
the filing of such Tax Return. The Shareholder and its
authorized representatives shall have the right to review and
comment on such Tax Return and statements prior to the filing of
such Tax Return. Any disagreement over the preparation in or of
such Tax Return shall be resolved pursuant to Section 7.11(m).
Subject to the preceding sentence, the Shareholder shall pay to
the Purchaser within fifteen (15) days after the date on which
Taxes are paid with respect to such periods an amount equal to
the portion of such Taxes allocated to the portion of such
Taxable period ending on the Closing Date to the extent such
Taxes are not reflected as a liability on the Final Working
Capital Statement. For purposes of this Section 7.11(b), in the
case of any Taxes that are imposed on a periodic basis and are
payable for a Straddle Period that includes (but does not end on)
the Closing Date, the portion of such Tax which relates to the
portion of such Taxable period ending on the Closing Date shall
(i) in the case of any Taxes other than Taxes based upon or
related to income or receipts, or imposed in connection with any
sale or other transfer or assignment of property, be deemed to be
the amount of such Tax for the entire Taxable period multiplied
by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire Taxable period, and
(ii) in the case of any Tax based upon or related to income or
receipts, or imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or
intangible) be deemed equal to the amount which would be payable
if the relevant Taxable period ended on the Closing Date;
provided, however, that any Taxes attributed to transactions or
events after the Closing on the Closing Date shall be allocated
to the portion of the taxable period beginning after the Closing
Date. Any credits (including estimated tax payments or
prepayments of taxes prior to Closing) relating to a Straddle
Period that begins before and ends after the Closing Date shall
be taken into account as though the relevant Straddle Period
ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner
consistent with prior practice of the Company.
(c) Shareholder's Consolidated Tax Returns. The Shareholder
will include the income of the Company and all domestic Company
Subsidiaries (including any deferred income triggered into income
by Treasury Regulations section 1.1502-13 or 1.1502-14 and any
excess loss accounts taken into income under Treasury Regulations
section 1.1502-19) on the Shareholder's consolidated income Tax
Returns for all periods through the Closing Date and pay any
income Taxes attributable to such income. The Shareholder will
allow the Purchaser an opportunity to review and comment upon
such Tax Returns (including any amended returns) to the extent
that they relate to the Company. Any disagreement over the
preparation of such Tax Return shall be resolved pursuant to
Section 7.11(m). The income of the Company will be apportioned
to the period up to and including the Closing Date and the period
after the Closing Date by closing the books of the Company as of
the end of the Closing Date. Any Tax related to any transaction
outside of the normal course after Closing but on the Closing
Date shall be the responsibility of the Purchaser even though any
such Tax may be reflected on such Tax Return. The Purchaser
shall advise Shareholder at least ten (10) days prior to the
Closing of any such transaction. The Purchaser shall reimburse
the Shareholder within fifteen (15) days following the filing of
such Tax Return for any such amount which shall be determined by
comparing the Tax reflected on such Tax Return to the Tax that
would have been owed had such transactions not occurred on the
Closing Date. The Shareholder will allow the Company and its
counsel to participate in any audits of the Shareholder's
consolidated federal income Tax Returns to the extent that such
returns relate to the Company or any Company Subsidiary, and the
Shareholder will not settle any such audit in a manner which
would adversely affect the Company or any Company Subsidiary
after the Closing Date without the prior written Consent of the
Purchaser, which Consent shall not unreasonably be withheld. In
connection with the examination of any federal Tax Return
including the Company or any Company Subsidiary relating either
to a Pre-Closing Period or to any portion of a Straddle Period
ended on the Closing Date, notwithstanding the other provisions
of this Agreement: (i) the Purchaser shall reimburse the
Shareholder for any Taxes due on the amended or adjusted federal
Tax Return to the extent that such Tax and interest has been
recorded with respect to a specific item as a reserve for tax
liability on the Company Financial Statements or the Final
Working Capital Statement ("Tax Reserves"), and (ii) the
Shareholder shall be obligated to prepare any required amendment
to any state or local income Tax Return resulting from such
federal examination within any applicable period for the
preparation and filing of such Tax Returns and to pay any Tax
reflected as due thereon. With respect to any such amended Tax
Returns due after the Closing, the Purchaser shall cause the
Company and any Company Subsidiary to cooperate with the
Shareholder in the preparation of those Tax Returns. The
Shareholder shall present any such Tax Returns due after the
Closing to the Purchaser for its review and approval at least
fifteen (15) days in advance of the due date of such Tax Returns,
which approval will not be unreasonably withheld or delayed.
Following such approval, the Purchaser shall cause such Tax
Returns to be completed and filed, except for consolidated or
combined Tax Returns that the Shareholder is required to file.
To the extent that Tax and interest reflected as due on the Tax
Returns was reflected on the Tax Reserves, the Purchaser shall
pay such amount directly to the appropriate taxing authority or
shall reimburse the Shareholder if the Shareholder pays the Tax
(e.g., as will generally be the case for consolidated and
combined Tax Returns); and, to the extent the Tax Reserves are
insufficient to cover such Tax, then the Shareholder shall
provide the Purchaser with the amount of any Tax and interest
reflected as due on any such Tax Return. Amounts payable
pursuant to this paragraph from one Party to the other shall be
paid at least ten (10) days prior to the due date of each such
Tax Return or the intended payment date.
(d) Cooperation on Tax Matters. The Purchaser, the Shareholder,
and the Company shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the
filing of any Tax Returns (including any amended returns) and any
audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and, upon the other
party's written request, the provision of records and information
which are reasonably relevant to any such audit, litigation or
other proceeding and making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. The Purchaser
shall provide, or cause to be provided, earnings and profits (as
computed for U.S. federal income tax purposes) of any non-U.S.
direct or indirect Subsidiary of the Company for the tax year of
such entity that includes the Closing (which need only be an
update for such year based on such computations made by any such
Subsidiary of the Company while owned directly or indirectly by
the Purchaser) and shall provide the Shareholder access to any
such Company's books and records and tax receipts with respect to
such Tax year. The Parties shall (i) retain all Tax Returns
schedules, books and records with respect to Tax matters
pertinent to the Company relating to any Taxable period first
ending after the Closing Date and for all prior periods until the
expiration of the statute of limitations (and, to the extent
pertinent, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered
into with any taxing authority, and (ii) provide the other party
reasonable written notice prior to destroying or discarding any
such books and records and, if the other party so requests, allow
the other party to take possession of such books and records.
Any information obtained under this Section 7.11(d) shall be kept
confidential except as may be otherwise necessary in connection
with the filing of Tax Returns or in a Tax audit or
administrative or judicial proceeding of any type related to
Taxes. The Parties agree, upon request, to use their best
efforts to obtain any certificate or other document from any
Governmental Entity or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated hereby). The Parties further agree, upon request,
to provide the other party with all information that either party
may be required to report to any Governmental Entity.
(e) Tax Sharing Agreements. Any tax sharing agreement affecting
the Company and any Company Subsidiary is terminated as of the
Closing Date and shall have no further effect for any taxable
year (whether the current year, a future year, or a past year).
(f) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any
penalties and interest) incurred in connection with the Transfers
and the other transactions contemplated by this Agreement
(collectively, "Transaction Taxes") shall be paid by the
Shareholder when due, and the Shareholder will, at its own
expense, file all necessary Tax Returns and other documentation
with respect to all such Transaction Taxes, and, if required by
applicable law, the Purchaser will, and will cause its Affiliates
to, join in the execution of any such Tax Returns and other
documentation.
(g) Carrybacks. Neither the Purchaser nor Company nor any
Company Subsidiary shall amend any Tax Return involving the
Company or a Company Subsidiary filed for any Tax period prior to
Closing or pursuant to Sections 7.11(a) or 7.11(b), without the
prior Consent of the Shareholder, which Consent shall not be
unreasonably withheld. The Shareholder will immediately pay to
the Purchaser any Tax refund (or reduction in Tax liability)
resulting from a carryback of a post-acquisition Tax attribute of
the Company into the Shareholder's consolidated federal income
Tax Return, if and when such refund or reduction is realized by
the Shareholder Group, after taking into account any corollary
adjustments that reduce other favorable tax attributes of the
Shareholder or the Shareholder Group (valued taking into account
timing differences in a reasonable manner). Similar principles
shall apply to Tax attributes other than federal income Tax
attributes. The Shareholder will cooperate with the Company in
obtaining such refunds (or reduction in Tax liability), including
through the filing of amended Tax Returns or refund claims.
(h) Previously Paid Taxes. For purposes of determining any
amount of Tax for which the Shareholder is responsible or that
the Shareholder is required to pay pursuant to any provision of
this Section 7.11, the Shareholder shall be treated as having
paid (and as having fully discharged its liability under this
Agreement for) all Taxes (including any estimated taxes) paid by
or on behalf of the Company or any Company Subsidiary on or
before the Closing Date, except to the extent that any such
payment was taken into account as an asset in the determination
of Final Working Capital Schedule. For this purpose, any amount
of Tax liability taken into account in the determination of Final
Working Capital Schedule shall be deemed to have been paid on or
before the Closing Date.
(i) Controlled Foreign Corporations. Neither the Purchaser nor
any Affiliate of the Purchaser shall permit any Company
Subsidiary that is a "controlled foreign corporation" within the
meaning of Section 957 of the Code prior to the first day of the
first income tax year beginning after the Closing Date of such
Company, to take any action that results in a more than de
minimis reduction of the "earnings and profits", as determined
for United States federal income tax purposes, of such Company by
virtue of (i) a dividend or deemed dividend for United States
federal income tax purposes or (ii) entering into a transaction
outside the ordinary course of business. This restriction shall
not apply to any earnings and profits derived after the Closing
Date, and shall in any event terminate as of the first day of the
first taxable year of such controlled foreign corporation
following the Closing Date.
(j) Contests. After the Closing, the Purchaser shall promptly
(within ten (10) days) notify the Shareholder in writing of the
commencement of any Tax audit or administrative or judicial
proceeding of any type related to Taxes or of any demand or claim
on the Purchaser which, if determined adversely to the taxpayer
or after the lapse of time may be grounds for indemnification
under Article XI. Such notice shall contain factual information
(to the extent known to the Purchaser) describing the asserted
Tax liability in reasonable detail and shall include copies of
any notice or other document received from any Governmental
Entity in respect of any such asserted Tax liability. If the
Purchaser fails to give the Shareholder prompt notice of an
asserted Tax liability as required by this Section 7.11(j), and
such failure results in a detriment to the Shareholder, then any
amount that the Shareholder is otherwise required to pay the
Purchaser Indemnified Parties with respect to such liability
shall be reduced by the amount caused by such detriment.
(k) Participation in Audits. The Shareholder may elect to
direct, through counsel chosen by the Shareholder, any audit,
administrative or judicial proceeding involving any asserted
liability with respect to which indemnity may be sought (any such
audits or proceedings relating to an asserted Tax liability are
referred to herein collectively as a "Contest"). If the
Shareholder elects to direct the Contest of an asserted Tax
liability, the Shareholder shall within ninety (90) calendar days
after receipt of written notice of the asserted Tax liability
notify the Purchaser of its intent to do so, and the Purchaser
shall fully cooperate in each phase of such Contest. If the
Shareholder elects not to direct the Contest or the Shareholder
fails to notify the Purchaser of its election as herein provided,
the Purchaser may pay, compromise or contest, at its own expense,
such asserted liability and seek indemnification therefore
pursuant to Article XI. However, in such case, the Purchaser and
each affected Company may not settle or compromise any asserted
Tax liability without first giving written notice to the
Shareholder of the terms of such settlement or compromise and
receiving the written Consent of the Shareholder to such
settlement or compromise; provided, however, that consent to such
settlement or compromise shall not be unreasonably withheld by
the Shareholder. In any event, each of the Purchaser and the
Shareholder shall have the right to attend and participate, at
its own expense, in the Contest. If the Shareholder chooses to
direct the Contest, the Purchaser and any affected Company shall
promptly empower (by power of attorney and such other
documentation as may be appropriate) such representatives of the
Shareholder as the Shareholder may designate to represent the
relevant entity or any successor thereto in the Contest insofar
as the Contest involves an asserted Tax liability for which the
Shareholder would be liable under this Section 7.11 or Article
XI.
(l) Participation in Foreign Audits. The Shareholder shall have
the right to participate at its own expense in any Tax audit or
administrative or judicial proceeding of non-U.S. Affiliates of
the Purchaser occurring after the Closing, to the extent such
audit or proceeding could adversely affect the Shareholder's or
its Affiliates' previously claimed foreign tax credits. The
Purchaser shall provide the Shareholder with reasonable notice of
any proposed foreign tax credit adjustments of the Company or the
Company Subsidiaries that could adversely affect the
Shareholder's or its Affiliates' foreign tax credits.
(m) Tax-related Disputes. In the event of a dispute arising
under this Section 7.11, the Parties shall resolve the dispute
pursuant to Section 12.6. In the alternative, with respect to
any dispute related to the preparation of a Tax Return (including
amended Tax Returns) prepared in connection with Section 7.11(a),
(b) or (c), the Parties may mutually agree to resolve the dispute
by submitting it to a nationally recognized accounting firm
mutually agreeable to all parties, and such accounting firm shall
resolve the dispute by selecting the Tax Return position or
presentation (determined on an item by item basis) it believes is
most reasonable and appropriate taking into account past practice
of the Shareholder, Company or Company Subsidiaries, and
applicable law. The decision of such accounting firm shall be
final and binding on all parties.
Section 7.12 Certain Transactions.
In the event the Shareholder (i) merges or consolidates
with or into another Person or another Person merges or
consolidates with or into the Shareholder and the Shareholder is
not the continuing or surviving corporation or resulting entity
of such consolidation or merger or (ii) transfers or conveys all
or substantially all of its assets and properties to any Person,
then, and in each such case, as a condition to the consummation
of any such transaction, the Shareholder shall cause proper
provision to be made so that (y) the surviving or successor
entity or assignee, as the case may be, assumes, in written form
reasonably acceptable to the Purchaser all the obligations of the
Shareholder under this Agreement, including with respect to
Section 7.10 and Article XI hereof, and in such event all
references to the Shareholder in this Agreement shall be deemed a
reference to such successor or assign and (z) if such merger,
consolidation, transfer or conveyance primarily relates to the
assets involved in the services being provided pursuant to the
Transition Services Agreement, the surviving or successor entity
or assignee, as the case may be, assumes, in written form
reasonably acceptable to the Purchaser, all the obligations of
the Shareholder under the Transition Services Agreement.
Section 7.13 Minimum Net Worth.
From the Closing Date to the date that is two (2) years
following the Closing Date, the Shareholder shall maintain
Consolidated Net Worth in an amount not less than $25 million
(the "Minimum Consolidated Net Worth"). In the event, at any
date of determination, Consolidated Net Worth shall not equal or
exceed Minimum Consolidated Net Worth, the Shareholder shall
promptly notify the Purchaser in writing and obtain a letter of
credit in an amount not less than $25 million from a financial
institution of national recognition reasonably acceptable to the
Purchaser to secure its obligations under this Agreement
including under Article XI hereof.
Section 7.14 Consents; Novation of Government Contracts.
(a) The Purchaser acknowledges that, in connection with the
matters contemplated by this Agreement, certain Consents and
waivers may be required from third parties to certain contracts
with the Shareholder or its Subsidiaries. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall
not constitute an agreement to assign any asset or claim or right
or any benefit arising under or resulting from such asset if an
attempted assignment thereof, without the Consent of the third
party, would constitute a breach or other contravention of the
rights of such third party, would be ineffective with respect to
any party to an agreement concerning such asset, or would in any
event adversely affect the rights of the Company or the Company
Subsidiaries in connection with such asset. If any transfer or
assignment by the Shareholder or any of its Subsidiaries or any
assumption by the Company or any Company Subsidiary or, any
interest in, or liability, obligation or commitment under, any
asset requires the Consent of a third party, then such assignment
or assumption shall be made subject to such Consent being
obtained. The Shareholder shall use commercially reasonable
efforts to obtain all Consents in connection with the Transfers
on or prior to the Closing Date.
(b) With respect to each transfer or assignment by the
Shareholder or any of its Subsidiaries or any assumption by the
Company or any Company Subsidiary or, any interest in, or
liability, obligation or commitment under, any asset that
requires the Consent of a third party that has not been obtained
by the Company or the Shareholder as of the Closing, the
Shareholder shall use commercially reasonable efforts to (i)
obtain the Consent of the third parties required thereunder, (ii)
make the benefit of such asset available to the Purchaser (and
all costs of securing such benefit shall be the responsibility of
the Shareholder) and (iii) enforce, at the request of the
Purchaser and at the expense and for the account of the
Purchaser, any right of the Shareholder arising from such asset
against the other party or parties related thereto (including the
right to elect to extend or terminate any contracts or other
agreements in accordance with the terms thereof). The
Shareholder shall use commercially reasonable efforts not to take
any action or to suffer any omission that could limit, restrict
or terminate in any material respect the benefits to the
Purchaser of such assets. With respect to any such asset as to
which the necessary approval or Consent for the assignment or
transfer to the Purchaser is obtained following the Closing, the
Shareholder shall transfer such contracts or other agreements to
the Purchaser by execution and delivery of an instrument of
conveyance reasonably satisfactory to the Purchaser within five
(5) Business Days following receipt of such approval or Consent.
(c) All material contracts or other agreements requiring third
party Consent in connection with the Transfers that are not
otherwise set forth on Schedule 4.5 or Schedule 4.14 are set
forth on Exhibit 7.14(c).
(d) The parties agree that novation agreements should not
be necessary, but recognize that, in accordance with FAR 42.1200 et
seq., novation of certain contracts for any Governmental Entity
may be requested by a contracting officer for the full transfer
and assignment of contracts for any Governmental Entity to the
Purchaser and that application for novation cannot be made until
after the execution of this Agreement and may take a substantial
amount of processing time. Promptly following the execution of
this Agreement, if any Governmental Entity requests novation of
any such contracts, the Parties shall use their commercially
reasonable efforts to obtain such novation. Each Party shall
keep the other fully informed, on a current and timely basis, as
to the progress of the novation process and provide copies of all
letters, correspondence, and other material documents to or from
the Governmental Entity with respect thereto.
Section 7.15 Transfer Structure; Transfer Documentation.
(a) The Parties acknowledge that prior to the date hereof,
in addition to any other actions allowed or contemplated by Articles
II and VII, the Shareholder was planning changes to its foreign
operations in certain respects ("Repatriation Plan"), which
Repatriation Plan could include electing to treat foreign
subsidiaries as branches rather than separate corporations,
transferring the ownership of such Company Subsidiaries and
similar strategies to repatriate foreign earnings and profits and
associated foreign tax credits. The Parties agree, from and
after the date hereof and until Closing, to cooperate in
assessing the impact of all or any portion of the Repatriation
Plan on the Purchaser, the Company, the Company Subsidiaries, and
their Affiliates following the Closing and on the Purchaser's
plans to integrate its business with that of the Company. The
Parties recognize and agree that the Repatriation Plan may
increase the Purchaser's Tax, administrative, filing and other
costs including the costs of domestic and foreign third party
advisors but excluding internal costs (collectively "Costs") or
otherwise adversely affect its own integration plans following
the Closing. Within five (5) days after the date hereof, the
Purchaser shall provide the Shareholder with a list of all
jurisdictions in which it operates through a "controlled foreign
corporation" as defined in Section 957 of the Code ("CFCs") and
where it may seek to integrate the Company's operations with its
own. The Shareholder, together with its historic tax and
business advisors will proceed to determine the Incremental Costs
to the Purchaser of the Shareholder's Repatriation Plan assuming
that the Purchaser will integrate all of the identified CFCs with
the Company operations. The Purchaser agrees to work
cooperatively with the Shareholder to assess the impact of the
Repatriation Plan on the Purchaser and its Affiliates. The
Purchaser shall provide such non-proprietary and non-confidential
information as the Shareholder reasonably requests to enable the
Shareholder to assess the impact the Repatriation Plan may have
on the Purchaser's post Closing integration plans For purposes
hereof, "Incremental Cost" means the excess of (i) Costs that
the Purchaser actually incurs after receipt of the Repatriation
Plan, or is reasonably anticipated it will incur on or prior to
the expiration of the statute of limitations with respect to the
Tax return of the Purchaser or any of its Affiliates for the year
or years immediately following effecting the Repatriation Plan
(including extensions) to consolidate the operations of each
Company CFC or former CFC with the Purchaser's own foreign
operations in the manner it prefers, over (ii) the Costs that the
Purchaser would have incurred but for the implementation of the
Repatriation Plan. It is agreed that all costs to the Purchaser
of domestic and foreign third party advisors in evaluating the
Repatriation Plan and the determination of Incremental Costs is
an Incremental Cost. The Purchaser shall not be obligated to
agree to a method of integration causing the least Incremental
Costs and, consistent with its commitment to work cooperatively
with the Shareholder, is not obligated to approve any specific
part of the Shareholder's Repatriation Plan, provided, however,
that the Purchaser shall not be arbitrary in withholding such
approval. The Shareholder shall provide the Purchaser with a
copy of its proposed Repatriation Plan and an estimate of
Incremental Costs, if any, on a CFC-by-CFC basis at least thirty
(30) days prior to the Closing and the Purchaser shall provide
its approval or rejection thereof in writing on a CFC-by-CFC
basis (including valid business reasons for the rejection of any
part of the Repatriation Plan) within fourteen (14) days after
the receipt thereof. The Purchaser shall be deemed to have
approved the Integration Plan to the extent it fails to provide
written notice as provided in the preceding sentence. The
Shareholder's utilization of foreign Tax credits shall not
constitute an Incremental Cost. The Shareholder shall reimburse
the Purchaser for any and all Incremental Costs incurred, direct
or indirect, attributable to the Repatriation Plan as approved by
the Purchaser. On and after the date hereof, the Parties shall
cooperate in good faith and share information in order for the
Parties to reasonably assess, at least thirty (30) days prior to
Closing, on a CFC-by-CFC basis, the minimum estimated Incremental
Costs to the Purchaser associated with any steps in the
Repatriation Plan that is approved ("Estimated Incremental
Cost"). The Estimated Incremental Cost will be netted against
amounts due to the Shareholder at the Closing. To the extent the
Estimated Incremental Cost is less than amounts actually incurred
by the Purchaser, the Purchaser shall provide the Shareholder
with an invoice for the actual Incremental Cost no less
frequently than every sixty (60) days following the Closing, in
sufficient detail for the Shareholder to assess the propriety and
calculation of the actual Incremental Cost and the Shareholder
shall pay such Incremental Cost within thirty (30) days. Any
dispute regarding the terms of this Section 7.15, including the
propriety of Costs or the calculation of Incremental Cost, shall
be subject to resolution in the manner set forth in Section
7.11(m). The Purchaser's failure to approve all or any part of
the Repatriation Plan shall not be a basis for declaring the
Purchaser to be in breach of any of its obligations under this
Agreement or for delaying or abandoning the Closing.
(b) The Parties expressly acknowledge and agree that the
Shareholder shall be free to take such steps as it may be
required to take to transfer the Conveyed Assets to the Company
or to remove any Excluded Assets or Excluded Liabilities from the
Company without Purchaser's prior consent and such steps shall
not be a violation of Section 7.1. The Shareholder shall bear
any and all costs, expenses, Taxes or Transfer Taxes associated
with any such steps. In the event that the Shareholder and the
Purchaser cannot agree on the correct amount of such additional
costs, such dispute shall be resolved in accordance with the
provisions of Section 7.11(m).
(c) The Parties acknowledge and agree in addition to the matters
set forth in Sections 7.15(a) and 7.15(b) that from the date
hereof to the Closing Date, the Parties shall cooperate in good
faith through their respective employees and agents to develop
additional mutually agreed upon structuring plans and transfer
documentation (the "Transfer Documentation") to effect the
Closing in a manner mutually beneficial; provided however that
neither Party shall be required to agree to any specific
restructuring plan or set of transfers other than as set forth in
Article II or as expressly set forth in this Section 7.15. The
Parties further acknowledge that several of the Purchaser's
Affiliates and Subsidiaries may participate directly as a
purchaser of the Conveyed Assets, the Shares or, if so agreed
equity interests or assets of the Company and the Company
Subsidiaries at the Closing. The Shareholder agrees to such
participation and the Parties agree and acknowledge that such
participation shall in no way affect the obligations of the
Purchaser hereunder. Purchaser shall bear any and all costs,
expenses, Taxes or Transfer Taxes associated with any such steps.
In the event that the Shareholder and the Purchaser cannot agree
on the correct amount of such additional costs, such dispute
shall be resolved in accordance with the provisions of Section
7.11(m).
Section 7.16 Customer Visits
.. During the period commencing on the date hereof and ending on
the Closing Date, the Purchaser shall not, and shall cause its
officers, directors, employees and other representatives not to,
contact any suppliers to, or customers of, the Company Business
in connection with or pertaining to the transactions contemplated
by this Agreement or the Ancillary Documents unless (i) the
Purchaser provides reasonable notice to the Shareholder in
advance of such contact and (ii) the Purchaser gives the
Shareholder a reasonable opportunity to participate if the
Shareholder elects. Upon such notice and election, the
Shareholder shall have the option to send a management employee
of the Company, reasonably satisfactory to the Purchaser, with
the Purchaser's representative(s) to any meeting with such
suppliers or customers and such management employee shall at all
times accompany the Purchaser's representative(s) to any meeting
with such suppliers or customers.
Section 7.17 Renegotiation of Agreements; Release of
Guarantees.
(a) Each of the Sellers shall use its commercially reasonable
efforts prior to Closing to (i) (A) renegotiate the wet lease
agreement described on Exhibit 7.17 and execute an amendment to
implement the modifications thereto contemplated on Exhibit 7.17
in form and substance reasonably satisfactory to the Purchaser
and (B) renegotiate the dry lease agreement described on Exhibit
7.17 and execute an amendment to implement the modifications
thereto contemplated on Exhibit 7.17, (ii) release the Company
and each Company Subsidiary from the guarantees associated with
that certain Credit Agreement, dated as of July 3, 2001, (as
amended through the Fourth Amendment, dated January 23, 2004, the
"CNF Credit Agreement"), among CNF Inc. and various financial
institutions party thereto and (iii) release the Company and each
Company Subsidiary from any other bank guarantees or other credit
arrangements backed by the credit of the Company or any Company
Subsidiary other than the bank guarantees or similar credit
arrangements associated with the Assumed Debt. If requested by
the Purchaser, the Shareholder shall execute and deliver at
Closing a specific indemnification instrument relating to such
continuing guarantee arrangement in form and substance reasonably
satisfactory to the Purchaser.
(b) Subject to Section 7.17(c), the Purchaser shall use its
commercially reasonably efforts prior to the Closing to release
the Shareholder and any Subsidiary of the Shareholder, other than
the Company or the Company Subsidiaries, from any bank guarantees
or similar credit arrangements associated with the Assumed Debt.
The Purchaser shall take all reasonable actions necessary to
repay, replace, assume, terminate or take such other action to
release the Shareholder and all Subsidiaries of the Shareholder
(other than the Company and the Company Subsidiaries) from any
and all continuing obligation or liability effective as of the
Closing Date in connection with outstanding letters of credit
under the CNF Credit Agreement, bank guarantees or other credit
arrangements backed by the credit of the Shareholder or any
Subsidiary thereof (other than the Company or any Company
Subsidiary) to the extent such letters of credit, bank guarantees
or other credit arrangements benefit the Company or any Company
Subsidiary. If requested by the Shareholder, the Purchaser shall
execute and deliver at Closing a specific indemnification
instrument relating to such continuing guaranty arrangement in
form and substance reasonably satisfactory to the Shareholder.
(c) Prior to the second anniversary of the Closing Date, the
Purchaser shall cause EWA to be irrevocably, unconditionally and
forever discharged, whether by defeasance of the Dayton Bonds in
accordance with the terms thereof or otherwise, from its
guarantee obligations under the Dayton Bonds as set forth on
Exhibit 1.2(j).
Section 7.18 D&O Insurance. The Shareholder shall maintain in
effect for a period of at least six (6) years following the
Closing Date for the benefit of the officers and directors of the
Company and the Company Subsidiaries with respect to acts or
omissions occurring prior to the Closing Date, the existing
policies of directors' and officers' liability insurance and
fiduciary insurance (and any renewals thereof) maintained by the
Company and the Company Subsidiaries as of the date of this
Agreement (the "Existing Policies"); provided, however, that (i)
the Shareholder may substitute for the Existing Policies a policy
or policies of not materially less favorable coverage (in the
aggregate), and (ii) the Shareholder shall not be required to pay
annual premiums for the Existing Policies (or for any substitute
policies) in excess of 200% of the annual premiums payable under
the Existing Policies as of the date hereof (the "Maximum
Premiums") and, in the event any future annual premiums for the
Existing Policy (or any substitute policies) exceed the Maximum
Premiums, the Shareholder shall be entitled to reduce the amount
of coverage of the Existing Policies (or any substitute policies)
to the amount of the coverage that can be obtained for a premium
equal to the Maximum Premiums.
Section 7.19 Transition Services Agreement. Between the date
of this Agreement and the Closing Date, the Parties shall use
commercially reasonable efforts to negotiate in good faith to
complete the Transition Services Agreement (the "Transition
Services Agreement") attached hereto as Exhibit 7.19 and to
execute same as soon as is reasonably practicable, but in any
event by the Closing Date.
Section 7.20 Sellers' Access to Books and Records. The
Purchaser shall, and shall cause the Company (or any assignee of
the Company to the extent the assignee is an Affiliate of the
Purchaser) and each Company Subsidiary to, cooperate with the
Sellers and grant to the Sellers and the Sellers' advisors and
representatives reasonable access, upon not less than three (3)
Business Days prior written notice, to such personnel (including,
for the avoidance of doubt, such personnel and employees of
Affiliates of the Purchaser other than the Company or a Company
Subsidiary who were, prior to the Closing Date, employees or
personnel of the Company or a Company Subsidiary or whose scope
of employment was otherwise related to the Company Business),
contracts, documents, books, records and other information
relating to the Company, the Company Subsidiaries and the Company
Business as the Sellers may reasonably require after the Closing
Date in connection with any litigation or preparation for the
litigation of any claim by or against any Seller or any
Subsidiary or Affiliate relating to the Company, any Company
Subsidiary, the Conveyed Assets, the Assumed Liabilities or the
conduct of the Company Business prior to the Closing Date or in
connection with any governmental investigation of the Sellers or
any of their Subsidiaries. The Purchaser will direct, and will
cause the Company and the Company Subsidiaries to direct, their
respective employees and personnel to render any assistance which
any Seller may reasonably request pursuant to this Section 7.20,
provided that the Purchaser shall be reimbursed by the Sellers
for any out-of-pocket costs and expenses which it may incur in
rendering the services provided for in this Section 7.20, and
that such access shall not unreasonably interfere with
Purchaser's business operations. Notwithstanding any other
provision of this Section 7.20, access to any employees,
personnel, contracts, documents, books and records may be denied
to the Sellers if the Purchaser is required under any applicable
Law relating to antitrust, employment or privacy issues to deny
such access, or to protect attorney-client privilege or attorney
work product. To the extent that Sellers request any access
contemplated under this Section 7.20, the Sellers agree to enter
into a confidentiality agreement with reasonable and customary
terms to be provided by the Purchaser.
Section 7.21 Vector Menlo Shippers' Association. Seller
covenants that, between the date of this Agreement and the
Closing Date, it shall use commercially reasonable efforts to
assign, or transfer, by novation or amendment, as necessary, each
of the seven (7) Service Contracts listed at items 18 through 24
of Schedule 4.14(o) (the "Selected Contracts"), inclusive, in
each case with the consent of each of the other parties to such
contract, if required under the terms of such contract, from
Vector Menlo Shippers' Association, LLC ("VMSA") to the Company,
so that the Company shall have all of the rights and benefits
accorded to VMSA under each of the said contracts. Seller
further covenants that, between the date of this Agreement and
the Closing Date, Seller, after causing such assignment or
transfer of the Service Contracts as aforesaid: (a) shall cause
VMSA to be dissolved in accordance with applicable law; (b) shall
cause that certain Management and Services Agreement by and
between VMSA, the Company, Menlo Logistics Inc. and Vector SCM,
LLC dated as of January 28, 2004 ("MSA") to be terminated in
accordance with its terms and without liability to the Company;
and (c) shall ensure that, after the Closing Date, the Company
shall have no liability to any other members of VMSA arising
under the terms and conditions of the MSA and shall have no
liability, under contract or otherwise, to any third party
arising from any obligations, contractual or otherwise, owed by
VMSA to that third party, except, in either case, liabilities or
obligations, contractual or otherwise, that relate to the Company
or the Company Business with respect to the Selected Contracts
that are assigned, or transferred, by novation or amendment to
the Company.
Section 7.22 Shared Usage Licenses. The Parties agree to work
together in good faith using commercially reasonable efforts to
obtain for the Company and the Company Subsidiaries the right to
continue to enjoy the benefits currently enjoyed by the Company
and the Company Subsidiaries under the license agreements
identified on Exhibit 7.22 (the "Shared Usage Licenses"). To the
extent any costs are incurred to obtain these continued benefits
for the Company and the Company Subsidiaries, the parties shall
bear such costs equally between them. The Sellers shall remain
responsible for any license, maintenance, or other fees due to a
vendor of any of the Shared Usage Licenses for any period prior
to the date of Closing. In the event the Parties are unable
prior to Closing to obtain for the Company and the Company
Subsidiaries the right to continue to receive the benefits of any
of the Shared Usage Licenses, then the Parties shall continue
after Closing to pursue these rights in accordance with this
Section 7.22 until such time as it is no longer commercially
reasonable to do so or the Purchaser determines such rights are
no longer needed.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1 Conditions to Each Party's Obligations. The
respective obligations of each Party to effect the transactions
contemplated hereby shall be subject to the fulfillment at or
prior to the Closing of each of the following conditions:
(a) Antitrust Approvals. The expiration or termination of the
waiting period (and any extension thereof) applicable to the
consummation of the Acquisition under the HSR Act and all
applicable filings shall have been made and all applicable
approvals shall have been obtained and applicable waiting periods
(and any extension thereof) shall have expired or terminated,
under the applicable Foreign Antitrust Laws of Canada and the EC
Merger Regulation (provided that, in the case of Canada, receipt
of an Advance Ruling Certificate or written notification stating
that the Canadian Commissioner of Competition does not intend to
make application to the Canadian Competition Tribunal regarding
the transaction (i.e., a "no-action letter") shall constitute
receipt of all applicable approvals).
(b) No Injunction. There shall be no effective injunction, writ
or preliminary restraining order or any order or ruling of any
nature issued by, and no lawsuit shall have been filed by, (i) a
Governmental Entity in the United States or Canada, (ii) an
arbitral body of competent jurisdiction in the United States,
Canada or the European Union or (iii) the European Union Court of
Justice or European Commission, or any agency thereof, ordering,
ruling or seeking an order (x) prohibiting the Acquisition (or
any portion thereof) from being consummated as provided herein,
or (y) restraining, conditioning or requiring any change of any
material term contained herein.
Section 8.2 Conditions to Obligations of the Purchaser
.. The obligations of the Purchaser to consummate the
transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing of each of the following
additional conditions:
(a) Governmental Consents. Except for the approvals required
under Laws relating to antitrust and competition, all Consents or
orders of, or registrations, declarations or filings with, all
Governmental Entities required to be made or obtained prior to
the Closing in connection with the execution, delivery or
performance hereof shall have been obtained or made, except where
the failure to have obtained or made any such Consent, order,
registration, declaration or filing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) Representations and Warranties. The representations and
warranties of the Sellers set forth in Articles IV and V (without
giving effect to any materiality or Material Adverse Effect
qualification) shall be true and correct as of the Closing Date
as though made on and as of the Closing Date (except to the
extent such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date), except as
would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(c) Performance of Obligations of the Sellers. The Sellers
shall have performed and complied in all material respects with
the covenants and agreements required to be performed or complied
with by them under this Agreement, taken as a whole, at or prior
to the Closing.
(d) No Material Adverse Effect. Between the date hereof and the
Closing Date, there shall not have occurred any Material Adverse
Effect or any development likely to result in a Material Adverse
Effect.
(e) Transfers. The Transfers contemplated by Section 2.1 and
Section 2.2 shall have been substantially completed on or prior
to the Closing in accordance with the terms hereof.
(f) Secretary Certificate. The Purchaser shall have received a
certificate duly executed by the Secretary or any Assistant
Secretary of each Seller dated as of the Closing Date,
substantially in the form attached as Exhibit 8.2(f).
Section 8.3 Conditions to Obligations of the Sellers
.. The obligations of the Sellers to consummate the transactions
contemplated hereby shall be subject to the fulfillment at or
prior to the Closing of each of the following additional
conditions:
(a) Governmental Consents. Except for the approvals required
under Laws relating to antitrust and competition, all Consents or
orders of, or registrations, declarations or filings with, all
Governmental Entities required to be made or obtained prior to
the Closing in connection with the execution, delivery or
performance hereof shall have been obtained or made, except where
the failure to have obtained or made any such Consent, order,
registration, declaration would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect on the business or financial condition of the Shareholder.
(b) Representations and Warranties. The representations and
warranties of the Purchaser set forth in Article VI (without
giving effect to any materiality or Material Adverse Effect
qualification) shall be true and correct as of the Closing Date
as though made on and as of the Closing Date (except to the
extent such representations and warranties expressly relate to an
earlier date, in which case as of such earlier date), except as
would not, individually or in the aggregate, reasonably be
expected to have a Purchaser Material Adverse Effect.
(c) Performance of Obligations by the Purchaser. The Purchaser
shall have performed and complied in all material respects with
the covenants and agreements required to be performed or complied
with by it under this Agreement, taken as a whole, at or prior to
the Closing.
(d) Transfers. The Transfers contemplated by Section 2.1 and
Section 2.2 shall have been substantially completed on or prior
to the Closing in accordance with the terms hereof.
(e) Secretary Certificate. The Shareholder shall have received
a certificate duly executed by the Secretary or any Assistant
Secretary of the Purchaser dated as of the Closing Date,
substantially in the forms attached hereto as Exhibit 8.3(e).
ARTICLE IX
CLOSING
SECTION 9.1 Closing. The closing (the "Closing") shall occur
on a date designated by the Purchaser within five (5) Business
Days following the satisfaction or waiver of the conditions set
forth in Article VIII that are contemplated to be satisfied prior
to the Closing Date, or on such other date as the Parties may
agree. The Closing shall take place at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP, 525 University Avenue, Suite
1100, Palo Alto, California 94301, or at such other place as the
Parties may agree.
Section 9.2 Sellers Closing Deliveries
.. At the Closing, the Sellers shall deliver, or cause to be
delivered, to the Purchaser the following:
(a) a certificate duly executed by authorized officers of each
Seller as to compliance with the conditions set forth in
Sections 8.2(b) and (c);
(b) stock certificates representing the Shares and accompanying
stock powers duly executed by Worldwide, evidencing the transfer
of the Shares to the Purchaser;
(c) resignations, effective as of the Closing Date, of all
officers and directors of the Company and the Company
Subsidiaries;
(d) evidence of the termination of any powers of attorney on
behalf of the Company as required in writing by the Purchaser
prior to the Closing;
(e) a certificate duly executed by the Secretary or any
Assistant Secretary of the Company, dated the Closing Date, as to
(1) the Company's charter documents and bylaws (2) the good
standing of the Company in its jurisdiction of incorporation and
in each other jurisdiction where it is qualified to do business,
and (3) the effectiveness of the resolutions of the board of
directors of the Company authorizing the execution, delivery and
performance hereof by the Company passed in connection with this
Agreement and the transactions contemplated by this Agreement,
including the Transfers, attaching copies of said resolutions;
(f) a certificate duly executed by the Secretary or any
Assistant Secretary of each Seller, dated the Closing Date, as to
(1) the good standing of each Seller in its jurisdiction of
incorporation and (2) the effectiveness of the resolutions of the
board of directors of each Seller authorizing the execution,
delivery and performance hereof by each Seller passed in
connection with this Agreement and the transactions contemplated
by this Agreement, including the Transfers, attaching copies of
said resolutions;
(g) the organizational record books, minute books and corporate
seal of the Company and each Company Subsidiary;
(h) a certificate of non-foreign status that complies with
Treasury Regulation Section 1.1445-2(b)(2);
(i) the Transition Services Agreement; and
(j) all other documents required to be entered into or delivered
by the Company and the Sellers at or prior to the Closing
pursuant hereto.
Section 9.3 Purchaser Closing Deliveries
.. On the Closing, the Purchaser shall have delivered, or caused
to be delivered, to the Shareholder the following:
(a) the Cash Purchase Price to be paid at Closing pursuant to
Section 3.2(a), paid and delivered in accordance with such
Section;
(b) a certificate of an authorized officer of the Purchaser as
to compliance with the conditions set forth in Sections 8.3(b)
and (c);
(c) a certificate by the Secretary or any Assistant Secretary of
the Purchaser, dated the Closing Date, as to (1) the good
standing of the Purchaser in its jurisdiction of incorporation
and (2) the effectiveness of the resolutions of the board of
directors of the Purchaser or committee thereof authorizing the
execution, delivery and performance hereof by the Purchaser
passed in connection with this Agreement and the transactions
contemplated by this Agreement;
(d) the Transition Services Agreement; and
(e) all other documents required to be entered into or delivered
by the Purchaser at or prior to the Closing pursuant hereto.
ARTICLE X
TERMINATION
SECTION 10.1 Termination
.. This Agreement may be terminated:
(a) in writing by mutual consent of the Parties;
(b) by written notice from the Sellers to the Purchaser, in the
event the Purchaser shall have breached or failed to perform any
of its covenants or agreements set forth in this Agreement
required to be performed by it at or prior to Closing, or if any
representation or warranty of the Purchaser shall have become
untrue, in either case, such that the conditions set forth in
Section 8.3(b) or Section 8.3(c) would not be satisfied and such
failure or breach is not cured within thirty (30) days following
the Sellers having notified the Purchaser of its intent to
terminate this Agreement pursuant to this Section 10.1(b);
(c) by written notice from the Purchaser to the Sellers, in the
event either Seller shall have breached or failed to perform any
of its covenants or agreements set forth in this Agreement
required to be performed by it at or prior to the Closing, or if
any representation or warranty of either Seller shall have become
untrue, in either case, such that the conditions set forth in
Section 8.2(b) or Section 8.2(c) would not be satisfied and such
failure or breach is not cured within thirty (30) days following
the Purchaser having notified the Sellers of its intent to
terminate this Agreement pursuant to this Section 10.1(c);
(d) by written notice by the Sellers to the Purchaser or the
Purchaser to the Sellers, as the case may be, in the event the
Closing has not occurred on or prior to June 30, 2005 (the
"Expiration Date") for any reason (including the pendency of any
claim, action, suit, investigation or other proceeding by any
Governmental Entity or other Person that questions the validity
or legality of the Acquisition or any other transaction
contemplated hereby or seeks damages in connection therewith)
other than delay or nonperformance of the Party seeking such
termination; or
(e) by written notice by the Sellers to the Purchaser or the
Purchaser to the Sellers, as the case may be, if a Governmental
Entity of competent jurisdiction or arbitral body shall have
issued an injunction, writ or restraining order or any order or
ruling and such injunction, writ, order or ruling shall have
become final and non-appealable and would prevent any of the
conditions to the obligations of the Party giving such notice
contained in Section 8.1, 8.2 or 8.3 from being satisfied;
provided, however, that in the event that such injunction, writ,
order or ruling, has been entered, the Party seeking to terminate
this Agreement pursuant to this Section 10.1(e) shall have used
its commercially reasonable efforts to remove such ruling, order,
injunction or other action.
Section 10.2 Specific Performance and Other Remedies
.. Each Party hereby acknowledges that the rights of each Party
to consummate the transactions contemplated hereby are special,
unique and of extraordinary character and that, in the event that
any Party violates or fails or refuses to perform any covenant or
agreement made by it herein, the non-breaching Party may be
without an adequate remedy at law. In the event that any Party
violates or fails or refuses to perform any covenant or agreement
made by such Party herein, the non-breaching Party or Parties
may, subject to the terms hereof and in addition to any remedy at
law for damages or other relief, institute and prosecute an
action in any court of competent jurisdiction to enforce specific
performance of such covenant or agreement or seek any other
equitable relief.
Section 10.3 Effect of Termination
.. In the event of termination of this Agreement pursuant to this
Article X, this Agreement shall forthwith become void and there
shall be no liability on the part of any Party or its partners,
officers, directors or stockholders, except for obligations under
Section 7.6 (Public Announcements), Section 12.1 (Notices),
Section 12.4 (Captions), Section 12.5 (Controlling Law;
Amendment), Section 12.6 (Consent to Jurisdiction, Etc.),
Section 12.8 (Counterparts), Section 12.11 (Integration) and
Section 12.13 (Transaction Costs) and this Section 10.3, all of
which shall survive the Termination Date. Notwithstanding the
foregoing, nothing contained in this Section 10.3 shall relieve
any Party from liability for any breach hereof occurring prior to
the Termination Date.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1 Indemnification Obligations of the Shareholder
.. From and after the Closing, the Shareholder shall indemnify,
defend and hold harmless the Purchaser Indemnified Parties from,
against, and in respect of, any and all claims, liabilities,
obligations, damages, losses, costs, expenses, penalties, fines
and judgments (at equity or at law, including statutory and
common) and damages whenever arising or incurred (including
amounts paid in settlement, costs of investigation and reasonable
attorneys' fees and expenses) arising out of or relating to
(without duplication):
(a) any breach or inaccuracy of any representation or warranty
made by any Seller in this Agreement (other than in connection
with Taxes under Section 4.15 which shall be governed solely by
Section 11.1(g)), (for purposes of this Section 11.1(a), such
representations and warranties shall be read (i) without
reference to materiality or Material Adverse Effect and (ii)
exclusive of any supplement or amendment to any Schedule whether
or not accepted by the Purchaser in accordance with Section 7.7
after the date of this Agreement;
(b) any breach of any covenant (other than covenants contained
in Section 7.2 (Inspection and Access to Information), Section
7.3 (Interim Financials), Section 7.4 (No Solicitation of
Transactions) or Section 7.5(d) (Commercially Reasonable Efforts;
Further Assurances; Cooperation) and other than covenants
relating to the payment of Taxes which are covered solely by
Section 11.1(g)), agreement or undertaking made by any Seller,
the Company or any Company Subsidiary in this Agreement, the
Company Ancillary Documents or the Shareholder Ancillary
Documents;
(c) any fraud on the part of any Seller, the Company or any
Company Subsidiary in connection with this Agreement, the Company
Ancillary Documents or the Shareholder Ancillary Documents;
(d) the ALPA Agreement;
(e) any Excluded Assets;
(f) any Excluded Liabilities;
(g) any liability of the Company or any Company Subsidiary (x)
for any Taxes of the Company or any Company Subsidiary with
respect to any Tax period or portion thereof ending on or before
the Closing Date (or for any Straddle Period to the extent
allocable (determined in a manner consistent with
Section 7.11(b)) to the portion of such period beginning before
and ending on the Closing Date) but only to the extent such Taxes
are not reflected, on an item-by-item basis, in the reserve for
Tax liability (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax
income) shown on the Company Financial Statements or the Final
Working Capital Statement, (including, without limitation, any
liability associated with the transfer of any Excluded Asset out
of the Company or any Company Subsidiary), and (y) for the unpaid
Taxes of any Person (other than the Company or a Company
Subsidiary) whether arising under Treasury Regulations section
1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or in any other
manner and (z) for Transaction Taxes;
(h) any claim or demand by a Multiemployer Plan for withdrawal
liability under Title IV of ERISA arising from, or with respect
to, actions taken by the Shareholder, the Company, any Company
Subsidiary or any ERISA Affiliate prior to the Closing; or
(i) the matters set forth on Exhibit 11.1(i).
The claims, liabilities, obligations, losses, damages,
costs, expenses, penalties, fines and judgments of the Purchaser
Indemnified Parties described in this Section 11.1 as to which
the Purchaser Indemnified Parties are entitled to indemnification
are collectively referred to as "Purchaser Losses".
Notwithstanding the foregoing, for the avoidance of doubt,
Purchaser Losses shall not include, and the Shareholder shall not
indemnify, defend and hold harmless the Purchaser Indemnified
Parties from, against, and in respect of, any and all claims,
liabilities, obligations, damages, losses, costs, expenses,
penalties, fines and judgments (at equity or at law, including
statutory and common) and damages whenever arising or incurred
(including amounts paid in settlement, costs of investigation and
reasonable attorneys' fees and expenses) arising out of or
relating to Sections 11.2(c), (d), (e), (f) (other than with
respect to a breach or inaccuracy of any representation and
warranty made by the Sellers in Section 4.29), (g), (i) and (j).
Section 11.2 Indemnification Obligations of the Purchaser
.. The Purchaser shall indemnify and hold harmless the
Shareholder Indemnified Parties from, against and in respect of
any and all claims, liabilities, obligations, losses, damages,
costs, expenses, penalties, fines and judgments (at equity or at
law, including statutory and common) and damages whenever arising
or incurred (including amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses)
arising out of or relating to:
(a) any breach or inaccuracy of any representation or warranty
made by the Purchaser in this Agreement;
(b) any breach of any covenant, agreement or undertaking made by
the Purchaser in this Agreement or in any Purchaser Ancillary
Document;
(c) obligations or liabilities described on Exhibit 11.2;
(d) any claim or demand by a Multiemployer Plan for withdrawal
liability under Title IV of ERISA arising from, or with respect
to, actions taken by the Purchaser, the Company, any Company
Subsidiary or ERISA Affiliate on or after the Closing;
(e) any Assumed Liabilities;
(f) the Assumed Debt;
(g) EWA's guarantee obligation under the Dayton Bonds as set
forth on Exhibit 1.2(j);
(h) any fraud on the part of the Purchaser in connection with
this Agreement or the Purchaser Ancillary Documents;
(i) the failure of the Company or any Company Subsidiaries to
assume and perform all of its obligations under the Collective
Bargaining Agreements listed in Exhibit 1.2(e) on or after the
Closing Date (including any obligation to engage in effects
bargaining or bargaining concerning benefit changes resulting
from the Acquisition); or
(j) any Tax refunds or credits, or other Tax benefits, realized
by the Purchaser (directly or via its ownership of the Company)
from an adjustment on a Tax Return for a period prior to the
Closing (or for an Straddle Period to the extent allocable
(determined in a manner consistent with Section 7.11(b)) to the
portion of such period ending on the Closing Date) that reduces
the Tax liability for the Company and its Subsidiaries with
respect to any Tax period or portion thereof ending after the
Closing Date (or for any Straddle Period to the extent allocable
(determined in a manner consistent with Section 7.11(b)) to the
portion of such period ending after the Closing Date), calculated
in a manner consistent with Section 11.5(b), including by way of
example and not by limitation, deductions originally taken in an
earlier year when the Company was a member of the Shareholder
group and joined in the Seller's consolidated federal income Tax
Return that are not allowed by a Governmental Entity until a
subsequent year when the Company is a member of the Purchaser
group, and items of income recognized as a post-Closing Tax
period by the Purchaser group that a Governmental Entity requires
the Shareholder group to recognize in a pre-Closing-Tax Period.
The claims, liabilities, obligations, losses, damages,
costs, expenses, penalties, fines and judgments of the
Shareholder Indemnified Parties described in this Section 11.2 as
to which the Shareholder Indemnified Parties are entitled to
indemnification are collectively referred to as "Shareholder
Losses". Notwithstanding the foregoing, for the avoidance of
doubt, Shareholder Losses shall not include, and the Purchaser
shall not indemnify, defend and hold harmless the Shareholder
Indemnified Parties from, against, and in respect of, any and all
claims, liabilities, obligations, damages, losses, costs,
expenses, penalties, fines and judgments (at equity or at law,
including statutory and common) and damages whenever arising or
incurred (including amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses)
arising out of or relating to Sections 11.1(d), (e), (f), (g),
(h) and(i).
Section 11.3 Indemnification Procedure
..
(a) Promptly following receipt by an Indemnified Party of notice
by a third party (including any Governmental Entity) of any
complaint or the commencement of any audit, investigation, action
or proceeding with respect to which such Indemnified Party may be
entitled to receive payment from the other Party for any
Purchaser Loss or any Shareholder Loss (as the case may be), such
Indemnified Party shall notify the Purchaser or the Shareholder,
as the case may be (the "Indemnifying Party"), promptly following
the Indemnified Party's receipt of such complaint or of notice of
the commencement of such audit, investigation, action or
proceeding; provided, however, that the failure to so notify the
Indemnifying Party shall relieve the Indemnifying Party from
liability hereunder with respect to such claim only if, and only
to the extent that, such failure to so notify the Indemnifying
Party results in such Indemnifying Party being materially
prejudiced as a result thereof. The Indemnifying Party shall
have the right, upon written notice delivered to the Indemnified
Party within forty-five (45) days thereafter to assume the
defense of such audit, investigation, action or proceeding,
including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of the fees and
disbursements of such counsel. In the event, however, that the
Indemnifying Party declines or fails to assume the defense of the
audit, investigation, action or proceeding on the terms provided
above or to employ counsel reasonably satisfactory to the
Indemnified Party, in either case within such 45-day period, then
the Indemnifying Party shall pay the reasonable fees and
disbursements of counsel for the Indemnified Party as incurred;
provided, however, that the Indemnifying Party shall not be
required to pay the fees and disbursements of more than one
counsel for all Indemnified Parties, and additional local
counsel, if necessary, in any single audit, investigation, action
or proceeding. In any audit, investigation, action or proceeding
for which indemnification is being sought hereunder the
Indemnified Party or the Indemnifying Party, whichever is not
assuming the defense of such action, shall have the right to
participate in such matter and to retain its own counsel at such
Party's own expense. The Indemnifying Party or the Indemnified
Party (as the case may be) shall at all times use reasonable
efforts to keep the Indemnifying Party or Indemnified Party (as
the case may be) reasonably apprised of the status of the defense
of any matter the defense of which it is maintaining and the
Parties shall cooperate in good faith with each other with
respect to the defense of any such matter. Notwithstanding
anything contained in this Section 11.3(a), the Indemnifying
Party shall not be entitled to assume the defense of any audit,
investigation, action or proceeding (and shall be liable for the
reasonable fees and disbursements of counsel of the Indemnified
Party in connection with defending such audit, investigation,
action or proceeding, which fees and disbursements shall be paid
by the Indemnifying Party in advance) if the audit,
investigation, action or proceeding (i) involves a matter where a
single counsel selected by the Indemnifying Party may not
represent the Indemnified Party and the Indemnifying Party under
applicable ethical rules involving conflicts of interest or (ii)
seeks an order, injunction or other equitable relief or relief
other than money damages against the Indemnified Party that the
Indemnified Party reasonably determines cannot be separated from
any related claim for money damages.
(b) No Indemnified Party may settle or compromise any claim or
consent to the entry of any judgment with respect to which
indemnification is being sought hereunder without the prior
written Consent of the Indemnifying Party, unless (i) the
Indemnifying Party fails to timely assume and maintain the
defense of such claim pursuant to Section 11.3(a) or (ii) such
settlement, compromise or Consent includes an unconditional
release of the Indemnifying Party and its officers, directors,
employees and Affiliates from all liability arising out of such
claim. An Indemnifying Party may not, without the prior written
Consent of the Indemnified Party, settle or compromise any claim
or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless (x) such
settlement, compromise or Consent includes an unconditional
release of the Indemnified Party and its officers, directors,
employees and Affiliates from all liability arising out of such
claim, (y) does not contain any admission or statement suggesting
any wrongdoing or liability on behalf of the Indemnified Party
and (z) does not contain any equitable order, judgment or term
that in any manner affects, restrains or interferes with the
business of the Indemnified Party or any of the Indemnified
Party's Affiliates.
(c) In the event an Indemnified Party claims a right to payment
pursuant hereto, such Indemnified Party shall send written notice
of such claim to the appropriate Indemnifying Party. Such notice
shall specify the basis for such claim. The failure by any
Indemnified Party to so notify the Indemnifying Party shall
relieve the Indemnifying Party from any liability that it may
have to such Indemnified Party with respect to any claim made
pursuant to this Section 11.3(c), only if, and only to the extent
that, such failure to so notify the Indemnifying Party results in
such Indemnifying Party being materially prejudiced as a result
thereof. Notices for claims in respect of a breach of a
representation or warranty must be delivered prior to the
expiration of the survival period for such representation or
warranty under Section 11.4. In the event the Indemnifying Party
has timely disputed its liability with respect to such claim as
provided above, as promptly as possible, such Indemnified Party
and the appropriate Indemnifying Party shall establish the merits
and amount of such claim (by mutual agreement, litigation,
arbitration or otherwise) and, within five (5)Business Days
following the final determination of the merits and amount of
such claim (by mutual agreement, litigation, arbitration or
otherwise), the Indemnifying Party shall pay to the Indemnified
Party immediately available funds in an amount equal to such
claim as determined hereunder.
Section 11.4 Claims Period
.. The Claims Periods hereunder shall begin on the date hereof
and terminate as follows:
(a) with respect to Purchaser Losses arising under
(i) Section 11.1(a) with respect to any breach or inaccuracy of
any representation or warranty set forth in Section 4.2
(Authorization), Section 4.3 (Capital Stock), and Section 4.27
(Brokers, Finders and Investment Bankers) and Article V
(collectively, the "Surviving Representations"), or
(ii) Section 11.1(b) (other than with respect to Sections 7.1
(Conduct of Business by the Company and the Company Subsidiaries
prior to the Closing), 7.5 (Commercially Reasonable Efforts;
Further Assurances; Cooperation), 7.6 (Public Announcements), 7.7
(Supplements to Schedules; Notices of Certain Events), 7.8
(Employee and Benefit Matters), 7.9(a) and (c) (Insurance), 7.14
(Consents; Novation of Government Contracts) and 7.15 (Transfer
Structure; Transfer Documentation)), Section 11.1(c), Section
11.1(d), Section 11.1(e), Section 11.1(f), Section 11.1(h) and
Section 11.1(i) (collectively, the "Surviving Obligations"), the
Claims Period shall continue indefinitely;
(b) with respect to Purchaser Losses arising under
Section 11.1(g) (collectively, the "Additional Surviving
Obligations"), the Claims Period shall continue until the
expiration of the applicable statutes of limitation;
(c) with respect to Shareholder Losses arising under (i) Section
11.2(a) with respect to any breach or inaccuracy of any
representation or warranty set forth in Section 6.2
(Authorization), (ii) under Section 11.2(b) with respect to
Sections 7.8(i), (j) and (k) (Employee and Benefit Matters) and
Sections 7.9(b) and (c) (Insurance) and (iii) under Sections
11.2(c), (d), (e), (f), (g), (h) and (i), the Claims Period shall
continue indefinitely and with respect to Shareholder Losses
arising under Section 11.2(b) (other than with respect to
Sections 7.8(i), (j) and (k) (Employee and Benefit Matters) and
Sections 7.9(b) and (c) (Insurance)) and Section 11.2(j), the
Claims Period shall continue until the expiration of the
applicable statutes of limitation; and
(d) with respect to all other Purchaser Losses or Shareholder
Losses arising hereunder the Claims Period shall terminate
eighteen (18) months after the Closing Date.
Notwithstanding the foregoing, if, prior to the close of business
on the last day of the applicable Claims Period, an Indemnifying
Party shall have been properly notified of a claim for indemnity
hereunder and such claim shall not have been finally resolved or
disposed of at such date, such claim shall continue to survive
and shall remain a basis for indemnity hereunder until such claim
is finally resolved or disposed of in accordance with the terms
hereof.
Section 11.5 Liability Limits
..
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the Purchaser Indemnified Parties shall not make a
claim against the Shareholder for indemnification under this
Article XI for Purchaser Losses unless and until the aggregate
amount of Purchaser Losses exceeds $3.75 million (the "Purchaser
Basket"), and in any event only to the extent each individual
Purchaser Loss or group of related individual Purchaser Losses
which arise out of the same event or occurrence exceeds $50,000
(or, if the event or occurrence giving rise to such Purchaser
Loss occurs after the date hereof and on or before the Closing
Date, $100,000) (the "Loss Threshold"), in which event the
Purchaser Indemnified Parties may claim indemnification for all
such Purchaser Losses to the extent such Purchaser Losses exceed
$1.5 million (the "Purchaser Deductible"); provided, however, (i)
the Surviving Obligations, the Additional Surviving Obligations
and the Surviving Representations shall not be subject to the
Purchaser Basket, the Loss Threshold or the Purchaser Deductible,
(ii) the first $5 million of Special Losses shall not be subject
to any of the liability limits in this Section 11.5(a)
(including, for the avoidance of doubt, the Purchaser Basket, the
Loss Threshold, the Purchaser Deductible and the Purchaser Cap)
and indemnification for the first $5 million of Special Losses
shall not be counted for purposes of determining whether the
Purchaser Cap has been exceeded and (iii) Special Losses
exceeding $5 million (and only to the extent such Special Losses
exceed $5 million) shall be counted for purposes of determining
whether the Purchaser Cap has been exceeded (but, for the
avoidance of doubt, shall not be subject to the Purchaser Basket,
the Loss Threshold or the Purchaser Deductible). The total
aggregate amount of liability of the Shareholder for Purchaser
Losses shall be limited to $25 million (the "Purchaser Cap");
provided, however, that the Surviving Obligations (other than
Special Losses in excess of $5 million), the Additional Surviving
Obligations and the Surviving Representations shall not be
subject to the Purchaser Cap.
(b) Calculation and Mitigation of Losses. In calculating
amounts payable to an Indemnified Party, the amount of the
Purchaser Losses or Shareholder Losses, as the case may be, (for
purposes of this Section 11.5(b) individually a "Loss" and
collectively "Losses" as the context requires) (i) shall not be
duplicative of any other Loss for which an indemnification claim
has been made; (ii) shall be computed net of any amounts actually
recovered by such Indemnified Party under any insurance policy
with respect to such Loss, after adjusting for any premium
increases relating to such Loss; (iii) shall be reduced to take
account of any net Tax benefit realized by such Indemnified Party
arising from the incurrence or payment of any indemnity payments
hereunder; and (iv) shall be reduced by any reversal of such Loss
in a subsequent period except to the extent that the delay in
recovery or reversal of such Loss creates an interest expense to
the Indemnified Party. In computing the amount of any such Tax
benefit, the Indemnified Party shall be deemed to recognize all
other items of income, gain, loss, deduction or credit after the
incurrence or payment of any indemnified Loss. Each Indemnified
Party shall be obligated to use its commercially reasonable
efforts to mitigate to the fullest extent practicable the amount
of any Loss for which it is entitled to seek indemnification
hereunder, and the costs of all such litigation efforts shall
constitute Losses for purposes of the provisions set forth in
this Article XI.
(c) No Special Damages. There shall be no indemnification
pursuant to this Agreement for any special, incidental, punitive,
consequential, or similar damages solely with respect to claims
made under Sections 11.1(a), 11.1(b), 11.2(a) or 11.2(b). There
shall be no indemnification pursuant to this Agreement for any
incidental, consequential or similar damages solely with respect
to 11.1(i).
(d) Other Adjustments. Notwithstanding anything to the contrary
contained in this Agreement in the event that any fact, event or
circumstance which results in an adjustment to the Purchase Price
(including the calculations contemplated by Sections 3.3 and 3.4
hereof) would also constitute a breach of or inaccuracy in any of
the representations, warranties, covenants or agreements of an
Indemnifying Party under this Agreement, the Indemnifying Party
shall have no obligation to indemnify any Indemnified Party with
respect to such breach or inaccuracy to the extent the Purchase
Price has been adjusted in respect thereof.
(e) The Parties (and, by their acceptance of the benefits under
this Agreement, each Purchaser Indemnified Party and Shareholder
Indemnified Party) hereby agree that their sole and exclusive
remedy after the Closing with respect to any and all Losses
relating to any or all of this Agreement, the Company Business,
the Company, the Company Subsidiaries and the Shares (other than
Losses of or arising from fraud) shall be pursuant to the
indemnification provisions set forth in this Article XI.
Section 11.6 Investigations; Tax Treatment
..
(a) The respective representations and warranties of the Parties
contained in this Agreement or any certificate or other document
delivered by any Party at or prior to the Closing and the rights
to indemnification set forth in Article XI shall not be deemed
waived or otherwise affected by any investigation made, or
knowledge acquired, by a Party.
(b) The Parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for Tax purposes as
an adjustment to the Purchase Price unless otherwise required by
applicable Law.
Section 11.7 Sellers' Representations and Warranties
.. The Parties acknowledge and agree that: (a) except for the
representations and warranties of the Sellers expressly contained
in Articles IV and V, neither the Sellers nor any of their
Affiliates, nor any of their respective directors, officers,
employees, agents or representatives, nor any other Person acting
on behalf of any foregoing Person, makes any representation or
warranty, express or implied; (b) no representations or
warranties are made in the Ancillary Documents. Notwithstanding
anything to the contrary in this Agreement or the Ancillary
Documents, the Purchaser acknowledges and agrees that the Sellers
make no representation or warranty with respect to, and nothing
contained in this Agreement (including Articles IV and V hereof),
in the Ancillary Documents or in any other agreement, document or
instrument to be delivered in connection herewith or therewith is
intended or shall be construed to be a representation or warranty
(express or implied) of any of the Sellers, for any purpose of
this Agreement (including this Article XI), the Ancillary
Documents or any other agreement, document or instrument to be
delivered in connection herewith or therewith, in respect of (x)
the Preliminary Working Capital Statement and the Final Working
Capital Statement, and (y) any financial reports, statements and
data delivered or made available to the Sellers between the date
hereof and the Closing Date whether pursuant to Section 7.3
hereof or otherwise.
Section 11.8 Successors or Assigns
.. The indemnification obligations of the Shareholder contained
in this Article XI shall be binding upon the successors and
assigns of the Shareholder and, as a condition to the
consummation of any acquisition transaction, shall be expressly
assumed by any such successor or assign, effective immediately
upon such Person becoming a successor or assign of the
Shareholder pursuant to documentation in form and substance
reasonably acceptable to the Purchaser.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1 Notices
.. All notices, communications and deliveries hereunder shall be
made in writing signed by or on behalf of the Party making the
same, shall specify the Section hereunder pursuant to which it is
given or being made, and shall be delivered personally or by UPS
Next Day Air (with evidence of delivery and postage and other
fees prepaid) as follows:
To the Purchaser
or Parent: United Parcel Service, Inc.
55 Glenlake Parkway
Atlanta, Georgia 30328
Attn: Michael S. O'Farrell
with a copy to: United Parcel Service, Inc.
55 Glenlake Parkway
Atlanta, Georgia 30328
Attn: Legal Department
and to: King & Spalding LLP
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attn: William R. Spalding, Esq.
To the Sellers: CNF Inc.
3240 Hillview Avenue
Palo Alto, CA 94304
Attn: General Counsel
Menlo Worldwide, LLC
One Lagoon Drive
Suite 400
Redwood City, CA 94065
Attn: Legal Department
with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, CA 90071-3144
Attn: Michael Gisser, Esq.
or to such other representative or at such other address of a
party as such party may furnish to the other parties in writing.
Any such notice, communication or delivery shall be deemed given
or made (a) on the date of delivery, if delivered in person, (b)
on the first (1st) Business Day after delivery to a UPS customer
service representative if sent by UPS Next Day Air.
Section 12.2 Schedules and Exhibits
.. The Schedules and Exhibits are hereby incorporated into this
Agreement and are hereby made a part hereof as if set out in full
herein.
Section 12.3 Assignment; Successors in Interest
.. Notwithstanding anything contained in this Agreement to the
contrary, no assignment or transfer by any Party of such Party's
rights and obligations hereunder shall be made except with the
prior written Consent of the other Parties; provided that the
Purchaser shall, without the obligation to obtain the prior
written Consent of any other Party, be entitled to assign this
Agreement or all or any part of its rights or obligations
hereunder, including the assignment of the Purchaser's right to
purchase the Shares and the Conveyed Assets or portions thereof
or otherwise consummate the transactions contemplated herein or
in the Transfer Documentation, to one or more Affiliates of the
Purchaser; provided further that no such assignment by the
Purchaser shall release the Purchaser from any of its obligations
hereunder or substitute any such assignee as a party hereto.
This Agreement shall be binding upon and shall inure to the
benefit of the Parties and their respective successors and
permitted assigns, and any reference to a Party shall also be a
reference to the successors and permitted assigns thereof.
Section 12.4 Captions
.. The titles, captions and table of contents contained herein
are inserted herein only as a matter of convenience and for
reference and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.
Section 12.5 Controlling Law; Amendment
.. This Agreement shall be governed by and construed and enforced
in accordance with the internal Laws of the State of New York
without reference to its choice of law rules (other than Section
5-1401 of the New York General Obligations Law). This Agreement
may not be amended, modified or supplemented except by written
agreement of the Parties.
Section 12.6 Consent to Jurisdiction, Etc
.. Each Party hereby irrevocably agrees that any Legal Dispute
shall be brought only to the exclusive jurisdiction of the courts
of the State of New York or the federal courts located in the
State of New York, and each Party hereby consents to the
jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding that is brought in any
such court has been brought in an inconvenient forum. During the
period a Legal Dispute that is filed in accordance with this
Section 12.6 is pending before a court, all actions, suits or
proceedings with respect to such Legal Dispute or any other Legal
Dispute, including any counterclaim, cross-claim or interpleader,
shall be subject to the exclusive jurisdiction of such court.
Each Party hereby irrevocably waives the right to a trial by
jury. In addition, each Party hereby waives, and shall not
assert as a defense in any Legal Dispute, that (a) such Party is
not subject thereto, (b) such action, suit or proceeding may not
be brought or is not maintainable in such court, (c) such Party's
property is exempt or immune form execution, (d) such action,
suit or proceeding is brought in an inconvenient forum or (e) the
venue of such action, suit or proceeding is improper. A final
judgment in any action, suit or proceeding described in this
Section 12.6 following the expiration of any period permitted for
appeal and subject to any stay during appeal shall be conclusive
and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by applicable Laws.
Section 12.7 Severability
.. Any provision hereof that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by Law, each Party hereby
waives any provision of law that renders any such provision
prohibited or unenforceable in any respect.
Section 12.8 Counterparts
.. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms hereof
to produce or account for more than one of such counterparts.
Section 12.9 Enforcement of Certain Rights
.. Nothing expressed or implied herein is intended, or shall be
construed, to confer upon or give any Person other than the
Parties, and their successors or permitted assigns, any right,
remedy, obligation or liability under or by reason of this
Agreement, or result in such Person being deemed a third-party
beneficiary hereof (except as provided in Sections 11.5(e) and
12.14(a)).
Section 12.10 Waiver
.. Any agreement on the part of a Party to any extension or
waiver of any provision hereof shall be valid only if set forth
in an instrument in writing signed on behalf of such Party. A
waiver by a Party of the performance of any covenant, agreement,
obligation, condition, representation or warranty shall not be
construed as a waiver of any other covenant, agreement,
obligation, condition, representation or warranty. A waiver by
any Party of the performance of any act shall not constitute a
waiver of the performance of any other act or an identical act
required to be performed at a later time.
Section 12.11 Integration
.. This Agreement and the documents executed pursuant hereto
supersede all negotiations, agreements and understandings among
the Parties with respect to the subject matter hereof (except for
that certain Confidentiality Agreement, dated as of September 3,
2004, by and between Parent and the Shareholder which shall
survive termination of this Agreement) and constitute the entire
agreement among the Parties with respect thereto.
Section 12.12 Cooperation Following the Closing
.. Following the Closing, each Party shall deliver to the other
Parties such further information and documents and shall execute
and deliver to the other Parties such further instruments and
agreements as any other Party shall reasonably request to
consummate or confirm the transactions provided for herein, to
accomplish the purpose hereof or to assure to any other Party the
benefits hereof.
Section 12.13 Transaction Costs
.. Except as provided above or as otherwise expressly provided
herein, (a) the Purchaser shall pay its own fees, costs and
expenses incurred in connection herewith and the transactions
contemplated hereby, including the fees, costs and expenses of
its financial advisors, accountants and counsel; and (b) the
Shareholder shall pay its own fees, costs and expenses incurred
in connection herewith and the transactions contemplated hereby,
and shall pay all fees, costs and expenses of the Company and the
fees, costs and expenses of financial advisors, accountants and
counsel to the Shareholder, Worldwide and the Company. All fees,
costs and expenses related to or arising in connection with
Transfers of the Conveyed Assets, the Excluded Assets, the
Assumed Liabilities, the Excluded Liabilities, the Transferred
Employees, the Logistics Contract Employees or the Excluded
Employees to or from the Company and the Company Subsidiaries
shall be borne by the Sellers.
Section 12.14 Parent Guarantee.
(a) Parent hereby unconditionally and irrevocably guarantees to
the Sellers, each Seller Indemnified Party and their respective
successors and permitted assigns the due and punctual payment in
full of each obligation (each, an "Obligation" and collectively,
the "Obligations") of the Purchaser under this Agreement and the
Purchaser Ancillary Documents. Parent agrees that if for any
reason whatsoever the Purchaser shall fail or be unable to duly,
punctually and fully pay any Obligation, Parent shall
unconditionally pay the Obligation. Nothing shall discharge or
satisfy the liability of Parent under the guarantee contained in
this Section 12.14 except the full payment of the Obligations.
The guarantee contained in this Section 12.14 constitutes a
guarantee of payment when due and not of collection.
(b) Subject to Section 12.14(d), the obligations of Parent under
this Section 12.14 shall not be subject to any reduction,
limitation, impairment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of any Obligation.
Without limiting the generality of the foregoing, the obligations
of Parent under the guarantee contained in this Section 12.14
shall not be discharged or impaired or otherwise affected by, (i)
the failure of any Seller to assert any claim or demand or to
enforce any right or remedy under this Section 12.14; (ii) any
default, failure or delay, willful or otherwise, in the payment
of all or any part of any Obligation; or (iii) any other act or
omission or delay to do any other act which might in any manner
or to any extent vary the risk of Parent or which would otherwise
operate as a discharge of a guarantor as a matter of law, and
Parent hereby waives (x) all presentments, demands for payment to
the Purchaser, notices of protest for non-payment, notices of
default, any other notice, any proof of reliance by any Seller
upon the guarantee contained in this Section 12.14 or acceptance
of the guarantee contained herein and all other formalities; (y)
any rights to set-off, recoupments, claims, counterclaims; and
(z) any right to revoke or terminate this guarantee.
(c) In furtherance of the foregoing and not in limitation of any
other right which the Sellers may have at law or in equity
against Parent by virtue of the guarantee contained in this
Section 12.14, upon failure of the Purchaser to make any payment
pursuant to any Obligation, when and as the same shall become due
whether at closing, under any provision contained in this
Agreement, any Ancillary Document or otherwise, Parent shall pay
such Obligation.
(d) Notwithstanding anything to the contrary set forth in this
Section 12.14, Parent shall have the right to assert as a defense
to any of its obligations hereunder any defense or exercise of
rights that would be available to it had it entered into the
Obligations directly in the place of the Purchaser.
[Signature Page to Follow]
IN WITNESS WHEREOF, the Parties have caused this
Agreement to be duly executed, as of the date first above
written.
UNITED PARCEL SERVICE OF AMERICA, INC.
By: /s/ Thomas H. Delbrook
_______________________________
Name: Thomas H. Delbrook
_______________________________
Title: Assistant Treasurer
_______________________________
UNITED PARCEL SERVICE, INC.
By: /s/ Thomas H. Delbrook
_______________________________
Name: Thomas H. Delbrook
_______________________________
Title: Assistant Treasurer
_______________________________
CNF INC.
By: /s/ W. Keith Kennedy, Jr.
_________________________________
Name: W. Keith Kennedy, Jr.
________________________________
Title: Chairman of the Board
________________________________
MENLO WORLDWIDE, LLC
By: CNF Inc., its managing member
By: /s/ W. Keith Kennedy, Jr.
_________________________________
Name: W. Keith Kennedy, Jr.
________________________________
Title: Chairman of the Board
________________________________