Bowthorpe Stock Purchase Agreement

BOWTHORPE PLC


BOWTHORPE B.V.


BOWTHORPE INTERNATIONAL INC.


BOWTHORPE GMBH


SALE OF SHARES OF


REDPOINT THERMALLOY LIMITED


EL.BO.MEC. S.R.L.


THERMALLOY (MALAYSIA) SDN BHD


THERMALLOY LIMITED (HONG KONG)


THERMALLOY INVESTMENT COMPANY


CURAMIK ELECTRONICS GMBH


TO


AAVID THERMAL TECHNOLOGIES, INC.


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STOCK PURCHASE AGREEMENT
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Dated as of August 23, 1999


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TABLE OF CONTENTS
PAGE 1. Sale and Purchase. .....................................................................1
1.1 Sale and Purchase of the Shares................................................1
1.2 Closing........................................................................2
1.3 Allocation of Purchase Price..................................................3
1.4 Post-Closing Purchase Price Calculation........................................4
1.5 Inventory Purchase Price Adjustment............................................5


2. Representations and Warranties of the Sellers...........................................6
2.1 Authorization, etc.............................................................6
2.2 Corporate Status...............................................................7
2.3 No Conflicts, Consents and Approvals, etc......................................7
2.4 The Shares.....................................................................8
2.5 Financial Statements and Other Information.....................................8
2.6 Absence of Undisclosed Liabilities.............................................9
2.7 Assets, Properties, etc.......................................................10
2.8 Contracts.....................................................................12
2.9 Employee Benefit Matters......................................................14
2.10 Intellectual Property.........................................................19
2.11 Governmental Authorizations; Compliance with Law..............................21
2.12 Litigation....................................................................21
2.13 Taxes.........................................................................21
2.14 Absence of Changes............................................................26
2.15 Insurance.....................................................................28
2.16 Environmental Matters.........................................................28
2.17 Affiliate Transactions........................................................30
2.18 Customers.....................................................................30
2.19 Suppliers; Raw Materials......................................................31
2.20 Product Warranties............................................................31
2.21 Absence of Certain Business Practices.........................................31
2.22 Banking and Agency Arrangements...............................................31
2.23 Brokers.......................................................................32
2.24 Foreign Subsidiaries..........................................................32
2.25 Disclosure....................................................................32


3. Representations and Warranties of the Purchaser........................................32
3.1 Authorization, etc............................................................32
3.2 Corporate Status..............................................................33
3.3 No Conflicts, Consents and Approvals, etc.....................................33
3.4 Bank Financing Commitment.....................................................33
3.5 Litigation....................................................................33
3.6 Purchase for Investment.......................................................34


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3.7 Brokers.......................................................................34
3.8 Purchaser's Investment Plan...................................................34


4. Certain Covenants......................................................................34
4.1 Obligations of Both the Parties...............................................34
4.2 Obligations of the Sellers....................................................35
4.3 Payment of Transaction-Related Taxes and Expenses.............................38
4.4 Taxes.........................................................................38
4.5 Publicity.....................................................................45
4.6 Modification of Disclosure Schedules..........................................46
4.7 Contact with Employees, Customers and Suppliers...............................46
4.8 Credit Support Arrangements...................................................46
4.9 Intercompany Accounts.........................................................47
4.10 Target Assets.................................................................47
4.11 No Solicitation...............................................................47
4.12 Discharge of Indebtedness and Liens...........................................48
4.13 Confidentiality...............................................................48
4.14 Insurance.....................................................................49
4.15 Non-Competition...............................................................49
4.16 Remediation of Existing Environmental Conditions..............................51


5. Employees and Employee Benefit Plans...................................................54
5.1 Compensation and Benefits of Target Company Employees.........................54
5.2 Savings Plan..................................................................57
5.3 No Third Party Beneficiaries..................................................58


6. Conditions Precedent...................................................................58
6.1 General.......................................................................58
6.2 Conditions to Obligations of Both Parties.....................................58
6.3 Conditions to Obligations of the Sellers......................................59
6.4 Conditions to Obligations of the Purchaser....................................59


7. Indemnification........................................................................60
7.1 Survival of Representations and Warranties....................................60
7.2 Indemnification...............................................................60


8. General Provisions.....................................................................64
8.1 Modification; Waiver..........................................................64
8.2 Entire Agreement..............................................................64
8.3 Exclusivity of Representations and Warranties and
Indemnification Provision; Relationship Between the Parties...................64
8.4 No Additional Rights or Remedies under Certain Agreements.....................65
8.5 Termination...................................................................65
8.6 Expenses......................................................................67


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8.7 Further Actions...............................................................67
8.8 Post-Closing Access...........................................................67
8.9 Notices.......................................................................67
8.10 Assignment....................................................................68
8.11 No Third Party Beneficiaries..................................................69
8.12 Counterparts..................................................................69
8.13 Interpretation................................................................69
8.14 Governing Law.................................................................70
8.15 Consent to Jurisdiction, etc..................................................70
8.16 Waiver of Jury Trial..........................................................70


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SCHEDULES


SCHEDULE DESCRIPTION


SELLERS' SCHEDULES


Schedule 2.1 Authorization, etc. Schedule 2.2 Corporate Status Schedule 2.3 Conflicts; Consents Schedule 2.4 Ownership of Shares Schedule 2.5 Financial Statements Schedule 2.6 Absence of Undisclosed Liabilities Schedule 2.7 Assets, Property, etc. Schedule 2.8 Contracts Schedule 2.9 Employee Benefit Matters Schedule 2.10 Intellectual Property Schedule 2.11 Governmental Permits Schedule 2.12 Litigation Schedule 2.13 Tax Matters Schedule 2.14 Absence of Certain Changes Schedule 2.15 Insurance Policies Schedule 2.16 Environmental Matters Schedule 2.17 Affiliate Transactions Schedule 2.18 Customers Schedule 2.19 Suppliers Schedule 2.20 Product Warranties Schedule 2.21 Absence of Certain Business Practices Schedule 2.22 Banking and Agency Arrangements Schedule 4.8 Credit Support Arrangements Schedule 4.10 Target Assets


PURCHASER'S SCHEDULES


Schedule 3.3 Conflicts; Consents Schedule 5.1 Target Company Group Benefit Plans Not Assumed by the
Purchaser


SELLERS' AND PURCHASER'S SCHEDULES


Schedule 1.3 Preliminary Allocation of Purchase Price Schedule 4.2.1 Liabilities Schedule Schedule 4.3 Payment of Transaction Related Taxes and Expenses Schedule 6.2.1 Required Third-Party Consents


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EXHIBITS


Exhibit 1.2 Form of Local Purchase Agreement Exhibit 2.9 Foreign Benefit Plan Representations Exhibit 2.24 Foreign Subsidiary Representations Exhibit 4.5 Press Release Exhibit 4.10 Target Asset Purchase Agreement Exhibit 5.1 UK Pension Transfer Provisions


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DEFINED TERMS


SECTION


Aavid Group 4.15(b) Accountant Inventory Statement 1.5(d) Accountant Statement 1.4(c) Active Employees 5.1(a) Active Savings Participants 5.2(b) Affiliate 2.17 Affiliated Group 2.13(a) Ancillary Agreements 2.1 Assumed Liabilities Adjustment 1.1 Attached Tax Information 4.4.3(c)(i) Benefit Plan 2.9 Bowthorpe B.V. Preamble Bowthorpe GmbH Preamble Bowthorpe International Preamble Bowthorpe plc Preamble Business 2.5 Business day 7.2.3(a) capital stock Preamble CIBC 3.4 Closing 1.2 Closing Date 1.2 Closing Date Inventory Statement 1.5(c) Closing Date Statement 1.4(b) Code 2.9 Combined Income Tax Returns 4.4.2(c) Combined Income Taxes 4.4.2(c) Company Contracts 2.8 Company Permits 2.11 Company Y2K Plan 2.10(b) Computer Systems 2.10(b) Confidentiality Agreement 4.2.2 Contracts 2.8 Credit Support Arrangements 4.8 Curamik Preamble Damages 7.2.1 Department 2.9 ElBoMec Preamble Employee 2.9 Employment Agreement 2.9 Environmental Conditions 4.16(a) Environmental Law 2.16(a)


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SECTION


ERISA 2.9 ERISA Affiliate 2.9 Estimated Assumed Liabilities Adjustment 1.2 Exclusivity Period 4.11(a) Financial Statements 2.5(a) French Employees 2.9.3 GAAP 2.5(a) German Employees 2.9.3 Hazardous Substance 2.16(a) HSR Act 2.3(b) Indemnitee 7.2.3 Indemnitor 7.2.3 Intellectual Property 2.10(a) Inventory Adjustment 1.5(b) Inventory Difference 1.5(b) Inventory Revaluation 1.5(b) IRS 2.9 Leased Real Property 2.7(a) Leases 2.7(c) Liabilities Schedule 4.2.1 Liens 2.3(a) Local Purchase Agreements 1.2(a) Malaysian Purchase Price 1.2 Malaysian Shares 1.2 Material Adverse Effect 2.2 Multi-Employer Plan 2.9 New Inventory Value 1.5(a) New 1998 Inventory Value 1.5(a) 1998 Inventory Adjustment 1.5(b) 1999 Combined Income Taxes 4.4.1(b) 1999 Pro Forma Return 4.4.1(b) 1999 Tax 4.4.1(b) Non-Company Affiliate 4.4.1 Order 4.1.2(b) Organizational Documents 2.1 PBGC 2.9 Pension Plan 2.9 pension scheme 2.9.3 Permitted Liens 2.7(a) Person 8.13 Pre 1999 Period 4.4.2(c) Profit Adjustment` 1.5(b) Property 4.16(b) Purchase Price 1.1


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SECTION


Purchaser Preamble Purchaser Statement 1.4(b) Purchaser Statement of Objection 1.5(c) Purchaser's Investment Plan 5.2(a) Redpoint Preamble Restricted Activities 4.15(a) Restricted Period 4.15(a) Restrictive Covenants 4.15(d) Returns 2.13(dd) Reviewing Accountants 1.4(c) Section 338 Taxes 4.4.2(c) Seller Group Employee 2.9(a) Seller Indemnified Group 7.2.2 Seller Savings Plan 5.1.2(a) Seller Statement 1.5(c) Sellers Preamble Sellers Representative 1.2(b) Shadow ACT Regulation 2.13(w) Shares Preamble Stand-alone Taxes 4.4.2(c) Statement of Objection 1.4(b) Straddle Period Return 4.4.3(b) Subsidiary Purchaser 1.1 Tangible Assets 2.7(a) Target Asset Purchase Agreement 4.10 Target Assets 4.10 Target Companies Preamble Target Company Group 2.1 Target Company Group Benefit Plan 2.9 Tax Dispute Accountants 4.4.7 Tax Dispute Resolution Mechanism 4.4.7 Taxes 2.13(dd) Thermal Management Business 4.15(a) Thermalloy Hong Kong Preamble Thermalloy Investment Preamble Thermalloy Malaysia Preamble Transfer Date 5.1.2(b) Treasury Regulations 2.13(l) TNRCC 4.16(a) VCP 4.16(a) VOCs 4.16(a) Welfare Plan 2.9 Y2K Compliant 2.10(b)


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STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of August 23, 1999, among Bowthorpe plc, a company formed under the laws of England and Wales ("BOWTHORPE PLC"), Bowthorpe B.V., a Netherlands corporation ("BOWTHORPE B.V."), Bowthorpe International Inc., a Delaware corporation ("BOWTHORPE INTERNATIONAL"), Bowthorpe GmbH, a German corporation ("BOWTHORPE GMBH"; together with Bowthorpe plc, Bowthorpe B.V. and Bowthorpe International, the "SELLERS"), and Aavid Thermal Technologies, Inc., a Delaware corporation (the "PURCHASER").


WHEREAS, Bowthorpe plc beneficially owns and controls all of the outstanding shares of Redpoint Thermalloy Limited, a company formed under the laws of England and Wales ("REDPOINT"); Bowthorpe B.V. beneficially owns and controls all of the outstanding share quota of El.Bo.Mec. S.r.l., an Italian corporation ("ELBOMEC"), and all of the outstanding ordinary shares of Thermalloy (Malaysia) Sdn Bhd, a Malaysian corporation ("THERMALLOY MALAYSIA"); Bowthorpe International beneficially owns and controls all of the outstanding ordinary shares of Thermalloy Limited (Hong Kong), a Hong Kong corporation ("THERMALLOY HONG KONG"), and all of the outstanding capital stock of Thermalloy Investment Company, a Texas corporation ("THERMALLOY INVESTMENT"); Bowthorpe GmbH owns 65.2% of the outstanding company shares of Curamik Electronics GmbH, a German corporation ("CURAMIK"); (together with Redpoint, ElBoMec, Thermalloy Malaysia, Thermalloy Hong Kong and Thermalloy Investment, the "TARGET COMPANIES");


WHEREAS, each Seller desires to sell all of the shares, share capital, ordinary shares, quota, company shares or capital stock, as the case may be, of each of the Target Companies owned by it (collectively the "SHARES") to the Purchaser and the Purchaser desires to purchase the Shares. For purposes of this Agreement, shares, share capital, ordinary shares, company shares, capital stock or any other equity interest of any Target Company shall hereinafter be referred to generally as "CAPITAL STOCK".


NOW, THEREFORE, the parties hereto agree as follows:


1. SALE AND PURCHASE.


1.1 SALE AND PURCHASE OF THE SHARES. Subject to the terms and conditions of this Agreement, at the Closing (as defined in Section 1.2), each Seller will sell the Shares owned by it, and the Purchaser will purchase (either directly or by a designated subsidiary to which Purchaser's rights hereunder are assigned in accordance with Section 8.10 hereof (a "SUBSIDIARY PURCHASER")) the Shares, for an aggregate purchase price (the "PURCHASE PRICE") equal to $79,500,000 less the sum of (A) any liabilities set forth on the Liabilities Schedule (as defined in Section 4.2.1 below) which remain outstanding on the Closing Date as permitted by this Agreement, after giving effect to payments pursuant to Section 4.12, (B) the amount, if any, by which (pound)1,313,000 exceeds the amount of the Target Company Group overdraft facilities paid by the Sellers pursuant to Section 4.12 (the amount set forth in clauses (A) and (B) being referred to as the "ASSUMED LIABILITIES ADJUSTMENT"), (C) the Inventory Adjustment (as defined below) and (D) the Profit Adjustment (as defined below),


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payable as set forth below in Section 1.2. That portion of the Shares comprising Redpoint capital stock shall be sold with full title guarantee free from all Liens (as defined below), charges and encumbrances, except Liens arising by or through the Purchaser or any of its Affiliates.


1.2 CLOSING. The closing of the sale and the purchase of the Shares (the "CLOSING") will take place at the offices of Fulbright & Jaworski L.L.P., New York, New York 10103, at 10:00 A.M., local time, no later than the second business day after satisfaction of the latest to occur of the conditions set forth in Section 6 hereof (other than the delivery of the officers' certificates referred to therein and other than any conditions which are waived in accordance with said Section) or such other time, place or date as the Sellers and Purchaser may mutually agree. Failure to consummate the transactions provided for in this Agreement on the date and time selected pursuant to this Section 1.2 shall not, except as permitted by Section 8.5 hereof, result in the termination of this Agreement and shall not relieve any party to this Agreement of any obligation hereunder. The date on which the Closing shall occur is hereinafter referred to as the "CLOSING DATE". At the Closing:


(a) each Seller will deliver to the Purchaser (i) a stock certificate
or stock certificates representing the Shares owned by it, endorsed or
accompanied by stock powers or transfer forms in favor of the Purchaser or
duly executed in blank, or an indemnity agreement in form reasonably
satisfactory to Purchaser, indemnifying Purchaser against loss resulting
from lost certificates, and accompanied by all requisite stock transfer
stamps or (ii) in the case of a Target Company organized outside the United
States, such other evidence of ownership or instruments of transfer as are
customary, if any, in the jurisdiction of organization of such Target
Company and sufficient to convey ownership of the shares of capital stock
of such Target Company to the Purchaser or to the Purchaser's designated
subsidiaries, and in the case of ElBoMec, Thermalloy Hong Kong and Curamik
pursuant to stock purchase agreements, in substantially the form attached
hereto as EXHIBIT 1.2, to be entered into as of the Closing Date hereof
between the relevant Seller and the Purchaser or such designated
subsidiaries of the Purchaser (the "LOCAL PURCHASE AGREEMENTS");


(b) in relation to Redpoint, the Sellers will deliver, or cause to be
delivered, in addition to those documents referred to in Section 1.2(a), a
copy of any power of attorney under which this Agreement, or any of the
transfers or other documents referred to or required by this Section 1.2,
is executed and evidence to the Purchaser's reasonable satisfaction of the
authority of any person signing on behalf of any corporate entity, (ii)
duly executed transfers in favor of the Purchaser or as it directs in
respect of the shares in Redpoint's subsidiary, Redpoint Limited, which are
not registered in the name of Redpoint together with the share certificates
for the shares in question and (iii) powers of attorney in a form agreed
between the parties duly executed by the registered holders of shares in
Redpoint for the purpose of securing the interest of the Purchaser in the
Shares in Redpoint pending their registration into the names of the
Purchaser and/or its nominee(s);


(c) in relation to Thermalloy Malaysia, the Sellers will deliver, or
cause to be delivered, in addition to those documents referred to in
Section 1.2(a), a copy of any power


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of attorney or other authority under which the transfer of the Shares
in Thermalloy Malaysia is executed and evidence to the Purchaser's
reasonable satisfaction of the authority of any person signing on
behalf of Bowthorpe B.V.; and


(d) the Purchaser will deliver, or cause to be delivered, an
amount equal to $79,500,000 less the sum of (I) the Estimated Assumed
Liabilities Adjustment (as defined below), (II) the Inventory
Adjustment, as finally determined pursuant to Section 1.5 below, and
(III) the Profit Adjustment, as finally determined pursuant to Section
1.5 below, to Bowthorpe plc, as representative of the Sellers (the
"SELLERS REPRESENTATIVE"), by wire transfer of immediately available
funds to a previously designated account of the Sellers Representative
on behalf of the Sellers.


At least five (5) business days prior to the Closing Date, the Sellers shall prepare and deliver to Purchaser a good faith estimate of the Assumed Liabilities Adjustment as of the Closing Date (the "ESTIMATED ASSUMED LIABILITIES ADJUSTMENT"), prepared in U.S. Dollars ...