AGREEMENT AND PLAN OF MERGER
AMONG CULLMAN VENTURES, INC.,
CERTAIN PRINCIPAL SHAREHOLDERS,
THE XXXX CORPORATION
AND
XXXX ACQUISITION CORP.
Dated as of September 29, 1999
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS...........................................1
1.1 Definitions.....................................1
1.2 Other Defined Terms............................10
1.3 Accounting Terms...............................12
1.4 Singular and Plural Forms......................12
ARTICLE II THE MERGER...........................................12
2.1 The Merger.....................................12
2.2 Constituent Corporations.......................12
2.3 Effective Time.................................13
2.4 Certificate of Incorporation...................13
2.5 By-Laws........................................13
2.6 Officers and Directors.........................13
ARTICLE III CONVERSION OF SHARES.................................13
3.1 Conversion.....................................13
3.2 Payment Fund...................................14
3.3 Expenses Escrow Fund...........................14
3.4 Indemnification Escrow Fund....................15
3.5 Purchase Price Adjustment......................16
3.6 Payments.......................................19
3.7 Dissenting Shares..............................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.......................................20
4.1 Organization and Good Standing; Corporate
Records......................................20
4.2 Power and Authority............................21
4.3 Capitalization.................................21
4.4 No Violation...................................22
4.5 Financial Statements; No Undisclosed Liabilities23
4.6 Absence of Certain Changes or Events...........23
4.7 Leases of Personal Property; Material Contracts;
No Default...................................25
4.8 Intellectual Property..........................26
4.9 Year 2000 Compliance...........................29
4.10 Actions........................................30
4.11 Compliance with Laws...........................30
4.12 Taxes..........................................30
4.13 Title to Property..............................34
4.14 Insurance......................................34
4.15 Approvals......................................35
4.16 Employee Benefit Plans; ERISA..................35
4.17 Subsidiaries...................................38
4.18 Environmental Matters..........................39
4.19 Labor Matters..................................40
4.20 Personal Property..............................40
4.21 Real Property..................................41
4.22 Distributors and Customers.....................41
4.23 Accounts Receivable; Escheat Property..........42
4.24 Inventory......................................42
4.25 Safe Deposit Boxes and Bank Accounts...........43
4.26 Broker's or Finder's Fees......................43
4.27 AGA LLC and CVI................................43
4.28 Expenses Escrow Fund Sufficient................43
4.29 Interpretive Provision.........................44
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND ACQUISITION SUB.................44
5.1 Organization and Good Standing.................44
5.2 Power and Authority............................44
5.3 No Violation...................................45
5.4 Brokerage......................................45
5.5 Financing......................................45
ARTICLE VI COVENANTS OF THE COMPANY PENDING THE CLOSING.........46
6.1 Regular Course of Business.....................46
6.2 Restricted Activities..........................46
6.3 Consents and Approvals.........................46
6.4 Approval of Shareholders.......................47
6.5 No Solicitation of Transaction.................47
6.6 Confidentiality................................47
6.7 Access to the Company and its Subsidiaries.....48
6.8 Supplements to Disclosure Schedules............48
6.9 Reasonable Efforts.............................48
6.10 Premerger Notification.........................49
6.11 Form 8023......................................49
6.12 Records of Trademarks, Service Marks and Copyrights
Registrations and Applications. ..............49
ARTICLE VII COVENANTS OF THE PURCHASER AND
ACQUISITION SUB PENDING THE CLOSING..................49
7.1 Consents and Approvals.........................49
7.2 Full Disclosure................................50
7.3 Confidentiality................................50
7.4 Employee Benefits and Plant Closing............50
7.5 Reasonable Efforts.............................51
7.6 Premerger Notification.........................51
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASER AND ACQUISITION SUB........................52
8.1 Representations and Warranties True............52
8.2 Performance of Covenants.......................52
8.3 No Governmental Proceeding.....................52
8.4 HSR and Other Approvals........................52
8.5 Approval of Stockholders.......................52
8.6 Opinion of Counsel.............................52
8.7 Certificates...................................53
8.8 Custody Agreement..............................53
8.9 AGA LLC Spinoff; CVI Corporate Distribution....53
8.10 Payoff Letters.................................53
8.11 Consents.......................................53
8.12 Employment Agreements..........................53
8.13 Option Extinguishment..........................53
8.14 Form 8023. ...................................54
8.15 Leases.........................................54
8.16 Incentive Plan Payments........................54
ARTICLE IX CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE COMPANY...........................54
9.1 Representations and Warranties True............54
9.2 Performance of Covenants.......................55
9.3 No Governmental Proceeding.....................55
9.4 HSR Approval...................................55
9.5 Approval of Stockholders.......................55
9.6 Opinion of Counsel.............................55
9.7 Certificates...................................55
9.8 Custody Agreement..............................55
9.9 Deliveries.....................................55
9.10 Form 8023......................................55
ARTICLE X THE CLOSING..........................................56
10.1 Time and Place of Closing......................56
10.2 Filing of Merger Certificate; Payment of
Indebtedness.................................56
ARTICLE XI SURVIVAL AND INDEMNITY...............................56
11.1 Survival.......................................56
11.2 Indemnification................................57
11.3 Notice of Claims...............................59
11.4 Matters Involving Third Parties................59
11.5 Maximum Indemnification........................60
11.6 General Deductible.............................60
11.7 Mitigation of Damages..........................60
11.8 Indemnification is Sole Remedy.................61
11.9 Role of Representative.........................61
11.10 Environmental Matters..........................61
ARTICLE XII TAX MATTERS..........................................62
12.1 S Corporation Status...........................62
12.2 Section 338(h)(10) Election....................62
12.3 Preparation and Filing of Tax Returns;
Payment of Taxes...............................63
12.4 Liability and Indemnification for Taxes........64
12.5 Procedures Related to Tax Claims...............65
12.6 Transfer and Gains Taxes.......................66
12.7 Assistance and Cooperation.....................67
12.8 Characterization of Indemnification Payments...67
12.9 Survival of Tax Claims and
Section 4.12 Representations...................67
12.10 Exclusive Remedy; Tax Indemnity Payments.......68
ARTICLE XIII TERMINATION, AMENDMENT AND WAIVER....................69
13.1 Termination....................................69
13.2 Effect of Termination..........................70
13.3 Amendment......................................70
13.4 Extension, Waiver..............................71
ARTICLE XIV OTHER AGREEMENTS.....................................71
14.1 Public Disclosure..............................71
14.2 Expenses.......................................71
14.3 Voting Agreement...............................71
14.4 Noncompetition, Nonsolicitation................72
14.5 Specific Performance; Injunctive Relief........73
14.6 Change of Name.................................73
14.7 Escheat Matters................................73
ARTICLE XV THE REPRESENTATIVE...................................73
15.1 Appointment of the Representative..............73
15.2 Subsequent Representative......................73
ARTICLE XVI MISCELLANEOUS........................................74
16.1 Entire Agreement...............................74
16.2 Assignment.....................................74
16.3 Governing Law and Venue........................74
16.4 Headings and Exhibits..........................74
16.5 Disclosure on Schedules........................74
16.6 Notices........................................75
16.7 Counterparts...................................76
EXHIBITS
EXHIBIT A Custody Agreement
EXHIBIT B Certificate of Merger
EXHIBIT C-1 Opinion of Xxxxxxxx & X'Xxxx, LLP
EXHIBIT C-2 Opinion of General Counsel of the Company
EXHIBIT D-1 Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
EXHIBIT D-2 Opinion of General Counsel of Purchaser
EXHIBIT E Form of Agreement Governing Assignment
CULLMAN VENTURES, INC.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT OF MERGER (the "AGREEMENT"), dated as of September 29,
1999, is made and entered into among THE XXXX CORPORATION, an Ohio
corporation (the "PURCHASER"), XXXX ACQUISITION CORP., a New York
corporation ("ACQUISITION SUB"), CULLMAN VENTURES, INC., a New York
corporation (the "COMPANY"), and the PRINCIPAL SHAREHOLDERS (as defined
herein) as to certain provisions as provided herein.
WHEREAS, the parties desire to enter into this Agreement with each
other under the terms of which Acquisition Sub will merge with and into the
Company, with the Company surviving and becoming a wholly-owned subsidiary
of the Purchaser.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, and intending to be legally bound, the parties to
this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, as used herein, shall have the
following meanings:
(a) "ACTION" shall mean any action, claim, dispute, proceeding, suit
or investigation, or any appeal therefrom.
(b) "AFFILIATE" shall mean, with respect to any Person, any Person
which, directly or indirectly through one or more intermediaries, controls,
is controlled by or is under common control with, such Person.
(c) "AGA LLC" shall mean AGA Creative LLC, a Delaware limited
liability company which holds the assets and liabilities comprising the
Allied Graphic Arts Business.
(d) "AGA LLC SPINOFF" shall mean the distribution by the Company to
the Cullman Shareholders or their designees of the Company's limited
liability company interest in AGA LLC, which distribution will not include
property or assets of the Company other than the limited liability company
interest.
(e) "AGREEMENT" shall mean this Agreement of Merger and shall include
all of the Schedules and Exhibits, if any, attached hereto.
(f) "ALLIED GRAPHIC ARTS BUSINESS" shall mean the business conducted
prior to the date of this Agreement by AGA LLC and its predecessor as a
division of the Company and the business presently conducted solely by AGA
LLC in the production and publication of (i) catalogues and brochures, and
other promotional materials, except for calendars for retailers, mail order
merchandisers and others, and (ii) calendars sold to druggists for
promotional purposes.
(g) "APPROVAL" shall mean any approval, authorization, consent,
license, franchise, order or permit of or by, or filing with, a Person.
(h) "AUDITED FINANCIAL STATEMENTS" shall mean the audited balance
sheet of the Company, together with the statements of income, changes in
shareholders' equity and cash flows for the fiscal years ended January 31,
1999, 1998 and 1997 certified by Cullman's Accountants, including (i) with
respect to the fiscal year ended January 31, 1999, the combining balance
sheet of the Group, together with the statement of income of the Group for
the fiscal year then ended, and (ii) with respect to the fiscal years ended
January 31, 1998 and 1997, the combining balance sheet, together with the
statement of income, of the divisions and Subsidiaries of the Company
presently included within the Group for each of the fiscal years then
ended.
(i) "BUSINESS" shall mean the Group's business of producing and
marketing (i) dated and organizing products (such as calendars, organizers,
planners and related accessories) and (ii) posters, coloring products,
decorative calendars and other print media. The Business includes all
business and assets of the Company other than the Allied Graphic Arts
Business, the assets and liabilities of AGA LLC and the CVI Corporate
Assets and Liabilities.
(j) "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday,
a legal holiday in the State of New York or a day on which commercial banks
in the State of New York are permitted or authorized to close.
(k) "CLOSING GROUP ACCOUNT STATEMENT" shall mean the statement of the
Group for the period from and including May 1, 1999 until the Effective
Time, prepared in accordance with Section 3.5(a) hereof.
(l) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(m) "COMMON SHARES" shall mean the common shares of the Company, par
value $.01 per share.
(n) "COMPANY LONG-TERM INDEBTEDNESS" shall mean the indebtedness of
the Company for borrowed money (including the current portion thereof) plus
any accrued but unpaid interest on such indebtedness to the Closing, plus
any early payment fees or "make whole" premiums paid by the Company in
connection with the Closing (which shall also include any early payment
fees, "make whole" premiums or any other penalties due upon the change in
control of the Company with respect to the termination of the revolving
credit facility) and any related fees or expenses incurred or charged in
connection therewith, including, but not limited to, attorneys fees and
charges for the release of Liens with respect to such indebtedness;
provided, that such indebtedness shall not include borrowings by the
Company under the revolving credit facility within the Credit Agreement
dated as of October 28, 1997, as amended, by and among the Company, the
lenders referred to therein, First Union National Bank, as agent, and The
Bank of New York, as documentation agent, except to the extent that such
borrowings or working capital or other funds of the Company are used after
April 30, 1999 to pay down any indebtedness for borrowed money other than
such revolving credit facility or for any purposes other than to pay
expenses incurred in the ordinary course of business (including capital
expenditures relating to projects included in the fiscal year 2000 capital
expenditures plan, provided that such capital expenditures do not
materially exceed the amount specified in such plan unless otherwise
approved by the Purchaser).
(o) "CONDITION" shall mean, with respect to a Person, the business,
properties, assets, operations, results of operations and/or condition
(financial or otherwise) of such Person.
(p) "CONSENT FEES" shall mean all fees and other monies paid or to be
paid by the Company or any Subsidiary in connection with obtaining the
consent or approval of any Person listed on SCHEDULE 1.1(P) hereto in order
for any Contract, IP License Agreement or Leased Real Property listed
thereon to be assigned or to remain in full force or effect after the
Closing of the transactions contemplated by this Agreement, including any
payment thereunder as a result of there being a "change in control" of the
Company as a result of the Merger.
(q) "CULLMAN SHAREHOLDERS" shall mean the holders of Common Shares.
(r) "CULLMAN'S ACCOUNTANTS" shall mean Deloitte & Touche LLP.
(s) "CUSTODY AGENT" shall mean United States Trust Company or other
financial institution mutually acceptable to the Representative and the
Purchaser.
(t) "CUSTODY AGREEMENT" shall mean the Custody Agreement by and among
the Purchaser, Acquisition Sub, the Company, the Representative, and the
Custody Agent, substantially in the form of EXHIBIT A hereto, with such
changes thereto as may be agreed to by the Purchaser, Acquisition Sub, the
Company, the Representative and the Custody Agent.
(u) "CVI CORPORATE" shall mean the corporate headquarters operations
of the Company located at 000 Xxxxxxx 0, Xxxxxxx, Xxxxxxxxxxx 00000 and at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(v) "CVI CORPORATE ASSETS AND LIABILITIES" shall mean the assets and
liabilities listed on SCHEDULE 1.1(T) hereto and any obligation to pay
Worthington Xxxx-Xxxxx any consulting or other fees.
(w) "CVI CORPORATE DISTRIBUTION" shall mean the distribution by the
Company to an entity designated by the Company of the CVI Corporate Assets
and Liabilities and "CVI DISTRIBUTEE" shall mean the foregoing entity.
(x) "DAMAGES" shall mean any claim, loss, deficiency (financial or
otherwise), liability, cost or expense (including without limitation
reasonable attorneys' fees, costs and expenses) or damage of any kind or
nature whatsoever.
(y) "ENVIRONMENTAL LAWS" shall mean all currently existing foreign,
federal, state and local laws, regulations, rules and ordinances relating
to pollution or protection of the environment or human health and safety,
including, without limitation, laws relating to releases or threatened
releases of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, ambient air, surface water, groundwater,
land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, release,
transport or handling of Hazardous Materials and all laws and regulations
with regard to record keeping, notification, disclosure and reporting
requirements respecting Hazardous Materials, and all laws relating to
endangered or threatened species of fish, wildlife and plants and the
management or use of natural resources.
(z) "ESCROW AGENT" shall mean United States Trust Company or other
financial institution designated by the Representative and "ESCROW FUNDS"
shall mean, collectively, the Indemnification Escrow Fund and the Expenses
Escrow Fund.
(aa) "GAAP" shall mean United States generally accepted accounting
principles.
(bb) "GOVERNMENTAL AUTHORITY" shall mean any foreign, federal, state,
local or other governmental, administrative or regulatory authority, body,
agency, court, tribunal or similar entity.
(cc) "GROSS PURCHASE PRICE" shall mean Five Hundred and Fifty Million
Dollars ($550,000,000), subject to adjustment as set forth in Section 3.5
hereof.
(dd) "GROUP" shall mean the AT-A-GLANCE Group Division of the
Company, together with all Subsidiaries of the Company other than AGA LLC
and other than the newly formed entity to which the CVI Corporate
Distribution shall be made, and consists of the Subsidiaries, divisions of
the Company and entities listed on SCHEDULE 1.1(DD) hereto.
(ee) "HAZARDOUS MATERIALS" shall mean any substance: (i) the presence
of which requires or may require investigation or remediation of any kind
under any Environmental Laws; (ii) which is defined as "hazardous waste,"
"hazardous material," "residual waste," "hazardous substance," "pollutant"
or "contaminant" under any federal, state or local statute, regulation,
rule or ordinance or amendments thereto including, without limitation,
CERCLA and/or the Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.) or (iii) which is otherwise regulated pursuant to any
applicable Environmental Law.
(ff) "HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereto.
(gg) "INDEMNIFIED PARTY" shall mean any party entitled to
indemnification pursuant to Section 11.2 hereof.
(hh) "INDEMNIFYING PARTY" shall mean any party required to indemnify
an Indemnified Party pursuant to Section 11.2 hereof.
(ii) "INTERIM BALANCE SHEET" shall mean the unaudited balance sheet of
the Group as of July 31, 1999, previously delivered to the Purchaser.
(jj) "INTERIM FINANCIAL STATEMENTS" shall mean the Interim Balance
Sheet together with the unaudited statement of income of the Group for the
six- month period ended July 31, 1999, previously delivered to the
Purchaser.
(kk) "IRS" shall mean the Internal Revenue Service.
(ll) "KNOWLEDGE OF THE COMPANY" shall mean the actual knowledge of the
officers and directors of the Company listed on SCHEDULE 1.1(LL) hereto
after due inquiry.
(mm) "LAW" shall mean any federal, state, local or foreign law,
statute, rule, regulation, ordinance, standard, requirement, administrative
ruling, order or process (including, without limitation, any zoning or land
use law or ordinance, building code, Environmental Law, securities, blue
sky, civil rights or occupational health and safety law or regulation) and
any court or arbitrator's order or process.
(nn) "LEASED REAL PROPERTY" shall mean all of the Company's rights and
interest in, to and under the leases of real property listed on SCHEDULE
4.21 hereto.
(oo) "LIABILITY" shall mean any debt, liability, commitment or
obligation of any kind, character or nature whatsoever, whether known or
unknown, secured or unsecured, accrued, fixed, absolute, contingent or
otherwise, and whether due or to become due.
(pp) "LIEN" shall mean any lien, statutory lien, pledge, mortgage,
security interest, charge, encumbrance, easement, right of way, covenant,
claim, restriction, right, option, conditional sale or other title
retention agreement, warrant or equity of any kind or nature.
(qq) "MATERIAL ADVERSE EFFECT" shall mean, with respect to a Person,
any change or effect that is or is likely to be, individually or in the
aggregate with all other changes or effects, materially adverse to the
Condition of such Person, after taking into account any insurance which may
be available with respect to such change or effect.
(rr) "NET PURCHASE PRICE" shall mean an amount equal to the Gross
Purchase Price minus (i) the Company Long-Term Indebtedness to be paid off
as of the Closing, (ii) any Company Long-Term Indebtedness that will remain
outstanding following the Closing, (iii) the Consent Fees paid or payable
at or in connection with the Closing, (iv) any other amounts paid or
payable on account of the occurrence of the change in control of the
Company under any agreement (other than amounts paid or payable in
connection with obtaining the consent or approval of any Person with
respect to such agreement ("APPROVAL PAYMENTS")), including, without
limitation, the Company's revolving credit facility and any agreement with
Xxxx Xxxxxx, Xxxxxxxxxxx Xxxxxxxx, Xxxx Xxxxxxx or any other Person, (v)
amounts paid or payable under The At-A-Glance Long-Term Incentive Plan
(including payroll or other employment taxes related to such payments),
effective February 1, 1998, as of or immediately prior to the Closing and
discretionary payments not to exceed $5.5 million in the aggregate which
may be paid to participants in such Plan, (vi) any amount paid by the
Company for the repurchase of its capital shares required by the
Shareholders Agreement, (vii) any amount paid in connection with the
Company Stock Option Plan (including payroll or other employment taxes
related to such payments), whether as a bonus, in settlement or
extinguishment of any employee option, or otherwise after the date hereof
and prior to the Closing, (viii) any amounts paid by the Company prior to
the Closing Date for investment banking, accounting, legal and other
advisory fees and expenses related to this Agreement and the transactions
contemplated thereby and (ix) the amount of $1 million to cover any
payments, charges, penalties, fees or other expenses which may be incurred
by the Company or any Subsidiary thereof for the matters described in
Schedule 1.1 (rr) hereto; provided, however, that to the extent that any
amount is reflected more than once in subparagraphs (i) through (ix) in
this Section 1.1(rr), it shall only be counted once for the purpose of
calculating the Net Purchase Price. For example, if the Company borrows
amounts under its revolving credit facility to pay for the items set forth
in clauses (iii) through (ix) hereof (which amounts would thus be included
within Company Long-Term Indebtedness), then, in calculating Net Purchase
Price, such items shall be disregarded to the extent of such borrowings.
(ss) "NEW YORK BCL" shall mean the Business Corporation Law of the
State of New York.
(tt) "OWNED REAL PROPERTY" shall mean the parcels of land described in
SCHEDULE 4.21 hereto and the properties subject to the leases underlying
outstanding Industrial Development Bonds of the Company.
(uu) "PAYING AGENT" shall mean First Union National Bank or any other
United States bank or other financial institution chosen by the
Representative.
(vv) "PER SHARE AMOUNT" shall mean the amount equal to (x) the Net
Purchase Price minus the Indemnification Escrow Amount (as hereinafter
defined) minus the amount deposited at Closing in the Expenses Escrow Fund
in accordance with Section 3.3 hereof divided by (y) the total number of
issued and outstanding Common Shares immediately prior to the Merger.
(ww) "PERSON" shall mean any individual, partnership, corporation,
limited liability company, association, business trust, joint venture,
governmental entity, business entity or other entity of any kind or nature,
including any business unit of such Person.
(xx) "PRINCIPAL SHAREHOLDERS" shall mean any and all of the following
individuals: Xxxxx X. Xxxxxxx, G. Xxxxxx Xxxxxxxx, Xxxxxxx X. Xxxxxxx,
Xxxxxxxxxxx Xxxx-Xxxxx and Xxxxx X. Xxxxx.
(yy) "PROPRIETARY INFORMATION" shall mean, with respect to a Person,
all confidential information, trade secrets, pricing and marketing
strategies, customer information, business leads, research and results
thereof, technology, know-how, techniques, data, methods, processes,
instructions, formulae, drawings and specifications (whether or not such
items have been reduced to written, computer-readable or other tangible
form) and other proprietary information and materials of every kind and
character relating to such Person.
(zz) "PURCHASER'S ACCOUNTANTS" shall mean Deloitte & Touche LLP.
(aaa) "REPRESENTATIVE" shall mean Xxxxx X. Xxxxxxx or his duly
authorized successor in accordance with Section 15.2 hereof.
(bbb) "SHAREHOLDERS AGREEMENT" shall mean the Amended and Restated
Shareholders' Agreement by and among the Company, the individuals named
therein and Xxxxx X. Xxxxxxx, as voting trustee, dated as of September 15,
1998, as amended.
(ccc) "SPECIFIED LEASES" shall mean each of the following leases: (i)
the Lease, dated October 15, 1997, between Xxxxxxx 7 Venture LLC and CVI
for offices at 000 Xxxxxxx 0, Xxxxxxx, Xxxxxxxxxxx; (ii) the Lease, dated
April 1, 1996, between Sage Realty Co. and CVI for offices at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx; (iii) the Lease, dated February 10, 1995,
between Two Park Co. and CVI, as amended, for Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx; (iv) the Lease, dated December 1997, between Total Oil Marine plc and
CVI for the second floor of Caparo House and (v) the Lease, dated December
1997, between Total Oil Marine plc and CVI for the third floor of Caparo
House.
(ddd) "SUBSIDIARY" shall mean any Person (other than AGA LLC) under
the control of another Person (where "control" means the direct or indirect
possession of the power to elect at least a majority of the board of
directors or other governing body of a Person through the ownership of
voting securities, ownership or partnership interests, by contract or
otherwise or, if no such governing body exists, the direct or indirect
ownership of 50% or more of the equity interests of a Person).
(eee) "TAX" shall mean any foreign, federal, state or local income,
gross receipts, license, severance, occupation, premium, environmental
(including taxes under Code Section 59A), customs, duties, profits,
disability, registration, alternative or add-on minimum, estimated,
withholding, payroll, employment, unemployment insurance, social security
(or similar), excise, sales, use, value-added, occupancy, franchise, real
property, personal property, business and occupation, mercantile, windfall
profits, capital stock, stamp, transfer, workmen's compensation or other
tax, fee or imposition of any kind whatsoever, including any interest,
penalties, additions, assessments or deferred liability with respect
thereto, whether disputed or not.
(fff) "TAX INDEMNITY AMOUNT" shall mean an amount equal to $10,000,000
minus any Tax Claims paid to any taxing authority or to the Purchaser to
satisfy any claim described in Sections 12.4(a), 12.4(b) or 12.6 of this
Agreement in respect of Taxes imposed on the Company or any of its
Subsidiaries.
(ggg) "TAX RETURN" shall mean any return, report, declaration, claim
for refund, estimate, election, or information statement or xxxx relating
to any Tax, including any schedule or attachment thereto, and any amendment
thereof.
(hhh) "UNIT" shall mean an interest in distributions from the Escrow
Funds.
(iii) "UNIT HOLDER" shall mean each holder of a Unit.
(jjj) "VOTING TRUST" shall mean the Voting Trust Agreement dated as of
July 31, 1987, and amendments thereto between Xxxxx X. Xxxxxxx, as voting
trustee, and certain Cullman Shareholders, as extended through July 31,
2007, pursuant to which Xxxxx X. Xxxxxxx has the right to vote all Common
Shares subject to such Voting Trust.
(kkk) "WARN ACT" shall mean the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. ss. 2101, et seq., as it may be amended from
time to time.
1.2 Other Defined Terms. The following terms shall have the
meanings given such terms in the Sections set forth below:
Term Section
---- -------
AGA Amount 3.4
AAA 3.5(c)
Antitrust Division 6.10
Allocations 12.2(b)
Approval Payments 1.1 (rr)
Arbitrator 3.5(c)
Audits 4.12(a)(iii)
Certificate 3.2(b)
Closing 10.1
Closing Date 10.1
Constituent Corporations 2.1
Contracts 4.7(b)
Date Data 4.9(b)
Deductible Amount 11.6
Disputed Item 3.5(c)
Dissenting Shares 3.7
Effective Time 2.2
Employee Plans 4.16
Environmental Permits 4.18
ERISA 4.16
ERISA Affiliate 4.16(e)
Expenses Escrow Fund 3.3
Final Distribution Date 3.4(c)
Final Purchase Price
Adjustment Amount 3.5(d)
FTC 6.10
Indemnification Escrow
Amount 3.4
Indemnification Escrow
Fund 3.4
Ineligibility 3.7
Intellectual Property 4.8(a)
IP License Agreements 4.8(d)
Merger 2.1
Merger Expenses 3.3
Notice Of Dispute 3.5(c)
Option Shares 4.3
Payment Fund 3.2
PBGC 4.16(d)
Personal Property Lease 4.7(a)
Post-Closing Period 12.4(b)
Pre-Closing Period 12.4(a)
Pre-Closing Straddle 12.4(a)
Period
Preliminary Purchase
Price 3.5(b)
Adjustment Amount
Proprietary Software 4.8(d)
QSSS Election 4.12(a)
Real Property 4.21(b)
Real Property Lease 4.21(b)
S-Election 4.12(a)
338(h)(10) Election 12.2(a)
Shares 4.3
Software 4.8(a)
Specified Items 11.2(a)
Straddle Period 12.4(a)
Subsidiary 4.17
Surviving Corporation 2.1
Tax Claim 12.5(a)
Third-Party Claim 11.4(a)
Trade Secrets 4.8(a)
Transfer Taxes 12.6
Unresolved Claims Amount 3.4(a)
Withdrawal 3.7
Year 2000 Compliance 4.9(a)
1.3 Accounting Terms. All accounting terms not specifically defined in
this Agreement shall be construed in accordance with GAAP consistently
applied.
1.4 Singular and Plural Forms. The use herein of the singular form
also denotes the plural form, and the use of the plural form herein also
denotes the singular form, as in each case the context may require.
ARTICLE II
THE MERGER
2.1 The Merger. Subject to the terms and conditions set forth in this
Agreement and in accordance with the New York BCL, at the Effective Time,
Acquisition Sub shall be merged with and into the Company (together with
Acquisition Sub, the "CONSTITUENT CORPORATIONS") in accordance with this
Agreement and the separate existence of Acquisition Sub shall cease (the
"MERGER"). The Company shall survive the Merger and the Company shall
become a wholly-owned Subsidiary of Purchaser and shall continue to be
governed by the laws of the State of New York (as such, the "SURVIVING
CORPORATION"). The Merger shall have the effects set forth in Section 906
of the New York BCL.
2.2 Constituent Corporations. (a) The name of Acquisition Sub is "Xxxx
Acquisition Corp." The issued and outstanding capital shares of Acquisition
Sub consist solely of 100 common shares, par value $.01 per share, all of
which are entitled to vote.
(b) The name of the Company is "Cullman Ventures, Inc." The name under
which the Company was incorporated was Nukeith, Inc. The issued and
outstanding capital shares of the Company consist solely of 135,990.1
Common Shares all of which are entitled to vote. As set forth in Section
4.3 hereof, there are outstanding options to purchase 7,667 Common Shares
which will be extinguished prior to the Closing.
2.3 Effective Time. The Merger shall become effective at the date and
time when a properly executed and verified Certificate of Merger,
substantially in the form of EXHIBIT B hereto, is duly filed by the
Department of State of the State of New York (the "EFFECTIVE TIME").
2.4 Certificate of Incorporation. The Certificate of Incorporation of
the Company shall be amended in its entirety to read as the Certificate of
Incorporation of Acquisition Sub as in effect immediately prior to the
Effective Time, except that Article One thereof shall provide that the name
of the Surviving Corporation shall be: "At-A-Glance, Inc.", which
Certificate of Incorporation, as amended, shall be the Certificate of
Incorporation of the Surviving Corporation unless and until amended as
permitted by the New York BCL.
2.5 By-Laws. The By-Laws of Acquisition Sub as in effect immediately
prior to the Effective Time shall be the By-Laws of the Surviving
Corporation unless and until amended in accordance with their terms and the
Certificate of Incorporation of the Surviving Corporation.
2.6 Officers and Directors. The officers of Acquisition Sub
immediately prior to the Effective Time shall be the officers of the
Surviving Corporation until their respective successors are duly appointed.
The directors of Acquisition Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation until their successors
are duly elected and qualified.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion. As of the Effective Time, by virtue of the Merger and
without any action on the part of any holder of capital shares of
Acquisition Sub or the Company:
(a) All capital shares of the Company which are held in the treasury
of the Company shall be canceled.
(b) Each issued and outstanding common share of Acquisition Sub shall
be converted into one issued and outstanding common share of the Surviving
Corporation.
(c) Each of the issued and outstanding Common Shares of the Company,
other than Dissenting Shares, shall be converted into the right to receive
the Per Share Amount in cash and one Unit.
3.2 Payment Fund. At the Closing, the Purchaser or Acquisition Sub
shall deposit, or shall cause the deposit of, with the Paying Agent an
amount equal to the Net Purchase Price minus the Indemnification Escrow
Amount minus the amount deposited at Closing in the Expenses Escrow Fund in
accordance with Section 3.3 hereof (the "PAYMENT FUND").
(a) Upon surrender to the Paying Agent of a certificate or
certificates which immediately prior to the Effective Time evidenced Common
Shares (the "CERTIFICATE" or "CERTIFICATES"), together with a properly
completed and executed stock power or other form of assignment, the Paying
Agent shall pay to the Cullman Shareholder that was the holder of such
Certificate(s) an amount equal to the Per Share Amount for each Common
Share evidenced by such Certificate(s) so surrendered. Such Cullman
Shareholder shall also be deemed to receive one Unit for each such Common
Share so surrendered. The Certificate(s) so surrendered shall be cancelled.
No interest will accrue or be payable on any cash payable to such Cullman
Shareholder. From the Effective Time until surrender in accordance with
this Section 3.2, each Certificate shall represent for all purposes only
the right to receive cash and Units pursuant to the conversion formula set
forth in Section 3.1 hereof.
(b) After the Effective Time, there shall be no transfers on the share
transfer books of the Common Shares outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for transfer, they shall be cancelled and
exchanged for the cash and Units described in Section 3.1 hereof by the
Paying Agent pursuant to the procedures set forth in Section 3.2(a) hereof.
3.3 Expenses Escrow Fund. At the Closing, the Purchaser or Acquisition
Sub shall deposit, or shall cause the deposit of, with the Escrow Agent,
the sum of (v) the Company's good faith estimate of all investment banking,
accounting and legal fees and other expenses (collectively, "MERGER
EXPENSES") incurred by the Company (but not the Purchaser or Acquisition
Sub) in connection with this Agreement but not paid prior to the Closing
Date plus (w) an amount determined by the Representative which represents a
reserve for expenses which may be incurred by the Representative on behalf
of the Unit Holders after the Closing Date in connection with calculating
the Final Purchase Price Adjustment Amount and resolving any disputes
relating to such amount plus (x) the Representative's estimate of the
aggregate amount of Tax payable by the Cullman Shareholders pursuant to
Section 12.3(a), the last sentence of Section 12.3(b) and Section 12.6
hereof (including the Taxes described in Sections 12.4(b)(ii) and
12.4(b)(iii) hereof) plus (y) an amount determined by the Representative
representing applicable withholding Taxes, including, without limitation,
withholding Taxes imposed upon the extinguishment of the Option Shares, and
plus (z) any other amount determined by the Representative as being
necessary or appropriate (the "EXPENSES ESCROW FUND"). The Company shall
advise the Purchaser in writing, at least two Business Day prior to the
Closing Date, of the amount of the Expenses Escrow Fund, which in no event
shall be less than $16,000,000, plus an amount necessary to satisfy the
Company's obligations under clause (y) (to the extent such amounts have not
been satisfied prior to the Closing). The Expenses Escrow Fund shall be
held by the Escrow Agent and distributable at the times, in the amounts and
to the persons designated by the Representative; provided, however, that
the Representative shall not permit the distribution of amounts out of the
Expense Escrow Fund to any Cullman Shareholder until such time as the
payment obligations set forth in items A, C, F and I of Schedule 3.3 have
been satisfied in full and the Representative is otherwise satisfied, in
its reasonable discretion, that there are sufficient funds to satisfy all
other obligations contemplated to be satisfied out of the Expenses Escrow
Fund.
3.4 Indemnification Escrow Fund. At the Closing, the Purchaser or
Acquisition Sub shall deposit, or shall cause the deposit of, with the
Custody Agent $55,000,000 (the "INDEMNIFICATION ESCROW AMOUNT", and
together with all earnings thereon, the "INDEMNIFICATION ESCROW FUND"). The
Indemnification Escrow Fund shall be held in accordance with the Custody
Agreement. The Company hereby grants to the Purchaser, on behalf of its
shareholders, effective as of the Effective Time, a security interest in
the Indemnification Escrow Fund for all amounts which may become owed to
Purchaser therefrom under this Agreement.
(a) Twenty-one (21) months after the Closing Date, the Custody Agent
shall pay to the Representative, on behalf of the Unit Holders, pursuant to
the Custody Agreement, the entire amount remaining in the Indemnification
Escrow Fund, other than an amount equal to the sum of (x) $8,750,000 plus
(y) the amount of any unresolved claims for indemnification by the
Purchaser pursuant to Section 11.2(a) and Article XII hereof pursuant to
which the Purchaser has duly notified the Representative and the Custody
Agent pursuant to the Custody Agreement (the "UNRESOLVED CLAIMS AMOUNT")
plus (z) the Tax Indemnity Amount.
(b) On the fifth anniversary of the Closing Date (the "FINAL
DISTRIBUTION DATE"), the Custody Agent shall pay to the Representative on
behalf of the Unit Holders, pursuant to the Custody Agreement, the
remaining balance of the Indemnification Escrow Fund; provided, that in the
event of any unresolved claims for indemnification by the Purchaser
pursuant to Section 11.2(a) and Article XII hereof pursuant to which the
Purchaser has duly notified the Representative and the Custody Agent
pursuant to the Custody Agreement, the amount to be so paid shall be
reduced by the Unresolved Claims Amount, and the payment by the Custody
Agent of amounts in the Indemnification Escrow Fund allocable to any such
unresolved claim shall be paid upon the resolution of such unresolved claim
in accordance with the Custody Agreement; provided, further, that if AGA
LLC does not then have a net worth (determined in a manner consistent with
past practice by AGA LLC) of at least $2,500,000 as certified to the
Purchaser by a duly authorized representative of AGA LLC as of the Final
Distribution Date, then, in such case, an amount (in addition to the
Unresolved Claims Amount, if any) equal to $6,500,000 (the "AGA Amount")
shall remain in the Indemnification Escrow Fund until the earlier of (x)
such date on which a duly authorized representative of AGA LLC certifies to
the Purchaser that AGA LLC then has a net worth of at least $2,500,000; and
(y) July 31, 2006; and provided, further, that, if on the Final
Distribution Date the Company is under audit or shall have received a
notice of any income Tax audit for a Pre-Closing Period (as defined in
Section 12.4(a)), an amount (in addition to the Unresolved Claims Amount,
if any, and the AGA Amount, if any) equal to the Tax Indemnity Amount shall
remain in the Indemnification Escrow Fund until such date on which all such
audits are completed and finally resolved.
3.5 Purchase Price Adjustment. (a) Within 30 days after the Closing
Date, the Representative shall prepare and deliver to the Purchaser the
Closing Group Account Statement. The Closing Group Account Statement shall
be prepared in accordance with this Section 3.5(a), consistent with the
Group's past practice in recording changes to the Group's interdivision
receivables account which past practices are set forth on SCHEDULE
3.5(A)(I) hereto. The Closing Group Account Statement shall reflect all
cash flows into the Group from AGA LLC and CVI Corporate and out of the
Group to AGA LLC and CVI Corporate, for the period from and including May
1, 1999 until the Effective Time, based on the following principles (which
are reflected on the estimated Closing Group Account Statement as of July
31, 1999 set forth on SCHEDULE 3.5(A)(II) hereto):
(i)Incoming cash flows, from AGA LLC and CVI Corporate, shall be
reflected as positive entries in the Closing Group Account Statement
and shall only include contributions or advances made by AGA LLC or
CVI Corporate to the Group plus the $20,000 monthly expense allocation
charged to the Group on account of the Company's headquarters expense
for which no cash has been paid by the Group; provided, however, to
the extent that any item that would otherwise be included in incoming
cash flow is included in subparagraphs (i) through (ix) in Section
1.1(rr) of this Agreement and results in an increase in the Net
Purchase Price, the amount by which the Net Purchase Price has been
increased as a result of such inclusion shall not be included as an
item of incoming cash flow for purposes of this Section 3.5; and
(ii) Outgoing cash flows, from the Group to AGA LLC and CVI
Corporate, shall be reflected as negative entries in the Closing Group
Account Statement and, shall only include contributions or advances
made by or on behalf of the Group to AGA LLC or CVI Corporate,
including any amount for Taxes required by the Shareholders Agreement
(whether payable before or after the Closing); provided, however, to
the extent that any item that would otherwise be included in outgoing
cash flow is included in subparagraphs (i) through (ix) in Section
1.1(rr) of this Agreement as a reduction in the Gross Purchase Price,
it shall not be included as an item of outgoing cash flow for purposes
of this Section 3.5; and further provided that Approval Payments shall
not be included as an item of outgoing cash flow for purposes of this
Section 3.5.
The Company estimates that if the Closing had occurred on July 31,
1999, the Purchase Price would have been reduced by approximately
$2,147,800 under this Section 3.5(a).
(b) Two Business Days before the Closing Date, the Representative
shall deliver to the Purchaser the Representative's good faith estimate of
the Final Purchase Price Adjustment Amount, which shall adjust the Purchase
Price based on the net amount of incoming and outgoing cash flows as
provided in Section 3.5(a) in preparing the Closing Group Account Statement
(such estimate being the "PRELIMINARY PURCHASE PRICE ADJUSTMENT AMOUNT"),
with a breakdown of the items used in calculating such Preliminary Purchase
Price Adjustment Amount. The Gross Purchase Price (and thereby the Net
Purchase Price) for purposes of the Purchaser's deposits at Closing
pursuant to Section 3.2 hereof shall be increased or decreased, as
applicable, to reflect such Preliminary Purchase Price Adjustment Amount.
(c) The Representative and his authorized representatives shall have
full access to the Surviving Corporation's books and records to the extent
necessary for the preparation of the Closing Group Account Statement. The
Closing Group Account Statement shall be delivered to the Purchaser no
later than 30 days after the Closing Date. The Purchaser shall have 45 days
from the date that the Purchaser receives the Closing Group Account
Statement to notify the Representative in writing if the Purchaser objects
to any item in the Closing Group Account Statement. Any such notice (a
"NOTICE OF DISPUTE") shall specify in detail the item or items in dispute
(a "DISPUTED ITEM" or "DISPUTED ITEMS"). If the Purchaser and the
Representative shall be unable to resolve any Disputed Item(s) within 30
days after delivery of the Notice of Dispute, then the Purchaser's
Accountants and Cullman's Accountants shall endeavor in good faith to
resolve any Disputed Item or Disputed Items. The Purchaser and the
Purchaser's Accountants shall be given access to the work papers of
Cullman's Accountants relating to the preparation of the Closing Group
Account Statement. The Representative and Cullman's Accountants shall be
given access to the books, records and employees of the Surviving
Corporation and the Group. In the event that the Purchaser's Accountants
and Cullman's Accountants are unable to resolve the Disputed Item(s) within
60 days after delivery of a Notice of Dispute, the Purchaser and the
Representative shall together appoint a representative from the New York
office of an independent nationally recognized accounting firm (the
"ARBITRATOR") to arbitrate the dispute and, if the Purchaser and the
Representative are unable to agree on an Arbitrator, at the request of
either such party made within 10 days after the end of such 60-day period,
the Arbitrator shall be chosen by the American Arbitration Association (the
"AAA") in New York City. The Purchaser, the Purchaser's Accountants, the
Representative and Cullman's Accountants shall present their positions with
respect to the Disputed Item or Disputed Items to the Arbitrator, together
with such other materials as the Arbitrator deems appropriate, within 20
days after the appointment of the Arbitrator. The Arbitrator shall, within
15 days after its receipt of such materials, submit a written decision on
each Disputed Item to the Purchaser and the Representative. Any
determination with respect to any Disputed Item shall be final and binding
on all parties to this Agreement and shall have the legal effect of an
arbitral award. Except as specifically set forth to the contrary in this
Section 3.5(c), the Arbitrator shall comply with, and the arbitration shall
be conducted in New York City in accordance with, the commercial
arbitration rules of the AAA as in effect for commercial arbitrations
conducted in New York City by the AAA. The fees and disbursements of the
Arbitrator shall be allocated 50% to the Purchaser and 50% to the
Representative on behalf of the Unit Holders.
(d) The Final Purchase Price Adjustment Amount shall be payable as set
forth below on the second business day after the delivery by the Arbitrator
of any decision on Disputed Item(s). If either (i) the Purchaser does not
deliver to the Representative any Notice of Dispute within 45 days of the
Purchaser's receipt of the Closing Group Account Statement, or (ii) the
Purchaser acknowledges in writing its acceptance of the Closing Group
Account Statement, then the Closing Group Account Statement shall be final
and binding on all parties to this Agreement, and the Final Purchase Price
Adjustment Amount be paid on a date which is no more than 45 days after the
Purchaser's receipt of the Closing Group Account Statement. Payment of the
Final Purchase Price Adjustment Amount shall be as follows:
(i)if the Final Purchase Price Adjustment Amount is a positive
number, the Purchaser shall pay such amount to the Representative, on
behalf of the Unit Holders, for deposit in the Expenses Escrow Fund;
and
(iii) if the Final Purchase Price Adjustment Amount is a negative
number, the Custody Agent shall pay such amount to the Purchaser from
the Expenses Escrow Fund.
"FINAL PURCHASE PRICE ADJUSTMENT AMOUNT" shall mean the amount, if
any, by which the final balance of the Closing Group Account Statement is
greater than (expressed as a positive number) or less than (expressed as a
negative number) the Preliminary Purchase Price Adjustment Amount.
3.6 Payments. Each payment described above in this Article III shall
be made by wire transfer of immediately available funds payable to the
order of the party indicated; provided, however, that on the death of any
Unit Holder, any right of the Unit Holder to receive any payments under
this Article III will be transferred in accordance with applicable laws of
descent and distribution, and on the transfer or assignment of any right to
receive any payments under this Article III pursuant to any court order,
the right will be transferred or assigned in accordance with the court
order. The Representative shall be responsible for directing all such
payments. All payments should be made net of applicable withholding Taxes,
which Taxes are to be paid from the Expenses Escrow Fund.
3.7 Dissenting Shares. Common Shares that do not vote for adoption of
this Agreement and with respect to which appraisal rights are perfected in
accordance with Section 623 of the New York BCL ("DISSENTING Shares") shall
not be converted into the right to receive cash and Units pursuant to
Section 3.1 hereof at or after the Effective Time unless and until the
holder of such Common Shares withdraws his demand for such appraisal rights
in accordance with Section 623 of the New York BCL ("WITHDRAWAL") or
becomes ineligible for such appraisal rights ("INELIGIBILITY"). Upon
Withdrawal or Ineligibility, then, as of the Effective Time or the
occurrence of such event, whichever last occurs, such holder's Common
Shares shall cease to be Dissenting Shares and shall be converted into and
represent the right to receive cash and Units pursuant to Section 3.1
hereof. Upon such conversion, the Representative shall cause to be
distributed from the Payment Fund an amount with respect to such converted
Common Shares computed in accordance with the payment formula described in
Section 3.1 hereof, and the Custody Agent shall pay over such amount to the
holder of such converted Common Shares as soon as practicable thereafter.
If any Cullman Shareholder shall properly demand his appraisal rights under
the New York BCL, the Company shall give the Purchaser notice thereof, and
Acquisition Sub and the Purchaser shall have the right to direct all
negotiations and proceedings with respect to any such appraisal rights. The
Company shall not, except with the prior consent of Acquisition Sub or the
Purchaser, voluntarily make any payment with respect to such appraisal
rights. After a final determination of the amounts to which the holders of
Dissenting Shares are entitled, the Representative shall cause to be
distributed from the Payment Fund such amounts from the balance of the
Payment Fund after taking into account all amounts paid or payable to
Cullman Shareholders other than holders of Dissenting Shares. If the
Payment Fund exceeds or is inadequate to pay the amounts to which the
Cullman Shareholders shall be entitled hereunder as a result of monies owed
to Dissenting Shareholders, the excess shall be paid into the
Indemnification Escrow Fund and any shortfall shall be made up from the
Indemnification Escrow Fund.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser and
Acquisition Sub as follows:
4.1 Organization and Good Standing; Corporate Records. The Company is
a corporation validly existing and in good standing under the laws of the
State of New York and has the requisite power and authority to own, operate
and lease its properties and assets and to conduct its business as they are
now being owned, operated, leased and conducted. The Company is duly
qualified or licensed to do business as a foreign corporation, and is in
good standing as a foreign corporation, in every jurisdiction in which the
failure to be so qualified or licensed or in good standing would have a
Material Adverse Effect on the Condition of the Business. SCHEDULE 4.1
hereto sets forth a true and complete list of all foreign jurisdictions in
which the Company is so qualified or licensed and in good standing. The
copies of the certificate of incorporation and bylaws of the Company
heretofore delivered or made available by the Company to the Purchaser are
true and complete copies of such instruments as amended to the date of this
Agreement and are in full force and effect on the date hereof.
(a) Copies of the certificate of incorporation of the Company and each
Subsidiary, certified by the Secretary of State of the State of
incorporation of each such corporation, and of the by-laws of the Company
and each Subsidiary, certified by the Secretary of each such corporation,
heretofore delivered to the Purchaser are true and complete copies of such
instrument as amended to the date of this Agreement. Such certificate of
incorporation and by-laws of the Company and each Subsidiary are in full
force and effect. Neither the Company nor any Subsidiary is in violation of
any provision of its certificate of incorporation or by-laws.
4.2 Power and Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement, perform its
obligations hereunder and consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company, the
performance by it of its obligations hereunder and the consummation by it
of the transactions contemplated hereby have been duly authorized by all
necessary corporate actions on the part of the Company. This Agreement
constitutes the legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
Laws now or hereafter in effect relating to creditors' rights generally and
subject to general principles of equity.
4.3 Capitalization. The authorized capital shares of the Company
consist solely of 200,000 Common Shares, of which 135,990.1 shares are
issued and outstanding (the "SHARES"). The Shares have been duly authorized
and validly issued and are fully paid and nonassessable. There are
outstanding options to purchase 7,667 Common Shares pursuant to the
Company's 1990 Non-qualified Stock Option Plan, which will be extinguished
immediately prior to the Closing (the "OPTION SHARES"). Except for the
Shares, the Option Shares, the rights created hereunder or under the
Shareholders Agreement as set forth on SCHEDULE 4.3 hereto, there are no
outstanding (i) capital shares or other voting securities of the Company,
(ii) securities of the Company convertible into or exchangeable for capital
shares or other voting securities of the Company, (iii) subscription
rights, options, warrants, calls, commitments, preemptive rights (other
than preemptive rights imposed solely by statute) or other rights of any
kind to acquire from the Company, or any obligation of the Company to issue
or sell, any capital shares or other voting securities or any securities of
the Company convertible into or exchangeable for such capital shares or
other voting securities, and (iv) equity equivalents, interests in the
ownership or earnings of, or stock appreciation, phantom stock or other
similar rights of or with respect to the Company. Except as set forth on
SCHEDULE 4.3 hereto, there are no outstanding obligations (contractual or
otherwise) of the Company to repurchase, redeem or otherwise acquire any
capital shares or any other securities of the type described in clauses (i)
- (iv) of the preceding sentence. Following the Closing, neither the
Company nor the Purchaser shall have any obligation under the Shareholders
Agreement. All Shares are subject to the Voting Trust, other than 2,239
Shares held by certain not-for-profit entities, and a true and correct copy
of the Voting Trust and all amendments thereto have been provided to
Purchaser.
4.4 No Violation. Except as set forth on SCHEDULE 4.4(I) hereto,
neither the execution and delivery of this Agreement by the Company, the
performance by it of its obligations hereunder, nor the consummation by it
of the transactions contemplated hereby, will (a) contravene any provision
of the certificate of incorporation or bylaws of the Company or any
Subsidiary; (b) violate, be in conflict with, constitute a default under,
permit the termination of, cause the acceleration (whether after the giving
of notice or the lapse of time or both) of the maturity of, any debt or
obligation of the Company or any Subsidiary relating to the Business or
binding on the Surviving Corporation or any Subsidiary after the Closing,
require the consent of any other party to, constitute a breach of, create a
loss of a benefit under, or result in the creation or imposition of any
Lien upon any of the properties or assets of the Business under, any note,
bond, license, mortgage, indenture, lease, contract, agreement, instrument
or commitment relating to the Business to which it is a party or by which
it or any of its assets or properties constituting part of the Business are
bound, other than such violations, conflicts, defaults, breaches, losses or
Liens which individually or in the aggregate, have a Material Adverse
Effect on the Condition of the Business or materially impair the ability of
the Company to perform its obligations hereunder, or (ii) will be cured
prior to or concurrently with the Closing, or (c) violate any Law or any
judgment, decree, order, regulation or rule of any Governmental Authority
to which the Company or any Subsidiary is subject or by which any of them
or any of their assets or properties constituting a part of the Business
are bound, or result in the loss of any license, privilege or certificate
benefitting the Company or any Subsidiary, other than such violations or
losses which would not, individually or in the aggregate, have a Material
Adverse Effect on the Condition of the Business or materially impair the
ability of the Company to perform its obligations hereunder. SCHEDULE
4.4(II) hereto sets forth the Company's estimate of Consent Fees and
prepayment penalties to be paid with respect to indebtedness of the Company
becoming due as a result of the transactions contemplated by this
Agreement.
4.5 Financial Statements; No Undisclosed Liabilities.
(a) The Company has previously delivered to the Purchaser the Audited
Financial Statements and the Interim Financial Statements. Except as may
otherwise be indicated therein or on SCHEDULE 4.5(A) hereto, the Audited
Financial Statements and the Interim Financial Statements (i) were compiled
from the books and records of the Company regularly maintained by
management and were prepared in accordance with GAAP, and (ii) present
fairly in all material respects the financial position of the Group as of
the respective dates thereof and the results of operations of the Group for
the periods indicated therein, in each case in accordance with GAAP,
consistently applied.
(b) Except as set forth on SCHEDULE 4.5(B) hereto or as reflected in
the Interim Balance Sheet, the Company and its Subsidiaries do not have,
and as a result of the transactions contemplated by this Agreement, will
not have, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise, and whether due or to become due), except for
liabilities and obligations (i) incurred in the ordinary course of business
consistent with past practice since the date of the Interim Balance Sheet,
or (ii) which, individually or in the aggregate, will not have a Material
Adverse Effect on the Condition of the Business or the Group.
(c) The Company has established reserves on its books, in accordance
with GAAP, for (i) all outstanding claims for workers' compensation and
(ii) all accounts receivable, including amounts charged back to customers
for deductions improperly taken by them from the amount which they were
invoiced.
4.6 Absence of Certain Changes or Events. Except in each case as set
forth on SCHEDULE 4.6 hereto or as otherwise contemplated by this
Agreement, since January 31, 1999:
(a) there has not occurred any change or event having a Material
Adverse Effect on the Condition of the Business; and
(b) neither the Company nor any Subsidiary has, to the extent the
following relate to the Business, (i) incurred any material Liability,
except normal trade or business obligations or Liabilities incurred in the
ordinary course of business in a manner consistent with past practice and
except for any Liens described in (i)-(v) of Section 4.13 hereof, (ii)
mortgaged, pledged or subjected to or permitted the imposition of any Lien
(other than statutory Liens for taxes not yet due and payable) upon any of
its assets or properties, except in the ordinary course of business in a
manner consistent with past practice or any Liens described in (i)-(v) of
Section 4.13 hereof, (iii) made or carried out any payment, discharge,
satisfaction or settlement of any material claim or obligation of the
Company or any Subsidiary, except in the ordinary course of business and
consistent with past practice, (iv) except as reflected in the Interim
Financial Statements, if prior to July 31, 1999, or as reflected on the
Closing Group Account Statement as an outgoing cash flow pursuant to
Section 3.5(a)(iii) hereof, if on or after May 1, 1999, declared, set aside
or paid any dividend or made any other distribution with respect to any
capital shares or securities convertible into or exercisable for capital
shares of the Company or any Subsidiary, (v) issued or sold, or entered
into any contract for the issuance or sale, of any capital shares or
securities convertible into or exercisable for capital shares of the
Company or any Subsidiary, (vi) entered into any material commitment or
transaction (including, without limitation, any borrowing or capital
expenditure) not in the ordinary course of business in a manner consistent
with past practice or not otherwise contemplated by this Agreement, (vii)
sold, assigned, pledged, transferred or otherwise disposed of any material
assets of the Company or any Subsidiary (excluding in all events sales of
assets no longer useful in the operation of the business and sales of
inventory to customers in the ordinary course of business consistent with
past practice and transfers or other dispositions between members of the
Group), or sold, assigned or otherwise disposed of or permitted to lapse
any rights to the use of any material patents, trademarks, service marks,
trade names, copyrights, licenses, franchises, know-how or any other
intangible assets of the Company or any Subsidiary, (viii) carried out any
write-down of the value of any asset of the Company or any Subsidiary or
any write-off as uncollectible of any accounts or notes receivable or any
portion thereof, other than write-downs or write-offs which do not exceed
$300,000, in the aggregate, as of the date hereof and except for write-offs
in the ordinary course of business consistent with past practice applied
against reserves in effect as of January 31, 1999, (ix) cancelled any
material debt or claims, or amended, terminated or waived any rights of
material value to the Company or any Subsidiary, other than in the ordinary
course of business consistent with past practice, (x) granted any increase
in the compensation of any employee earning in excess of $100,000 per
annum, including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment, or any increase in the
compensation payable or to become payable to any such employee, except, in
each case, for increases granted in the ordinary course of business in a
manner consistent with past practice or in accordance with the terms of any
of the Contracts disclosed on SCHEDULE 4.7(B) hereto, (xi) adopted or
modified any employee plan or arrangement or entered into or modified any
employment agreement, (xii) suffered or incurred damage or destruction, or
any loss (whether or not covered by insurance) of, any material properties
or assets of the Company or any Subsidiary, or (xiii) entered into or
agreed (whether in writing or otherwise) to enter into any agreement or
other arrangement to take any action referred to in this Section 4.6.
4.7 Leases of Personal Property; Material Contracts; No Default.
(a) SCHEDULE 4.7(A) hereto sets forth a true and complete list of each
lease of personal property relating to the Business to which the Company or
any Subsidiary is a party or by which it or its properties or assets
relating to the Business are bound which provides for payments in excess of
$100,000 per annum and which has a remaining term in excess of one year
(collectively, the "PERSONAL PROPERTY LEASES"). The Company has delivered
or made available to the Purchaser a true and complete copy of each of the
Personal Property Leases.
(b) SCHEDULE 4.7(B) hereto sets forth a true and complete list of all
agreements relating to the Business to which the Company or any Subsidiary
is a party or by which it or any of its properties or assets relating to
the Business are bound (collectively, the "CONTRACTS"), of the following
types: (i) employment agreements providing for annual compensation in
excess of $50,000 with respect to any employee; (ii) agreements which limit
or restrict the Company, any Subsidiary or any Affiliate (including, after
the Closing, the Purchaser, Acquisition Sub and any Affiliate) from
competing in any line of business included in the Business or otherwise in
any other business, or from carrying on or expanding the nature or
geographical scope of the Business anywhere in the world, or agreements
which restrict the products, product lines or distribution channels in
which the Company, any Subsidiary or any Affiliate (including, after the
Closing, the Purchaser, Acquisition Sub or any Affiliate) can compete,
other than limitations and restrictions relating to the use of patents,
trademarks, trade names and copyrights and intellectual property licenses
currently used in the Business; (iii) agreements which limit or restrict
the Company, any Subsidiary and any Affiliate (including, after the
Closing, the Purchaser, Acquisition Sub and any Affiliate) from purchasing
any raw materials, goods, supplies, services or products from any Person,
including its subsidiaries and Affiliates, (iv) sales agency, distribution
or manufacturers representatives' agreements which provide for compensation
on a commission basis which compensation is expected to exceed $50,000 in
the twelve month period ended June 30, 1999; (v) collective bargaining
agreements or other Contracts with any labor union or other labor
organization relating to wages, hours and other conditions of employment in
effect as of the date hereof; (vi) loan agreements, notes, mortgages,
indentures, security agreements and other agreements and instruments
relating to the borrowing of money, in each case pursuant to which the
outstanding indebtedness is in excess of $50,000; (vii) material franchise
and broker agreements between the Company or any Subsidiary and any other
Person; (viii) license agreements between the Company, as licensee, and
each licensor to which the Company has a payment obligation of more than
$50,000 in the aggregate of guaranteed royalties during the respective
remaining terms of such license agreements between the Company and such
licensor; (ix) powers of attorney (other than agency agreements and powers
of attorney entered into in the ordinary course of business); (x)
partnership or joint venture agreements; (xi) agreements with any
Affiliate; and (xii) any other agreement (other than purchase orders,
agreements with third party service providers, "off-the-shelf" software
licenses or arrangements and agreements with vendors and customers entered
into on an arms-length basis in the ordinary course of business) requiring
payments in excess of $100,000 during the remainder of its term. The
Company has delivered or made available to the Purchaser a true and
complete copy of each of the Contracts or other agreements listed on
SCHEDULE 4.7(B) hereto.
(c) Except as set forth on SCHEDULE 4.7(C) hereto, the Company and its
Subsidiaries have performed in all material respects, or are now performing
in all material respects, their obligations under, and are not in default
(and would not by the lapse of time or the giving of notice or both be in
default) under, or in breach or violation of, nor have they received notice
of any asserted claim of a material default by the Company or any
Subsidiary under, or a material breach or violation by the Company or any
Subsidiary of, any of the Personal Property Leases or Contracts and, to the
knowledge of the Company, the other party or parties thereto are performing
in all material respects and are not in violation thereunder.
4.8 Intellectual Property. (a) As used herein, the term "INTELLECTUAL
PROPERTY" means all patents and patent applications; trademarks, service
marks, and trademark or service xxxx registrations and applications, trade
names, Internet domain names, logos, designs, slogans, and general
intangibles of like nature, together with all goodwill related to the
foregoing; copyrights, copyright and mask works (as defined in 17 U.S.C.
901, et seq) registrations, renewals and applications for copyrights and
mask works; computer programs, including any and all software
implementations of algorithms, models and methodologies whether in source
code or object code form, databases and compilations, including any and all
data and collections of data, all documentation, including user manuals and
training materials, related to any of the foregoing and the content and
information contained on any Web site (collectively, "SOFTWARE");
confidential information, technology, know-how, inventions, processes,
formulae, algorithms, models and methodologies (such confidential items,
collectively "TRADE SECRETS") owned by the Company or used or presently
proposed to be used in the Business as of the Closing.
(b) The Company and its Subsidiaries own, or are licensed or otherwise
have the legal right to use (and the right to sell or license the
Intellectual Property on SCHEDULE 4.8(B) owned by the Company or any
Subsidiary), all Intellectual Property necessary to the conduct of the
Business as currently conducted free and clear of all Liens, other than
Liens which will be released as of the Closing, and the use of such
Intellectual Property by the Company and its Subsidiaries does not
infringe, violate or dilute any Intellectual Property rights of any Person,
subject to such exceptions which would not, individually or in the
aggregate, have a Material Adverse Effect on the Condition of the Business.
(c) SCHEDULE 4.8(C) hereto contains, for the following Intellectual
Property owned by the Company and its Subsidiaries and material to the
Business, a complete and accurate list of all U.S., state and foreign: (i)
patents and patent applications; (ii) trademark and service xxxx
registrations (including Internet domain name registrations), trademark and
service xxxx applications and material unregistered trademarks and service
marks; and (iii) copyright registrations, copyright applications and
material unregistered copyrights. The Company, or one of its Subsidiaries,
currently is the sole and exclusive owner and has filed with the U.S. or
foreign agency for each application and registration listed on SCHEDULE 4.8
hereto.
(d) SCHEDULE 4.8(D) hereto also lists (i) all Software which is owned
by the Company or its Subsidiaries ("PROPRIETARY SOFTWARE"), and (ii) all
agreements material to the operations of the Business (which for purposes
of this Section 4.8(d) shall include those disclosed pursuant to Section
4.7(b) (viii)) which grant or by which the Company or any of its
Subsidiaries has obtained any right to use or practice any rights under any
Intellectual Property (excluding "click-wrap," or "shrink-wrap" agreements
or agreements contained in "off-the-shelf" Software or the terms of use or
service for any website), to which the Company or any of its Subsidiaries
is a party or otherwise bound, as licensee or licensor thereunder,
including, without limitation, license agreements, settlement agreements
and covenants not to xxx (collectively, the "IP LICENSE AGREEMENTS").
(e) Any Intellectual Property owned by the Company or its
Subsidiaries, and, to the knowledge of the Company, any Intellectual
Property used (but not owned) by the Company or its Subsidiaries, has been
duly maintained, is valid and subsisting, in full force and effect and has
not been cancelled, expired or abandoned.
(f) Except as set forth on SCHEDULE 4.8 hereto, the consummation of
the transactions contemplated hereby will not require the consent of third
parties in respect of any material Intellectual Property, and such
consummation will not result in the loss or impairment of the Company's and
its Subsidiaries rights to own or use any material Intellectual Property.
(g) Except or as set forth on SCHEDULE 4.8 hereto:
(i)no claims or threats of claims have been asserted since
February 1, 1997 by any Person related to the use in the conduct of
the Business, as currently conducted, of any Intellectual Property or
challenging or questioning the validity or effectiveness of any
material license or agreement to which the Company or any Subsidiary
is a party relating to the Intellectual Property, and no such claims
or threats of claims are still in effect or pending;
(ii) no settlement agreements, consents, judgements, orders,
forebearance to xxx or similar obligations limit or restrict the
Company's or any Subsidiary's rights in and to any Intellectual
Property;
(iii) the Company and its Subsidiaries have not licensed or
sublicensed their rights in any Intellectual Property, or received or
been granted any such rights, other than pursuant to the IP License
Agreements;
(iv) to the knowledge of the Company, no third party is
misappropriating, infringing, diluting or violating any Intellectual
Property owned by the Company or its Subsidiaries;
(v) the IP License Agreements are valid and binding obligations
of the Company and/or the relevant Subsidiary, enforceable in
accordance with their terms, and there exists no event or condition
which will result in a violation or breach of, or constitute a default
by the Company and/or the relevant Subsidiary or, to the knowledge of
the Company and its Subsidiaries, the other party thereto, under any
such IP License Agreement;
(vi) the Company and its Subsidiaries have taken reasonable
measures to protect the confidentiality of their Trade Secrets; and
(vii) all Proprietary Software set forth in Schedule 4.8 was
either developed (a) by employees of the Company or one of its
Subsidiaries within the scope of their employment; (b) by independent
contractors as "works-made-for-hire," as that term is defined under
Section 101 of the United States Copyright Act, 17 U.S.C. ss. 101,
pursuant to a written agreement; or (c) by third parties who have
assigned all of their rights therein to the Company or relevant
Subsidiary pursuant to a written agreement. No former or present
employees, officers or directors of the Company or any Subsidiary
retain any rights of ownership or use of the Proprietary Software.
4.9 Year 2000 Compliance
(a) All Software (whether embedded or otherwise), and systems owned,
used, held for use, licensed or relied on by the Company and its
Subsidiaries in the conduct of Business is Year 2000 Compliant or is
reasonably expected to be Year 2000 Compliant, including, without
limitation, with respect to interface with their customers' and suppliers'
Software, by October 31, 1999, except for such Software and systems the
failure of which to be Year 2000 Compliant would not individually or in the
aggregate, have a Material Adverse Effect on the Condition of the Business.
As used herein, "YEAR 2000 COMPLIANT" and "YEAR 2000 COMPLIANCE" mean for
all dates and times, including, without limitation dates and times before,
on and after December 31, 1999, when used on a stand-alone system or in
combination with other software or systems: (i) the application system
functions and receives and processes dates and times correctly without
abnormal results; (ii) all date related calculations are correct
(including, without limitation, age calculations, duration calculations and
scheduling calculations); (iii) all manipulations and comparisons of
date-related data produce correct date results for all valid date values
within the scope of the application; (iv) there is no century ambiguity;
(v) all reports and displays are sorted correctly; and (vi) leap years are
accounted for and correctly identified (including, without limitation, that
2000 is recognized as a leap year).
(b) The Company and/or its Subsidiaries requested and obtained written
representations or assurances from each material supplier and from a
majority of material customers that (x) provides data of any type that
includes date information or which is otherwise derived from, dependent on
or related to date information ("DATE DATA") to the Company and/or its
Subsidiaries, (y) processes in any way Date Data for the Company and/or its
Subsidiaries or (z) otherwise provides any material product or service to
the Company and/or its Subsidiaries that is dependent on Year 2000
Compliance, that such entity believes that all of its Date Data and related
software and systems that are used for, or on behalf of, the Company and/or
its Subsidiaries are Year 2000 Compliant.
4.10 Actions. Except as set forth on SCHEDULE 4.10 hereto, there is no
Action pending or, to the knowledge of the Company, threatened, against the
Company or any Subsidiary or any of their respective assets, properties or
rights, before any court, arbitrator or other Governmental Authority which
(i) questions or challenges the validity of the Merger or any action taken
or proposed to be taken by the Company pursuant hereto or in connection
with the transactions contemplated hereby or (ii) would, if adversely
determined, individually or in the aggregate, have a Material Adverse
Effect on the Condition of the Business or, individually, result in Damages
in the amount of $200,000 or more.
4.11 Compliance with Laws. Except as set forth on SCHEDULE 4.11
hereto, (i) the Company and its Subsidiaries are in compliance in all
material respects with all Laws applicable thereto, (ii) neither the
Company nor any Subsidiary is at present charged with or, to the knowledge
of the Company, threatened with any charge concerning or under any
investigation with respect to, any violation, in any material respect, of
any provision of any Law, and (iii) neither the Company nor any Subsidiary
is in violation of or in default under, and to the knowledge of the
Company, no event has occurred which, with the lapse of time or the giving
of notice or both, would result in the violation of or default under, the
terms of any judgment, decree, order, injunction or writ of any court or
other Governmental Authority.
4.12 Taxes.
(a) Except as set forth on SCHEDULE 4.12(A) hereto:
(i) The Company has been a "small business corporation," as
defined in Section 1361(b) of the Code, at all times since November 1,
1987. The Company has had in effect, at all times since November 1,
1987, a valid election to be treated as an "S corporation," as defined
in Section 1361(a) of the Code, for federal income Tax purposes and in
the state and local jurisdictions set forth on Schedule 4.12(a)(i). No
Subsidiary other than Landmark General Corporation has made an
election to be treated as a "qualified subchapter S subsidiary"
("QSSS"), as defined in Section 1361(b)(3)(B) of the Code (and in any
comparable provision of state or local law) ("QSSS ELECTION"). None of
the Company, any of its Subsidiaries or, to the knowledge of the
Company, any of the Cullman Shareholders has taken or caused or
permitted to be taken any action that would cause, or would have
caused, a termination of the S-Election or any QSSS Election for any
period.
(ii) The Company and each of its Subsidiaries has timely filed,
or caused to be timely filed, with the appropriate taxing authorities
all Tax Returns, and all such Tax Returns are true, correct and
complete in all material respects. The Company and each of its
Subsidiaries has paid in full, within the time and in the manner
prescribed by law, all Taxes that are due and payable. There is no
action, suit, proceeding, investigation, audit, claim or assessment
pending or threatened in writing with respect to the Company or any of
its Subsidiaries with respect to a liability for Taxes or with respect
to any Tax Return.
(iii) Schedule 4.12(a)(iii) lists all audits, examinations and
investigations since January 1, 1992 ("Audits"), whether or not such
Audits are ongoing, together with a description of the matters raised
during such Audits and any revenue agent reports or similar reports
for state and local income tax purposes issued in connection
therewith, with respect to the Company or any of its Subsidiaries.
(iv) The Company and each of its Subsidiaries has complied in all
respects with all applicable Laws relating to the withholding of Taxes
(including withholding of Taxes pursuant to Sections 1441 and 1442 of
the Code or similar provisions under foreign Laws and withholding of
employment Taxes) and has, within the time and manner prescribed by
Law, withheld and paid over to the proper taxing authorities all
amounts required to be withheld and paid over under all applicable
Laws.
(v) No deficiency for any Tax has been assessed with respect to
the Company or any of its Subsidiaries which has not been paid in
full.
(vi) SCHEDULE 4.12(A)(VI) lists all jurisdictions in which the
Company or any of its Subsidiaries files Tax Returns. No jurisdiction
where the Company or any of its Subsidiaries does not file a Tax
Return has made a claim that such company which does not file a Tax
Return is required to file a Tax Return for such jurisdiction.
(vii) There are no Liens for Taxes upon the assets or properties
of the Company or any of its Subsidiaries or the stock or equity
interests of the Company or any of its Subsidiaries, other than Liens
for current Taxes not yet delinquent or Taxes which are not yet due
and payable or which are being contested in good faith.
(viii)There are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect
to any Taxes or Tax Returns of the Company or any of its Subsidiaries.
(ix) Neither the Company nor any of its Subsidiaries has
requested an extension of time within which to file any Tax Return
with respect to any taxable period or year for which such Tax Return
has not since been filed.
(x) Neither the Company nor any of its Subsidiaries has agreed to
any extension of time with respect to a Tax assessment or deficiency
with respect to any Tax Return that is currently the subject of audit.
(xi) Since January 1, 1992, no closing agreement pursuant to
Section 7121 of the Code (or any predecessor provision) or any similar
provision of any state, local or foreign Law has been entered into by
or with respect to the Company or any of its Subsidiaries.
(xii) Neither the Company nor any of its Subsidiaries is a party
to, is bound by, or has obligation under, any Tax sharing agreement,
Tax indemnification agreement or similar contract or arrangement, and
neither the Company nor any of its Subsidiaries has potential
liability or obligation to any person as a result of, or pursuant to,
any such agreement, contract or arrangement. Neither the Company nor
any of its Subsidiaries has any liability for Taxes of another person
by contract or otherwise.
(xiii)No power of attorney which is currently in force has been
granted by or with respect to the Company or any of its Subsidiaries
with respect to any matter relating to Taxes.
(xiv) Neither the Company nor any of its Subsidiaries has been a
member of an affiliated group filing a federal income Tax Return.
(xv) Neither the Company nor any of its Subsidiaries has incurred
or will incur in connection with the transactions contemplated by this
Agreement any Tax under Section 1374 of the Code (or similar provision
of state and local law) in excess of the amount set forth on SCHEDULE
4.12(A)(XV) hereto.
(xvi) Neither the Company nor any of its Subsidiaries has
participated in or cooperated with an international boycott within the
meaning of Section 999 of the Code.
(xvii)Landmark has no assets other than those listed on SCHEDULE
4.12(A)(XVII) hereto.
(xviii) No property of the Company or any of its Subsidiaries is
property that the Company or any of its Subsidiaries is or will be
required to treat as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Code (as in effect prior to
amendment by the Tax Equity and Fiscal Responsibility Act of 1982).
(xix) Neither the Company nor any of its Subsidiaries has engaged
in a like-kind exchange within the meaning of Section 1031 of the Code
or received cash proceeds in connection with an involuntary conversion
within the meaning of Section 1033 of the Code, in which the
replacement property could be purchased on or after the Closing Date.
(xx) No Cullman Shareholder is a foreign person for purposes of
Section 1445 of the Code and the Treasury Regulations promulgated
thereunder.
(b) The Company and each of its Subsidiaries will deliver or make
available to Purchaser complete and accurate copies of each of: (i) all tax
opinions, audit reports, letter rulings, technical advice memoranda and
similar items obtained or received since January 1, 1992 relating to United
States federal, state, local and foreign Taxes due from or with respect to
the Company or any of its Subsidiaries and (ii) United States federal Tax
Returns, and those state, local or foreign Tax Returns filed by the Company
or any of its Subsidiaries since January 1, 1992. The Company and each of
its Subsidiaries will deliver to Purchaser all materials with respect to
the foregoing for all matters arising after the date hereof.
4.13 Title to Property. Except as set forth on SCHEDULE 4.13 hereto,
the Company and its Subsidiaries have good title to or a valid leasehold
interest in or license to use all of their material properties and assets
(real, personal, mixed, tangible and intangible) used by the Business, free
and clear of all Liens, except (i) Liens for current Taxes not yet
delinquent or Taxes which are not yet due and payable or which are being
contested in good faith, (ii) such Liens and imperfections of title, if
any, as are not substantial in character, amount or extent and do not
materially impair the use or occupancy of such property or assets or
operations of the Company and its Subsidiaries, taken as a whole, (iii)
Liens arising by operation of law without the knowledge of the Company,
(iv) any workmen, repairmen, warehousemen, mechanics', carriers' and
similar Liens and Liens arising in the ordinary course of business; (v)
Liens arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business; and (vi) where the failure to have such good title or valid
leasehold interest or license to use would not, individually or in the
aggregate, have a Material Adverse Effect on the Condition of the Business.
4.14 Insurance. SCHEDULE 4.14 hereto sets forth a true and complete
list of all material insurance policies or binders currently insuring the
property, assets or business liabilities of the Company and its
Subsidiaries that constitute part of the Business. The Company has
delivered or made available to the Purchaser true and complete copies of
such policies and binders. Except as set forth on SCHEDULE 4.14 hereto, (a)
all such policies or binders are in full force and effect and no premiums
due and payable thereon are delinquent, (b) there are no pending material
claims against such insurance policies or binders by the Company or any
Subsidiary as to which the insurers have denied liability, (c) the Company
and its Subsidiaries have complied in all material respects with the
provisions of such policies and (d) there exist no material claims under
such insurance policies or binders that have not been properly and timely
submitted by the Company or any Subsidiary to their insurers.
4.15 Approvals.
(a) Except as set forth on SCHEDULE 4.15 hereto, and except for any
filings under the HSR Act, neither any declaration, filing or registration
with, notice to, nor Approval of, any Governmental Authority is required to
be made, obtained or given by or with respect to the Company or any
Subsidiary in connection with the execution, delivery or performance by the
Company of this Agreement, the performance by it of its obligations
hereunder or the consummation by it of the transactions contemplated
hereby, except where the failure to make, obtain or give such declarations,
filings, registrations, notices or Approvals would not, individually or in
the aggregate, have a Material Adverse Effect on the Condition of the
Business.
(b) The Company and its Subsidiaries have all material Approvals
required for the operation of the Business and the use and ownership or
leasing of their properties and assets that constitute part of the
Business, as currently operated, used, owned or leased. All of such
Approvals are valid, in full force and effect and in good standing, except
where the failure to be so would not, individually or in the aggregate,
have a Material Adverse Effect on the Condition of the Business. There is
no proceeding pending or, to the knowledge of the Company, threatened, that
disputes the validity of any such Approval or that is likely to result in
the revocation, cancellation or suspension, or any adverse modification of
any such Approval.
4.16 Employee Benefit Plans; ERISA. SCHEDULE 4.16 hereto contains a
list of all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
under which employees of the Company, its Subsidiaries or an ERISA
Affiliate (as defined herein) are eligible to participate or derive a
benefit (collectively, the "EMPLOYEE PLANS"). Neither the Company, any
Subsidiary nor any ERISA Affiliate has any commitment or formal plan,
whether legally binding or not, to create any additional employee benefit
plan or modify or change any existing Employee Plan that would affect any
employee or former employee of the Company or any Subsidiary. Except as
disclosed on SCHEDULE 4.16 hereto:
(a) Each Employee Plan is in compliance, in all material respects,
with applicable requirements prescribed by any and all state, federal or
foreign laws, including, but not limited to, ERISA and the Code. Each
Employee Plan that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal
Revenue Service after December 31, 1993 as to such Plan's qualification
under Section 401(a) of the Code and, to the knowledge of the Company,
there is no fact, condition or set of circumstances that could adversely
affect such favorable determination.
(b) The Company and its Subsidiaries have in all material respects
performed all obligations required to be performed by them under ERISA, the
Code and any other applicable state, federal or foreign law and under the
terms of each Employee Plan. Neither the Company nor any Subsidiary has
received any written notice within the past six years of the existence of
any material default or violation by any other party of any of such laws,
terms or requirements applicable to any of the Employee Plans.
(c) Other than routine claims for benefits, neither the Company nor
any Subsidiary has received any written notice within the past six years of
any pending material claims or lawsuits which have been asserted or
instituted against any of the Employee Plans, the assets of the trusts or
funds under the Employee Plans, the sponsor or administrator of any of the
Employee Plans, or against any fiduciary or any of the Employee Plans with
respect to the operation of such Employee Plan.
(d) Neither the Company nor any Subsidiary has received any written
notice within the past six years of any pending investigation or pending
enforcement action by the Pension Benefit Guaranty Corporation ("PBGC"),
the Department of Labor, the IRS or any other governmental agency with
respect to any of the Employee Plans.
(e) Neither the Company, any Subsidiary nor any other corporation,
trade or business which is affiliated with the Company, in the manner
described in Section 414(b), (c), (m) and (o) of the Code or Section
4001(a)(14) of ERISA (an "ERISA AFFILIATE") has made or been obligated to
make contributions to any defined benefit pension plan at any time during
the period beginning January 1, 1993, other than the two Employee Plans
(listed on SCHEDULE 4.16 hereto) that are assigned plan numbers 001 and
007. Neither of these two Employee Plans is a multi-employer plan within
the meaning of Section 4001(a)(3) of ERISA.
(f) With respect to each Employee Plan, the Company has delivered to
the Purchaser a current, accurate and complete copy (or, to the extent no
written copy exists, an accurate description) thereof, including any
amendments thereto, and, to the extent applicable: (i) any related trust
agreement or other funding instrument and the latest financial statements
thereof; (ii) the most recent determination letter, if applicable; (iii)
any summary plan description and other written communications by the
Company or its Subsidiaries to their employees concerning the extent of the
benefits provided under an Employee Plan; and (iv) for the three most
recent years (A) the IRS Form 5500 and attached schedules, (B) audited
financial statements, and (C) actuarial valuation reports.
(g) (i) As of the Closing Date, the Company and its Subsidiaries have
made all required premium payments when due to the PBGC; and (ii) neither
the Company nor its Subsidiaries is subject to any liability to the PBGC
for any plan termination occurring on or prior to the Closing Date.
(h) With respect to each Employee Plan subject to Title IV of ERISA,
the present value of accrued benefits under such Employee Plan, based upon
the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such Employee Plan's actuary with respect to
such Employee Plan did not exceed, as of its latest valuation date, the
then current value of the assets of such Employee Plan allocable to such
accrued benefits.
(i) No Employee Plan subject to Title IV of ERISA or any trust
established thereunder has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal year of each
such Employee Plan ended prior to the Closing Date nor has there been any
application for waiver of the minimum funding standards imposed by Section
412 of the Code. All contributions required to be made with respect to any
Employee Plan on or prior to the Closing Date have been timely made or are
reflected on the Interim Balance Sheet.
(j) No Employee Plan has engaged in a non-exempt "prohibited
transaction" as defined in Section 4975 of the Code or Section 406 of ERISA
(k) No Employee Plan provides medical, surgical, hospitalization,
death or similar benefits (whether or not insured) for employees or former
employees (or their beneficiaries) of the Company and its Subsidiaries for
periods extending beyond their respective dates of retirement or other
termination of service, other than (A) coverage mandated by applicable law,
(B) death benefits under any "pension plan" or (C) benefits the full cost
of which is borne by the current or former employee (or his beneficiary).
(l) No amounts payable under the Employee Plans will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the
Code. No Subsidiary has made any payments, or is obligated to make any
payments and is not a party to any agreement that could obligate it to make
any payments that will not be deductible under Section 280G of the Code.
(m) The consummation of transactions contemplated by this Agreement
will not, either alone or in combination with another event, (i) entitle
any current or former employee or officer of the Company and its
Subsidiaries or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer, or (iii) require the immediate funding or financing of any
compensation or benefits.
(n) At no time have employees of the Allied Graphic Arts Business
participated or been eligible to participate in any of the Employee Plans
set forth on Schedule 4.16.
4.17 Subsidiaries. SCHEDULE 4.17 hereto contains a true and complete
list of all of the Company's Subsidiaries, their jurisdictions of
incorporation and the jurisdictions where each of the Subsidiaries is
qualified as a foreign corporation to do business. SCHEDULE 4.17 hereto
also contains a true and complete list of the authorized and outstanding
capital stock of each Subsidiary. Each Subsidiary is duly qualified or
licensed to do business as a foreign corporation and is in good standing as
a foreign corporation in every jurisdiction in which the failure to be
qualified or licensed would have a Material Adverse Effect on the Condition
of the Business. Each of the Subsidiaries is a corporation validly existing
and in good standing under the laws of the jurisdiction of incorporation
and has the corporate power to conduct its business as it is now being
conducted. All of the outstanding shares of capital stock of each of the
Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and are owned of record and beneficially by the Company or
another Subsidiary free and clear of any Lien as shown on SCHEDULE 4.17
hereto. Except for the shares of capital stock owned by the Company or
another Subsidiary and as set forth on SCHEDULE 4.17 hereto, there are no
outstanding (i) shares of capital stock or other voting securities of any
Subsidiary, (ii) securities of any Subsidiary convertible into or
exchangeable for shares of capital stock or other voting securities of any
Subsidiary, (iii) subscription rights, options, warrants, calls,
commitments, preemptive rights (other than preemptive rights imposed solely
by statute) or other rights of any kind to acquire from any Subsidiary, or
any obligation of any Subsidiary to issue or sell, any shares of capital
stock or other voting securities or any securities of such Subsidiaries
convertible into or exchangeable for such capital stock or other voting
securities, and (iv) equity equivalents, interests in the ownership or
earnings of, or stock appreciation, phantom stock or other similar rights
of or with respect to any Subsidiary. There are no outstanding obligations
(contractual or otherwise) of any Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock or any other securities of
the type described in clauses (i) -(iv) of the preceding sentence. Other
than AGA LLC, the Company has no investment in any other corporation,
partnership, limited liability company, joint venture or other business
association or entity.
4.18 Environmental Matters. Except as set forth on SCHEDULE 4.18
hereto, (i) the Company, its Subsidiaries and the operations of the
Business have been and are in material compliance with all applicable
Environmental Laws and all requirements of applicable permits, licenses,
approvals and other authorizations issued pursuant to applicable
Environmental Laws ("ENVIRONMENTAL PERMITS"), (ii) there has not been any
release of Hazardous Materials on, in, under or from any Real Property or
any property formerly owned or occupied by the Company, its Subsidiaries or
any predecessors thereto, that would be reasonably likely to result in
investigation or remediation under applicable Environmental Laws; (iii)
neither the Company nor any Subsidiary has received any notice within the
past five years from any Governmental Authority or other Person claiming
any violation of or requesting an investigation concerning the violation of
any Environmental Law, or otherwise alleging that the Company, its
Subsidiaries or any predecessors thereto may be liable under any
Environmental Law; (iv) neither the Company nor any Subsidiary has received
a request within the past five years from any Governmental Authority for
information concerning the release, discharge or disposal of Hazardous
Materials, whether at the Real Property or at any other location, whether
or not currently or formerly owned by the Company, its Subsidiaries or any
predecessors thereto, except to the extent a Governmental Authority may
have requested information but not pursued a claim against the Company or
its Subsidiaries within two years of having made the request; (v) in
connection with any pending applications or proceedings for new, renewal or
modified Environmental Permits, the Company has not been made aware that
the terms, conditions and requirements of such Environmental Permits, or
any modification to same, may be imposed or required that, individually or
in the aggregate, could have a material effect on the Company or any
Subsidiary; (vi) the Company has provided or made available to Purchaser
all environmental reports, studies or analyses which have been delivered to
any lender in connection with the Credit Agreement, dated as of October 28,
1997, as amended, by and among the Company, the lenders referred to
therein, First Union National Bank, as agent, and The Bank of New York, as
documentation agent, and are in the possession of the Company, relating to
environmental compliance, the environmental condition of the Real Property
or any property formerly owned or operated by the Company, its Subsidiaries
or any predecessors thereto, or any off-site environmental liability of the
Company or its Subsidiaries; and (vii) in connection with the Business,
neither the Company nor any Subsidiary has assumed, contractually or
through a merger, any material liabilities or obligations under any
Environmental Law.
4.19 Labor Matters. Except as set forth on SCHEDULE 4.19 hereto, (i)
there is no unfair labor practice charge or complaint against the Company
or any Subsidiary pending before the National Labor Relations Board, any
state labor relations board or any court or tribunal and, to the Company's
knowledge, none is or has been threatened; (ii) there is no labor strike,
dispute, request for representation, organizing activity, slowdown or
stoppage actually pending against or affecting the Company or any
Subsidiary and, to the Company's knowledge, none is or has been threatened.
To the Company's knowledge, the Company and its Subsidiaries are in
compliance in all material respects with Title VII of the Civil Rights Act
of 1964, as amended, the Fair Labor Standards Act, as amended, the
Immigration Reform and Control Act of 1986, the Americans with Disabilities
Act, the Family Medical Leave Act, and all applicable local, state and
federal laws, rules and regulations governing occupational safety and
health requirements and payment of minimum wages and overtime rates. Except
as set forth on SCHEDULE 4.19 hereto, there are no pending claims against
the Company or any Subsidiary arising out of, or relating to, or alleging
any violation of any of the foregoing. Except for individuals utilized by
the Allied Graphic Arts Business, neither the Company nor any of its
Subsidiaries has engaged any individual as an independent contractor or
made payments for services to be performed by any individual as an
independent contractor who should be considered, under applicable Law, an
employee of (rather than an independent contractor to) the Company or a
Subsidiary of the Company.
4.20 Personal Property. SCHEDULE 4.20 hereto sets forth a true and
complete list of all equipment and fixtures having an acquisition cost of
$500,000 or more owned by the Company or any Subsidiary that are used in
the Business. Except as set forth on SCHEDULE 4.20 hereto, all such assets
are in substantially good condition and repair, normal wear and tear
excepted, and are adequate for the uses to which they are being put in the
ordinary course of the Business. All of the assets listed on SCHEDULE 4.20
hereto, together with all other personal property owned by the Company and
its Subsidiaries constitute, in the reasonable business judgment of the
Company, all of the tangible personal property necessary for the operation
of the Business as it is currently operated (other than such personal
property as may be leased or licensed by the Company and its Subsidiaries
and other than those items, if any, the failure of which to own or lease
would not, individually or in the aggregate, have a Material Adverse Effect
on the Condition of the Business).
4.21 Real Property.
(a) Set forth on SCHEDULE 4.21(A) hereto is a list of all the real
property owned by Company and its Subsidiaries and used in the Business
(the "OWNED REAL PROPERTY").
(b) Set forth on SCHEDULE 4.21(B) hereto is a list of all leases,
subleases, licenses and other agreements (collectively, the "REAL PROPERTY
LEASES") under which the Company or any Subsidiary uses or occupies or has
the right to use or occupy, now or in the future, any real property used in
the Business (the land, buildings and other improvements covered by the
Real Property Leases being herein called the "LEASED REAL PROPERTY"). The
Owned Real Property and the Leased Real Property are collectively referred
to herein as the "REAL PROPERTY".
(c) Except as provided on SCHEDULE 4.21(C) hereto, neither the Company
nor any Subsidiary owns or holds, or is obligated under or a party to, any
option, right of first refusal or other contractual right to sell or
dispose of the Owned Real Property or any portion thereof or interest
therein.
(d) Except as set forth on SCHEDULE 4.21(D) hereto, neither the
Company nor any Subsidiary owns or holds, or is obligated under or a party
to, any option, right of first refusal or other contractual right to
purchase any Leased Real Property or any portion thereof or interest
therein.
4.22 Distributors and Customers. SCHEDULE 4.22 hereto sets forth a
list of the top ten customers based on net sales of the Business for the
fiscal year ended January 31, 1999. Except as set forth on SCHEDULE 4.22
hereto, to the knowledge of the Company, (i) the Company enjoys good
working relationships under all of its distributor, sales representative
and similar agreements necessary to the normal operation of the Business,
and (ii) since January 31, 1999, no customer has notified the Company in
writing that it will reduce or intends to reduce its purchases of the
Group's 2000 edition products by $1,000,000 or more as compared with its
purchases of the Group's 1999 edition products.
4.23 Accounts Receivable; Escheat Property. (a) Except as set forth on
SCHEDULE 4.23(A) hereto, the accounts receivable of the Company and its
Subsidiaries (i) arose from bona fide sales transactions in the ordinary
course of business and are payable on ordinary trade terms, (ii) subject to
proper power and authority of the debtors creating the obligations, are
legal, valid and binding obligations of the respective debtors enforceable
in accordance with their terms subject to bankruptcy, insolvency,
fraudulent conveyance, moratorium or other similar laws affecting
creditors' rights generally and to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity),
(iii) do not represent obligations for goods sold on consignment or
approval; (iv) do not represent obligations for goods sold on a
sale-or-return basis for which no reserve has been recorded in the ordinary
course in accordance with GAAP and the Company, as of the date hereof, has
no knowledge of any facts that would cause it to believe that the amount of
such reserve is inappropriate, and (v) are subject to reserves established
on the Interim Balance Sheet or, with respect to accounts receivable
arising subsequent to the date thereof, to reserves established in the
ordinary course consistent with past practice and in accordance with GAAP.
At least 75% of the amount of the accounts receivable from Kmart
Corporation reflected on the Interim Financial Statements will be collected
within six months of the Closing Date, subject only to the reserves
provided for such accounts as of July 31, 1999. All settlements relating to
the Day Dream litigation are reflected as assets on the Company's books and
the full amount thereof will be collected by the Company on a timely basis
and for the account of the Group. SCHEDULE 4.23(A) hereto sets forth a
description of any security arrangements and collateral (other than
guarantees and letters of credit taken in the ordinary course of business
and purchase money security interests) securing the repayment or other
satisfaction of receivables of the Company and its Subsidiaries.
(b) The Company's liability under abandoned property, escheat or other
similar laws with respect to unclaimed credits, outstanding payables,
unclaimed checks and other matters covered by the foregoing Laws did not
exceed $400,000 as of July 31, 1999.
4.24 Inventory. The inventory of the Company and its Subsidiaries
consists of a quality and quantity usable and salable in the ordinary
course of business consistent with past practice, subject to normal and
customary allowances in the industry for spoilage, damage and outdated
items and subject to the Company's policies and practices regarding
reserves for obsolescence of seasonal merchandise in the ordinary course of
business consistent with past practice which is at a minimum in accordance
with GAAP. Except as set forth on SCHEDULE 4.24 hereto, all items included
in the inventory of the Company and its Subsidiaries are the property of
the Company and its Subsidiaries, free and clear of any Liens, have not
been pledged as collateral, are not held by the Company or its Subsidiaries
on consignment from others and conform in all material respects to all
standards applicable to such inventory or its use or sale imposed by
governmental or regulatory authorities.
4.25 Safe Deposit Boxes and Bank Accounts. Prior to the Closing, the
Company shall deliver to the Purchaser a list of the names and locations of
all banks, trust companies, savings and loan associations and other
financial institutions at which the Company or any Subsidiary maintains
safe deposit boxes or lock boxes or bank accounts and the names of all
persons authorized to have access to such boxes and accounts.
4.26 Broker's or Finder's Fees. Neither the Company nor its Affiliates
has authorized any Person (other than Xxxxxxx, Xxxxx & Co.) to act as
broker, finder, banker, consultant, intermediary or in any other similar
capacity which would entitle such person to any investment banking,
brokerage, finder's or similar fee in connection with the Merger or the
other transactions contemplated by this Agreement.
4.27 AGA LLC and CVI. The definition of "ALLIED GRAPHIC ARTS BUSINESS"
is a true and correct description of business conducted by AGA LLC. AGA LLC
does not provide any services for the Company (other than CVI Corporate) or
the Group, and following the Closing, the Company (other than CVI
Corporate) and the Group shall not be obligated to provide any services or
perform any obligations on behalf of or for AGA LLC and there will be no
contractual relationship in effect between the Company and AGA LLC. In
connection with the AGA LLC Spinoff and the CVI Distribution, no assets
presently used in the Business will be distributed or transferred from the
Business other than as set forth on SCHEDULE 4.27 hereto and, following the
Closing, AGA will have no rights to any assets or properties, including
Intellectual Property, used in the Business. All intercompany accounts
receivable and accounts payable owing between the Group, on the one hand,
and AGA LLC and CVI, on the other hand, will be eliminated at Closing.
4.28 Expenses Escrow Fund Sufficient. The Representative shall take
all necessary action in order to discharge obligations of the Company,
which are part of or contemplated by the transactions hereunder and for
which payments are to be made out of the Expenses Escrow Fund, in order
that the Company shall not have any liabilities therefor after such
discharge.
4.29 Interpretive Provision. Disclosure by any party on a Schedule
relating to a representation and warranty qualified by materiality or some
other modifier shall not constitute an admission by such disclosing party
that such item is material or otherwise required to be disclosed on such
Schedule. Disclosure by a party of a contract, agreement or other
information on a Schedule shall not constitute an admission by the
disclosing party that such contract, agreement or information is required
to be disclosed on such Schedule. The inclusion of any dollar amount in any
of the representations or warranties made in this Article IV shall not be
construed as or deemed to be evidence of materiality to the operation of
the Business or Condition of the Business for purposes of that or any other
representation or warranty contained herein, nor shall the disclosure of
any agreement, mortgage, claim or other matter on any Schedule hereto be
deemed to imply that the existence of such matter or a breach, lapse,
acceleration or adverse finding with respect to such matter would
necessarily constitute a Material Adverse Effect with respect to the
Condition of any Person or the Condition of the Business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND ACQUISITION SUB
The Purchaser and Acquisition Sub hereby jointly and severally
represent, warrant and agree as follows:
5.1 Organization and Good Standing. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio. Acquisition Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
5.2 Power and Authority. The Purchaser and Acquisition Sub have all
requisite corporate power and authority to execute and deliver this
Agreement, perform its obligations hereunder and consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Purchaser and Acquisition Sub, the performance by them of
their respective obligations hereunder and the consummation by them of the
transactions contemplated hereby have been duly authorized by all necessary
corporate actions on the part of the Purchaser and Acquisition Sub. This
Agreement constitutes the legal, valid and binding obligation of the
Purchaser and Acquisition Sub, enforceable against them in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar Laws now or hereafter in effect
relating to creditors' rights generally and subject to general principles
of equity.
5.3 No Violation. Neither the execution and delivery of this Agreement
by the Purchaser and Acquisition Sub, the performance by them of their
respective obligations hereunder, nor the consummation by them of the
transactions contemplated hereby, will (a) contravene any provision of the
certificate of incorporation or bylaws of the Purchaser or Acquisition Sub;
or (b) to the best knowledge of the Purchaser, violate, be in conflict
with, constitute a default under, permit the termination of, cause the
acceleration (whether after the giving of notice or the lapse of time or
both) of the maturity of any debt or obligation of the Purchaser or
Acquisition Sub, require the consent of any other party to, constitute a
breach of, create a loss of a material benefit under, or result in the
creation or imposition of any Lien upon any of the properties or assets of
the Purchaser or Acquisition Sub under, any note, bond, license, mortgage,
indenture, lease, contract, agreement, instrument or commitment to which
Purchaser or Acquisition Sub is a party or by which they or any of their
respective assets or properties are bound, or violate any Law or any
judgment, decree, order, regulation or rule of any Governmental Authority
to which the Purchaser or Acquisition Sub is subject or by which they or
any of their respective assets or properties are bound which would
materially and adversely affect the ability of Purchaser or Acquisition Sub
to perform their obligations hereunder.
5.4 Brokerage. No broker or finder has acted directly or indirectly
for the Purchaser or Acquisition Sub in connection with this Agreement or
the transactions contemplated hereby, and no broker or finder is entitled
to any brokerage or finder's fee or other commission in respect thereof
based in any way on agreements, arrangements or understandings made by or,
to the knowledge of the Purchaser, on behalf of the Purchaser or
Acquisition Sub.
5.5 Financing. The Purchaser or Acquisition Sub has available, and on
the Closing Date will have available, sufficient funds to enable it to fund
the Payment Fund and the Escrow Funds as provided in Article III hereof.
ARTICLE VI
COVENANTS OF THE COMPANY PENDING THE CLOSING
The Company covenants and agrees that from the date of this Agreement
until the Closing Date, except as otherwise consented to by the Purchaser
or Acquisition Sub in writing:
6.1 Regular Course of Business. The Company shall, and shall cause its
Subsidiaries to: (i) carry on the Business in the ordinary course and in
substantially the same manner as heretofore conducted, (ii) use their
reasonable best efforts to maintain and preserve (A) their present
workforces, and (B) their present relationships with their agents,
licensees, suppliers and customers, and (iii) keep in full force and effect
insurance comparable in amount and scope of coverage to that now
maintained.
6.2 Restricted Activities. Except for the AGA LLC Spinoff or the CVI
Corporate Distribution or to the extent otherwise specifically contemplated
by this Agreement, neither the Company nor any of its Subsidiaries shall
engage in any of the following transactions or activities: (i) change or
amend the certificate of incorporation or by-laws of the Company or its
Subsidiaries; (ii) declare, set aside, make or pay any dividend or other
distribution, whether in cash, stock, property or otherwise, with respect
to its capital shares, except for dividends contemplated to be paid under
Section 1.3 of the Shareholders Agreement and which will be chargeable as
an outgoing cash flow under Section 3.5(a)(ii) hereof; (iii) except as
required by the Shareholders Agreement, reclassify, combine, split,
subdivide or redeem, purchase or otherwise acquire, directly or indirectly,
any of its capital stock; (iv) issue, sell, pledge, dispose of, grant,
encumber, or authorize the issuance, sale, pledge, disposition, grant or
encumbrance of, any shares of capital stock of the Company or (v) change
any accounting practices. Without limiting the generality of the foregoing,
the Company shall not, directly or indirectly, (i) cause or authorize any
state of affairs, action or omission described in clauses (i) through (xii)
of Section 4.6(b) hereof, or (ii) take or agree in writing, or otherwise to
take, any action which could reasonably be expected to make any
representation or warranty contained in Article IV hereof untrue or
incorrect as of the date when made or as of any future date or which could
reasonably be expected to prevent the satisfaction of any conditions to
closing set forth in Article VIII hereof.
6.3 Consents and Approvals. The Company shall use commercially
reasonable efforts to obtain at the earliest practicable date, and in any
event prior to Closing, all Approvals from Government Authorities and, to
the extent that the rights of the Company or any Subsidiaries under any
material Contract would be impaired upon consummation of the Merger, all
Approvals reasonably requested by the Purchaser or Acquisition Sub with
respect to such Contracts or to obtain fulfillment of the conditions set
forth in Article VIII hereof.
6.4 Approval of Shareholders. The Company shall cause a meeting of its
shareholders to be duly called and held as soon as reasonably practicable
in accordance with the best judgment of its Board of Directors, but in no
event not later than 45 days after the date of this Agreement, for the
purpose of voting on the Merger and all other actions contemplated by this
Agreement which require approval of or adoption by the Company's
shareholders or any other matter which the Company reasonably determines
should be submitted to its shareholders.
6.5 No Solicitation of Transaction. The Company shall not and shall
cause its Subsidiaries not to, directly or indirectly, initiate, solicit or
encourage any discussions or negotiations, or enter into any agreements,
with any Person other than the Purchaser with respect to the sale of all or
any material portion of the Business or the merger or consolidation of the
Company or any Subsidiary with any other Person and shall cease any
discussions relating thereto; provided, however, that the Board of
Directors of the Company on behalf of the Company may, upon receipt of an
unsolicited proposal which the Board of Directors of the Company believes
to be superior from a financial point of view to the Merger, engage in any
such discussions or negotiations if the failure to take such actions could,
in the opinion of the Board of Directors of the Company, after consultation
with counsel, cause the members of the Board of Directors of the Company to
breach their fiduciary duties to the Cullman Shareholders under applicable
Law. The Company shall, promptly after receipt thereof by the Company or
any Subsidiary, notify the Purchaser of any offer by any Person to make any
such purchase, merger or consolidation or enter into any such agreement.
The Company further agrees that it will not waive the provisions of any
confidentiality agreement it has entered into with any Person in the last
six months prior to the date hereof.
6.6 Confidentiality. The Company shall, and shall cause its officers,
counsel and other authorized representatives to, hold in strict confidence,
and not disclose to any other party, and not use in any way except in
connection with the transactions contemplated by this Agreement, without
the prior written consent of the Purchaser or Acquisition Sub, all
information obtained from the Purchaser or Acquisition Sub in connection
with the transactions contemplated by this Agreement, except such
information may be disclosed (i) where necessary to any Governmental
Authorities, (ii) if required by court order or decree or applicable Law,
(iii) if it is publicly available, or (iv) if it is otherwise contemplated
herein.
6.7 Access to the Company and its Subsidiaries. The Company shall
ensure that the Purchaser and Acquisition Sub and their officers, counsel
and other authorized representatives, upon reasonable notice, shall have
full and free access at all reasonable times approved in advance by the
Company (with such approval not to be unreasonably withheld) to all of the
properties, books, contracts, commitments and records of the Company or any
Subsidiary, including, without limitation, title reports, title policies
and surveys, to the extent related to the Business maintained by or located
on the premises of the Company or any Subsidiary, and that the Company
shall furnish the Purchaser with such additional financial and operating
data and other information as to the Business as the Purchaser or
Acquisition Sub shall from time to time reasonably request, including,
without limitation, applications or statements to be made to any
Governmental Authority in connection with the transactions contemplated by
this Agreement, provided, however, that such investigations shall be
reasonable and not disruptive of the day-to-day operations of the business
of the Company or any Subsidiary, and shall cooperate with the Purchaser in
the obtaining of title reports, title updates and title policies and
surveys. Notwithstanding anything to the contrary contained in the
foregoing sentence, neither the Company nor any Subsidiary shall be
required to furnish to the Purchaser or Acquisition Sub correspondence,
reports or other documents concerning this Agreement, the transactions to
be effected pursuant to this Agreement or the negotiations in connection
therewith.
6.8 Supplements to Disclosure Schedules. From time to time prior to
the Closing, the Company shall deliver to the Purchaser and Acquisition Sub
information supplementing or amending the representations, warranties and
disclosures (including the Schedules hereto) in order to make such
information therein timely, complete and accurate and any covenant,
representation or warranty of the Company set forth in Sections 4.7(a),
4.7(b)(viii), 4.7(b)(xii), 4.8(c) or 4.8(d) affected thereby, and only with
respect to events occurring after the date hereof, shall be deemed to have
been amended accordingly; provided, however, that such amendment or
supplement as to the representations in Sections 4.7(b)(viii) and
4.7(b)(xii) can only relate to agreements entered into in the ordinary
course of business.
6.9 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, the Company will use its reasonable efforts in good faith to
take, or cause to be taken, all actions, and to do, or cause to be done,
all things necessary, proper or desirable, or advisable under applicable
law, so as to permit the consummation of the Merger as promptly as
reasonably practicable and otherwise to enable the consummation of the
transactions contemplated hereby and will cooperate fully with the other
parties to that end.
6.10 Premerger Notification. The Company shall timely and promptly
make all filings which are required under the HSR Act, and will seek early
termination of the waiting period and will make all necessary filings under
the Competition Act (Canada) and the Investment Canada Act and any other
foreign Law. The Company shall timely and promptly provide any additional
information or documentation requested by the Federal Trade Commission (the
"FTC"), the Antitrust Division of the United States Department of Justice
(the "ANTITRUST DIVISION") or any other foreign, federal, state, county or
local government or any other governmental, regulatory or administrative
agency or authority or members of their respective staffs in connection
with a second request or otherwise. The Company shall furnish to the
Purchaser such necessary information and assistance as the Purchaser may
request in connection with its preparation of necessary filings or
submissions to the FTC, the Antitrust Division or any other foreign,
federal, state, county or local government or any other governmental,
regulatory or administrative agency or authority.
6.11 Form 8023. Prior to Closing, the Company shall deliver to the
Purchaser, on behalf of each of the Cullman Shareholders, including (i) any
dissenting Cullman Shareholders and (ii) each beneficiary and trustee of
any Cullman Shareholder that is a trust, a signed Form 8023.
6.12 Records of Trademarks, Service Marks and Copyrights Registrations
and Applications. The Company agrees to use commercially reasonable efforts
to list in the records of the appropriate U.S. or foreign agency the proper
entity as the sole and exclusive owner for each application and
registration of trademarks, service marks and copyrights listed on SCHEDULE
4.8 hereto.
ARTICLE VII
COVENANTS OF THE PURCHASER AND
ACQUISITION SUB PENDING THE CLOSING
The Purchaser and Acquisition Sub covenant and agree that, except as
otherwise consented to by the Company, prior to the Closing:
7.1 Consents and Approvals. The Purchaser and Acquisition Sub shall
use commercially reasonable efforts to obtain or make at the earliest
practicable date, and in any event before Closing, all Approvals from
Governmental Authorities reasonably requested by the Company to obtain
fulfillment of the conditions set forth in Article IX hereof. The Purchaser
and the Acquisition Sub shall cooperate with the Company and its
Subsidiaries to the extent necessary to effectuate the timely transfer of
any environmental permits, operating certificates, licenses, or other
governmental approvals required in connection with the operation of any
property of the Company.
7.2 Full Disclosure. Until the Closing, the Purchaser and Acquisition
Sub shall, upon request, provide the Company, its officers, counsel and
other authorized representatives with such information and documentation
concerning the Purchaser and Acquisition Sub as may be reasonably necessary
for the Company to verify performance of and compliance with the
Purchaser's and Acquisition Sub's representations, warranties, covenants
and conditions herein contained.
7.3 Confidentiality. The Purchaser and Acquisition Sub shall, and
shall cause their officers, counsel and other authorized representatives
and affiliated parties to, hold in strict confidence, and not disclose to
any other party, and not use in any way except in connection with the
transactions contemplated by this Agreement, without the prior written
consent of the Company, all information obtained from the Company or its
Subsidiaries in connection with the transactions contemplated by this
Agreement, except such information may be disclosed (i) where necessary to
lenders (provided such lenders agree to preserve the confidentiality of the
information) and to any Governmental Authority, (ii) if required by court
order or decree or applicable law, (iii) if it is publicly available or
(iv) if it is otherwise contemplated herein.
7.4 Employee Benefits and Plant Closing. Immediately after the Closing
Date and subject to the Purchaser's sole right to terminate thereafter, the
Purchaser or Acquisition Sub will cause the Surviving Corporation and the
Subsidiaries to continue to provide a plan of group health insurance to all
employees of the Business which is comparable to any such plan in effect
immediately prior to the Closing Date, which plan shall include a waiver of
a waiting period and all pre-existing medical conditions to the extent so
provided by the Company's group health insurance plans for employees of the
Business who were not excluded from coverage under the Company's group
health insurance plans as of the Closing Date and any such group health
insurance plan shall recognize the service of such employees of the
Business prior to the Closing Date for eligibility purposes on and after
the Closing Date. The Purchaser and/or Acquisition Sub shall not, at any
time prior to 60 days after the Closing Date, without complying fully with
the notice and other requirements of the WARN Act, effectuate (i) a "plant
closing" as defined in the WARN Act affecting any site of employment or one
or more facilities or operating units within any site of employment of the
Company or the Subsidiaries, or (ii) a "mass layoff" as defined in the WARN
Act affecting any site of employment of the Company or the Subsidiaries. In
addition, the Purchaser and Acquisition Sub each hereby agree to indemnify
the Cullman Shareholders and to defend and hold the Cullman Shareholders
harmless from and against any and all Damages which the Cullman
Shareholders may incur in connection with any suit or claim of violation
brought against the Cullman Shareholders under the WARN Act, which relates
to actions taken by the Purchaser with regard to any site of employment or
one or more facilities or operating units within any site of employment of
the Company or the Subsidiaries.
7.5 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the Purchaser and Acquisition Sub will use its
reasonable efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation
of the Merger as promptly as reasonably practicable and otherwise to enable
the consummation of the transactions contemplated hereby and will cooperate
fully with the other parties hereto to that end.
7.6 Premerger Notification. The Purchaser shall timely and promptly
make all filings which are required under the HSR Act, and will seek early
termination of the waiting period and will make all necessary filings under
the Competition Act (Canada) and the Investment Canada Act and any other
foreign Law. The Purchaser shall timely and promptly provide any additional
information or documentation requested by the FTC, the Antitrust Division
or any other foreign, federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority or
members of their respective staffs in connection with a second request or
otherwise. The Purchaser shall furnish to the Company such necessary
information and assistance and the Company may request in connection with
its preparation of necessary filings or submissions to the FTC, the
Antitrust Division or any other foreign, federal, state, county or local
government or any other governmental, regulatory or administrative agency
or authority.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE PURCHASER AND ACQUISITION SUB
The obligations of the Purchaser and Acquisition Sub to effect the
Closing hereunder are subject to the satisfaction, at or prior to the
Closing, of all of the following conditions:
8.1 Representations and Warranties True. The representations and
warranties contained in Article IV hereof, in the Schedules to this
Agreement, and in all certificates delivered by the Company to the
Purchaser and Acquisition Sub pursuant hereto or in connection with the
transactions contemplated hereby shall be in all material respects true and
accurate as of the date when made (except to the extent the specified
Schedules in Section 6.8 are deemed to be amended pursuant to Section 6.8)
and shall be deemed to be made again at and as of the Closing Date and
shall then be true and accurate in all material respects (except for
changes contemplated by this Agreement and except for representations and
warranties that by their terms speak as of the date of this Agreement or
some other date which shall be true and correct only as of such date).
8.2 Performance of Covenants. The Company shall have performed and
complied in all material respects with each and every covenant, agreement
and condition required by this Agreement to be performed or complied with
by it prior to or on the Closing Date.
8.3 No Governmental Proceeding. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and
prohibits the consummation of the transactions contemplated by this
Agreement.
8.4 HSR and Other Approvals. All applicable waiting periods under the
HSR Act shall have expired or early termination shall have been granted and
all approvals required by any other Governmental Authority shall have been
obtained.
8.5 Approval of Stockholders. The approval of the Cullman Shareholders
referred to in Section 6.4 hereof shall have been obtained.
8.6 Opinion of Counsel. The Company shall have delivered to the
Purchaser and Acquisition Sub an opinion of Xxxxxxxx & X'Xxxx, LLP, counsel
to the Company, and Xxxxxx Xxxx, General Counsel of the Company, dated the
Closing Date, in form and substance reasonably satisfactory to the
Purchaser and Acquisition Sub and its counsel, to the effect set forth in
EXHIBITS C-1 AND C-2, respectively, hereto.
8.7 Certificates. The Purchaser and Acquisition Sub shall have
received a certificate dated the Closing Date of the President or any Vice
President of the Company certifying as to the satisfaction of the
conditions set forth in Sections 8.1 and 8.2 hereof.
8.8 Custody Agreement. The Company, the Representative and the Custody
Agent shall have executed and delivered the Custody Agreement, which shall
be in form reasonably satisfactory to Purchaser.
8.9 AGA LLC Spinoff; CVI Corporate Distribution. The Company shall
have effected the AGA LLC Spinoff and the CVI Corporate Distribution on the
terms described herein.
8.10 Payoff Letters. The Company shall have delivered to the Purchaser
payoff letters, in form and substance reasonably satisfactory to the
Purchaser and its counsel, from all lenders or other parties entitled to be
paid indebtedness of the Company for borrowed money (including accrued but
unpaid interest thereon and early payment fees in connection with such
payment) at Closing by the Company.
8.11 Consents. The Company and its Subsidiaries shall have obtained
all consents under Contracts, IP License Agreements and Real Property
Leases listed on Schedule 8.11 hereto and all other consents shall have
been obtained the failure of which to obtain would have a Material Adverse
Effect on the Condition of the Business.
8.12 Employment Agreements. The Purchaser or Acquisition Sub shall
have entered into employment agreements with G. Xxxxxx Xxxxxxxx or Xxxxxxx
Xxxxxxx or both, and employment agreements, including appropriate
non-competition arrangements, with Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxxxx, Xxxx
Xxxxx, Xxxx Xxxxxx and Xxxxxx Xxxxxxxx and such other persons to be
mutually agreed upon by the Purchaser and the Company and none of the
foregoing persons shall have notified the Purchaser or Acquisition Sub that
he intends not to perform thereunder.
8.13 Option Extinguishment. All Option Shares shall have been
extinguished prior to the Closing.
8.14 Form 8023. Each of the Cullman Shareholders, including (i) any
dissenting Cullman Shareholders and (ii) each beneficiary and trustee of
any Cullman Shareholder that is a trust, shall have signed Form 8023 at or
prior to the Closing.
8.15 Leases. (i) Each of the Specified Leases shall have been either
assigned to AGA LLC or the CVI Distributee or terminated, (ii) evidence of
the assignment or termination and consent or approval thereof by the lessor
under the Lease, if required, shall have been delivered to the Purchaser
and (iii) AGA LLC and the CVI Distributee shall have entered into an
Agreement Governing Assignment substantially in the form of EXHIBIT E
hereto if any Specified Lease has been assigned to them. If the conditions
set forth in the preceding sentence have not been satisfied with respect to
a Specified Lease, the Representative shall deliver to Purchaser security
reasonably satisfactory to Purchaser to cover the liability of the Company
under such Specified Lease.
8.16 Incentive Plan Payments. All payments required to be made under
the At-A-Glance Long-Term Incentive Plan effective February 1, 1998, as a
result of the transactions contemplated by this Agreement, shall have been
made as of the Closing.
ARTICLE IX
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Closing hereunder are
subject to the satisfaction, at or prior to the Closing, of all of the
following conditions:
9.1 Representations and Warranties True. The representations and
warranties contained in Article V hereof and in all certificates delivered
by the Purchaser or Acquisition Sub to the Company pursuant hereto or in
connection with the transactions contemplated hereby shall be in all
material respects true and accurate as of the date when made and shall be
deemed to be made again at and as of the Closing Date and shall then be
true and accurate in all material respects (except for changes contemplated
by this Agreement and except for representations and warranties that by
their terms speak as of the date of this Agreement or such other date which
shall be true and accurate only as of such date).
9.2 Performance of Covenants. The Purchaser and Acquisition Sub shall
have performed and complied in all material respects with each and every
covenant, agreement and condition required by this Agreement to be
performed or complied with by them prior to or on the Closing Date.
9.3 No Governmental Proceeding. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
into any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
prohibits the consummation of the transactions contemplated by this
Agreement.
9.4 HSR Approval. All applicable waiting periods under the HSR Act
shall have expired or early termination shall have been granted.
9.5 Approval of Stockholders. The approval of the stockholders of the
Company referred to in Section 6.4 hereof shall have been obtained.
9.6 Opinion of Counsel. The Purchaser and Acquisition Sub shall have
delivered to the Company an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, counsel to the Purchaser and Acquisition Sub, and Xxx X. XxXxxxxxx,
General Counsel of Purchaser, dated the Closing Date, in form and substance
reasonably satisfactory to the Company and its counsel, Xxxxxxxx & X'Xxxx,
LLP to the effect set forth in EXHIBITS D-1 AND D-2, respectively, hereto.
9.7 Certificates. The Company shall have received a certificate dated
the Closing Date of the President or any Vice President of the Purchaser
certifying as to the satisfaction of the conditions set forth in Sections
9.1 and 9.2 hereof.
9.8 Custody Agreement. The Purchaser, Acquisition Sub and the Custody
Agent shall have executed and delivered the Custody Agreement.
9.9 Deliveries. The Purchaser or Acquisition Sub shall have made the
payments provided for in Sections 3.2, 3.3 and 3.4 hereof.
9.10 Form 8023. The Purchaser and any of its Affiliates required to
sign Form 8023 shall have signed Form 8023 at or prior to the Closing.
ARTICLE X
THE CLOSING
10.1 Time and Place of Closing. The Closing of the Merger and the
other transactions contemplated by this Agreement (the "CLOSING") shall
take place beginning at 10:00 A.M. on the date which is three Business Days
after the conditions to the Closing may be satisfied or waived (the
"CLOSING DATE"), at the offices of Xxxxxxxx & O'Neil, LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 or at such other time or place as may
be mutually agreed upon by the parties.
10.2 Filing of Merger Certificate; Payment of Indebtedness. On the
Closing Date (i) the fully-executed Certificate of Merger shall be filed
with the Department of State of the State of New York in accordance with
the law of such State, (ii) the Company shall pay and discharge in full,
with funds provided by the Purchaser, the then outstanding long-term
indebtedness of the Company for borrowed money (other than the Company's
Industrial Development Bonds) plus accrued but unpaid interest thereon and
early payment fees in connection with such payment, and (iii) the other
payments and deliveries contemplated by this Agreement shall be made,
including the Consent Fees.
ARTICLE XI
SURVIVAL AND INDEMNITY
11.1 Survival. Each representation and warranty contained herein or in
any certificate or other document delivered pursuant hereto or in
connection herewith shall survive any examination made by or on behalf of
any party hereto, the execution and delivery of this Agreement and the
consummation of the Merger until twenty-one months after the Closing Date;
provided, however, that the survival of representations and warranties set
forth in Section 4.12 hereof shall be governed by the provisions of Article
XII hereof; and provided, further, that (i) the representations and
warranties set forth in Sections 4.16(a), 4.16(b) and 4.23(b) shall
continue until the applicable statute of limitations, (ii) each
representation and warranty set forth in Section 4.18 and the last sentence
of Section 4.19 hereof shall survive until the fifth anniversary of the
Closing Date and (iii) the representation and warranty in Section 4.23(a)
(regarding settlement payments for the Day Dream litigation only) shall
continue until August 31, 2002. No action for indemnity based on a breach
of a representation or warranty may be brought after the applicable
expiration date, provided that if there shall then be pending at such time
any claim for indemnification asserted under this Article XI or Article XII
(whether or not formal legal action shall have been commenced based upon
such claim), such claim shall continue to be subject to indemnification in
accordance with this Agreement. Any covenant or obligation set forth in
this Agreement that is to be performed after the Closing Date will continue
until fully performed; the indemnification provided pursuant to Section
11.2(a)(ii) and (iii) hereof shall not be subject to any limitation in time
and the indemnification set forth in Section 11.2(a)(iv) and (v) shall
continue until the fifth anniversary of the Closing Date.
11.2 Indemnification. Subject to the limitations set forth in this
Article XI, the parties hereto agree as follows:
(a) From and after the Closing, the Purchaser, its Affiliates, their
successors and assigns shall be indemnified, held harmless and defended
against any Damages incurred by any of them or the Company, but excluding
any losses relating to Taxes which are governed exclusively by the
provisions of Article XII hereof (subject to the provisions of Sections
11.5, 11.7 and 11.9 hereof), to the extent such Damages are caused by or
arise out of (i) any breach of any representation, warranty or covenant
made by the Company in this Agreement; (ii) the Allied Graphic Arts
Business and the obligations and liabilities relating thereto, including,
without limitation, any liability arising from the failure, under
applicable Law, to treat any individual utilized by the Allied Graphic Arts
Business as an employee rather than an independent contractor; (iii) the
CVI Corporate Assets and Liabilities; (iv) any Damages relating to
environmental conditions arising out of or in connection with any property
formerly owned or operated by the Company, its Subsidiaries, or any
predecessors thereto, including, but not limited to, properties formerly
owned or operated by the Company or its Subsidiaries located in Pittsfield,
Massachusetts and Cudahy, Wisconsin or (v) any liability arising from the
failure, under applicable Law, to treating any individual utilized by the
Company or any Subsidiary in the Business as an employee rather than an
independent contractor. The Purchaser, its Affiliates, their successors and
assigns shall have recourse only against the Indemnification Escrow Fund
for such Damages; provided, however, if an indemnification claim hereunder
arises from the items set forth in clauses (ii) or (iii) of the immediately
preceding sentence or from the failure of the Company to be an "S"
corporation for federal income Tax purposes as of any time prior to or on
the Closing (together, the "SPECIFIED ITEMS"), then the Purchaser, its
Affiliates, their successors and assigns shall have recourse first against
the Indemnification Escrow Fund for Damages arising from such Specified
Items and, to the extent no amounts remain on deposit in the
Indemnification Escrow Fund sufficient to provide indemnification to the
Purchaser, its Affiliates, their successors and assigns for such Damages
arising from such Specified Items, the Purchaser, its Affiliates, their
successors and assigns shall have recourse (subject to Section 11.5)
directly against any and all of the Principal Shareholders and, with
respect to the Damages under subclause (ii) above, against AGA LLC; and
further provided that, if indemnification claims arising from Specified
Items are satisfied out of the Indemnification Escrow Fund and, thereafter,
there are insufficient amounts remaining on deposit in the Indemnification
Escrow Fund to satisfy indemnification claims arising from other Damages,
then the Purchaser, its Affiliates, their successors and assigns shall have
recourse (subject to Section 11.5) directly against any and all of the
Principal Shareholders to the extent of the lesser of (i) the amounts paid
from the Indemnification Escrow Fund to satisfy Specified Items and (ii)
the amount by which such other Damages exceeds the amount remaining on
deposit in the Indemnification Escrow Fund. The Purchaser, its Affiliates
and their successors and assigns shall not be entitled to indemnification
under this Section 11.2(a) for (i) any breach of the covenants set forth in
Section 14.4 hereof, or (ii) in connection with the matters identified in
Section 1.1(rr)(ix) hereof. For purposes of this Section 11.2 (a) only, in
determining the existence of any inaccuracy or breach of any representation
or warranty by the Seller contained in this Agreement, any requirement in
any representation or warranty that an event or fact be material or have a
Material Adverse Effect in order for such event or fact to constitute an
inaccuracy or breach of a representation or warranty shall be disregarded;
provided, however, this sentence shall not apply with respect to Section
4.5(a).
(b) From and after the Closing, the Purchaser and Acquisition Sub
shall indemnify, hold harmless and defend the Cullman Shareholders, their
successors and assigns, against any Damages incurred by them (i) which are
caused by or arise out of any breach of any representation, warranty or
covenant made by the Purchaser or Acquisition Sub in this Agreement, or
(ii) to the extent such Damages are caused by or arise out of the operation
of the Business after the Closing Date (except to the extent the Purchaser
is entitled to indemnification hereunder). The Cullman Shareholders are
third party beneficiaries of this Agreement for purposes of this Article
XI.
(c) In the event of any claim for indemnification for a breach of the
representation and warranty made in Section 4.23(a) hereof regarding the
collectibility of the Day Dream litigation settlement amounts, upon payment
of the claim, the Purchaser agrees to assign to the Representative any and
all rights which the Purchaser may have against the Persons who were to
make settlement payments to the Company or its Affiliates with respect to
such litigation.
(d) In the event of any claim by the Purchaser for indemnification for
a breach of the representation and warranty contained in Section 4.23(b),
the Purchaser agrees that the Damages shall relate only to the amount above
$400,000.
11.3 Notice of Claims. An Indemnified Party shall notify the
Indemnifying Party within a reasonable period of time after becoming aware
of, and shall provide to the Indemnifying Party as soon as practicable
thereafter, all information and documentation necessary to support and
verify any Damages which the Indemnified Party shall have determined has
given or could give rise to a claim for indemnification under Section 11.2
hereof, and the Indemnifying Party and its agents shall be given access to
all books and records in the possession or control of the Indemnified Party
which the Indemnifying Party reasonably determines to be related to such
claim.
11.4 Matters Involving Third Parties.
(a) If any third party shall commence an Action against any
Indemnified Party with respect to any matter (a "THIRD PARTY CLAIM") which
may give rise to a claim for indemnification under Section 11.2, the
Indemnified Party shall notify the Indemnifying Party in writing as soon as
practicable, but in no event more than 10 days after the Indemnified Party
shall have been served.
(b) The Indemnifying Party shall have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
so long as (i) the Indemnifying Party shall notify the Indemnified Party in
writing (within 10 days after its receipt of notice of the Third Party
Claim) that the Indemnified Party will be entitled to indemnification under
Section 11.2 hereof from and against any Damages the Indemnified Party may
suffer arising out of the Third Party Claim and (ii) the Indemnifying Party
diligently conducts the defense of the Third Party Claim. It is agreed that
no delay on the part of the Indemnified Party in notifying any Indemnifying
Party of a claim (including any Third-Party Claim) will relieve the
Indemnifying Party thereby unless said Indemnifying Party is prejudiced by
such failure to give notice.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 11.4(b) above, (i) the
Indemnified Party may retain separate co-counsel, at its sole cost and
expense, and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party shall not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed, (iii) the Indemnified Party shall
cooperate within reason with the Indemnifying Party's defense of such Third
Party Claim and (iv) the Indemnifying Party shall not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld or delayed.
Notwithstanding any other provision of this Section 11.4, if an Indemnified
Party withholds its consent to a settlement or elects to defend any claim,
where but for such action the Indemnifying Party could have settled such
claim, the Indemnifying Party shall be required to indemnify the
Indemnified Party only up to a maximum of the bona fide settlement offer
for which the Indemnifying Party could have settled such claim.
11.5 Maximum Indemnification. The aggregate liability for
indemnification under subclauses (i) through (v) of Section 11.2(a) and
under Article XII hereof shall not exceed 17.5% of the Gross Purchase Price
and the aggregate liability of the Principal Shareholders, which shall be
only for claims arising from Specified Items (pursuant to Section 11.2(a)
and Article XII hereof), and, which, solely for such purposes, shall be
joint and several among them, shall not exceed $55,000,000 in the
aggregate.
11.6 General Deductible. The Purchaser shall not be entitled to any
indemnification under Section 11.2(a)(i) hereof with respect to breaches of
representations and warranties (but not covenants) by the Company, and the
Cullman Shareholders shall not be entitled to any indemnification under
Section 11.2(b) hereof with respect to breaches of representations and
warranties (but not covenants) by the Purchaser or Acquisition Sub, unless
the cumulative amount of the Damages for which the Indemnified Party may be
entitled to such indemnification exceeds $2,000,000 (the "DEDUCTIBLE
AMOUNT") in the aggregate whereupon only the amount of such Damages in
excess of the Deductible Amount shall be recoverable with respect to such
breaches.
11.7 Mitigation of Damages. If any event shall occur which would
otherwise entitle a party to assert a claim for indemnification hereunder,
no Damages shall be deemed to have been sustained by such party to the
extent of (i) any net proceeds received by such party or its Affiliates
from any insurance policy, in effect as of the Closing Date, with respect
thereto or (ii) any net Tax savings that have been or will be realized by
such party, but the foregoing shall apply only after the amount of Damages
paid to the Purchaser or its Affiliates with respect to any claims for
indemnification has exceeded $10 million in the aggregate whereupon only
the amount of such Damages in excess of $10 million shall be taken into
account in determining such net Tax savings.
11.8 Indemnification is Sole Remedy. Absent fraud, the sole and
exclusive remedy of an Indemnified Party for the matters for which
indemnification is provided under Section 11.2 hereof shall be a claim for
indemnity under this Article XI; provided, however, that this Section 11.8
shall not prevent the Purchaser from seeking the remedies contemplated by
Section 14.5 hereof in connection with any breach of Sections 14.3 or 14.4
hereof.
11.9 Role of Representative. For purposes of this Article XI, (i) any
notice to be given by the Purchaser shall be given to the Representative,
on behalf of the Unit Holders, (ii) any notice to be given to the Purchaser
shall be given by the Representative, on behalf of the Unit Holders, and
(iii) the Representative shall have the right and power, on behalf of the
Unit Holders under this Article XI and Article XII hereof, to exercise the
rights of the Unit Holders as the Indemnifying Party or the Indemnified
Party, as the case may be.
11.10 Environmental Matters. The Purchaser shall be entitled to
indemnification under Section 11.2 for the breach of Section 4.18 with
respect to matters involving remedial action only to the extent that such
remedial action is (i) conducted in a technically sound and reasonable
cost-effective manner and (ii) implements the remediation standards
applicable under Environmental Laws given the use of the property at issue
as of the Closing Date. The Purchaser and the Acquisition Sub shall be
entitled to control the defense of any such matters. The Purchaser shall
provide the Representative with all draft remedial and investigatory
reports in a timely fashion to allow the Representative to provide
comments, and the Representative, to the extent reasonably feasible, shall
have the right to review prior to transmission all correspondence that the
Purchaser proposes to transmit to any Governmental Authority regarding or
relating to its remedial actions at or in connection with the Real
Property. In addition, the Purchaser shall provide the Representative with
(i) copies of all final reports and/or correspondence relating to the
remedial action, and (ii) advance notice reasonable under the circumstances
of, and opportunity to participate in, all negotiations with any applicable
Governmental Authority.
ARTICLE XII
TAX MATTERS
12.1 S Corporation Status. The Company shall maintain the status of
the Company as an S Corporation for federal and state income Tax purposes
through the Closing Date.
12.2 Section 338(h)(10) Election.
(a) The Purchaser shall make the election, with respect to the Common
Shares of the Company only, provided for by section 338(h)(10) of the Code
and Section 1.338(h)(10)-1 of the Regulations (and any comparable elections
that are available under state or local Tax law) (the "338(H)(10)
ELECTION"). The Purchaser and the Principal Shareholders, through the
Representative, shall cooperate with each other to take all actions
necessary and appropriate, including filing such additional forms, returns,
elections, schedules and other documents as may be required to effect and
preserve a timely 338(h)(10) Election in accordance with the provisions of
section 1.338(h)(10)-1 of the Regulations (and any comparable provisions
under state or local tax law) or any successor provisions. The Principal
Shareholders and the Purchaser shall, and the Principal Shareholders shall
cause the other Cullman Shareholders to, report the purchase by the
Purchaser of the Shares of Common Stock pursuant to this Agreement
consistent with the 338(h)(10) Election (and any comparable elections under
state or local Tax laws that are available) and not take any position
inconsistent therewith in any Tax Return or in any proceeding before any
taxing authority.
(b) In connection with the 338(h)(10) Election, not later than 180
days after the Closing, Purchaser shall prepare, and the Purchaser and the
Principal Shareholders, through the Representative, shall agree to (i) the
"Modified Aggregate Deemed Sale Price" of each of the Company's Assets
(within the meaning of, and in accordance with, section 1.338(h)(10)-1(f)
of the Regulations) and (ii) the proper allocations (the "Allocations") of
the "Modified Aggregate Deemed Sale Price" among the assets of the Company
(in accordance with section 338(b)(5) of the Code and the Regulations
promulgated thereunder). The Principal Shareholders and the Purchaser
shall, and the Principal Shareholders shall cause the other Cullman
Shareholders to, (i) be bound by such determination and such allocation for
purposes of determining any Taxes, (ii) prepare and file their Tax Returns
on a basis consistent with such determination of the "Modified Aggregate
Deemed Sale Price" and such Allocations and (iii) take no position
inconsistent with such determination and Allocations on any applicable Tax
Return or in any proceeding before any taxing authority. In the event that
any of the Allocations is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other party
hereto concerning resolution of the dispute. The Cullman Shareholders will
include on their Tax Returns any income, gain, loss, deduction or other Tax
item resulting from the Section 338(h)(10) Election and any liability for
Taxes resulting therefrom shall be borne solely by the Cullman
Shareholders.
12.3 Preparation and Filing of Tax Returns; Payment of Taxes.
(a) The Representative shall prepare and timely file or cause to be
prepared and timely filed (at the Cullman Shareholders' cost and expense
and in a manner consistent with past practice) all Tax Returns of the
Company and each of its Subsidiaries (including, for this purpose, AGA LLC)
for all Pre-Closing Periods (as defined in Section 12.4(a)). Not less than
twenty (20) business days prior to the due date for filing any Tax Return
of the Company or any of its Subsidiaries (taking into account any
applicable extensions) for any taxable period ending on the Closing Date,
the Representative shall deliver a copy of such Tax Return to the Purchaser
for its review and comment thereon. Such Tax Returns shall disclose, in a
manner that is reasonably satisfactory to the Purchaser, such information
as the Purchaser reasonably deems necessary to ensure that the applicable
statute of limitations applicable to such Tax Returns shall be determined
under Section 6501(a) of the Code and any comparable provisions of state,
local, and foreign law. For this purpose, the Purchaser and the Principal
Shareholders agree that such disclosure shall include (i) the net
unrealized built in gain in Success Business Industries and Landmark on the
dates of acquisition by the Company; (ii) the dates of acquisition by the
Company of Success Business Industries and Landmark; (iii) the categories
of assets to which such built in gain was attributable on the dates of
acquisition; and (iv) the adjustments made to arrive at the current net
recognized built in gain to be shown on such Tax Returns. The Principal
Shareholders shall cause all Taxes shown to be due and payable on such Tax
Returns to be timely paid.
(b) The Purchaser shall cause the Company and its Subsidiaries to
prepare and timely file all Tax Returns of the Company and its Subsidiaries
other than those Tax Returns provided for in Section 12.3(a) hereof.
Subject to Section 12.4, the Purchaser shall pay or cause the Company and
its Subsidiaries to pay all Taxes shown to be due and payable thereon. Not
less than twenty (20) business days prior to the due date for filing any
Tax Return of the Company or any of its Subsidiaries (taking into account
any applicable extensions) for any Straddle Period (as defined in Section
12.4(a)), the Purchaser shall deliver a copy of such Tax Return to the
Representative for his review and comment thereon. The Representative shall
pay directly to the Purchaser the Cullman Shareholders' portion of the
Taxes shown to be due on any Tax Return for any Straddle Period determined
under Section 12.4(d) of this Agreement within ten (10) business days prior
to the due date for the filing of such Tax Return.
12.4 Liability and Indemnification for Taxes.
(a) Except as otherwise provided in Section 12.6, from and after the
Closing Date, the Purchaser and its affiliates (including the Company and
its Subsidiaries after the Closing), shall be indemnified, and held
harmless from and against, all liability, demands, claims, actions or
causes of action, assessments, losses, damages, costs and expenses
(including reasonable attorneys' and accountants' fees and expenses)
imposed on, sustained, incurred or suffered by the Purchaser or its
affiliates (including the Company and its Subsidiaries after the Closing),
directly or indirectly, by reason of or resulting from any and all Taxes
imposed upon the Company, its Subsidiaries or the Cullman Shareholders with
respect to, arising out of, or pursuant to (i) any taxable period of the
Company or its Subsidiaries ending on or before the Closing Date (a
"PRE-CLOSING PERIOD"), (ii) any taxable period beginning before the Closing
Date and ending after the Closing Date (a "STRADDLE PERIOD"), but only with
respect to the portion of such Straddle Period ending on the Closing Date
and in the manner provided in Section 12.4(d) hereof (such portion, a
"PRE-CLOSING STRADDLE PERIOD"), (iii) Treasury Regulations section 1.1502-6
(or any comparable provision under state, local or foreign law imposing
several liability upon members of a consolidated, combined, affiliated or
unitary group) for any Pre-Closing Period or Pre-Closing Straddle Period,
and (iv) a breach or inaccuracy in any representation contained in Section
4.12 of this Agreement or any covenant set forth in this Article XII.
(b) Without limiting the generality of Section 12.4(a) above and
notwithstanding anything to the contrary contained in this Agreement, the
Purchaser and its affiliates (including the Company and its Subsidiaries
after the Closing) shall be indemnified, defended and held harmless from
and against any and all Taxes asserted against, resulting from, imposed on,
sustained, incurred or suffered by, or asserted against any of the
Purchaser and its affiliates (including the Company and its Subsidiaries
after the Closing), directly or indirectly, by reason of or resulting from
(i) the failure of the Company to be an "S" corporation for federal income
Tax purposes as of any time prior to or on the Closing, (ii) except as
provided in Section 12.6, the transactions effected pursuant to this
Agreement, including, but not limited to, Taxes imposed on the Company or
any of its Subsidiaries under Sections 1374 or 1375 of the Code or under
state, local or other law as a result of the 338(h)(10) Election, and (iii)
the AGA LLC Spinoff and the CVI Corporate Distribution, including all real
and personal property Taxes imposed on assets owned by AGA LLC or included
in the CVI Corporate Distribution.
(c) From and after the Closing Date, the Purchaser shall indemnify the
Cullman Shareholders, and hold them harmless from and against, all
liability, demands, claims, actions or causes of action, assessments,
losses, damages, costs and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses) imposed on,
sustained, incurred or suffered by the Cullman Shareholders, directly or
indirectly, by reason of or resulting from any and all Taxes imposed upon
the Company or any of its Subsidiaries with respect or pursuant to (i) any
taxable period of the Company or any of its Subsidiaries ending after the
Closing Date (a "POST-CLOSING PERIOD"), (ii) any Straddle Period, but only
with respect to the portion of such Straddle Period beginning the day after
the Closing Date and in the manner provided in Section 12.4(d) hereof (such
portion, a "POST-CLOSING STRADDLE PERIOD"), and (iii) Taxes imposed as a
result of a breach or inaccuracy in any covenant of the Purchaser set forth
in this Article XII.
(d) For purposes of calculating the Taxes imposed which relate to a
Straddle Period, the Closing Date shall be treated as the last day of a
taxable period, and the portion of any such Tax that is allocable to the
taxable period that is so deemed to end on and include the Closing Date:
(i) in the case of Taxes that are either (x) based upon or related to
income or receipts or (y) imposed in connection with any sale, transfer,
assignment or distribution of property (real or person, tangible or
intangible), shall be deemed equal to the amount which would be payable if
the period for which such Tax is assessed ended on and included the Closing
Date, and (ii) in the case of Taxes other than Taxes described in clause
(i) hereof, shall be computed on a per diem basis.
12.5 Procedures Related to Tax Claims.
(a) If a notice of deficiency, proposed adjustment, adjustment,
assessment, audit, examination, administrative or court proceeding, suit,
dispute or other claim (a "TAX CLAIM") is delivered, sent, commenced or
initiated to or against the Company or any of its Subsidiaries by any
taxing authority with respect to Taxes for which one party to this
Agreement is entitled to indemnification from another party, the Company
and its Subsidiaries shall promptly notify the Representative in writing of
the Tax Claim. If a Tax Claim with respect to Taxes for which one party to
this Agreement is entitled to indemnification from another party shall be
delivered, sent, commenced or initiated to or against the Cullman
Shareholders by any taxing authority, the Principal Shareholders shall
cause the Representative to promptly notify the Purchaser in writing of
such Tax Claim.
(b) Except as otherwise provided in this Section 12.5, if any Tax
Claim is delivered, sent, commenced or initiated against the Company or any
of its Subsidiaries by any taxing authority, the Purchaser shall be solely
responsible for controlling the defense of such Tax Claim.
(c) If such Tax Claim relates to a Pre-Closing Period, the Principal
Shareholders shall, through the Representative, control, defend, settle,
compromise, or contest such Tax Claim; provided, however, that,
notwithstanding anything to the contrary set forth herein, (i) the
Representative shall keep the Purchaser fully informed of any proceedings,
events and developments related to or in connection with such Tax Claim;
(ii) the Purchaser shall be entitled to receive copies of all
correspondence and documents related to such Tax Claim; (iii) the
Representative shall consult with the Purchaser and shall not enter into
any settlement with respect to any such Tax Claim without Purchaser's prior
written consent, which consent shall not be unreasonably withheld; and (iv)
at its own cost and expense, the Purchaser shall have the right to
participate in (but not control) the defense of such Tax Claim.
Notwithstanding the foregoing, in the event that the Representative wishes
to settle a Tax Claim and the Purchaser withholds its consent, the
Purchaser shall take over control of the Tax Claim at its own cost and
expense and, to the extent that the amount of the Tax Claim ultimately is
determined to be greater than the amount for which the Representative was
willing to settle, the Purchaser shall bear such excess cost. Except as
provided in the preceding sentence, the costs and expenses (including the
cost of counsel) incurred by the Representative in contesting any such Tax
Claim shall be borne by the Principal Shareholders. The Purchaser and its
Affiliates (including the Company or any of its Subsidiaries after the
Closing) shall cooperate with the Representative in connection with any
such Tax Claim.
12.6 Transfer and Gains Taxes. All sales (including, without
limitation, bulk sales), use, transfer, recording, ad valorem, privilege,
documentary, gains, gross receipts, registration, conveyance, excise,
license, stamp, duties or similar Taxes and fees (collectively, the
"TRANSFER TAXES") arising out of, in connection with or attributable to the
transactions effected pursuant to this Agreement shall be borne equally by
the Purchaser, on the one hand, and the Principal Shareholders, on the
other; provided, however that any Transfer Taxes arising out of, in
connection with or attributable to the AGA LLC Spinoff and the CVI
Corporate Distribution, shall be borne and paid solely by the Principal
Shareholders. The party which has primary legal responsibility for the
payment of any particular Transfer Tax (the "PAYOR") shall prepare and
timely file all relevant Tax Returns required to be filed in respect of
such Transfer Tax, pay the Transfer Tax shown on such Tax Return, and
notify the other parties in writing of the Transfer Tax shown on such Tax
Return and how such Transfer Tax was calculated, and such
other parties shall reimburse the Payor for their respective share of the
amount of such Transfer Tax in immediately available funds within ten (10)
business days of receipt of such notice.
12.7 Assistance and Cooperation. After the Closing, each of the
Purchaser, the Company and its Subsidiaries and the Principal Shareholders
shall:
(a) cooperate fully in preparing any Tax Returns of the Company and
its Subsidiaries and preparing for any audits of, or disputes or litigation
with taxing authorities regarding, any Tax Returns with respect to the
Company and its Subsidiaries;
(b) make available to the other and to any taxing authority as
reasonably requested all information and documents relating to Taxes of the
Company and its Subsidiaries;
(c) provide timely notice to the other in writing of any pending or
threatened tax audits, assessments or litigation with respect to the
Company and its Subsidiaries for any taxable period for which the other
party may have liability under this Article XII; and
(d) furnish the other with copies of all correspondence received from
any taxing authority in connection with any tax audit or information
request with respect to any taxable period for which the other may have
liability under this Article XII.
12.8 Characterization of Indemnification Payments. All amounts paid
pursuant to Article XI or this Article XII shall be treated as adjustments
to the Gross Purchase Price for all Tax purposes.
12.9 Survival of Tax Claims and Section 4.12 Representations.
Notwithstanding any other provision of this Agreement to the contrary, any
obligations of the parties pursuant to this Article XII and all
representations and warranties contained in Section 4.12 of this Agreement
shall be unconditional and absolute and shall survive until the Final
Distribution Date; provided that, if on the Final Distribution Date the
Company is under audit or shall have received a notice of any income Tax
audit for a Pre-Closing Period, such obligations and representations and
warranties shall survive until the date on which all such audits are
completed and finally resolved. 12.10 Exclusive Remedy; Tax Indemnity
Payments. Notwithstanding any other provision of this Agreement to the
contrary:
(a) The provisions of this Article XII shall be the exclusive means by
which any party may recover damages from any other party with respect to
any claim based on Taxes;
(b) Any claim for indemnification made by the Purchaser or its
Affiliates (including the Company or any of its Subsidiaries after the
Closing) for Taxes pursuant to this Agreement shall be payable solely out
of the Indemnification Escrow Fund, except to the extent that such claim
arises under Section 12.4(b)(i) of this Agreement or any Taxes related to
the Allied Graphic Arts Business and the obligations and liabilities
relating thereto, including, without limitation, any liability arising from
the failure, under applicable Law, to treat any individual utilized by the
Allied Graphic Arts Business as an employee rather than an independent
contractor, in which case the Purchaser or its Affiliates (including the
Company or any of its Subsidiaries after the Closing) shall have recourse
(subject to Section 11.5) directly against the Principal Shareholders in
the event the Indemnification Escrow Fund is not sufficient to satisfy such
claim in full; provided that, if indemnification claims arising from
Specified Items are satisfied out of the Indemnification Escrow Fund and,
thereafter, there are insufficient amounts remaining on deposit in the
Indemnification Escrow Fund to satisfy indemnification claims arising from
other Damages, then the Purchaser, its Affiliates, their successors and
assigns shall have recourse (subject to Section 11.5) directly against any
and all of the Principal Shareholders to the extent of the lesser of (i)
the amounts paid from the Indemnification Escrow Fund to satisfy Specified
Items and (ii) the amount by which such other Damages exceeds the amount
remaining on deposit in the Indemnification Escrow Fund; and
(c) Any amounts payable or to be paid to the Purchaser pursuant to
this Article XII shall be governed by the provisions of the Custody
Agreement.
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
13.1 Termination. (a) This Agreement may be terminated at any time
prior to the Closing Date:
(i) by mutual consent of the Purchaser and the Company;
(ii) by either the Purchaser or the Company if the Closing has
not occurred prior to December 15, 1999;
(iii) by either the Purchaser or the Company if there has been a
material misrepresentation or material breach on the part of the other
party in the representations, warranties or covenants set forth in
this Agreement which is not cured within 10 Business Days after such
other party has been notified in writing of the intent to terminate
this Agreement pursuant to this clause (iii);
(iv) by either the Purchaser or the Company, if any approval of a
Governmental Authority, the lack of which would result in the failure
to satisfy the conditions to Closing set forth in Article VIII or
Article IX hereof, shall have been denied by such Governmental
Authority, or such Governmental Authority shall have requested the
withdrawal of any application therefor or shall have indicated its
intention to initiate a proceeding to enjoin the Merger and the
transactions contemplated by this Agreement;
(v) by either the Purchaser or the Company, if any permanent
injunction or action by any court or other Governmental Authority of
competent jurisdiction enjoining, denying approval of or otherwise
prohibiting consummation of any of the transactions contemplated by
this Agreement shall become final and nonappealable; or
(vi) by the Purchaser within five Business Days after the
Purchaser has received notice under Section 6.8 of a supplement or
amendment to any Schedule which would have the effect of amending the
Schedules and which has disclosed any Material Adverse Effect on the
Condition of the Business.
(b) The Principal Shareholders agree that, in the event that following
the termination of this Agreement, other than (1) by the Purchaser and the
Company pursuant to Section 13.1(a)(i), (2) by the Company pursuant to
Section 13.1(a)(iii), (3) by the Purchaser or the Company pursuant to
Sections 13.1(a) (ii) (but only by reason of Section 13.1(a)(iv) or Section
13.1(a)(v)), Section 13.1(a)(iv) or Section 13.1(a)(v), or (4) by the
Purchaser pursuant to Section 13.1(a)(vi), the Common Shares or the
Business of the Company is acquired by another Person (whether by purchase,
merger, consolidation, sale of assets, liquidation, dissolution or
otherwise) within a 6-month period following such termination, or an
agreement with respect thereto is entered into within such 6-month period
and is thereafter consummated, the positive difference between (i) the
amount received for each Common Share by the Cullman Shareholders in such
transaction and (ii) the Net Purchase Price divided by the number of the
outstanding Common Shares of the Company as set forth in Section 4.3 hereof
shall be paid to the Purchaser within two business days after such payment
is made to or on behalf of the Cullman Shareholders.
13.2 Effect of Termination. In the event of termination of this
Agreement as expressly permitted under Section 13.1 hereof, this Agreement
shall forthwith become void (except for Sections 6.6, 7.3, 13.1(b) and 14.2
and this Section 13.2) and there shall be no liability on the part of
either the Company, Acquisition Sub or the Purchaser or their respective
officers, directors or affiliates; provided, that, if such termination
shall result from the willful breach by a party of the covenants of such
party contained in this Agreement, such party shall be fully liable for any
and all Damages sustained or incurred as a result of such breach. In the
event of termination hereunder prior to the Closing, the Purchaser and
Acquisition Sub shall return promptly to the Company all documents, work
papers and other material of the Company and its Subsidiaries furnished or
made available to the Purchaser and Acquisition Sub or their
representatives or agents and all copies thereof, and no information
received by the Purchaser or Acquisition Sub shall be revealed to any third
party nor used for the advantage of the Purchaser or Acquisition Sub or any
other party.
13.3 Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties hereto. The
Company, the Purchaser and Acquisition Sub may amend this Agreement at any
time prior to the filing of the Certificate of Merger with the Department
of State of the State of New York; provided that an amendment made
subsequent to the adoption of this Agreement by the shareholders of any
Constituent Corporation shall not (i) alter or change the amount or class
of shares, securities, cash, property and/or rights to be received in
exchange for or on conversion of all or any of the shares of any class or
series thereof of such Constituent Corporation, (ii) alter or change any
term of the Certificate of Incorporation of the Surviving Corporation to be
effected by the Merger, or (iii) alter or change any of the terms and
conditions of this Agreement if such alteration or change would adversely
affect the holders of any class of shares or series thereof of such
Constituent Corporation.
13.4 Extension, Waiver. At any time prior to the Closing, the parties
hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, and (iii) waive compliance with any
of the agreements or conditions contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid if set
forth in writing in an instrument signed by or on behalf of such party. The
waiver by any party hereto of a breach of this Agreement shall not operate
or be construed as a waiver of any subsequent breach.
ARTICLE XIV
OTHER AGREEMENTS
14.1 Public Disclosure. Prior to the Closing Date, the Purchaser,
Acquisition Sub and the Company agree to notify and consult with each other
prior to issuing any statement or communication to the public or the press
regarding the transactions contemplated by this Agreement.
14.2 Expenses. The Purchaser, Acquisition Sub and the Company shall
each bear their own expenses (including those of counsel, accountants and
investment bankers) incurred by any of them in connection with this
Agreement and the transactions contemplated herein, except that all
expenses of the Company relating thereto shall be deemed to be part of the
CVI Corporate Assets and Liabilities.
14.3 Voting Agreement. By his execution of this Agreement, Xxxxx X.
Xxxxxxx, as voting trustee under the Voting Trust, hereby agrees, at the
stockholders meeting to be called in accordance with Section 6.4 hereof, to
vote all Shares which he is entitled to vote at such meeting in favor of
the Merger and transactions contemplated by this Agreement. Each of the
Principal Shareholders agrees that prior to the termination of this
Agreement (i) he will not amend or take any action to amend the Voting
Trust (other than the termination of the Voting Trust immediately prior to
the Closing), (ii) he will not grant any proxy or take any action to allow
any Person to have voting rights with respect to his Common Shares, or
(iii) he will not sell, assign, transfer or otherwise dispose of (including
by gift, contribution, but excluding by will, the laws of descent and
distribution or otherwise by operation of law, distribution or otherwise)
or pledge or encumber their Common Shares or any interest therein or enter
into any agreement, understanding or other arrangement with respect to any
of the foregoing.
14.4 Noncompetition, Nonsolicitation. (a) By executing this Agreement,
each of Xxxxx X. Xxxxxxx, G. Xxxxxx Xxxxxxxx and Xxxxxxx X. Xxxxxxx agrees
that, for a period of five years from and after the Closing Date, he shall
not, and he shall cause each of his Affiliates not to, (i) directly or
indirectly, engage in (other than for the account of the Purchaser or the
Surviving Corporation), or be employed by, or act as a consultant with
respect to, or serve as a director of, or have any ownership interest in
(other than the ownership of less than 2% of the Common Shares of a
corporation whose stock is traded on a national stock exchange or
over-the-counter market) any Person (other than the Purchaser or the
Surviving Corporation) which is, or expects to be, engaged in the
production or distribution of diaries, calendars, appointment books,
organizers, planners, time management products or other dated products, or
posters, coloring products, decorative calendars and other print media, or
(ii) directly or indirectly on behalf of or through any Person (other than
the Purchaser or the Surviving Corporation) solicit for employment, employ
or otherwise engage any Person who is as of the date hereof an employee of
the Business; provided, however, that nothing contained herein shall
restrict Messrs. Xxxxx X. Xxxxxxx, G. Xxxxxx Xxxxxxxx and Xxxxxxx X.
Xxxxxxx, their Affiliates, AGA LLC, or their successors and assigns from
continuing the Allied Graphic Arts Business, so long as (A) it is not
competitive with the Business, in terms of products irrespective of the
means of distribution, as conducted by the Group on the Closing Date, or
(B) it does not avail itself of business opportunities that relate to the
Business as conducted by the Group on the Closing Date; in each case other
than catalogues and promotional calendars sold to druggists.
(b) The Purchaser, Xxxxx X. Xxxxxxx, G. Xxxxxx Xxxxxxxx and Xxxxxxx X.
Xxxxxxx agree that the periods of time and the scope applicable to the
covenants of this Section 14.4 are reasonable and necessary to protect the
legitimate business interests of the Purchaser and the Surviving
Corporation without unduly limiting Xxxxx X. Xxxxxxx'x, G. Xxxxxx
Xxxxxxxx'x or Xxxxxxx X. Xxxxxxx' ability to obtain employment or otherwise
earn a living. However, if such period or scope should be adjudged
unreasonable in any judicial or other dispute resolution proceeding, then
the period of time or scope shall be reduced by the extent deemed
unreasonable, so that these covenants may be enforced during such period
and for such scope as are adjudged to be reasonable.
14.5 Specific Performance; Injunctive Relief. Each of the parties
hereto acknowledges, understands and agrees that any breach or threatened
breach by such party or such party's Affiliates of Sections 6.6, 7.3, 14.3
or 14.4 will cause irreparable injury to the other party and that money
damages will not provide an adequate remedy therefor. Accordingly, in the
event of any such breach or threatened breach, the non-breaching party
shall have the right and remedy (in addition to any other rights or
remedies available at law or in equity, including, money damages) to have
the provisions of such Section 6.6, 7.3, 14.3 or 14.4 specifically enforced
by, and to seek injunctive relief and other equitable remedies in, any
court having competent jurisdiction.
14.6 Change of Name. Following the Closing, the Purchaser agrees that
the name of the Surviving Corporation will not include the word "Cullman."
14.7 Escheat Matters. The Purchaser agrees that it
shall administer
and treat claims, returns and other matters under escheat, abandoned
property or similar laws involving the Company or any of its Subsidiaries
consistently with the manner that the Purchaser treats and administers the
foregoing with respect to the Purchaser and its Subsidiaries.
ARTICLE XV
THE REPRESENTATIVE
15.1 Appointment of the Representative. Xxxxx X. Xxxxxxx has been
irrevocably appointed as the representative (Mr. Cullman and any person
succeeding him as provided in Section 15.2 being hereinafter called the
"REPRESENTATIVE") of the interests of the Unit Holders to exercise such
powers and perform such duties as are set forth in this Agreement and in
the Custody Agreement including, by way of illustration and not by way of
limitation, whether to accept or dispute any assertion of a claim by the
Purchaser for indemnification pursuant to Article XI.
15.2 Subsequent Representative. In the event of the death or permanent
disability of Xxxxx X. Xxxxxxx as the initial Representative, his successor
Representative shall be Worthington Xxxx-Xxxxx. If such person shall be
unable to serve, the Representative shall be designated by the affirmative
vote of the Cullman Shareholders holding in the aggregate more than 50% of
the Common Shares.
ARTICLE XVI
MISCELLANEOUS
16.1 Entire Agreement. This Agreement (including the documents and
instruments referred to herein) embodies the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereby and supersedes all other prior commitments, arrangements or
understandings, both oral and written, between the parties with respect
thereto. There are no agreements, covenants, representations or warranties
with respect to the transactions contemplated hereby other than those
expressly set forth herein.
16.2 Assignment. Except as set forth in this Section 16.2, this
Agreement may not be assigned (whether by operation of law or otherwise) by
any party without the prior written consent of the other parties hereto.
The Purchaser and the Acquisition Sub may assign this Agreement to any of
their wholly-owned subsidiaries without the prior written consent of the
Company; provided, that such assignment shall not release the Purchaser or
Acquisition Sub from their respective obligations under this Agreement .
Subject to the foregoing, this Agreement shall be binding upon, and shall
inure to the benefits of, the parties hereto and their respective heirs,
personal representatives successors and assigns.
16.3 Governing Law and Venue. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New
York. The parties agree that all actions or proceedings arising in
connection with this Agreement shall be tried and litigated only in the
federal or state courts located in the County of New York, State of New
York. The Purchaser, Acquisition Sub and the Company and Messrs. Cullman,
Hargrove, Willies, Xxxx-Xxxxx and Xxxxx hereby irrevocably submit to the
exclusive jurisdiction of the federal and state courts located in the
County of New York, State of New York for the purpose of any such action or
proceeding.
16.4 Headings and Exhibits. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof. Schedules and documents
referred to in this Agreement are an integral part of this Agreement.
16.5 Disclosure on Schedules. Disclosure by a party on one Schedule
shall be deemed to be disclosure on all pertinent Schedules, but this
provision shall not limit the obligation of the party making disclosure on
any Schedule to prepare that Schedule fully, correctly and completely.
16.6 Notices. Any notices or other communications required or
permitted hereunder shall be in writing and personally delivered at the
addresses designated below, by facsimile transmission to the respective
facsimile numbers designated below, or mailed by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows, or
to such other address or addresses as may hereafter be furnished by one
party to the other party in compliance with the terms hereof:
If to the Purchaser or the Surviving Corporation:
The Xxxx Corporation
Xxxxxxxxxx Xxxxx Xxxxxxxxx
Xxxxxx, Xxxx 00000
Attention: Xxx X. XxXxxxxxx, Esq.
(Facsimile No.: (000) 000-0000)
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
(Facsimile No.: (000) 000-0000)
If to the Company:
Cullman Ventures, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(Facsimile No.: (000) 000-0000)
Attention: Xxxxx X. Xxxxxxx
and:
Cullman Ventures, Inc.
000 Xxxxxxx 0, Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
(Facsimile No.: (000) 000-0000)
Attention: G. Xxxxxx Xxxxxxxx
If to the Representative to:
Xx. Xxxxx B. Cullman
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(Facsimile No.: (000) 000-0000)
With a copy to:
Xxxxxxxx & X'Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(Facsimile No.: (000) 000-0000)
Attention: Xxxxx X. Xxxxxxx, Esq.
All such notices and communications shall be deemed to be given for
purposes of this Agreement on the day such writing is received by the
intended recipient thereof.
16.7 Counterparts. This Agreement may be executed in any number of
counterparts each of which, when executed, shall be deemed to be an
original and all of which together shall be deemed to be one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
CULLMAN VENTURES, INC.
By /s/ Xxxxx X. Xxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxx
Title: President
THE XXXX CORPORATION
By /s/ Xxxxxx X. Xxxxx
__________________________________
Name: Xxxxxx X. Xxxxx
Title: Chairman, CEO and President
XXXX ACQUISITION CORP.
By /s/ Xxxxxxx X. Xxxx
__________________________________
Name: Xxxxxxx X. Xxxx
Title: Vice President
The undersigned, Xxxxx X. Xxxxxxx, hereby executes and delivers this
Agreement solely to evidence his agreement to be bound by Article XI and
Article XII hereof, as applicable to him, and Sections 6.12, 13.1(b), 14.3,
14.4, 14.5 and 16.3 hereof.
/s/ Xxxxx X. Xxxxxxx
______________________________
Xxxxx X. Xxxxxxx
Each of the undersigned, G. Xxxxxx Xxxxxxxx and Xxxxxxx X. Xxxxxxx,
hereby executes and delivers this Agreement solely to evidence his
agreement to be bound by Article XI and Article XII hereof, as applicable
to him, and Sections 6.12, 13.1(b), 14.3, 14.4, 14.5 and 16.3 hereof.
/s/ G. Xxxxxx Xxxxxxxx
_________________________________
G. Xxxxxx Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
_________________________________
Xxxxxxx X. Xxxxxxx
Each of the undersigned, Worthington Xxxx-Xxxxx and Xxxxx X. Xxxxx,
hereby executes and delivers this Agreement solely to evidence his
agreement to be bound by Article XI and Article XII hereof, as applicable
to him, and Sections 6.12, 13.1(b), 14.3 and 16.3 hereof.
/s/ Worthington Xxxx-Xxxxx
_________________________________
Worthington Xxxx-Xxxxx
/s/ Xxxxx X. Xxxxx
_________________________________
Xxxxx X. Xxxxx
The undersigned, AGA LLC, hereby executes and delivers this Agreement
solely to evidence its agreement to be bound by Section 11.2(a) hereof.
AGA CREATIVE LLC
By /s/ G. Xxxxxx Xxxxxxxx
______________________________
Name: G. Xxxxxx Xxxxxxxx
Title: Vice President
