Exhibit 10.2
SUBSCRIPTION AGREEMENT
Dated as of January 15, 2000
The parties to this Subscription Agreement (this "Agreement")
are U.S. Industries, Inc., a Delaware corporation ("USI"), JUSI Holdings, Inc.,
a Delaware corporation that is an indirect wholly-owned subsidiary of USI
("JUSI" and, collectively with USI, the "Parent"), Strategic Industries, LLC, a
Delaware limited liability company ("SILLC"), Strategic Industries, Inc., a
Delaware corporation formerly known as Rexair Holdings, Inc. that is a
wholly-owned subsidiary of JUSI (the "Company"), and Automotive Interior
Products, LLC, a Delaware limited liability company (the "Buyer"). Capitalized
terms used in this Agreement without definition have the meanings ascribed to
them in Section 9.14.
Buyer desires to subscribe for common and preferred units and
a note of SILLC. SILLC desires to issue and sell such notes and units to Buyer,
and to use the proceeds therefrom to purchase from the Company a number of
shares (the "Company Shares") of common stock, par value $.01 per share, of the
Company ("Company Common Stock") equal to 75% of the issued and outstanding
shares of Company Common Stock after giving effect to such issuance. The Company
desires to use the proceeds from the issuance and sale of the Company Shares to
SILLC, and the proceeds of new bank financing, to repay intercompany debt owed
by it to JUSI.
In consideration of the mutual agreements set forth below, and
intending to be legally bound hereby, the parties to this Agreement agree as
follows:
ARTICLE I
SUBSCRIPTION FOR SECURITIES
1.01. SUBSCRIPTION FOR NOTE AND UNITS OF SILLC.
(a) At the Closing (as defined in Section 2.01), immediately
prior to the issuance and sale of the Company Shares contemplated by Section
1.02 of this Agreement:
(i) SILLC shall issue and sell to Buyer a junior
subordinated note of SILLC (the "Junior Subordinated Note") in the principal
amount of $10 million substantially in the form of ANNEX A and Buyer shall pay
to SILLC $10 million for such note; and
(ii) SILLC shall issue and sell to Buyer 53,114 Class A
Common Units, 179,486 Class B Common Units and 97,674 Junior Preferred Units
(collectively, the "Purchased Units") and Buyer shall pay to SILLC an aggregate
of $10 million for such units, consisting of $53,114 for the Class A Common
Units, $179,486 for the Class B Common Units and $9,767,400 for the Junior
Preferred Units.
(b) SILLC shall use the proceeds of such issuances and sales
to purchase the Company Shares pursuant to Section 1.02 of this Agreement.
(c) The Purchased Units, when issued and sold to Buyer, shall
be free and clear of all claims, liens, encumbrances, security interests,
pledges, mortgages, title defects of any kind, options, voting trusts, proxies,
voting agreements, rights of first refusal or first offer, preemptive rights,
covenants, charges or restrictions on transfer of any nature whatsoever (each,
an "Encumbrance"), except those created in favor of Buyer pursuant to this
Agreement and the SILLC Stockholders Agreement.
1.02. SUBSCRIPTION FOR THE COMPANY SHARES.
(a) At the Closing, SILLC shall purchase from the Company, and
the Company shall issue and sell to SILLC, the Company Shares, and SILLC shall
pay to the Company $20 million for such shares.
(b) The Company shall use the $20 million of proceeds to repay
intercompany debt pursuant to Section 1.04 of this Agreement
(c) The Company Shares, when issued and sold to SILLC, shall
be free and clear of all Encumbrances, except those created in favor of SILLC
under this Agreement and the Stockholders Agreement (as defined below).
1.03. INCURRENCE OF COMPANY DEBT. At the Closing, the Company
or a Company Subsidiary shall borrow an aggregate of $178 million (the "Company
Bank Indebtedness") under credit facilities (the "Company Credit Facility") on
the terms of the Bank Commitment Letter (as defined in Section 4.05). USI shall
fully and unconditionally guarantee the Company Bank Indebtedness. The Company
shall use the proceeds of borrowings under the Company Credit Facility to pay
financing expenses as contemplated by Section 9.12 of this Agreement and to
repay intercompany debt pursuant to Section 1.04 of this Agreement.
1.04. REPAYMENT OF INTERCOMPANY DEBT. At the Closing, the
Company shall repay an aggregate principal amount of $195 million of
intercompany debt owed by the Company to USI Global Corp., a Delaware
corporation and a wholly owned subsidiary of USI. All remaining intercompany
debt owned by the Company to USI Global Corp. shall be capitalized.
ARTICLE II
THE CLOSING
2.01. TIME AND PLACE OF CLOSING. The closing of the
transactions contemplated by this Agreement (the "Closing") will take place at
the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 at 9:30 A.M. (local time) on the first Business Day following the date on
which all of the conditions to each party's obligations hereunder have been
satisfied or waived, or at such other place or time or both as the parties may
agree. The date on which the Closing actually occurs and the
transactions contemplated hereby become effective is referred to herein as the
"Closing Date."
2.02. DELIVERIES BY SILLC. At the Closing, SILLC will deliver
or cause to be delivered the following to Buyer:
(a) The Junior Subordinated Note and certificates evidencing
the Class A Common Units, the Class B Common Units and the Junior Preferred
Units, in each case accompanied by stock or note powers duly endorsed in blank;
(b) The certificates contemplated by Section 7.04 hereof;
(c) An executed counterpart of the Indemnification Agreement
substantially in the form of ANNEX B hereto (the "Indemnification Agreement");
(d) An executed counterpart of the Registration Rights
Agreement substantially in the form of ANNEX C hereto (the "Registration Rights
Agreement");
(e) An executed counterpart of the Securities Purchase and
Holders Agreement substantially in the form of ANNEX D hereto (the "Stockholders
Agreement");
(f) An executed counterpart of the Management Agreement (as
defined in Section 5.10);
(g) A legal opinion of Weil, Gotshal and Xxxxxx LLP, counsel
to Parent, as to customary matters in a form reasonably acceptable to Buyer; and
(h) An executed counterpart of the Escrow Agreement (as
defined in Section 5.12).
2.03. DELIVERIES BY BUYER. At the Closing, Buyer will deliver
or cause to be delivered the following to Parent and SILLC:
(a) $20 million in immediately available funds to an account
designated in writing by SILLC at least two (2) Business Days prior to the
Closing;
(b) The certificates contemplated by Section 6.04 hereof;
(c) An executed counterpart of the Registration Rights
Agreement;
(d) An executed counterpart of the Stockholders Agreement;
(e) A legal opinion of Dechert Price & Xxxxxx, counsel to
Buyer, as to customary matters in a form reasonably acceptable to Parent; and
(f) An executed counterpart of the Escrow Agreement.
2.04. DELIVERIES BY THE COMPANY. At the Closing, the Company
will deliver or cause to be delivered the following to Buyer, Parent and/or
SILLC:
(a) Certificates representing the Company Shares registered in
the name of SILLC;
(b) The resignations of all members of the Board of Directors
of the Company (other than as indicated by Buyer in writing prior to the
Closing);
(c) An executed counterpart of the Indemnification Agreement;
(d) An executed counterpart of the Registration Rights
Agreement; and
(e) An executed copy of the Management Agreement; and
(f) An executed counterpart of the Stockholders Agreement.
2.05. DELIVERIES BY PARENT. At the Closing, Parent will
deliver or cause to be delivered the following to Buyer:
(a) The stock books, stock ledgers, minute books and corporate
seals of the Company and the Company Subsidiaries;
(b) An executed counterpart of the Indemnification Agreement;
(c) An executed counterpart of the Stockholders Agreement;
(d) An executed counterpart of the Registration Rights
Agreement; and
(e) A release in a form reasonably acceptable to Buyer and
Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT
Each Parent hereby jointly and severally represents and
warrants to Buyer (it being understood that, for purposes of all such
representations and warranties, the Corporate Reorganization shall be deemed to
have been completed):
3.01. CORPORATE ORGANIZATION; ETC. The Company and each of the
Subsidiaries of the Company (each a "Company Subsidiary" and collectively, the
"Company Subsidiaries") is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to conduct its business as it is now
being conducted and to own, lease and operate its property and assets except
where the failure to have such power or authority is not, in the aggregate,
reasonably likely to have a Company Material Adverse Effect. SILLC is a limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite limited
liability company power and authority to conduct its business as it is now being
conducted and to own, lease and operate its property and assets. Each of the
Company, the Company Subsidiaries and SILLC is qualified or otherwise authorized
to transact business as a foreign corporation and, in the case
of SILLC, as a foreign limited liability company, and is in good standing in
each jurisdiction set forth in Section 3.01 of the Disclosure Schedule, which
jurisdictions are the only jurisdictions in which the location of its properties
or the conduct of its business requires such qualification or authorization and
in which the failure so to qualify would either individually or in the aggregate
have a Company Material Adverse Effect (as defined in Section 9.14) or a SILLC
Material Adverse Effect (as defined in Section 9.14).
3.02. CAPITALIZATION OF THE COMPANY AND SILLC.
(a) The authorized capital stock of the Company consists of
1,000 shares of Company Common Stock. JUSI is the record and beneficial owner of
1,000 shares of Company Common Stock and has good and valid title to the Company
Common Stock, free and clear of all Encumbrances. All of the Company Shares,
when issued, will be duly authorized, validly issued, fully paid and
nonassessable, not issued in violation of any agreement or other understanding
binding upon Parent or the Company or any preemptive rights, and issued in
compliance with all applicable federal and state securities or "blue sky" laws
and regulations. Except as listed in Section 3.02 of the Disclosure Schedule
hereto and as contemplated by this Agreement, there are no outstanding (a)
securities convertible into or exchangeable for capital stock of the Company,
(b) options, warrants or other rights (including, without, limitation,
preemptive rights) to purchase or subscribe for securities of the Company or (c)
contracts, commitments, agreements, understandings or arrangements of any kind
relating to the issuance of any capital stock or other equity securities or any
such convertible or exchangeable securities or any such options, warrants or
rights, pursuant to which, in any of the foregoing cases, the Company or any
Company Subsidiary is subject or bound. The consummation of the transactions
contemplated hereby will convey to SILLC good title to the Company Shares free
and clear of all proxies, voting agreements and other Encumbrances, except for
those created in favor of SILLC under this Agreement or the Stockholders
Agreement.
(b) Immediately prior to the Closing, the authorized
membership interests of SILLC shall consist of 1,000,000 Class A Common Units,
1,000,000 Class B Common Units and 1,000,000 Junior Preferred Units, of which
318,786 Class A Common Units, 448,614 Class B Common Units and 692,326 Junior
Preferred Units shall be issued and outstanding. All the Purchased Units will be
duly authorized, validly issued, fully paid and nonassessable, will not be
issued in violation of any agreement or other understanding binding upon Parent
or SILLC or any preemptive rights, and will be issued in compliance with all
applicable federal and state securities or "blue sky" laws and regulations.
Except as listed in Section 3.02 of the Disclosure Schedule hereto and as
contemplated by this Agreement, there are no outstanding (a) securities
convertible into or exchangeable for membership interests of SILLC, (b) options,
warrants or other rights (including, without, limitation, preemptive rights) to
purchase or subscribe for securities of SILLC or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
of any capital stock or other equity securities or any such convertible or
exchangeable securities or any such options, warrants or rights, pursuant to
which, in any of the foregoing cases, SILLC is subject or bound. The
consummation of the transactions contemplated hereby will convey to Buyer good
title to the Purchased Units and the Junior Subordinated Note free and clear of
all proxies, voting agreements and other Encumbrances, except for those created
in favor of Buyer under this Agreement or the Stockholders Agreement.
3.03. COMPANY SUBSIDIARIES. All of the Company Subsidiaries
are listed in Section 3.03(a) of the Disclosure Schedule together with their
jurisdiction of incorporation or organization and the percentage interest held
directly or indirectly by the Company. Except as listed in Section 3.03(b) of
the Disclosure Schedule, all issued and outstanding capital stock of each
Company Subsidiary is validly issued, fully paid and nonassessable, was not
issued in violation of any agreement or other understanding binding upon Parent,
the Company or the Company Subsidiaries or any preemptive rights, and was issued
in compliance with all applicable federal and state securities or "blue sky"
laws and regulations, and is owned, directly or indirectly, by the Company, free
and clear of all Encumbrances. Except as listed in Section 3.03(b) of the
Disclosure Schedule, there are no outstanding (a) securities convertible into or
exchangeable for the equity securities of any of the Company Subsidiaries, (b)
options, warrants or other rights (including without limitation preemptive
rights) to purchase or subscribe for securities of any of the Company
Subsidiaries or (c) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any equity securities of
any of the Company Subsidiaries, any such convertible or exchangeable securities
or any such options, warrants or rights pursuant to which, in any of the
foregoing cases, the Company or any Company Subsidiary is subject or bound.
3.04. EACH PARENT'S, SILLC'S AND THE COMPANY'S AUTHORITY
RELATIVE TO THIS AGREEMENT. Each Parent and the Company is a corporation duly
organized and validly existing under the laws of Delaware. Each Parent and the
Company has all requisite corporate authority and power to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. SILLC has
all requisite limited liability company authority and power to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, and the other agreements and
instruments to be executed in connection herewith and the consummation of the
transactions contemplated hereby by Parent, SILLC and the Company have been duly
and validly authorized by all required action on the part of Parent, SILLC and
the Company and no other proceedings on the part of Parent, SILLC or the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent, SILLC and the Company and, assuming this Agreement has been
duly authorized, executed and delivered by Buyer, constitutes a valid and
binding agreement of Parent, SILLC and the Company, enforceable against Parent,
SILLC and the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith, and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). As of the Closing,
the other agreements and instruments contemplated hereby will have been duly and
validly executed and delivered by Parent, SILLC and the Company, as applicable,
and assuming due authorization, execution and delivery by Buyer, will constitute
valid and binding agreements of Seller and the Company, enforceable against the
Seller and the Company in accordance with their terms.
3.05. CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set
forth in Section 3.05 of the Disclosure Schedule, neither the execution and
delivery of this Agreement or the other agreements and instruments to be
executed by Parent, SILLC and the Company in connection herewith, nor the
consummation of the transactions contemplated
hereby or thereby will (a) violate any provision of the Certificate of
Incorporation or By-Laws (or other comparable governing documents) of the
Company, the Company Subsidiaries, Parent or SILLC, (b) require any consent,
waiver, approval, authorization or permit (a "Consent") of, or filing with or
notification to, any governmental or regulatory authority, arbitrator, agency or
commission, including courts of competent jurisdiction, domestic or foreign (a
"Governmental Entity"), except where the failure to obtain such Consent or make
such filing or notification is not reasonably likely to have a SILLC Material
Adverse Effect or a Company Material Adverse Effect, (c) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default, or give rise to any right of termination, cancellation or
acceleration or any obligation to repay under, any of the terms, conditions or
provisions of any indenture, mortgage, note, bond, encumbrance, license,
government registration, contract, lease, agreement or other instrument or
obligation (each, an "Obligation") to which the Company, any Company Subsidiary,
Parent or SILLC is a party or by which the Company, any Company Subsidiary,
Parent or SILLC, or any of their respective property or assets may be bound,
except such violations, breaches and defaults which, in the aggregate, are not
reasonably likely to have a SILLC Material Adverse Effect, a Company Material
Adverse Effect or would not impair, hinder or adversely affect the ability of
Parent to perform any of its obligations under this Agreement or to consummate
the transactions contemplated hereby (a "Parent Material Adverse Effect") or
those as to which requisite waivers or Consents have been obtained or (d)
violate any order, writ, settlement, judgment, injunction, decree, statute,
ordinance, rule, law, code, regulation or other requirement (each, an "Order")
of any Governmental Entity applicable to the Company, any Company Subsidiary,
Parent or SILLC, except such violations which, in the aggregate, are not
reasonably likely to have a SILLC Material Adverse Effect, a Company Material
Adverse Effect or a Parent Material Adverse Effect.
3.06. FINANCIAL STATEMENTS. Attached hereto as Schedule 3.06
are copies of the audited combined balance sheets of the Company as of September
30, 1999 and 1998 and the related audited combined statements of operations,
cash flows and changes in invested capital (deficit) for each of the three years
ended September 30, 1999 (the balance sheet as of September 30, 1999, being
hereinafter referred to as the "Balance Sheet" and all such financial statements
being hereinafter collectively referred to as the "Financial Statements"). The
Financial Statements (i) were compiled from the books and records of the
Company, and (ii) fairly present the combined financial position, the combined
results of operations and the combined cash flows of the Company as of the dates
or for the periods presented in conformity with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved except as otherwise noted therein.
3.07. FORM 10; ABSENCE OF CERTAIN CHANGES. As of the date on
which it was filed, the information contained in the Form 10 did not contain any
untrue statement of a material fact nor omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except as set
forth in the Form 10 or Section 3.07 of the Disclosure Schedule, since the date
of the Balance Sheet, none of the Company or any Company Subsidiary has:
(a) suffered any adverse change in its business, operations or
financial position, except such changes which, in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect;
(b) conducted its business outside the ordinary and usual
course consistent with past practice, except in connection with the transactions
contemplated hereby or by the Form 10;
(c) made any election for Tax (as defined below) purposes or
for purposes of a Return (as defined below) (or had any such election made on
its behalf), (including any election pursuant to Treasury Regulation section
301.7701) or entered into any agreement, arrangement or settlement with respect
to material Taxes with any Governmental Entity or other Person;
(d) other than as required by collective bargaining
agreements, granted any increase in the salaries or other compensation payable
or to become payable to, or any advance (excluding advances for ordinary
business expenses) or loan to, any officer, employee or shareholder of the
Company or any Company Subsidiary (other than normal merit increases for
employees previously budgeted made in the ordinary course of business and
consistent with past practice), or any increase in, or any addition to, other
benefits (including any bonus, profit-sharing, pension, retirement or other
plan) to which any of the officers and employees may be entitled;
(e) made any contributions or payments to any pension or
retirement plan or under any profit-sharing, bonus or similar plan except
payments in the ordinary course of business and consistent with past practice
made pursuant to the Benefit Plans described in Section 3.12 of the Disclosure
Schedule hereto, or any other payment of any kind to or on behalf of any officer
or employee other than payment of base compensation and reimbursement for
reasonable expenses in the ordinary course of business;
(f) suffered any change in or, to the knowledge of Parent,
received any written notice of any loss of any of the suppliers, clients,
distributors, customers or employees that are material to the business of the
Company or any Company Subsidiary, including any loss or change which may result
from the transactions contemplated by this Agreement, except any losses or
changes which, in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect;
(g) been involved in any disposition of or has failed to keep
in effect any rights in, to or for the use of any franchise, right, license,
permit or certificate material to the business of the Company or any Company
Subsidiary, except any failures to keep in effect any right which, in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect;
(h) changed any method of keeping of its books of account or
accounting practices other than pursuant to the Corporate Reorganization;
(i) disposed of or failed to keep in effect any rights in, to
or for the use of any of the intellectual property material to the business of
the Company or any Company Subsidiary, except any such dispositions or failures
which, in the aggregate, are not reasonably likely to have a Company Material
Adverse Effect;
(j) sold, transferred or otherwise disposed of any material
assets, properties or rights of any of the businesses of the Company or any
Company Subsidiary, except inventory sold in the ordinary course of business
consistent with past practice;
(k) made nor authorized any single capital expenditure in
excess of $100,000 or capital expenditures in excess of $500,000 in the
aggregate (other than emergency expenditures; it being understood that the
Company shall use its reasonable efforts under the circumstances to contact
Buyer prior to making any material emergency expenditure outside of these
baskets);
(l) changed or modified in any manner the Company's or any
Company Subsidiary's existing credit, collection and payment policies,
procedures and practices with respect to accounts receivable and accounts
payable, respectively, including without limitation, acceleration of collections
of receivables, failure to make or delay in making collections of receivables
(whether or not past due), acceleration of payment of payables or failure to pay
or delay in payment of payables;
(m) incurred any damage, destruction or loss, whether covered
by insurance or not, materially affecting the financial condition or business of
the Company or any Company Subsidiary;
(n) waived or released any material right or claim of the
Company or any Company Subsidiary; or
(o) permitted or suffered any Encumbrances on any assets
(tangible or intangible) or properties of the Company or any Company Subsidiary
other than Encumbrances incurred in the ordinary course of business consistent
with past practice and except those Encumbrances which, in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect.
3.08. COMPLIANCE WITH LAW. Except as set forth in Section
3.08(a) of the Disclosure Schedule, the Company and the Company Subsidiaries
have complied and are in compliance with all, and have not received any written
notice of any violation of any, applicable Orders of any Governmental Entity,
except such non-compliances which, in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect. Except as set forth in Section
3.08(b) of the Disclosure Schedule, the Company and the Company Subsidiaries
have all domestic and foreign governmental licenses, permits and other
authorizations to conduct their businesses as currently conducted and all such
permits, licenses and authorizations are in full force and effect, except where
the failure to have such licenses and permits or to have such licenses and
permits in full force and effect, in the aggregate, is not reasonably likely to
have a Company Material Adverse Effect.
3.09. CONTRACTS. Section 3.09 of the Disclosure Schedule sets
forth a complete list of all written and oral material contracts of the Company
and the Company Subsidiaries as follows:
(a) employment, severance and consulting agreements that
provide for severance or termination payments in excess of $100,000 to which the
Company or any of the Company Subsidiaries is presently a party (the "Benefit
Arrangements");
(b) collective bargaining agreements;
(c) agreements that are required to be filed as an exhibit to
the Form 10, other than such agreements which would become effective only upon
the consummation of the proposed Spin-off (as defined in the Form 10); and
(d) indentures, mortgages and notes or other debt instruments
evidencing indebtedness, other than any such instrument in a principal amount of
less than $100,000.
Each material contract to which the Company or the Company
Subsidiaries is a party or is bound is valid, binding and enforceable against
the Company or any Company Subsidiary, as the case may be, and to the knowledge
of Parent, the other parties thereto, in accordance with its terms and is in
full force and effect, except those the absence of which would not, individually
or in the aggregate, have a Company Material Adverse Effect. Except as set forth
in Section 3.09 of the Disclosure Schedule, the Company and the Company
Subsidiaries are not in default under any of the material contracts, and no
event has occurred which, with notice or lapse of time, or both, would
constitute such a default, except for any defaults which, in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect.
Neither the Company nor any Company Subsidiary has received
any written claim from any other party to any material contract that the Company
or any Company Subsidiary has breached any obligations to be performed by it
thereunder, or is otherwise in default or delinquent in performance thereunder,
except any of the foregoing which, in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect.
3.10. LITIGATION. Except as set forth in the Form 10 or
Section 3.10(a) of the Disclosure Schedule, there is no action, suit,
investigation or proceeding pending or threatened against the Company or any
Company Subsidiary before any Governmental Entity which is reasonably likely to
have a Company Material Adverse Effect. Except as set forth in Section 3.10(b)
of the Disclosure Schedule, none of the Company or any Company Subsidiary has
received notice that it is subject to any outstanding Order of any Governmental
Entity which is reasonably likely to have a Company Material Adverse Effect.
3.11. TAXES.
(a) Except as set forth in Section 3.11(a) of the Disclosure
Schedule, each of the Company and each Company Subsidiary has duly and timely
filed all material returns, declarations, reports, estimates, information
returns and statements ("RETURNS") required to be filed with respect to it in
respect of any Taxes, and each of the Company and each Company Subsidiary has
timely paid all Taxes that are shown to be due and payable on such Returns.
Except as set forth in Section 3.11(a) of the Disclosure Schedule, no material
deficiencies for any Taxes have been asserted in writing or assessed against the
Company or any Company Subsidiary, which remain unpaid or for which adequate
provision, net of any reserves provided for matters set forth in Sections
3.11(a) and 3.11(c) of the Disclosure Schedule, has not been made in the
Financial Statements. Except as set forth in Section 3.11(a) of the Disclosure
Schedule, none of the Company or any Company Subsidiary (a) has, with respect to
any assets or property held, filed a consent to the application of Section
341(f) of the Internal Revenue Code of 1986, as amended (the "CODE"), (b) has
made any payments, is
obligated to make any payments, or is a party to any agreement, including this
Agreement, that could obligate it to make any payments that will not be
deductible under Code section 280G, (c) is required to make any adjustment under
Code section 481 (or any comparable provision of state, local or foreign law) by
reason of a change in accounting method, or (d) is a partner in any entity
considered to be a partnership for federal income tax purposes. For purposes of
this Agreement, "TAXES" shall mean all income taxes (including any tax on or
based upon net income, or gross income, or income as specially defined, or
earnings, or profits, or selected items of income, earnings, or profits) and all
gross receipts, estimated, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, or windfall profit taxes, environment, alternative, or add-on minimum
taxes, custom duties or other taxes, fees, assessments, or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any federal, state, local or foreign taxing or
other authority.
(b) Neither the Company nor any Company Subsidiary is a "U.S.
Real Property Holding Corporation" within the meaning of Section 897 of the
Code.
(c) Except as set forth in Section 3.11(c) of the Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to or bound
by any Tax allocation or Tax sharing agreement or has any current or potential
contractual obligation or liability as a transferee or successor to indemnify
any other person with respect to Taxes.
(d) Except as set forth in Section 3.11(d) of the Disclosure
Schedule, no Governmental Entity currently is auditing any of the Company or
Company Subsidiaries' Returns, nor has any of the Company or Company
Subsidiaries received written notice of any proposed material audits of such
Returns. Except as set forth in Section 3.11(d) of the Disclosure Schedule, with
respect to each of the Company and Company Subsidiaries, no written claim for
Taxes (or written request for Returns) has ever been made by a Governmental
Entity in a jurisdiction where the Company or Company Subsidiary, as the case
may be, does not file Returns. Except as set forth in Section 3.11(d) of the
Disclosure Schedule, none of the Company or Company Subsidiaries has outstanding
any waiver of any statute of limitations in respect of Taxes or any outstanding
agreement regarding any extension of time with respect to a Tax assessment or
deficiency. Except as set forth in Section 3.11(d) of the Disclosure Schedule,
since the beginning of fiscal 1996, none of the Company or Company Subsidiaries
is a party to a closing agreement, or the subject of a private ruling,
concerning Taxes with any Governmental Entity which would have a material effect
continuing after Closing.
(e) Except as set forth in Section 3.11(e) of the Disclosure
Schedule, each of the Company and Company Subsidiaries has withheld and paid, in
all material respects, all Taxes required to be withheld and paid in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder or third party.
3.12. EMPLOYEE BENEFIT PLANS; ERISA.
(a) All material written "employee benefit plans", as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and all other pension, profit sharing, retirement,
supplemental retirement, stock, stock option, change of control, basic and
supplemental accidental death and dismemberment, basic and
supplemental life and health insurance, post-retirement medical or life,
welfare, dental, vision, savings, bonus, deferred compensation, incentive
compensation, business travel and accident, severance pay, salary continuation,
short-term and long-term disability, termination or other compensation plan,
arrangement or agreement or other material employee fringe benefit plans
maintained by the Company or any of the Company Subsidiaries or any other
employer (an "ERISA Affiliate") that is, or at any relevant time was, together
with the Company or any of the Company Subsidiaries, treated as a "single
employer" under Section 414(b), 414(c), 414(m) or 414(o) of the Code, or to
which the Company or any of the Company Subsidiaries or any ERISA Affiliate
contributes or is obligated to contribute thereunder for current or former
employees of the Company or any of the Company Subsidiaries (the "Employee
Benefit Plans") other than any Employee Benefit Plan which is a multiemployer
plan, as defined in Section 3(37) of ERISA ("Multiemployer Plan"), are, in all
material respects, maintained in accordance with their terms and with all
applicable provisions of the Code and ERISA (including rules and regulations
thereunder) and other applicable federal and state laws and regulations,
including the timely filing of all material reports, returns and similar
documents with the appropriate government agency or distribution to Employee
Benefit Plan participants, as applicable, except where the failure to so
maintain them would not be reasonably likely to result in a Company Material
Adverse Effect. True and complete copies of each such Employee Benefit Plan, and
where applicable, a copy of the most recent determination letter received from
the Internal Revenue Service (the "IRS"), and the most recent IRS Form 5500
filed, with respect to each such Employee Benefit Plan, have been furnished to
Buyer.
(b) Except as indicated in Section 3.12(b) of the Disclosure
Schedule, the Employee Benefit Plans (other than the Multiemployer Plans)
intended to qualify under Section 401 of the Code are, and at all times since
their inception have been, so qualified and the trusts maintained pursuant
thereto are exempt from federal income taxation under Section 501 of the Code,
and nothing has occurred with respect to the operation of such plans which would
be reasonably likely to result in the loss of such qualification or exemption or
the imposition of any material liability, penalty or tax under ERISA or the
Code. Except as set forth in Section 3.12(b) of the Disclosure Schedule, each
such Employee Benefit Plan intended to qualify under Section 401 of the Code has
received a determination letter from the IRS to the effect that each such plan
is qualified and all related trusts are exempt from federal income taxes on a
determination letter request is pending with the IRS to such effect, and no
determination letter with respect to any such plan has been revoked nor, is
there any reason for such revocation, nor has any such plan been amended, or
failed to be amended, since the date of its most recent determination letter in
any respect which would adversely affect its qualification.
(c) All contributions (including all employer contributions
and employee salary reduction contributions) and payments required to have been
made under any of the Employee Benefit Plans or by law (without regard to any
waivers granted under Section 412 of the Code) or in connection therewith have
been made by the due date thereof (including any valid extension, except where
the failure to make such contribution would not be reasonably likely to result
in a Company Material Adverse Effect). No asset of the Company or any Company
Subsidiary is subject to any lien under Sections 401(a)(29) or 412(n) of the
Code or Section 4068 of ERISA or arising out of any action filed under Section
4301(b) of ERISA.
(d) Except as set forth in Section 3.12(d) of the Disclosure
Schedule, neither the Employee Benefit Plans, the Company, the Company
Subsidiaries, any ERISA Affiliate, nor any employee of the foregoing, nor any
trusts created thereunder, has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the Code or Section 406 of ERISA, nor has any such
person breached any duty imposed by Title I of ERISA, with respect to any
Employee Benefit Plan.
(e) Neither the Company, the Company Subsidiaries nor any
ERISA Affiliate has incurred any material liability to the Pension Benefit
Guaranty Corporation (the "PBGC") with respect to any Employee Benefit Plan
subject to Title IV of ERISA, other than for the payment of premiums, all of
which have been paid when due. No Employee Benefit Plan has applied for or
received a waiver of the minimum funding standards imposed by Section 412 of the
Code. The Company has furnished to Buyer the most recent actuarial report with
respect to each Employee Benefit Plan that is a defined benefit pension plan, as
defined in Section 3(35) of ERISA. To the knowledge of Parent, the information
supplied to the actuary by the Company, the Company Subsidiaries and any ERISA
Affiliate for use in preparing those reports was complete and accurate. No event
has occurred since the date of any such actuarial report that had, or is likely
to have, a materially adverse effect on the ratio of plan assets to the
actuarial present value of plan obligations for accumulated benefits shown in
such report.
(f) At no time since May 31, 1995 has the Company, the Company
Subsidiaries or any ERISA Affiliate incurred any liability which could subject
Buyer to any material liability under Section 4062, 4063, 4064 or 4069 of ERISA.
(g) Except as indicated in Section 3.12(g) of the Disclosure
Schedule, at no time since May 31, 1995, have the Company, the Company
Subsidiaries or any ERISA Affiliate, been required to contribute to, or incurred
any withdrawal liability, within the meaning of Section 4201 of ERISA to any
multiemployer pension plan, within the meaning of Section 3(37) of ERISA nor
does the Company, the Company Subsidiaries or any ERISA Affiliate to the
knowledge of the Seller have any potential withdrawal liability arising from a
transaction described in Section 4204 of ERISA. All required contributions,
withdrawal liability payments or other payments of any type that the Company,
the Company Subsidiaries or any ERISA Affiliate have been obligated to make to
any multiemployer plan have been duly and timely made. Any withdrawal liability
incurred with respect to any multiemployer plan has been fully paid as of the
date hereof. Neither the Company, the Company Subsidiaries nor any ERISA
Affiliate has undertaken any course of action that could reasonably be expected
to lead to a complete or partial withdrawal from any multiemployer plan.
(h) Except as indicated in Section 3.12(h) of the Disclosure
Schedule, no payment which is or may be made by from or with respect to any
Employee Benefit Plan, to any employee, former employee, director or agent of
the Company, the Company Subsidiaries, either alone or in conjunction with any
other payment, will or could properly be characterized as an excess parachute
payment under section 280G of the Code.
3.13. TITLE TO PROPERTIES. Each of the Company and the Company
Subsidiaries has good, valid and, in the case of real property, marketable title
to all of the material assets and properties which it owns, including but not
limited to those reflected on
the Balance Sheet or acquired by the Company and any Company Subsidiary since
the date of the Balance Sheet (except for assets and properties sold, consumed
or otherwise disposed of by the Company or any Company Subsidiary in the
ordinary course of business consistent with the past practice since the date of
the Balance Sheet), and such material assets and properties are owned free and
clear of all Encumbrances, except for (a) Encumbrances disclosed in the Form 10
or listed in Section 3.13 of the Disclosure Schedule, (b) liens for current
Taxes not yet due and payable or for Taxes the validity of which is being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established on the Balance Sheet, (c) Encumbrances to secure
indebtedness reflected on the Balance Sheet or indebtedness incurred in the
ordinary course of business and consistent with past practice after the date
thereof, (d) mechanic's, materialmen's and similar Encumbrances which have
arisen in the ordinary course of business and (e) any of the foregoing
Encumbrances which, in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect or materially adversely interfere with the use
of such assets and properties as they are presently being used.
3.14. PATENTS, TRADEMARKS, ETC. Except as set forth in Section
3.14 of the Disclosure Schedule:
(a) the Company and the Company Subsidiaries own or possess
adequate licenses or other valid rights to use all United States and foreign
patents, trademarks, trade names, service marks, copyrights and applications,
including foreign applications therefor, which are material to the conduct of
the business of the Company and the Company Subsidiaries taken as a whole (the
"Patent and Trademark Rights"),
(b) the validity of the Patent and Trademark Rights and the
title thereto of the Company or any Company Subsidiary are not being questioned
in any litigation to which the Company or any Company Subsidiary is a party, nor
is any such litigation overtly threatened, and
(c) the conduct of the business of the Company and the Company
Subsidiaries as now conducted does not infringe or otherwise conflict with any
valid patents, trademarks, trade names, service marks or copyrights of others in
any way which is reasonably likely to have a Company Material Adverse Effect.
3.15. ENVIRONMENTAL MATTERS.
(a) Except as set forth in the Form 10 or Section 3.15 of the
Disclosure Schedule, the Company and the Company Subsidiaries hold, and are in
compliance with, all material permits, licenses and government authorizations
required for the Company and the Company Subsidiaries to conduct their
respective businesses under any U.S. federal and state or foreign statutes and
regulations relating to pollution or protection of human health or the
environment, including the Comprehensive Environmental Response, Compensation,
and Liability Act, the Resource Conservation and Recovery Act, the Clean Air
Act, the Clean Water Act, and similar state laws ("Environmental Laws"), and the
Company and the Company Subsidiaries are otherwise in compliance with all
applicable Environmental Laws, except where the failure to be in compliance
would not be reasonably likely to have a Company Material Adverse Effect.
(b) Except as set forth in the Form 10 or Section 3.15 of the
Disclosure Schedule, none of the Company or any Company Subsidiary has been
notified that it is a potentially responsible party under the Comprehensive
Environmental Response, Compensation, and Liability Act or any similar state or
foreign law with respect to any on-site or off-site location for which liability
is currently being asserted which is reasonably likely to have a Company
Material Adverse Effect.
(c) Except as set forth in the Form 10 or Section 3.15 of the
Disclosure Schedule, none of the Company or any Company Subsidiary is subject to
any Order relating to compliance with any Environmental Law or to investigation
or cleanup of substances regulated under any Environmental Law as hazardous
which is reasonably likely to have a Company Material Adverse Effect.
(d) Except as set forth in the Form 10 or Section 3.15 of the
Disclosure Schedule, no substances regulated under Environmental Laws have been
released, spilled, leaked, discharged, disposed of, pumped, poured emitted,
emptied, injected, leached, dumped or allowed to escape at any property now or
formerly owned, operated or leased by the Company or the Company Subsidiaries or
any former Company subsidiaries which is reasonably likely to have a Company
Material Adverse Effect.
(e) Parent has provided Buyer copies of all material
environmental inspections, investigations, studies, audits, tests, reviews or
other analyses in Seller's possession or control conducted in relation to any
property now or previously owned, operated or leased by the Company or the
Company Subsidiaries or any former Company subsidiaries.
3.16. BROKERS AND FINDERS. None of Parent, SILLC, the Company
or any Company Subsidiary or any of their respective officers, directors or
employees has incurred any liability for any investment banking fees, brokerage
fees, commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement except for such liability as shall
be borne by Parent.
3.17. UNDISCLOSED LIABILITIES. Neither the Company nor any
Company Subsidiary has any liabilities or obligations of any nature whatsoever,
whether due or to become due, accrued, absolute, contingent or otherwise, other
than (i) liabilities and obligations that are fully reflected, accrued or
reserved for in the Balance Sheet, (ii) liabilities and obligations incurred in
the ordinary course of business and consistent with past practice since the date
of the Balance Sheet, (iii) liabilities and obligations set forth in Section
3.17 of the Disclosure Schedule to the extent readily apparent on its face, and
(iv) other liabilities and obligations that individually or in the aggregate are
not reasonably likely to result in a Company Material Adverse Effect.
3.18. RELATED PARTY TRANSACTIONS. Except as described in
Section 3.18 of the Disclosure Schedule or in connection with the Corporate
Reorganization, since October 1, 1998, neither Parent nor any Affiliate of
Parent (other than the Company or any Company Subsidiary) (i) has had any
interest in any assets or property (whether real or personal, tangible or
intangible), used by the Company or any Company Subsidiary in the conduct of its
business, or (ii) has engaged in any other transaction with the Company or any
Company Subsidiary. Neither Parent nor any Affiliate of Parent (other than the
Company or any
Company Subsidiary) has made any agreement or arrangement to make any payments
to any officer or employee of the Company or any Company Subsidiary conditioned
upon the execution of this Agreement or the consummation of the transactions
contemplated hereby for which the Company or any Company Subsidiary will be
liable.
3.19. ADEQUACY OF ASSETS. Except for cash management services
currently provided by Parent, the Company owns directly or through the Company
Subsidiaries all assets necessary for the Company Subsidiaries to conduct their
businesses as currently operated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Parent and SILLC as follows:
4.01. ORGANIZATION; ETC. Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority to
conduct its business as it is now being conducted and to own, lease and operate
its property and assets, except where the failure to have such power or
authority is not, in the aggregate, reasonably likely to have a Buyer Material
Adverse Effect (as defined).
4.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has all
requisite limited liability company authority and power to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the other agreements and
instruments to be executed by Buyer in connection herewith and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
all required limited liability company action on the part of Buyer and no other
limited liability company proceedings on the part of Buyer are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Buyer and,
assuming this Agreement has been duly authorized, executed and delivered by
Parent, SILLC and the Company, constitutes a valid and binding agreement of
Buyer, enforceable against Buyer in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
4.03. CONSENTS AND APPROVALS; NO VIOLATIONS. Neither the
execution and delivery of this Agreement or the other agreements and instruments
to be executed by Buyer in connection herewith, nor the consummation of the
transactions contemplated hereby or thereby by Buyer will (a) violate any
provision of its Certificate of Formation or Limited Liability Company Operating
Agreement, true and correct copies of which have been furnished to Seller, (b)
require any Consent of, or filing with or notification to, any Governmental
Entity, except where the failure to obtain such Consent or make such filing or
notification is not reasonably likely to have a Buyer Material Adverse Effect,
(c) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration
or any obligation to repay) under, any of the terms, conditions or provisions of
any Obligation to which Buyer is a party or by which Buyer or any of its
properties or assets may be bound, except such violations, breaches and defaults
which, in the aggregate, are not reasonably likely to have a Buyer Material
Adverse Effect or those as to which requisite waiver or Consents have been
obtained or (d) violate any Order of any Governmental Entity applicable to
Buyer, except such violations which, in the aggregate, are not reasonably likely
to have a Buyer Material Adverse Effect.
4.04. ACQUISITION OF PURCHASED SECURITIES FOR INVESTMENT.
Buyer is acquiring the Purchased Securities for investment and not with a view
toward, or for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling such Purchased Securities. Buyer
agrees that the Purchased Securities may not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of without registration under
the Securities Act of 1933, as amended (the "Securities Act"), except pursuant
to an exemption from such registration under the Securities Act.
4.05. FINANCIAL CAPABILITY. Buyer has obtained a commitment
letter (the "Buyer Commitment Letter") providing an aggregate of $70 million for
this transaction and the transaction contemplated by the Securities Purchase
Agreement and naming Parent as a third-party beneficiary, a true and correct
copy of which letter is contained in Section 4.05 of the Disclosure Schedule.
4.06. BROKERS AND FINDERS. Neither Buyer nor any of its
officers, directors or employees has employed any investment banker, broker or
finder or incurred any liability for any investment banking fees, brokerage
fees, commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
4.07. BUYER'S SOPHISTICATION. Buyer is an informed and
sophisticated purchaser, and has engaged expert advisors, experienced in the
evaluation and purchase of securities. Buyer has undertaken such investigation
as it has deemed necessary to enable it to make an informed and intelligent
decision with respect to this Agreement and the transactions contemplated
hereby. Buyer acknowledges that none of Parent, SILLC nor the Company (or their
agents or representatives) has made any representation or warranty as to SILLC,
the Company, any Company Subsidiary, or their prospects (financial or
otherwise), except as expressly set forth in this Agreement. Except as otherwise
set forth in this Agreement, the Indemnification Agreement and the Stock
Purchase Agreement (as defined in Section 9.14) or the Tax Sharing Agreement, it
is therefore expressly understood and agreed that Buyer accepts the condition of
the properties of SILLC, of the Company and the Company Subsidiaries "AS IS,
WHERE IS" without any representation, warranty or guarantee, express or implied,
as to merchantability, fitness for a particular purpose or otherwise as to the
condition, size, extent, quantity, type or value of such property.
ARTICLE V
COVENANTS OF THE PARTIES
5.01. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement, the Corporate Reorganization or Section 5.01 of
the Disclosure Schedule or with
the prior written consent of Buyer (which consent shall not be unreasonably
withheld) during the period from the date of this Agreement to the Closing Date,
the Company shall, and shall cause each Company Subsidiary to (a) conduct its
business and operations in the ordinary course of business consistent with past
practice except for the Corporate Reorganization and (b) use all commercially
reasonable efforts consistent therewith to preserve intact its properties,
assets and business organizations, to keep available the services of its
officers and employees and to maintain satisfactory relationships with
customers, suppliers, distributors and others having commercially beneficial
business relationships with it, to maintain its books of account and records, in
each case, in the ordinary course of business consistent with past practice.
Without limiting the generality of the foregoing, and except as otherwise
provided in this Agreement or as contemplated hereby or by the Corporate
Reorganization or as set forth in Section 5.01 of the Disclosure Schedule, the
Company shall not, and shall cause each Company Subsidiary not to, prior to the
Closing Date, without the prior written consent of Buyer (which consent shall
not be unreasonably withheld):
(a) issue, sell or pledge, or authorize or propose the
issuance, sale or pledge of (i) additional shares of capital stock of the
Company or any Company Subsidiary, as the case may be, or securities convertible
into any such shares or any rights, warrants or options to acquire any such
shares or other convertible securities or (ii) any other securities in respect
of, in lieu of, or in substitution for, the shares of capital stock of the
Company or any Company Subsidiary, as the case may be, outstanding on the date
hereof;
(b) declare or pay any dividend or distribution on any units
of Company Common Stock or shares of capital stock of any Company Subsidiary;
(c) redeem, purchase or otherwise acquire any outstanding
units of Company Common Stock or any outstanding shares of capital stock of any
Company Subsidiary (or any warrants, rights or options to acquire Company Common
Stock or any outstanding shares of capital stock of any Company Subsidiary);
(d) amend its Certificate of Incorporation, or By-Laws (or
other comparable governing documents);
(e) except as contemplated by this Agreement, incur any
long-term indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse the obligations of any other Person;
(f) (i) increase the rate or terms of compensation of any of
its directors, officers or employees, except such increases for employees as are
granted in the ordinary course of business consistent with past practice
previously budgeted (a copy of which budget has been delivered to Buyer prior to
the date hereof), or (ii) pay or agree to pay any pension, retirement allowance
or other employee benefit not required or permitted by any existing Employee
Benefit Plan or other agreement or arrangement to any such director, officer or
employee, whether past or present;
(g) sell, transfer, lease or otherwise dispose of any of its
property or assets (other than inventory in the ordinary course of business) or
mortgage or encumber any of its material property or assets;
(h) make any loan to, or enter into or effect any other
transaction with, any of its directors or officers, or Parent or any Affiliate
of Parent (excluding the Company and the Company Subsidiaries);
(i) enter into other material agreements, commitments or
contracts, except agreements, commitments or contracts made in the ordinary
course of business consistent with past practice;
(j) make any election for Tax purposes or for purposes of a
Return (or have any such election made on its behalf), including any election
pursuant to Treasury Regulation section 301.7701, or enter into any agreement,
arrangement or settlement with respect to material Taxes with a Governmental
Entity or other Person;
(k) change any method of accounting;
(l) merge or consolidate with, or purchase substantially all
of the assets of, or otherwise acquire any business of any Person, except
pursuant to the Corporate Reorganization;
(m) take any action or omit to take any action which will
result in a material violation of any applicable law or Order or cause a
material breach of any agreements, contracts or commitments by it which is
material to its business (including, without limitation, the material contracts
disclosed in Schedule 3.09 of the Disclosure); or
(n) agree or commit to take any of the foregoing actions.
5.02. BUYER COMMITMENT LETTER. Buyer shall maintain the Buyer
Commitment Letter in full force and effect until the Closing Date.
5.03. ADDITIONAL INFORMATION.
(a) From the date of this Agreement until the Closing Date,
Parent will cause the Company and the Company Subsidiaries to provide Buyer and
its officers, consultants, employees, counsel, agents, lenders and other
representatives with reasonable access during normal business hours to the
properties, books, contracts, and records of the Company and the Company
Subsidiaries. All such information shall be subject to the terms and conditions
of the letter agreement dated August 17, 1999 (the "Confidentiality Agreement"),
between Citicorp Venture Capital Ltd. and USI.
(b) After the Closing, upon reasonable written notice, Buyer
will give or cause to be given to Parent and its authorized representatives,
reasonable access to such information relating to the Company and the Company
Subsidiaries as is reasonably necessary for the preparation or filing of any Tax
return, financial statement or report, or is otherwise reasonably requested;
PROVIDED, HOWEVER, that any such access shall be conducted at a reasonable time
and in such a manner as not to interfere unreasonably with the operations of the
business of the Company and the Company Subsidiaries. Buyer agrees to cause each
of the Company and the Company Subsidiaries to preserve its records for a period
of seven (7) years from the Closing Date and, if it wishes to destroy any such
records after the retention period, it shall first give sixty (60) days' prior
written notice to Parent, which shall
then have the right to take possession of such records, at its expense, within
sixty (60) days after the delivery of such notice.
(c) CERTAIN POST-CLOSING ASSISTANCE BY THE BUYER. So long as
it does not unreasonably interfere with the business operation of the Company or
any Company Subsidiary, Buyer agrees to cause the appropriate personnel at the
Company and the Company Subsidiaries, at no cost or expense to Parent, to
prepare during normal business hours and with reasonable advance notice all
customary accounting and related reports with respect to the Company and the
Company Subsidiaries for periods since September 30, 1999, up to the Closing
Date which are reasonably requested by Parent in connection with Parent's
preparation and/or filing of various financial and accounting reports.
(d) CASH MANAGEMENT. Parent shall continue to cause the
funding by the Company and the Company Subsidiaries of the Company and Company
Subsidiary checks, in accordance with past practices, which are presented for
payment through the day prior to the Closing Date. Parent shall have no
obligation to fund checks which are presented for payment on and after the
Closing Date. Amounts received in the lockbox and depository accounts of Parent
through the Closing Date shall continue to be paid to Parent in accordance with
past practices, provided that such collections are appropriately reflected on
the Balance Sheet. The bank accounts of the Company and the Company Subsidiaries
will continue to be owned by the Company and the Company Subsidiaries after the
Closing Date.
5.04. COVENANT TO SATISFY CONDITIONS. Parent will use all
reasonable efforts to ensure that the conditions set forth in Article VII hereof
are satisfied. Buyer will use all reasonable efforts to ensure that the
conditions set forth in Article VI hereof are satisfied.
5.05. EMPLOYEE MATTERS.
(a) Except as may otherwise be required by a collective
bargaining agreement or contract, the Company and the Company Subsidiaries shall
maintain after the Closing Date the Employee Benefit Plans or substitute for
such Plans other plans and policies which shall provide benefits and coverage to
current and retired employees of the Company and the Company Subsidiaries that
are in the aggregate substantially similar to the benefits and coverage afforded
by the Employee Benefit Plans. Prior to the Closing, the Seller and the Company
will take any and all such actions necessary or appropriate to establish, adopt,
enter into and implement such plans, policies, administrative systems and
contracts, including, without limitation, establishing as necessary plans and
related trust agreements that are substantially identical to the pension benefit
plans included within the Employee Benefit Plans, continuing such benefits and
coverage in accordance with this Section 5.05(a). Nothing in this Agreement
shall preclude the Company from amending or terminating any Employee Benefit
Plan or any other Company benefit plan.
(b) As soon as practicable, but no more than sixty (60) days
following the Closing Date, the Seller shall cause the assets related to the
accounts maintained for the benefit of current and former employees of the
Company and the Company Subsidiaries pursuant to the 401(k) plans set forth on
Section 5.05(b) of the Disclosure Schedule (the "Company 401(k) Plans") held in
the applicable Master Trusts (the "Master 401(k) Trusts") to be transferred to a
successor trust established by the Company or one of its Affiliates (the "New
401(k) Trust"). The amount of assets transferred from the Master 401(k) Trusts
to the
New 401(k) Trust shall be equal to the fair market value of the assets held in
the Master 401(k) Trusts for such employee and former employees' accounts.
(c) As soon as practicable following the Closing Date, but in
no event later than (i) 60 days after the Closing Date and (ii) 30 days after
the finalization of the necessary data required for determination of assets and
liabilities, Parent shall spin off assets and liabilities from Parent's USI
Group Pension Plan (the "Spinoff Plan") for benefits accrued as of the Closing
Date with respect to the active, terminated vested and retired former employees
of the Company Subsidiaries participating in the Spinoff Plan as detailed in
Schedule 5.05(c). The amount of assets transferred shall be calculated in
accordance with section 1.414(1)-1(n)(1) of the Treasury Regulations applying
the following PBGC assumptions used for plans terminating as of the Closing
Date:
- PBGC interest rate used to value annuities specified in
Table I of Appendix B of Part 4044 of the PBGC
regulations promulgated under ERISA
- 1983 Group Annuity Mortality Table
- Expense load in accordance with Appendix C of Part 4044
of the PBGC regulations promulgated under ERISA
- Expected retirement ages as specified in Appendix D of
Part 4044 of the PBGC regulations promulgated under
ERISA
- No other demographic assumption shall be used.
The amount of assets to be transferred shall be calculated as of the Closing
Date based on employee data as of 12/31/99, aged to the Closing Date and
credited with actual trust earnings from the Closing Date to the actual transfer
date, adjusted for applicable benefit payments and plan expenses in accordance
with past practices.
(d) All contributions that are, or will be, required to be
made to the Spinoff Plan or a successor to such plans by Section 302 of ERISA or
section 412 of the Code with respect to the plan year beginning or ending in
1999, to the extent not paid by Parent prior to the Closing Date, will be paid
subsequent to the Closing Date by Parent in accordance with Section 302 of ERISA
and section 412 of the Code.
5.06. FURTHER ASSURANCES. Each of the parties hereto agrees to
use its reasonable efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations or otherwise to consummate and make effective the
transactions contemplated by this Agreement including the Corporate
Reorganization, the sale, assignment, transfer and conveyance of the Purchased
Units, the Note, and the Company Shares contemplated by Article I hereof and the
underlying assets and properties used in the conduct of the business of any
Company Subsidiary or the benefits thereof. If at any time after the Closing
Date any further action is necessary or desirable to carry out the purposes of
this Agreement including the Corporate Reorganization and the sale, assignment,
transfer and conveyance of the Purchased Units, the Note, and the Company Shares
contemplated by Article I hereof and the underlying assets
and properties used in the conduct of the business of any Company Subsidiary or
the benefits thereof, the parties hereto shall take or cause to be taken all
such necessary action, including, without limitation, the execution and delivery
of such further instruments and documents as may be reasonably requested by any
party for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby.
5.07. BINDING ON SUCCESSORS. In the event Buyer, the Company
or any of their respective successors or assigns or Parent, SILLC or any of
their respective successors or assigns (a) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (b) transfers all or substantially all of its
properties and assets to any Person, then and in each such case, proper
provision shall be made so that the successors and assigns of Buyer or the
Company or Parent or SILLC, as applicable (or their successors and assigns),
shall assume any obligations set forth in this Article V that survive the
Closing Date.
5.08. NON-SOLICITATION.
(a) In consideration of the consideration paid to SILLC
pursuant to Section 1.02 hereof, Parent covenants and agrees that, for three (3)
years after the Closing Date, neither Parent nor any of its Affiliates shall
solicit, employ, retain as a consultant, interfere with or attempt to entice
away from the Company or any Company Subsidiary or any successor to any of the
foregoing any individual who is, has agreed to be or within one year of such
solicitation, employment, retention, interference or enticement has been,
employed or retained by the Company, the Company Subsidiary or any successor to
any of the foregoing.
(b) Parent acknowledges and agrees that the remedy at law for
any breach, or threatened breach, of any of the provisions of this Section 5.08
will be inadequate and, accordingly, Parent covenants and agrees that the Buyer
shall, in addition to any other rights and remedies which the Buyer may have, be
entitled to equitable relief, including injunctive relief, and to the remedy of
specific performance with respect to any breach or threatened breach of such
covenant, as may be available from any court of competent jurisdiction. Such
right to obtain equitable relief may be exercised, at the option of the Buyer,
concurrently with, prior to, after, or in lieu of, the exercise of any other
rights or remedies that the Buyer may have as a result of any such breach or
threatened breach.
(c) In the event that the provisions of this Section 5.08
shall be determined by a court of competent jurisdiction to be unenforceable
under applicable law as to that jurisdiction (the parties agreeing that such
decision shall not be binding, RES JUDICATA or collateral estoppel in any other
jurisdiction) for any reason whatsoever, then any such provision or provisions
shall not be deemed void, but the parties hereto agree that said limits may be
modified by the court and that said covenant contained in this Section 5.08
shall be amended in accordance with said modifications, it being specifically
agreed by Seller and the Buyer that it is their continuing desire that this
covenant be enforced to the full extent of its terms and conditions or if a
court finds the scope of the covenant unenforceable, the court should redefine
the covenant so as to comply with applicable law.
5.09. CONFIDENTIALITY. Parent shall, and shall cause its
Affiliates and representatives to, keep confidential and not disclose to any
other Person or use for its own benefit or the benefit of any other Person any
confidential proprietary information,
technology, know-how, trade secrets (including, without limitation, all results
of research and development), product formulas, industrial designs, franchises,
inventions or other industrial and intellectual property in its, his, her or
their possession or control regarding the Company, any Company Subsidiary or
their business and operation. The obligations of the Parent under this Section
5.09 shall not apply to information which (i) is or becomes generally available
to the public without breach of the commitment provided for in this Section; or
(ii) is required to be disclosed by law, order or regulation of a court or
tribunal or governmental authority; PROVIDED, HOWEVER, that, in any such case,
Parent shall notify the Buyer and the Company as early as reasonably practicable
prior to disclosure to allow the Buyer and the Company to take appropriate
measures to preserve the confidentiality of such information.
5.10. MANAGEMENT SERVICES AGREEMENT. Buyer and Parent will
mutually agree on the terms of a Management Services Agreement between the
Company and SILLC, to be effective on the Closing Date for a term of five years
(the "Management Services Agreement"). The Management Services Agreement will
provide that the Company will pay to SILLC $3.5 million during each year of the
term (paid quarterly), for management services to be agreed by the parties. In
addition, the Management Services Agreement will provide that SILLC shall be
entitled to a lump-sum payment equal to the sum of all remaining payments due
under the Management Services Agreement in the event that the Company is sold to
a party not affiliated with Buyer or SILLC during the term.
5.11. CHANGE IN CONTROL PAYMENTS. The Company shall pay or
shall cause to be paid all amounts which shall become due and payable by the
Company or any of the Company Subsidiaries as a result of a trigger of a change
of control or similar provision in any agreement as a result of consummation of
the transactions contemplated herein.
5.12. RETURN OF COMPANY SHARES TO JUSI. At the Closing,
pursuant to an escrow agreement mutually acceptable to Buyer, SILLC and Parent
(the "Escrow Agreement"), SILLC will deliver the Company Shares to an escrow
agent to be selected by Parent and reasonably acceptable to SILLC. The escrow
agent will hold the Company Shares until the fifth anniversary of the Closing
(the "Maturity Date"), and will return the Company Shares to SILLC on the
Maturity Date, except that (i) if USI has not been fully released from the
Guarantee on or before the Maturity Date, on the Maturity Date SILLC shall
forthwith transfer and assign all of its right, title and interest in and to the
Company Shares to JUSI and (ii) if an event of default has occurred and is
continuing under the Company Credit Facility and USI has made a cash payment
under the Guarantee, USI will have the right, exercisable upon written demand
given 90 days after such payment (and so long as SILLC has not reimbursed USI
for the amount of the payment under the Guarantee (plus accrued interest at the
prime rate of Chase Manhattan Bank)), to require that the Company Shares be
returned to JUSI promptly following such demand. Prior to the Maturity Date,
Buyer shall not, and shall cause the Company not to, amend, supplement, or
modify any of the terms of the Company Credit Facility without the prior written
consent of USI, unless such amendment, supplement or modification (A) results in
an immediate and full release of USI from the Guarantee or (B) effects changes
that do not increase the maximum amount of the commitment under the Company
Credit Facility
or the interest rate payable thereunder or that are not otherwise more
restrictive or burdensome than the existing terms of the Company Credit
Facility.
5.13. TRANSITIONAL ADMINISTRATIVE SERVICES. For a period of
six (6) months after the Closing, Parent shall, at no cost to the Company or
SILLC, perform administrative services for the Company consistent with those
performed for the Company since January 1, 1999. During this six-month period,
Parent shall cooperate with SILLC and/or one or more third party service
providers selected by SILLC to effect an orderly transition of services from
Parent to SILLC and/or other service providers.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF PARENT, NEWCO
AND THE COMPANY
The obligations of Parent, SILLC and the Company to effect the
transactions contemplated hereby shall be subject to the receipt of the
deliveries contemplated by Section 2.03 hereof and to the fulfillment, or
written waiver by Parent, at or prior to the Closing of each of the following
conditions:
6.01. REPRESENTATIONS AND WARRANTIES TRUE.
(a) Each of the representations and warranties of Buyer
contained in Sections 4.01, 4.02 and 4.06 of this Agreement shall be true and
correct at and as of the Closing Date, with the same force and effect as though
made at and as of the Closing Date (except to the extent that any representation
or warranty is made as of a specific date, in which case such representation or
warranty shall be true and correct as of such date).
(b) The representations and warranties of Buyer in this
Agreement (other than those referred to in Section 6.01(a)) shall be true and
correct at and as of the Closing Date with the same force and effect as though
made at and as of the Closing Date (except to the extent that any representation
or warranty is made as of a specific date, in which case such representation or
warranty shall be true and correct as of such date). The determination of
whether the condition set forth in this Section 6.01(b) shall be satisfied shall
be made on a cumulative basis by adding the effect of all breaches of
representations and warranties (determined without regard to any materiality or
Buyer Material Adverse Effect or similar qualifiers). If the effect of the
aggregation of such breaches of representations or warranties does not result in
a Buyer Material Adverse Effect, then this condition shall be deemed satisfied.
6.02. PERFORMANCE. Buyer shall have performed and complied in
all material respects with all agreements, obligations, covenants and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing.
6.03. NO INJUNCTION OR PROCEEDING. No Order shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits or restricts the consummation of the transactions contemplated hereby.
No action or proceeding by any Governmental Entity shall be pending or
threatened in writing against Buyer, the Parent, SILLC, the Company or any of
their respective Affiliates, associates, officers or directors
seeking to prevent or delay the transactions contemplated hereby or challenging
any of the terms or provisions of this Agreement or seeking material damages in
connection therewith.
6.04. CERTIFICATES. Buyer shall have furnished Parent with
such certificates of its officers and others to evidence its compliance with the
conditions set forth in this Article VI as may be reasonably requested by
Parent.
6.05. CREDIT FACILITY. The lenders under the Company
Commitment Letter shall have made available to the Company an aggregate of $178
million under the Company Credit Facility and an additional $15 million shall be
available immediately after such borrowing.
6.06. SECURITIES PURCHASE TRANSACTION. The transactions
contemplated by the Securities Purchase Agreement shall have been consummated.
6.07. MATERIAL ADVERSE EFFECT. No Buyer Material Adverse
Effect shall have occurred nor shall any event or circumstance which could
reasonably be expected to produce a Buyer Material Adverse Effect have occurred.
6.08. HSR ACT. The applicable waiting periods under the HSR
Act shall have expired or been terminated.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to effect the transactions
contemplated hereby shall be subject to its receipt of the deliveries
contemplated by Section 2.02 hereof and to the fulfillment, or written waiver by
Buyer, at or prior to the Closing of each of the following conditions:
7.01. REPRESENTATIONS AND WARRANTIES TRUE.
(a) Each of the representations and warranties of Parent
contained in Sections 3.01, 3.02, 3.03, 3.04 and 3.16 of this Agreement shall be
true and correct at and as of the Closing Date with the same force and effect as
though made at and as of the Closing Date, with the same force and effect as
though made at and as of the Closing Date (except to the extent that any
representation or warranty is made as of a specific date, in which case such
representation or warranty shall be true and correct as of such date).
(b) The representations and warranties of Parent in this
Agreement (other than those referred to in Section 7.01(a)) shall be true and
correct at and as of the Closing Date (except to the extent that any
representation or warranty is made as of a specific date, in which case such
representation or warranty shall be true and correct as of such date). The
determination of whether the condition set forth in this Section 7.01(b) shall
be satisfied shall be made on a cumulative basis by adding the effect of all
breaches of representations and warranties (determined without regard to any
materiality or Company Material Adverse Effect or similar qualifiers). If the
effect of the aggregation of such breaches of
representations or warranties does not result in a Company Material Adverse
Effect, then this condition shall be deemed satisfied.
7.02. PERFORMANCE. Parent, SILLC and the Company shall have
performed and complied in all material respects with all agreements,
obligations, covenants and conditions required by this Agreement to be performed
or complied with by it on or prior to the Closing.
7.03. NO INJUNCTION OR PROCEEDING. No Order shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits or restricts the consummation of the transactions contemplated hereby.
No action or proceeding by any Governmental Entity shall be pending or
threatened in writing against Buyer, Parent, SILLC, the Company or any of their
respective Affiliates, associates, officers or directors seeking to prevent or
delay the transactions contemplated hereby, challenging any of the terms or
provisions of this Agreement or seeking material damages in connection
therewith.
7.04. CERTIFICATES. Parent shall have furnished Buyer with
such certificates of its officers or other representatives and others to
evidence compliance by the Seller with the conditions set forth in this Article
VII as may be reasonably requested by Buyer.
7.05. CREDIT FACILITY. The Company shall have borrowed an
aggregate of $178 million under the Company Credit Facility and an additional
$15 million shall be available immediately after such borrowing.
7.06. CONSENTS. Parent, the Company or the appropriate Company
Subsidiary shall have received all consents from third parties (including any
Governmental Entity), the absence of which could reasonably be expected to have
a Company Material Adverse Effect, including the consents described in Section
3.05 of the Disclosure Schedule, in form and substance reasonably acceptable to
Buyer.
7.07. MATERIAL ADVERSE EFFECT. No Company Material Adverse
Effect shall have occurred nor shall any event or circumstance which could
reasonably be expected to produce a Company Material Adverse Effect have
occurred.
7.08. HSR ACT. The applicable waiting periods under the HSR
Act shall have expired or been terminated.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.01. TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by written mutual consent of Buyer and Parent;
(b) by either Parent or Buyer by written notice given to the
other at any time after March 31, 2000 if, through no fault of the party seeking
termination, the Closing shall not have occurred;
(c) by Buyer by written notice given to Parent, if there has
been a material violation or breach by Parent, SILLC or the Company of any
agreement, representation or warranty contained in this Agreement and such
violation or breach has not been cured within 30 days following notice thereof;
or
(d) by Parent by written notice given to the Buyer, if there
has been a material violation or breach by Buyer of any agreement,
representation or warranty contained in this Agreement and such violation or
breach has not been cured within 30 days following notice thereof.
8.02. PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by any or all of the parties pursuant to Section 8.01 hereof, written
notice thereof shall forthwith be given to the other party or parties hereto and
this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
(a) upon request therefor, each party will redeliver all
documents, work papers and other material of any other party or of the Company
or any Company Subsidiary relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing
or causing to be furnished the same;
(b) all information received by Buyer with respect to the
business of the Company or any Company Subsidiary shall be held subject to and
in accordance with the terms of the Confidentiality Agreement, which agreement
shall continue notwithstanding the termination of this Agreement; and
(c) any termination pursuant to Section 8.01(c) or (d) shall
not be deemed a waiver of any rights or remedies otherwise available under this
Agreement, by operation of law or otherwise, to the party who so terminates and
shall not relieve the breaching party (whether or not it is the terminating
party) from any liability to the other party hereto arising from or related to
such breach.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01. AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented at any time by the parties hereto only by an
instrument in writing duly signed by the parties hereto.
9.02. EXTENSION; WAIVER. At any time prior to the Closing
Date, the parties entitled to the benefits of the respective term or provision
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein any document, certificate or
writing delivered pursuant hereto or (c) waive compliance with any obligation,
covenant, agreement or condition contained herein. Any agreement on the part of
any party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of the parties entitled to the benefits
of such extended or waived term or provision.
No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar). No delay on the part of any party in exercising any right, power,
or privilege hereunder shall operate as a waiver thereof.
9.03. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except
as otherwise provided for in the Indemnification Agreement and the Tax Sharing
Agreement, the representations and warranties made in this Agreement shall not
survive beyond the Closing.
9.04. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement together
with the Indemnification Agreement, the Tax Sharing Agreement, the Registration
Rights Agreement, the Stockholders Agreement and the Management Agreement (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof (other than the Confidentiality Agreement) and (b) shall not be
assigned by operation of law or otherwise by Parent, SILLC or the Company
without the prior written consent of Buyer, which shall not be unreasonably
withheld. This Agreement may be assigned by Buyer to (i) any Affiliate (but no
such assignment shall release Buyer of its obligations hereunder) (ii) one or
more of its lenders if required by same or (iii) to any purchaser of the
outstanding stock or all or substantially all of the assets of the Company,
without the prior written consent of Seller.
9.05. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, each of which shall remain in full force
and effect.
9.06. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission or telexed or three days after
being mailed by registered or certified mail (return receipt requested), postage
prepaid, and one Business Day after deposited with an overnight courier service
if delivered by overnight courier, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice;
PROVIDED, that notices of a change of address shall be effective only upon
receipt thereof):
(a) if to the Parent, SILLC or the Company, to:
c/o U.S. Industries, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000)000-0000
Attention: General Counsel
(b) if to Buyer, to:
Automotive Interior Products, LLC
c/o Citicorp Venture Capital Ltd.
000 Xxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: G. Xxxxxx X'Xxxxxxx
9.07. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
9.08. SPECIFIC PERFORMANCE. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
9.09. PUBLIC DISCLOSURE. Notwithstanding anything herein to
the contrary, each of the parties to this Agreement hereby agrees with the other
party or parties hereto that, except as may be required to comply with the
requirements of any applicable laws and the rules and regulations of any stock
exchange upon which the securities of one of the parties (or its Affiliate) is
listed, in which case the party making the release or announcement shall provide
a copy of such release or announcement 48 hours in advance to the other parties,
no press release or announcement with respect to the transactions contemplated
by this Agreement shall be issued by any party to this Agreement prior to the
Closing without the advance consent of the other parties.
9.10. DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning interpretation of this Agreement.
9.11. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.12. FEES AND EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, Parent shall pay all of the
reasonable and invoiced out-of-pocket expenses incurred by Parent, the Company
and any Company Subsidiary in connection with the negotiation and preparation of
this Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, all legal, accounting and other costs and
expenses and any filing fee under the HSR Act; provided, however, that any
out-of-pocket expenses incurred in connection with the Bank Commitment Letter
and the Credit Facility, and up to $700,000 of other reasonable and invoiced
out-of-pocket legal and accounting expenses incurred by Parent, shall be paid
out of proceeds of the Company Credit Facility. If the transactions contemplated
by this Agreement are consummated, the Company shall pay all of the reasonable
and invoiced out-of-pocket legal, accounting and environmental consulting
expenses incurred by the Buyer in connection with the negotiation and
preparation of this Agreement and the consummation of the transactions
contemplated hereby, and Buyer shall pay any other expenses incurred by it in
connection therewith. If the transactions contemplated by this Agreement are not
consummated, Buyer shall be responsible for all of its own out-of- pocket
expenses.
9.13. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and nothing in this
Agreement, express or implied, is intended by or shall confer upon any other
Person or Persons any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
9.14. DEFINITIONS. As used in this Agreement:
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities and Exchange Act of 1934, as
amended.
"Business Day" shall mean any day in which banks are open for
business in New York City.
"Buyer Material Adverse Effect" shall mean a material adverse
effect (or series of related changes or effects) on the business, financial
condition or results of operations of the Buyer; PROVIDED that, for purposes of
this Agreement, changes or effects (i) attributable to worldwide, national or
local economic conditions or (ii) generally affecting the industries in which
the Buyer operates shall, in each case, not be deemed to constitute a Buyer
Material Adverse Effect.
"Company Material Adverse Effect" shall mean a material
adverse effect (or series of related changes or effects) on the business,
financial condition or results of operations of the Company and the Company
Subsidiaries taken as a whole; PROVIDED that, for purposes of this Agreement,
changes or effects (i) attributable to worldwide, national or local economic
conditions or (ii) generally affecting the industries in which the Company or
any Company Subsidiary operates shall, in each case, not be deemed to constitute
a Company Material Adverse Effect.
"Corporate Reorganization" means the transactions contemplated
by Section 1.02 of the Securities Purchase Agreement by and among U.S.
Industries, Inc., JUSI Holdings, Inc., Strategic Industries, LLC and Automotive
Interior Products, LLC, dated as of January 15, 2000 (the "Securities Purchase
Agreement").
"Form 10" shall mean the following sections of Amendment No. 2
to the Form 10 filed with the Securities and Exchange Commission on November 4,
1999, solely as it relates to the Company Subsidiaries: "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Person" shall mean any individual, corporation, partnership,
association, limited liability company, trust, unincorporated organization,
other entity or group (as group is defined in Section 13(d)(3) of the Exchange
Act).
"SILLC Material Adverse Effect" shall mean a material adverse
effect (or series of related changes or effects) on the business, financial
condition or results of operations of SILLC and its Subsidiaries taken as a
whole; PROVIDED that, for purposes of this Agreement, changes or effects (i)
attributable to worldwide, national or local economic conditions or (ii)
generally affecting the industries in which SILLC or any Subsidiary of SILLC
operates shall, in each case, not be deemed to constitute a SILLC Material
Adverse Effect.
"SILLC Stockholders Agreement" shall mean the Securities
Purchase and Holders Agreement, to be dated the Closing Date, by and among
SILLC, the Company, JUSI Holdings, Inc. and Management Investors.
"Subsidiary" shall mean any Person of which more than 50% of
the total voting power of stock or other equity interests having ordinary voting
power for the election of directors or managers of such Person is at the time
owned or controlled, directly or indirectly, by another Person.
[SIGNATURES BEGIN ON NEXT PAGE]
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be signed by its duly authorized officers as of the date first
above written.
U.S. INDUSTRIES, INC.
By:
------------------------------
Name:
Title:
JUSI HOLDINGS, INC.
By:
------------------------------
Name:
Title:
STRATEGIC INDUSTRIES, LLC
By:
------------------------------
Name:
Title:
STRATEGIC INDUSTRIES, INC.
By:
------------------------------
Name:
Title:
AUTOMOTIVE INTERIOR PRODUCTS, LLC
By:
------------------------------
Name:
Title:
================================================================================
SUBSCRIPTION AGREEMENT
BY AND AMONG
U.S. INDUSTRIES, INC.,
JUSI HOLDINGS, INC.,
STRATEGIC INDUSTRIES, LLC,
STRATEGIC INDUSTRIES, INC.,
AND
AUTOMOTIVE INTERIOR PRODUCTS, LLC
Dated as of January 15, 2000
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I SUBSCRIPTION FOR SECURITIES..............................1
1.01. Subscription for Note and Units of SILLC.....................1
1.02. Subscription for the Company Shares..........................2
1.03. Incurrence of Company Debt...................................2
1.04. Repayment of Intercompany Debt...............................2
ARTICLE II THE CLOSING..............................................2
2.01. Time and Place of Closing....................................2
2.02. Deliveries by SILLC..........................................3
2.03. Deliveries by Buyer..........................................3
2.04. Deliveries by the Company....................................3
2.05. Deliveries by Parent.........................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT.................4
3.01. Corporate Organization; Etc..................................4
3.02. Capitalization of the Company and SILLC......................5
3.03. Company Subsidiaries.........................................6
3.04. Each Parent's, SILLC's and the Company's Authority Relative to
this Agreement...........................................6
3.05. Consents and Approvals; No Violations........................7
3.06. Financial Statements.........................................7
3.07. Form 10; Absence of Certain Changes..........................7
3.08. Compliance with Law..........................................9
3.09. Contracts....................................................9
3.10. Litigation..................................................10
3.11. Taxes ...................................................10
3.12. Employee Benefit Plans; ERISA...............................12
3.13. Title to Properties.........................................14
3.14. Patents, Trademarks, Etc....................................14
3.15. Environmental Matters.......................................14
3.16. Brokers and Finders.........................................15
3.17. Undisclosed Liabilities.....................................15
TABLE OF CONTENTS
(CONTINUED)
PAGE
3.18. Related Party Transactions..................................16
3.19. Adequacy of Assets..........................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.................16
4.01. Organization; Etc...........................................16
4.02. Authority Relative to this Agreement........................16
4.03. Consents and Approvals; No Violations.......................16
4.04. Acquisition of Purchased Securities for Investment..........17
4.05. Financial Capability........................................17
4.06. Brokers and Finders.........................................17
4.07. Buyer's Sophistication......................................17
ARTICLE V COVENANTS OF THE PARTIES................................18
5.01. Conduct of Business of the Company..........................18
5.02. Buyer Commitment Letter.....................................19
5.03. Additional Information......................................19
5.04. Covenant to Satisfy Conditions..............................20
5.05. Employee Matters............................................20
5.06. Further Assurances..........................................21
5.07. Binding on Successors.......................................22
5.08. Non-Solicitation............................................22
5.09. Confidentiality.............................................23
5.10. Management Services Agreement...............................23
5.11. Change in Control Payments..................................23
5.12. Return of Company Shares to JUSI............................23
5.13. Transitional Administrative Services........................24
ARTICLE VI CONDITIONS TO THE OBLIGATIONS OF PARENT,
NEWCO AND THE COMPANY...................................24
6.01. Representations and Warranties True.........................24
6.02. Performance.................................................25
6.03. No Injunction or Proceeding.................................25
6.04. Certificates................................................25
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6.05. Credit Facility.............................................25
6.06. Securities Purchase Transaction.............................25
6.07. Material Adverse Effect.....................................25
6.08. HSR Act.....................................................25
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER......................25
7.01. Representations and Warranties True.........................25
7.02. Performance.................................................26
7.03. No Injunction or Proceeding.................................26
7.04. Certificates................................................26
7.05. Credit Facility.............................................26
7.06. Consents....................................................26
7.07. Material Adverse ...........................................26
7.08. HSR Act.....................................................26
ARTICLE VIII TERMINATION AND ABANDONMENT.............................27
8.01. Termination.................................................27
8.02. Procedure and Effect of Termination.........................27
ARTICLE IX MISCELLANEOUS PROVISIONS................................28
9.01. Amendment and Modification..................................28
9.02. Extension; Waiver...........................................28
9.03. Non-Survival of Representations and Warranties..............28
9.04. Entire Agreement; Assignment................................28
9.05. Validity....................................................28
9.06. Notices.....................................................28
9.07. Governing Law...............................................29
9.08. Specific Performance........................................29
9.09. Public Disclosure...........................................29
9.10. Descriptive Headings........................................30
9.11. Counterparts................................................30
9.12. Fees and Expenses...........................................30
9.13. Parties in Interest.........................................30
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9.14. Definitions.................................................30
LIST OF ANNEXES
Annex A - Form of Junior Subordinated Note
Annex B - Indemnification Agreement
Annex C - Registration Rights Agreement
Annex D - Stockholders Agreement
Annex E - Release
