AGREEMENT AND PLAN OF MERGER
by and among
TEREX CORPORATION,
MAGIC ACQUISITION CORP.
and
GENIE HOLDINGS, INC.,
and
THE SELLERS
Dated as of July 19, 2002
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..............................................1
1.1 Definitions..................................................1
ARTICLE II THE MERGER; CONVERSION OF SHARES........................11
2.1 The Merger..................................................11
2.2 Effective Time..............................................12
2.3 Organizational Documents; Directors and Officers............12
2.4 Conversion of Capital Stock.................................12
2.5 Sellers' Deliveries at the Closing..........................13
2.6 Buyer's Deliveries at the Closing...........................13
2.7 The Closing.................................................13
2.8 Tax Opinion Adjustment......................................14
2.9 Dissenting Shares...........................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS...............14
3.1 Ownership of the Shares.....................................14
3.2 Authorization...............................................14
3.3 Non-Contravention...........................................15
3.4 Acquisition of Buyer Common Stock for Investment; Ability to
Evaluate and Bear Risk....................................15
3.5 Information Supplied; Disclosure............................16
ARTICLE IV ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE SELLERS..............................16
4.1 Corporate Existence and Power...............................16
4.2 Authorization...............................................17
4.3 Governmental Authorization..................................17
4.4 Non-Contravention...........................................17
4.5 Capitalization..............................................18
4.6 Subsidiaries................................................18
4.7 Financial Statements........................................18
4.8 Absence of Certain Changes..................................19
4.9 Material Contracts..........................................20
4.10 Undisclosed Liabilities.....................................21
4.11 Litigation..................................................21
4.12 No Default; Compliance with Laws............................22
4.13 Taxes.......................................................22
4.14 Affiliate Transactions......................................23
4.15 Employees...................................................24
4.16 Employee Benefits...........................................24
4.17 Property....................................................25
4.18 Environmental Matters.......................................26
4.19 Brokers.....................................................28
4.20 Reorganization..............................................28
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4.21 [INTENTIONALLY OMITTED].....................................28
4.22 Products Liability..........................................28
4.23 Insurance...................................................29
4.24 Intellectual Property.......................................29
4.25 Takeover Statutes...........................................29
4.26 Accounts Receivable; Inventory..............................30
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER.................30
5.1 Corporate Existence and Power...............................30
5.2 Authorization...............................................30
5.3 Governmental Authorization..................................31
5.4 Non-Contravention...........................................31
5.5 Capital Structure...........................................32
5.6 SEC Documents; Buyer Financial Statements...................32
5.7 No Material Adverse Effect..................................32
5.8 Availability of Funds.......................................33
5.9 Brokers.....................................................33
5.10 Information Supplied........................................33
5.11 Reorganization..............................................33
5.12 Buyer Acknowledgement.......................................33
ARTICLE VI COVENANTS OF THE SELLERS AND THE COMPANY................33
6.1 Conduct of the Company......................................33
6.2 Certain Actions.............................................35
6.3 Access to Information.......................................35
6.4 Notices of Certain Events...................................36
6.5 No Solicitation.............................................36
6.6 Pre-Closing Transfer........................................37
6.7 Award Program of the Company................................37
6.8 Share Holdback..............................................37
6.9 Closing Debt................................................37
6.10 Non-Competition.............................................37
6.11 Lease Agreements............................................38
6.12 Financial Information.......................................38
6.13 Quarterly Financial Statements..............................38
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ARTICLE VII COVENANTS OF BUYER......................................38
7.1 Certain Actions.............................................38
7.2 Obligations Regarding Acquisition Subsidiary................38
7.3 Access To Records...........................................38
7.4 Preparation of the Form S-3.................................39
7.5 Employee Arrangements.......................................39
7.6 Contingent Payment..........................................40
7.7 Acces Industrie Receivable Contingent Payment...............42
7.8 Officers' and Directors' Indemnification....................43
7.9 Tax Matters.................................................43
7.10 Recapitalization............................................43
ARTICLE VIII COVENANTS OF BUYER AND THE SELLERS......................44
8.1 Reasonable Best Efforts.....................................44
8.2 Certain Filings.............................................44
8.3 Public Announcements........................................44
8.4 Lock-up; Registration Rights Agreement......................44
8.5 Confidentiality.............................................45
8.6 Tax Representation Letter...................................45
ARTICLE IX CONDITIONS TO CLOSING...................................46
9.1 Conditions to Party's Obligation to Effect the Merger.......46
9.2 Further Conditions to Obligation of the Sellers
and the Company...........................................46
9.3 Further Conditions to Obligation of Buyer
and Acquisition Subsidiary................................47
ARTICLE X TERMINATION.............................................48
10.1 Termination.................................................48
10.2 Effect of Termination.......................................50
ARTICLE XI SURVIVAL; INDEMNIFICATION...............................50
11.1 Survival....................................................50
11.2 Indemnification.............................................50
11.3 Indemnification Procedures..................................52
11.4 Claims Resolution Procedure.................................55
11.5 Satisfaction of Indemnity Claims............................56
11.6 Adjustment to Merger Consideration..........................57
ARTICLE XII MISCELLANEOUS...........................................57
12.1 Survival....................................................57
12.2 Notices.....................................................57
12.3 The Sellers' Representative.................................58
12.4 No Waivers; Amendments......................................59
12.5 Fees and Expenses...........................................59
12.6 Successors and Assigns......................................59
12.7 Governing Law...............................................59
12.8 WAIVER OF JURY TRIAL........................................60
12.9 Counterparts; Effectiveness.................................60
12.10 Interpretation..............................................60
12.11 Severability................................................60
12.12 Headings....................................................60
12.13 Entire Agreement............................................60
12.14 Specific Performance........................................60
12.15 No Third-Party Beneficiaries................................61
EXHIBITS
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Sellers' Representative Agreement
Exhibit C Form of Buyer Representation Letter
Exhibit D Form of Company Representation Letter
Exhibit E Form of Sellers' Representation Letter
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Exhibit F Form of Stock Purchase Agreement
Exhibit G Form of Escrow Agreement
Exhibit H-1 Form of Non-Competition and Confidentiality Agreement
Exhibit H-2 Form of Amendment to Change-in-Control Agreements
for certain Sellers
Exhibit H-3 Form of Amendment to Change-in-Control Agreements for employees
Exhibit I Form of Lease Amendments
Exhibit J Prohibited Actions
Exhibit K Environmental Matters
Exhibit L PricewaterhouseCoopers Memorandum
Exhibit M Provisions of Xxxxxxx Coie LLP Opinion
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 19, 2002 (this
"Agreement"), by and among Terex Corporation, a Delaware corporation ("Buyer"),
Magic Acquisition Corp., a newly formed Washington corporation and a wholly
owned subsidiary of Buyer ("Acquisition Subsidiary"), Genie Holdings, Inc., a
Washington corporation (the "Company"), and Xxxxxx Xxxxxxxxx, X. Xxxx Xxxxxxxx
and F. Xxxxx Xxxxx and the limited partnerships set forth in Section 1.1(a) of
the Sellers Disclosure Schedule (each individually, a "Seller" and collectively,
the "Sellers").
W I T N E S S E T H:
WHEREAS, each of the Sellers owns the number of shares of
common stock, par value $0.01 per share ("Common Stock"), of the Company, set
forth opposite such Seller's name in Section 3.1 of the Sellers' Disclosure
Schedule (collectively, the "Seller Shares"), representing all of the issued and
outstanding shares of capital stock of the Company;
WHEREAS, prior to the consummation of the Merger, the Company
intends to effectuate the Recapitalization;
WHEREAS, in connection with the Recapitalization, certain of
the Sellers intend to deposit the Seller Shares constituting Class B Common
Stock to the Trust;
WHEREAS, the respective Boards of Directors of each of Buyer,
Acquisition Subsidiary and the Company have approved and adopted this Agreement
and deemed this Agreement to be advisable and in the best interests of their
respective stockholders and have each approved the transactions contemplated
hereby, including the merger of Acquisition Subsidiary with and into the
Company, in accordance with the terms of this Agreement and the Washington
Business Corporations Act (the "WBCA"); and
WHEREAS, for federal income tax purposes, it is intended that
the Merger will qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement is intended to be and hereby is adopted as a plan of
reorganization within the meaning of Sections 354 and 361 of the Code and
Section 1.368-2(g) of the Treasury Regulations.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises hereafter set forth and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms shall have the meanings set forth below:
"AAA" shall have the meaning set forth in Section 11.4(a).
"Acces Foreclosure Proceeds" shall mean any amounts received
by Buyer as a result of the repossession and subsequent resale of any equipment
or other property which secures the Acces Industrie Receivable, minus the costs
and expenses of such repossession, handling, holding and resale of such
equipment or property.
"Acces Industrie Receivable" shall mean all amounts payable to
the Company or any of its Subsidiaries by (i) Acces Industrie, (ii) Acces
Industrie Expana or (iii) Acces Industrie Espana, S.A. (A.S.), as of the Closing
Date.
"Acces Receivable Past Due Amount" shall have the meaning set
forth in Section 7.7(a).
"Acces Receivable Past Due Date" shall mean the date on which
the Acces Industrie Receivable is more than 90 days past due.
"Acces Receivable Contingent Payment" shall have the meaning
set forth in Section 7.7(b).
"Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the transactions contemplated hereby)
involving the Company or its Subsidiaries: (i) any merger, consolidation, share
exchange, recapitalization, liquidation, dissolution, business combination or
other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 20% or more of the consolidated assets of the
Company and its Subsidiaries, taken as a whole; (iii) any acquisition of 20% or
more of the outstanding shares of capital stock of the Company or any of its
Subsidiaries; or (iv) any other acquisition or disposition the consummation of
which would prevent or materially diminish the benefits to Buyer of the Merger.
"Acquisition Subsidiary" shall have the meaning set forth in
the Preamble.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with any such Person. For purposes of this definition, "control" shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Affected Employee" shall have the meaning set forth in
Section 7.5.
"Agreement" shall have the meaning set forth in the Preamble.
"Articles of Merger" shall have the meaning set forth in
Section 2.2.
"Average Qualifying Date Buyer Common Stock Price" means the
average of the closing prices of Buyer Common Stock on the NYSE, as reported by
The Wall Street Journal (national edition) (or if not reported thereby, as
reported by any other authoritative source) for ten consecutive Trading Days.
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"Balance Sheet" means the audited consolidated balance sheet
of the Company and its Subsidiaries as of December 31, 2000 and 2001.
"Balance Sheet Date" means December 31, 2001.
"Books and Records" means all minute books, stock record
books, financial books and records, accounting records, internal records and
audit records and other similar books and records.
"Business" means the business and operations of the Company
and its Subsidiaries as of the Closing.
"Business Day" means any day that the NYSE is normally open
for trading for a full day and that is not a Saturday, a Sunday or a day on
which banks in the City of New York are authorized or required to close for
regular banking business.
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer's Applicable Percentage" shall mean a percentage equal
to one hundred percent minus the Sellers' Applicable Percentage.
"Buyer Balance Sheet" shall have the meaning set forth in
Section 5.6.
"Buyer Balance Sheet Date" means December 31, 2001.
"Buyer Common Stock" means the voting common stock, par value
$0.01 per share, of Buyer.
"Buyer Common Stock Guaranteed Value" means 1.15 times the
Buyer Price.
"Buyer Disclosure Schedule" means the disclosure schedule in
connection with this Agreement which Buyer shall have delivered to the Sellers
and the Company as of the date hereof.
"Buyer Financial Statements" shall have the meaning set forth
in Section 5.6.
"Buyer Indemnitee" shall have the meaning set forth in Section
11.2.
"Buyer Subsidiaries" shall have the meaning set forth in
Section 5.1.
"Buyer Price" means the average of the closing prices on the
NYSE as reported in The Wall Street Journal (national edition) (or if not
reported thereby, any other authoritative source) of the Buyer Common Stock for
the ten consecutive Trading Days ending on the Trading Day immediately prior to
the Closing Date; provided, that in the event the Buyer Price is greater than
the Highest Buyer Price, the Buyer Price shall be deemed to be the Highest Buyer
Price and in the event the Buyer Price is less than the Lowest Buyer Price, the
Buyer Price shall be deemed to be the Lowest Buyer Price.
"Capital Securities" shall have the meaning set forth in
Section 4.6(a).
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"Cash Consideration" means the amount of $10.1 million,
subject to adjustment pursuant to Section 2.8.
"Cash Consideration Per Sellers' Share" means an amount
deliverable in respect of each of the Seller Shares (other than Trust Shares)
equal to the quotient of (i) the Cash Consideration divided by (ii) the total
number of such Seller Shares outstanding immediately prior to the Closing.
"CERCLA" shall have the meaning set forth in Section
4.18(a)(v).
"Claim Notice" shall have the meaning set forth in the Escrow
Agreement.
"Claims Resolution Date" shall have the meaning set forth in
Section 11.4.
"Closing" shall have the meaning set forth in Section 2.1.
"Closing Date" shall have the meaning set forth in Section
2.7.
"Closing Debt" shall mean the consolidated short-term and
long-term bank debt and borrowed money (which shall not include reclassified
debt in connection with the Restated Financial Statements) of the Company and
its Subsidiaries less the cash of the Company and its Subsidiaries, as of the
end of the last business day of the last full week immediately preceding the
Closing Date.
"Code" shall have the meaning set forth in the Recitals.
"Common Stock" shall have the meaning set forth in the
recital.
"Company" shall have the meaning set forth in the Preamble.
"Company Articles" means the articles of incorporation of the
Company, as in effect on the date hereof.
"Confidentiality Agreement" shall have the meaning set forth
in Section 6.3.
"Contingent Payment" shall have the meaning set forth in
Section 7.6(a).
"Contract" shall mean any written agreement, contract, lease,
note, loan, evidence of indebtedness, letter of credit, franchise agreement,
employment agreement, license, instrument, obligation, commitment, which
pursuant to its terms has not expired, terminated or been fully performed by the
parties thereto and shall exclude any purchase and sales orders and quotation
and other executory commitments.
"Damages" means any and all claims, liability, demands,
losses, costs and amounts paid or expenses incurred (including reasonable fees
for attorneys, accountants, consultants and experts); provided that Damages
shall be less (i) any amounts actually recovered by the indemnified party under
insurance policies with respect to such Damages and (ii) the amount of any Tax
benefits to the indemnified party as a result of the Damages incurred.
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"Disclosure Schedules" means Buyer Disclosure Schedule and the
Sellers' Disclosure Schedule.
"Disputes" shall have the meaning set forth in Section 11.4.
"Effective Time" shall have the meaning set forth in Section
2.2.
"Eligible Market" means any of the New York Stock Exchange,
the American Stock Exchange, the Nasdaq or the Nasdaq Small Cap Market.
"Eligible Shares" means the number of Restricted Shares for
such Qualifying Date less the number of shares of Buyer Common Stock that are
the subject of a Reduction Event pursuant to Section 7.6(d).
"Environmental Laws" shall have the meaning set forth in
Section 4.18.
"Environmental Permit" shall have the meaning set forth in
Section 4.18. "ERISA" shall have the meaning set forth in
Section 4.16(a).
"ERISA Affiliate" shall have the meaning set forth in Section
4.16(a).
"Escrow Account" shall have the meaning set forth in Section
6.8.
"Escrow Agreement" shall have the meaning set forth in Section
6.8.
"Escrow Shares" shall have the meaning set forth in Section
6.8.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Financial Statements" shall have the meaning set forth in
Section 4.7.
"Finally Resolved" shall have the meaning set forth in the
Escrow Agreement.
"First Quarter Financial Statements" shall have the meaning
set forth in Section 4.7(b).
"GAAP" means United States generally accepted accounting
principles.
"Governmental Entity" means any national, federal, state,
municipal, local, territorial, foreign or other governmental authority or any
department, commission, board, bureau, agency, regulatory authority or
instrumentality thereof, or any court, judicial, administrative or arbitral body
or public or private tribunal.
"Hazardous Material" shall have the meaning set forth in
Section 4.18.
"Highest Buyer Price" shall mean an amount per share that is
equal to a 15% premium to the 10 day average closing price of Buyer Common Stock
immediately prior to execution of this Agreement.
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"XXX Xxx" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Intellectual Property Rights" shall have the meaning set
forth in Section 4.24.
"IRS" means the Internal Revenue Service of the United States.
"Judgment" means any decree, order, judgment, injunction, writ
or rule of any Governmental Entity or arbitration tribunal.
"Law" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation or Judgment.
"Lease Agreements" shall mean collectively, (A) that certain
Lease Agreement, which is undated and which was executed and/or acknowledged on
May 30, 2000, between Access Investments, as landlord, and Genie Industries,
Inc., as tenant, covering real property known as Genie Building #1 and located
at 00000 XX 00xx Xxxxxx, Xxxxxxx, Xxxxxxxxxx (the "Genie Building #1 Lease"),
(B) that certain Lease Agreement, which is undated and which was executed and/or
acknowledged on May 30, 2000, between B. W. Investments, as landlord, and Genie
Industries, Inc., as tenant, covering real property known as Genie Building #3
and located at 00000 XX 00xx Xxxxxx, Xxxxxxx, Xxxxxxxxxx (the "Genie Building #3
Lease"), and (C) that certain Land Lease Agreement, which is undated and which
was executed and/or acknowledged on May 30, 2000, between Access Investments, as
landlord, and Genie Industries, Inc., as tenant, covering land located at the
Xxxxxxxxx xxxxxx xx XX 00xx Xxxxxx and 185th NE, Redmond, Washington (the "Land
Lease").
"Leased Real Property" shall have the meaning set forth in
Section 4.17(c).
"Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, claim, security interest or other encumbrance of
any kind not yet due and payable in respect of title or such property or asset.
"Litigation" means any action, suit, arbitration,
investigation or proceeding, including any Judgment.
"Lock-up Provisions" means the lock-up provisions set forth in
Section 8.4 and in the Registration Rights Agreement.
"Lowest Buyer Price" shall mean an amount per share that is
equal to a 15% discount to the 10 day average closing price of Buyer Common
Stock immediately prior to execution of this Agreement.
"Material Adverse Effect" means any change, effect,
circumstance or event that is or is reasonably likely to (i) be materially
adverse to the business, financial condition, results of operations, assets or
liabilities of a Person and its Subsidiaries, taken as a whole, or (ii)
materially adversely affect the ability of a Person to perform its obligations
under this Agreement or timely consummate the transactions contemplated by this
Agreement, other than (A) any such change, effect, circumstance or event that
exist on the date hereof and have been reflected in this Agreement or the
Disclosure Schedules or (B) any such change, effect, circumstance or event
resulting from any changes or events that are generally applicable to the
industries in which the Company or Buyer operate or to the United States economy
or financial markets generally.
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"Material Contract" shall have the meaning set forth in
Section 4.9(a).
"Maximum Contingent Payment" or "MCP" means a maximum of
$4,867,500 for the first Qualifying Date and a maximum of $2,433,750 for each of
the second and third Qualifying Date, subject to adjustment as set forth in
Section 7.6(d).
"Merger" shall have the meaning set forth in Section 2.1.
"Merger Consideration Per Sellers' Share" means the sum of (i)
the Cash Consideration Per Sellers' Share plus (ii) the Stock Consideration Per
Sellers' Share.
"Merger Consideration Per Trust Share" means the number of
fully paid and nonassessable shares of Buyer Common Stock (rounded down to the
nearest whole share) deliverable in respect of each of the Trust Shares equal to
the quotient of (i) the Per Share Value divided by (ii) the Buyer Price.
"More Likely Than Not Opinion" means an opinion of Tax Counsel
that, with respect to a proposed action to be taken after the Closing Date, on
the basis of factual representations and reasonable assumptions, it is more
likely than not that such action would not cause the Merger to fail to qualify
as a reorganization within the meaning of Section 368(a) of the Code.
"Nasdaq" means the Nasdaq National Market.
"Notice" shall have the meaning set forth in Section 12.2
hereof.
"NYSE" means The New York Stock Exchange, Inc.
"Offset Price" shall have the meaning set forth in Section
6.8(a).
"Owned Real Property" shall have the meaning set forth in
Section 4.17(b).
"Patent Rights" shall have the meaning set forth in Section
4.24.
"Permitted Liens" means (i) Liens for Taxes not yet due and
payable or which are being contested in good faith and by appropriate
proceedings; (ii) carriers', warehouseman's, mechanic's, material man's,
repairman's, or other similar Liens arising in the ordinary course of business;
(iii) easements, right-of-way, encroachments, restrictions, conditions and other
similar encumbrances incurred or suffered in the ordinary course of business;
and (iv) other nonmaterial title defect or Liens.
"Per Share Value" means an amount equal to the quotient of (i)
$74,250,000 divided by (ii) the total number of outstanding Shares immediately
prior to the Closing.
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"Person" means an individual, corporation, limited liability
company, partnership, joint venture, joint stock company, association, trust,
unincorporated entity or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof, whether acting in
an individual, fiduciary or other capacity.
"Plans" shall have the meaning set forth in Section 4.16(a).
"Post-Closing Calendar Half" shall have the meaning set forth
in Section 7.7.
"Prohibited Action" shall mean any action the taking of which
would be in violation of the terms and conditions set forth on Exhibit I.
"Pro Rata Portion" means, for each Seller, a fraction, the
numerator of which is the number of Seller Shares held by such Seller
immediately prior to the Closing, and the denominator of which is the aggregate
number of Seller Shares held by all of the Sellers immediately prior to the
Closing.
"Qualifying Date" means each of (i) the twelve month
anniversary, (ii) the eighteen month anniversary and (iii) the twenty-four month
anniversary of the Closing Date.
"Qualifying Date Multiple" or "QDM" means the quotient of the
Average Buyer Common Stock Price for the ten day period ending on the applicable
Qualifying Date divided by the Buyer Price.
"Real Property Leases" shall have the meaning set forth in
Section 4.17(c).
"Rebate" shall have the meaning set forth in Section
11.2(f)(ii).
"Recapitalization" shall have the meaning set forth in Section
7.10.
"Receivables Certificate" shall have the meaning set forth in
Section 7.7.
"Reduction Event" shall have the meaning set forth in Section
7.6(d).
"Registration Rights Agreement" shall have the meaning set
forth in Section 8.4.
"Registration Statement" shall have the meaning set forth in
Section 3.5.
"Release Notice" means any notice delivered by Buyer to the
Sellers' Representative, which notice releases any or all of the Buyer Common
Stock received by the Sellers pursuant to this Agreement from the Lock-up
Provisions.
"Release Period" means the period beginning on the date
following the delivery of the applicable Release Notice as long as such shares
are freely transferable by the Sellers without restriction or limitation under
Rule 144 of the Securities Act or under an effective Registration Statement and,
in either case, if requested, Buyer shall promptly deliver an opinion necessary
for the sale of shares of Buyer Common Stock and for the removal of any
restrictive legends thereon and ending on the earlier of the applicable
Qualifying Date or the date upon which such shares of Buyer Common Stock cease
to be freely transferable by the Sellers.
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"Restated First Quarter Financial Statements" means the
restatement of the First Quarter Financial Statements.
"Restated Financial Statements" means the restatements of the
Financial Statements for the years ended December 31, 2000 and December 31,
2001, as prepared and approved by PricewaterhouseCoopers on July 10, 2002.
"Restricted Shares" means 50% of the Stock Consideration on
the first Qualifying Date plus an additional 25% of the Stock Consideration on
each of the second and third Qualifying Date.
"Rights" means, with respect to any Person, securities or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for, redeem or acquire, or any options, warrants,
calls, puts or commitments relating to, or any stock appreciation right or other
instrument the value of which is determined in whole or in part by reference to
the market price or value of, shares of capital stock of such Person.
"Rules" shall have the meaning set forth in Section 11.4(a).
"Rule 144" means Rule 144 under the Securities Act or any
successor rule.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section
5.6.
"Second Quarter Financial Statements" shall mean the unaudited
consolidated balance sheet of the Company as of June 30, 2002 and the related
unaudited consolidated statements of income and cash flows of the Company for
the three month period then ended.
"Secretary of State" shall have the meaning set forth in
Section 2.2.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Seller" or "Sellers" shall have the meaning set forth in the
Preamble.
"Sellers' Applicable Percentage" shall mean a percentage equal
to $15,000,000 divided by the face amount of the Acces Industrie Receivable on
the Closing Date.
"Sellers' Disclosure Schedule" means the disclosure schedule
in connection with this Agreement which the Sellers, individually and on behalf
of the Company, shall have delivered to Buyer as of the date hereof.
"Sellers' Representative" shall have the meaning set forth in
Section 12.3.
"Seller Shares" shall have the meaning set forth in the
recitals.
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"Shares" shall mean the Seller Shares and the Trust Shares,
collectively.
"Short Sale" shall have the meaning set forth in Section
7.6(g).
"Should Opinion" means an opinion of Tax Counsel that, with
respect to a proposed action to be taken after the Closing Date, on the basis of
factual representations and reasonable assumptions, such action should not cause
the Merger to fail to qualify as a reorganization within the meaning of Section
368(a) of the Code.
"Stock Consideration" means the number of fully paid and
nonasseassable shares of Buyer Common Stock (rounded down to the nearest whole
share) equal to the quotient of (i) $64.9 million divided by (ii) the Buyer
Price.
"Stock Consideration Per Sellers' Share" means the number of
fully paid and nonassessable shares of Buyer Common Stock (rounded down to the
nearest whole share) deliverable in respect of each of the Seller Shares
(excluding the Trust Shares) equal to the quotient of (i) the Stock Value Per
Seller Share divided by (ii) the Buyer Price.
"Stock Value Per Sellers' Share" means an amount equal to the
quotient of (A) the difference of (i) the Stock Consideration multiplied by the
Buyer Price less (ii) the product of the Trust Consideration multiplied by the
Buyer Price divided by (B) the total number of Seller Shares (excluding the
Trust Shares) outstanding immediately prior to the Closing which is expressed
as: ((Stock Consideration x Buyer Price) - (Trust Consideration x Buyer
Price))/Seller Shares.
"Straddle Period" means any period with respect to Taxes that
begins prior to the Closing Date and ends after the Closing Date.
"Subsequent Collection Amount" shall have the meaning set
forth in Section 11.2(f)(ii).
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of the capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other Persons performing similar functions are at the
time, directly or indirectly, owned by such Person.
"Surviving Entity" shall have the meaning set forth in Section
2.1.
"Target Debt" shall mean $205 million.
"Tax Counsel" means Xxxxx Xxxx LLP or any other nationally
recognized tax counsel selected by Buyer.
"Tax Opinion" means a More Likely Than Not Opinion or a Should
Opinion.
"Taxes" means (i) all taxes of any kind, and all charges,
customs, fees, levies, duties, imposts, required deposits or other assessments,
including all net income, capital gains, gross income, gross receipts, property,
franchise, sales, use, excise, withholding, payroll, employment, social
security, worker's compensation, unemployment, occupation, capital stock, ad
valorem, value added, transfer, gains, profits, net worth, asset, transaction,
business consumption and other taxes, (ii) all interest, penalties or additions
to tax with respect thereto, and (iii) any transferee liability in respect of
any items described in clause (i) and/or (ii) above (including pursuant to
Treasury Regulation Section 1.1502-6 or comparable provisions of state, local or
foreign tax law) imposed upon any Person by a taxing authority or other
Governmental Entity under applicable Law.
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"Tax Return" means any return, declaration, estimate, report,
form or similar statement required to be filed with respect to any Tax,
including any information return, amended return, claim for refund, schedule or
declaration of estimated Tax.
"Terex FMV" shall mean the average of the closing prices on
the NYSE as reported in The Wall Street Journal (national edition) (or if not
reported thereby, any other authoritative source) of the Buyer Common Stock for
the ten consecutive Trading Days ending on the Trading Day immediately prior to
the day a Claim is Finally Resolved.
"Title IV Plan" shall have the meaning set forth in Section
4.16(c).
"Trading Day" means a day on which the shares of Common Stock
are traded on an Eligible Market.
"Trading Restriction Period" shall have the meaning set forth
in Section 7.6(g).
"Trust" shall have the meaning set forth in Section 6.7.
"Trust Consideration" means the product of (i) the Merger
Consideration Per Trust Share multiplied by (ii) the total number of Trust
Shares outstanding immediately prior to the Closing.
"Trust Shares" shall mean the number of Seller Shares
contributed by certain of the Sellers to the Trust following the
Recapitalization.
"WBCA" shall have the meaning set forth in the Recitals.
ARTICLE II
THE MERGER; CONVERSION OF SHARES
2.1 The Merger. Upon the terms and subject to conditions of this Agreement,
at the closing of the transactions contemplated herein (the "Closing"), and in
accordance with the WBCA, at the Effective Time, the Acquisition Subsidiary
shall be merged (the "Merger") with and into the Company and the separate
corporate existence of the Acquisition Subsidiary shall thereafter cease. After
the Merger, the Company shall continue as the surviving entity (sometimes
referred to as the "Surviving Entity"). The Merger shall have the effect as
provided in the applicable provisions of the WBCA. Without limiting the
generality of the foregoing, upon the consummation of the Merger, all the
rights, privileges, immunities, powers and franchises of the Company and
Acquisition Subsidiary shall vest in the Surviving Entity and all obligations,
duties, debts and liabilities of the Company and Acquisition Subsidiary shall be
the obligations, duties, debts and liabilities of the Surviving Entity.
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2.2 Effective Time. On the Closing Date, Acquisition Subsidiary and the
Company will cause an appropriate Articles of Merger (the "Articles of Merger")
to be executed and filed with the Secretary of State of the State of Washington
(the "Secretary of State") in such form and executed as provided in the WBCA.
The Merger shall become effective on the date and at the time when the Articles
of Merger has been duly filed with the Secretary of State or, subject to the
WBCA, such time as is agreed upon by the parties and specified in the Articles
of Merger, and such time is hereinafter referred to as the "Effective Time."
2.3 Organizational Documents; Directors and Officers. (a) Pursuant to the
Merger, the Articles of Incorporation of the Company and the By-Laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
organizational documents of the Surviving Entity until thereafter amended as
provided by Law.
(b) The individuals set forth in Section 2.3(b) of the Sellers' Disclosure
Schedule shall, from and after the Effective Time, be the members of the Board
of Directors of the Surviving Entity and the officers of the Surviving Entity
until their successors shall have been duly elected, appointed or qualified or
until their earlier death, resignation or removal in accordance with the
Articles of Incorporation of the Surviving Entity.
2.4 Conversion of Capital Stock. Upon the terms and subject to the
conditions of this Agreement, as of the Effective Time, by virtue of the Merger
and without any action on the part of the holders of any Shares:
(a) Subject to Section 2.6, each of the issued and outstanding Seller
Shares shall be converted into the right to receive the Merger Consideration Per
Sellers' Share and any additional amounts pursuant to Sections 7.6 and 7.7, upon
surrender of the certificates formerly representing the Seller Shares in the
manner provided in Section 2.5. Subject to Section 2.6, each of the issued and
outstanding Trust Shares shall be converted into the right to receive the Merger
Consideration Per Trust Share, upon surrender of the certificates formerly
representing the Trust Shares in the manner provided in Section 2.5. All Shares,
when so converted, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a certificate
representing any Shares shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration Per Sellers' Share or the
Merger Consideration Per Trust Share, as the case may be, to which they are
entitled hereunder.
(b) As of the Effective Time, the stock transfer books of the Company shall
be closed and there shall be no transfers on the stock transfer books of the
Surviving Entity of Shares which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, certificates representing Shares
are presented to the Surviving Entity, they shall be cancelled and exchanged for
the Merger Consideration Per Sellers' Share or the Merger Consideration Per
Trust Share, as the case may be, as provided in this Article II and in
accordance with the WBCA.
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2.5 Sellers' Deliveries at the Closing. Subject to and upon the terms and
conditions of this Agreement, at the Closing, the Sellers will deliver, or cause
to be delivered, to Buyer: (a) one or more stock certificates that, in the
aggregate, represent all of the Shares, in each case duly endorsed in blank or
accompanied by stock powers duly executed in blank, in proper form for transfer
and with any required stock transfer stamps attached, (b) the officer's
certificate provided for in Section 9.2(c); (c) an executed copy of the
Registration Rights Agreement substantially in the form attached hereto as
Exhibit A; (d) an executed copy of the Escrow Agreement substantially in the
form attached as Exhibit G, (e) an executed copy of a non-competition and
confidentiality agreement between Xxxxxx Xxxxxxxxx and the Company substantially
in the form attached hereto as Exhibit H-1, (f) executed copies of amendments to
the change in control agreements between X. Xxxx Bushnell and Genie Holdings,
Inc. and F. Xxxxx Xxxxx and Genie Holdings, Inc., each amendment agreement to be
substantially in the form attached hereto as Exhibit H-2, (g) executed copies of
amendments to the change in control agreements for at least five of the seven
employees set forth in Section 2.5 of the Sellers Disclosure Schedule, each
substantially in the form attached hereto as Exhibit H-3, (h) executed copies of
amendments to the Lease Agreements in substantially the form attached hereto as
Exhibit I, (i) an executed copy of the Company Representation Letter
substantially in the form attached as Exhibit D, (j) an executed copy of the
Sellers' Representative Agreement substantially in the form attached as Exhibit
B, (k) an executed opinion from Xxxxxxx Coie LLP addressing the opinions set
forth on Exhibit M attached hereto and (k) such additional documents and
certificates required to be delivered by the Sellers at or prior to the Closing
Date pursuant to this Agreement.
2.6 Buyer's Deliveries at the Closing. (a) Subject to and upon the terms
and conditions of this Agreement, at the Closing and concurrently with the
actions described in Section 2.5, Buyer shall deliver to each of the Sellers:
(i) stock certificates for Buyer Common Stock registered in the name of each
Seller that represent the Stock Consideration Per Sellers' Share multiplied by
the Seller Shares held by such Seller immediately prior to the Effective Time
minus the number of Escrow Shares set forth opposite the name of such Seller on
Section 3.1 of the Sellers' Disclosure Schedule to be deposited in the Escrow
Account pursuant to Section 6.8; (ii) the Cash Consideration Per Sellers' Share
by wire transfer of immediately available cash to the accounts specified in
Section 3.1 of Sellers' Discloser Schedule; (iii) the officer's certificate
provided for in Section 9.2(c); (iv) an executed copy of the Registration Rights
Agreement substantially in the form attached hereto as Exhibit A; (v) an
executed copy of the Buyer Representation Letter substantially in the form
attached as Exhibit C, (vi) an executed copy of the Escrow Agreement
substantially in the form attached as Exhibit G and (vii) such additional
documents and certificates required to be delivered by Buyer at or prior to the
Closing Date pursuant to this Agreement.
(b) Subject to and upon the terms and conditions of this Agreement, at the
Closing and concurrently with the actions described in Section 2.5, Buyer shall
deliver to the Trust stock certificates for Buyer Common Stock registered in the
name of the Trust that represent the Trust Consideration.
2.7 The Closing. The transactions described in Sections 2.2, 2.4, 2.5 and
2.6 shall be deemed to occur simultaneously and unless all of the transactions
described in Sections 2.2, 2.4, 2.5 and 2.6 are in fact effected at the Closing,
none of such transactions shall become effective and the Closing shall not have
taken place. The Closing shall take place on the date (the "Closing Date") that
is the third Business Day to occur after the date on which the last of the
conditions set forth in Article IX (other than conditions that by their terms
are to be satisfied on the Closing Date) shall have been satisfied or waived in
accordance with the terms of this Agreement. The Closing shall take place at the
offices of Xxxxx Xxxx LLP, 1290 Avenue of the Americas, New York, New York, at
10:00 a.m., local time, on the Closing Date.
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2.8 Tax Opinion Adjustment. If the tax opinion to be given by Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, cannot be rendered as a result of the Merger
potentially failing to satisfy continuity of interest requirements under
applicable federal income tax principles relating to reorganizations under
Section 368(a) of the Code, then the Buyer shall reduce the Cash Consideration
to the minimum extent necessary to enable the tax opinion to be rendered by
Skadden, Arps, Slate Xxxxxxx & Xxxx LLP and correspondingly increase the Stock
Consideration and this Agreement shall be deemed to be adjusted accordingly.
2.9 Dissenting Shares. By virtue of their approval of this Agreement and
the transactions contemplated hereby, as evidenced by their execution of this
Agreement, the Sellers acknowledge that they shall have no dissenters' rights of
appraisal set forth in Section 20 of the WBCA.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the Sellers, jointly and severally, represents and warrants to
Buyer and Acquisition Subsidiary as follows (except that the representations set
forth in Section 3.1 shall be made by each Seller individually with respect to
himself or itself):
3.1 Ownership of the Shares. Each of the Sellers (a) owns that number of
Shares set forth opposite such Seller's name in Section 3.1 to the Sellers'
Disclosure Schedule; provided, however, the Trust may own the Trust Shares as of
the Closing and (b) upon delivery of his or its Shares to Buyer (including the
Shares owned by the Trust) pursuant to this Agreement in consideration of
Buyer's payments therefor and the compliance by Buyer with this Agreement, such
Shares will be free and clear of all Liens. The Merger will not give rise to any
Rights, preemptive rights or rights of first refusal with respect to such Shares
and except as set forth in Section 3.1 of the Sellers' Disclosure Schedule, each
of the Sellers does not otherwise have any Rights with respect to the capital
stock of the Company or any of its Subsidiaries.
3.2 Authorization. Each of the Sellers that is not a natural person, has
the requisite power and authority, and has taken all action necessary to
authorize (including taking all action as a stockholder of the Company necessary
to approve and adopt the Agreement and the transactions contemplated hereby,
including the Merger) the execution and delivery of, and performance of its
obligations under, this Agreement, the Registration Rights Agreement and the
Escrow Agreement to which such Seller is to be a party and the consummation of
the transaction contemplated hereby and thereby and no other action on the part
of such Seller is necessary to authorize the execution, delivery and performance
of this Agreement, the Registration Rights Agreement and the Escrow Agreement
and the consummation of the transactions contemplated hereby and thereby other
than the filing of the Articles of Merger referred to in Section 2.2. Each of
the Sellers that is a natural person has the full, absolute and entire power and
legal right to execute, deliver and perform his obligations under this
Agreement, the Registration Rights Agreement and the Escrow Agreement to which
such Seller is to be a party. Assuming due execution and delivery by the other
parties hereto, this Agreement is, and the Registration Rights Agreement and the
Escrow Agreement will be at the Closing a valid and legally binding obligation
of each Seller, enforceable in accordance with its terms, except as (a) the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium or
other similar Laws affecting the enforcement of creditors' rights generally and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
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3.3 Non-Contravention. The execution, delivery and performance of this
Agreement by each of the Sellers does not and will not (a) conflict with or
violate its organizational documents or agreements (if any), (b) conflict with
or violate any Law or Judgment applicable to such Seller, (c) result in the
creation or imposition of any Lien on any of the Shares held by it or (d)
require any consent or other action by any Person under, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, cancellation,
modification or acceleration of any right or obligation of such Seller or a loss
of any benefit to which such Seller is entitled under any note, bond, mortgage,
indenture, deed of trust, license, agreement, lease, permit, franchise or other
instrument or obligation to which such Seller is a party or by which such Seller
or such Sellers' properties are bound or affected, except, in the case of
clauses (b), (c) or (d) of this Section 3.3, where the violation, conflict,
breach, default, acceleration, termination, modification, creation or
imposition, would not, individually or in the aggregate, have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole.
3.4 Acquisition of Buyer Common Stock for Investment; Ability to Evaluate
and Bear Risk. (a) Each of the Sellers is acquiring its portion of the Stock
Consideration not with a view toward, or for sale in connection with, any
distribution in violation of the Securities Act. Each of the Sellers
acknowledges and agrees that its portion of the Stock Consideration may not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed
of without registration under the Securities Act and any applicable securities
Laws, except pursuant to an exemption from such registration under the
Securities Act and such Laws and subject to the limitations and conditions set
forth in Section 3 of the Registration Rights Agreement; provided, however, that
nothing in this Agreement shall prevent the Sellers from entering into hedging
contracts or derivative contracts arrangements with respect to its portion of
the Stock Consideration to the extent permitted by Law.
(b) Each of the Sellers (i) is able to bear the economic risk of holding
its portion of the Stock Consideration for an indefinite period, (ii) can afford
to suffer the complete loss of its investment in its portion of the Stock
Consideration, and (iii) has knowledge and experience in financial and business
matters such that such Seller is capable of evaluating the risks of the
investment in its portion of the Stock Consideration.
(c) Each of the Sellers acknowledges and agrees that, except for
certificates representing those shares of Buyer Common Stock which are subject
to an effective Registration Statement filed by Buyer or until no longer
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required by applicable Law, the certificates evidencing the shares of Buyer
Common Stock issued in the Merger shall contain a legend substantially as
follows (it being agreed that Buyer will provide replacement certificates
without any such legend if not required by applicable Law in Buyer's reasonable
judgment upon request by a Seller):
The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares
represented by this certificate may only be sold or
transferred if they are at the time registered under the
Securities Act of 1933 or if the sale or transfer thereof is
not required to be so registered or is made pursuant to an
exemption from registration provided by said Act or the rules
and regulations promulgated thereunder. The shares represented
by this certificate are subject to the restrictions set forth
in the Agreement and Plan of Merger, dated as of July 19,
2002, by and among Terex Corporation, Magic Acquisition Corp.,
Genie Holdings, Inc. and the Sellers named therein and the
Registration Rights Agreement, dated as of the Closing Date,
by and among the Stockholders named therein and Terex
Corporation.
3.5 Information Supplied; Disclosure. None of the information supplied or to be
supplied by each of the Sellers in writing specifically for inclusion or
incorporation by reference in the Registration Statement on Form S-3 to be filed
with the SEC by Buyer following the Closing in connection with the resale of
shares of Buyer Common Stock issued under this Agreement and pursuant to the
terms of the Registration Rights Agreement (the "Registration Statement") will,
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
The Company and the Sellers, jointly and severally, hereby represent and
warrant to Buyer and Acquisition Subsidiary as follows:
4.1 Corporate Existence and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington and has full corporate power and authority to own, lease and operate
its property and assets and to conduct its business as presently conducted and
to carry out its responsibilities under this Agreement. The Company is duly
qualified to do business and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not have, individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole. All such
jurisdictions where the Company is qualified to do business as a foreign
corporation are listed in Section 4.1 of the Sellers' Disclosure Schedule. The
Company has heretofore delivered to Buyer complete and correct copies of the
Company Articles as currently in effect.
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4.2 Authorization. The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of all transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company. Each of the Board
of Directors of the Company and the shareholders of the Company has approved
this Agreement and the Merger and no other action on the part of the Company is
necessary to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby other than the
filing of the Articles of Merger referred to in Section 2.2. This Agreement has
been duly executed and delivered by the Company and, assuming the due execution
and delivery by the other parties hereto, this Agreement is a valid and legally
binding obligation of the Company, enforceable in accordance with its terms,
except as (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium or other similar Laws affecting the enforcement of
creditors' rights generally and (b) the availability of equitable remedies may
be limited by equitable principles of general applicability.
4.3 Governmental Authorization. Except as listed in Section 4.3 of the
Sellers' Disclosure Schedule, no consent, waiver, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Company or any of its Subsidiaries
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (a) the filing
of the Articles of Merger with the Secretary of State, (b) such consents,
waivers, approvals, orders, authorizations, registration, declarations and
filings as may be required under the HSR Act or the competition Laws or
regulations of the European Union of any foreign supranational authority in any
jurisdiction in which the Company or the Buyer (directly or through
Subsidiaries, in each case) has assets or conducts business; and (c) such other
consents, waivers, authorizations, filings, approvals and registrations as would
not have a Material Adverse Effect on the Company and its Subsidiaries, taken as
a whole.
4.4 Non-Contravention. Except as set forth in Section 4.4 of the Sellers'
Disclosure Schedule, the execution, delivery and performance of this Agreement
by the Company does not and will not (a) violate the Company Articles or any
organizational documents or agreements of any of its Subsidiaries, (b) assuming
compliance with the matters referred to in Section 4.3, violate any Law or
Judgment applicable to the Company or any of its Subsidiaries, (c) result in the
creation or imposition of any Lien on any of the property held by the Company or
any of its Subsidiaries, or (d) require any consent or other action by any
Person under, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or give rise to any right of
termination, cancellation, modification or acceleration of any right or
obligation of the Company or a loss of any benefit to which the Company is
entitled under any note, bond, mortgage, indenture, deed of trust, license,
agreement, lease, permit, franchise or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which the Company, any
of its Subsidiaries or their respective properties are bound or affected,
except, in the case of clauses (b), (c) or (d) of this Section 4.4, where the
violation, conflict, breach, default, acceleration, termination, modification,
creation or imposition, would not have, individually or in the aggregate, a
Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
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4.5 Capitalization. Section 4.5 of the Sellers' Disclosure Schedule sets
forth the authorized and issued capital stock of the Company and all Rights in
respect thereof. All of the outstanding capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable. Other than in
connection with the Recapitalization, the Company has no other outstanding
Capital Securities or Rights in respect of such Capital Securities and there are
no existing contracts, commitments, understandings or arrangements by which the
Company may become bound to issue additional Capital Securities or Rights in
respect of such Capital Securities. There are no outstanding contracts,
commitments, understandings or arrangements by which the Company may become
bound to issue additional Capital Securities or Rights in respect of such
Capital Securities. The Company does not, and at Closing the Company will not,
have any shares of Common Stock held in its treasury.
4.6 Subsidiaries. (a) Section 4.6(a) of the Sellers' Disclosure Schedule
sets forth a true, complete and correct list of (i) all of the Company's
Subsidiaries, all outstanding capital stock, membership or partnership interests
or other equity based or equity linked securities ("Capital Securities") of each
such Subsidiary, (ii) all Rights relating to such Subsidiary, (iii) all
contracts, commitments, understandings or arrangements by which such Subsidiary
may become bound to issue additional Capital Securities, and (iv) the owners of
all such interests and the identity of the parties to any such agreements or
arrangements. Except as disclosed in Section 4.6(a) of the Sellers' Disclosure
Schedule, all of the outstanding Capital Securities or other voting securities
of each Subsidiary of the Company is validly issued, fully paid and
non-assessable and those Capital Securities owned by the Company are owned free
and clear of any Lien with respect thereto. No Subsidiary of the Company has
issued any securities in violation of any Rights and, except as set forth on
Section 4.6(a) of the Sellers' Disclosure Schedule, there are no options,
warrants, calls, rights or other securities, agreements or commitments of any
character obligating or committing either a Subsidiary of the Company or the
Company to issue, deliver or sell shares of such Subsidiary's capital stock or
debt securities, or obligating either a Subsidiary of the Company or the Company
to grant, extend or enter into any such option, warrant, call or other such
right, agreement or commitment.
(b) Each Subsidiary of the Company (i) is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation, (ii) is duly qualified to do business, and is in good standing,
in each jurisdiction where such qualification is necessary, and (iii) has full
corporate power and corporate authority to own, lease and operate its property
and assets and to carry on its business as presently conducted.
(c) Except as set forth in Section 4.6(c) of the Sellers' Disclosure
Schedule, the Company has no ownership interest or Rights in any Person.
4.7 Financial Statements. (a) The audited consolidated balance sheets as of
December 31, 1999, 2000 and 2001 and the related audited consolidated statements
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of income and cash flows for each of the years ended December 31, 1999, 2000 and
2001 of the Company (the "Financial Statements") have been delivered by the
Company to Buyer. In addition, the Company has delivered the Restated Financial
Statements to Buyer. The audited consolidated balance sheet as of December 31,
1999 and the related audited consolidated statements of income and cash flows
for the year then ended of the Company and the Restated Financial Statements
fairly present, in all material respects, in conformity with GAAP (except as may
be indicated in the notes thereto and subject to normal year-end adjustments),
the consolidated financial position of the Company as of the dates thereof and
their consolidated results of operations and cash flows for the periods then
ended.
(b) The Company has delivered to the Buyer the unaudited consolidated
balance sheet of the Company as of March 31, 2002 and the related unaudited
consolidated statements of income and cash flows of the Company for the three
month period then ended (the "First Quarter Financial Statements"), which fairly
present, in all material respects, in conformity with GAAP (except as may be
indicated in the notes thereto and subject to normal adjustments and except as
set forth on Section 4.7(b) of the Sellers' Disclosure Schedule, applied on a
consistent basis during the three month period then ended (except as may be
indicated in the notes thereto and subject to normal adjustments), the
consolidated financial position of the Company as of the dates thereof and their
consolidated results of operations and cash flows for the three month period
then ended.
4.8 Absence of Certain Changes. Except as set forth in Section 4.8 of the
Sellers' Disclosure Schedule, or as contemplated by this Agreement, since the
Balance Sheet Date, (x) the business of the Company and its Subsidiaries has
been conducted in the ordinary course consistent with past practices and (y)
there has not been:
(a) any event, occurrence or facts which, individually or in the aggregate,
has had a Material Adverse Effect on the Company and its Subsidiaries, taken as
a whole;
(b) any amendment or change in the certificate of incorporation, by-laws or
similar organizational documents of the Company, the Sellers, or Subsidiaries of
the Company;
(c) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of
the Company or any of its Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practices;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien other than Permitted Liens on any material asset other
than in the ordinary course of business consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in Subsidiaries of the Company set forth in Section 4.8(f) of the
Sellers' Disclosure Schedule made in the ordinary course of business consistent
with past practices;
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(g) any change in any method of financial accounting or financial
accounting practice by the Company or any of its Subsidiaries except for any
such changes after the date hereof required by reason of a concurrent change in
GAAP;
(h) any issuance or sale of any debt or equity securities of the Company or
its Subsidiaries, or the issuance or grant of any options, warrants or other
rights to acquire from the Company or its Subsidiaries, directly or indirectly,
any debt or equity securities of the Company or its Subsidiaries;
(i) any damage, destruction or loss of any property or asset, whether or
not covered by insurance, for an amount in excess of $500,000;
(j) increase in the compensation payable to or to become payable to any of
the officers, directors or employees of the Company or its Subsidiaries, or any
bonus or pension, insurance or other benefit payment or arrangement, and any
stock awards, stock option grants or stock appreciation rights made to or with
any officers, employees or agents;
(k) obligation or liability incurred by the Company or its Subsidiaries to
any of its officers, directors or stockholders except for normal and customary
compensation payable to officers in the ordinary course of the Company's or its
Subsidiaries' business consistent with past practice;
(l) purchase, license, sale, assignment or other disposition or transfer,
or any agreement or other arrangement for the purchase, license, sale,
assignment or other disposition or transfer, of any of the assets, properties or
goodwill of the Company or its Subsidiaries other than a license or sale of any
product or products of the Company or its Subsidiaries made in the ordinary
course of the Company's or its Subsidiaries' business and the transactions
contemplated by this Agreement;
(m) payment or discharge by the Company or its Subsidiaries of any Lien on
any asset or property of the Company or its Subsidiaries, or the payment or
discharge of any liability that was not either shown or reflected on the
Financial Statements or incurred in the ordinary course of the Company's or its
Subsidiaries' business after December 31, 2002, in an amount in excess of
$10,000 for any single liability to a particular creditor; or
(n) any labor dispute or Litigation material to the business or the
financial condition of the Company or its Subsidiaries.
4.9 Material Contracts. (a) Section 4.9 of the Sellers' Disclosure Schedule
lists (i) all leases or subleases of real property used in the business of the
Company or any of its Subsidiaries, (ii) all material leases or subleases of
equipment pursuant to which the Company or any of its Subsidiaries is lessor or
sublessor, as the case may be, (iii) any Contract involving an investment by the
Company or any of its Subsidiaries in any partnership, limited liability company
or joint venture, other than such investments made in the ordinary course of
business, (iv) any Contract of the Company or any of its Subsidiaries which
involves a financing arrangement in excess of $100,000, other than purchase
orders entered into in the ordinary course of business which contain customary
terms and conditions, (v) any Contract involving the Company or any of its
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Subsidiaries and a dealer, distributor, national account or a rental company for
an amount in excess of $100,000, other than purchase orders entered into in the
ordinary course of business which contain customary terms and conditions, (vi)
any Contract involving noncompetition or any other restriction with respect to
the geographical area of operations or scope or type of business of the Company
or any of its Subsidiaries, (vii) any Contract pursuant to which the Company or
any of its Subsidiaries grants or is granted any license or other rights to use
any of the assets of the Company or any of its Subsidiaries or any rights of
joint use with respect to any of such assets, (viii) any Contract relating to
any acquisition or disposition of any capital stock or equity interest of the
Company or any of its Subsidiaries, (ix) Contracts that are material to the
business, financial position or results of operations of the Company and (x)
Contracts that involve aggregate payments in excess of $500,000 per annum, other
than purchase orders entered into in the ordinary course of business which
contain customary terms and conditions (such Contracts described in (i)-(x)
above, the "Material Contracts").
(b) To the extent that a Material Contract set forth in Section 4.9 of the
Sellers' Disclosure Schedule is evidenced by documents, copies thereof
(including any amendments or waivers with respect thereto) have been made
available to the Buyer. To the extent that the Material Contracts are not
evidenced by documents, the Company has provided to the Buyer a written
description of all of the material terms and conditions of such Material
Contracts. Each Material Contract is in full force and effect and is enforceable
against the Company or its Subsidiaries a party thereto in accordance with its
terms. There does not exist under any Material Contract any default or condition
or event that, after notice or lapse of time or both, would constitute a
material default on the part of the Company or any of its Subsidiaries or, to
the knowledge of the Company, on the part of any other parties to such Material
Contract. The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby and
thereby, do not and will not conflict with, or result in the breach or
termination of any provision of, or constitute a default (with or without the
giving of notice or the lapse of time, or both) under, or give rise to any right
of termination, cancellation or loss of any benefit to which the Company or any
of its Subsidiaries is entitled under any provision of a Material Contract.
4.10 Undisclosed Liabilities. Except for liabilities, commitments or
obligations (a) incurred in the ordinary course of business subsequent to the
Balance Sheet Date, (b) accrued or reserved against in the Financial Statements
or (c) disclosed herein or in Section 4.10 to the Sellers' Disclosure Schedule,
since the Balance Sheet Date neither Company nor or any of its Subsidiaries has
incurred any material liabilities or obligations (whether direct, indirect,
accrued or contingent) that would be required to be reflected or reserved
against in a consolidated balance sheet of the Company prepared in accordance
with GAAP.
4.11 Litigation. Except as set forth in Section 4.11 of the Sellers'
Disclosure Schedule, there is no Litigation pending or, to the knowledge of the
Sellers, threatened against the Company, any of its Subsidiaries, or their
respective properties or their respective directors, officers or employees
(which Litigation arises from the representation of, or employment with, the
Company by such directors, officers or employees) of the Company or any of its
Subsidiaries. Except as set forth in Section 4.11 of the Sellers' Disclosure
Schedule, neither the Company nor any of its Subsidiaries is subject to any
outstanding Judgment.
-21-
4.12 No Default; Compliance with Laws. Neither the Company nor any
Subsidiary of the Company is in default or violation of any term, condition or
provision of (i) their respective certificates of incorporation, by-laws or
similar organizational documents or (ii) any Law applicable to the Company or
any Subsidiary of the Company that would have a Material Adverse Effect on the
operation of the Company's business. Neither the Company nor any of its
Subsidiaries has received written notification from any Governmental Entity (a)
asserting a material violation of any Law applicable to the conduct of its
business, (b) threatening to revoke any license that is material, franchise,
permit or government authorization, or (c) restricting or in any way limiting
its operations as currently conducted. No investigation or review by any
governmental entity with respect to the Company or any Subsidiary of the Company
or any of their officers or employees (in their capacities as such) is pending
or, to the knowledge of the Company, threatened, nor has the Company received
any written notice from any Governmental Entity indicating an intention to
conduct the same.
4.13 Taxes. Except as set forth in the Sellers' Disclosure Schedule, (a)
the Company has (i) correctly prepared and timely filed (taking into account
extensions) all material Tax Returns required to be filed or sent by or with
respect to the Company or any Company Subsidiary, (ii) timely paid all material
Taxes that are or were due and payable whether or not shown (or required to be
shown) on a Tax Return, (iii) no liability for Taxes with respect to any taxable
period, or portion thereof, ending on or before March 31, 2002 that is in excess
of the reserve for Taxes reflected on the unaudited consolidated balance sheet
delivered pursuant to Section 4.7(b) hereof, and (iv) complied in all material
respects with all applicable Laws relating to the withholding and payment of
Taxes and have timely withheld from employee wages and paid over to the proper
Governmental Entities all amounts required to be so withheld and paid over under
all applicable Laws. The Company has provided Buyer with copies of its U.S.
federal and state income Tax Returns for tax years ended December 31, 1998,
December 31, 1999 and December 31, 2000.
(b) There are no Liens for Taxes upon the assets of the Company or any of
its Subsidiaries except Permitted Liens. Except as set forth in the Sellers'
Disclosure Schedule, no claim has ever been made in writing to the Company, its
Subsidiaries or, to the knowledge of the Sellers, to the Company's agent for
service of process by any taxing authority with respect to the Company or any of
its Subsidiaries in a jurisdiction where the Company and/or any of its
Subsidiaries do not file Tax Returns, that the Company or any such Subsidiary is
or may be subject to taxation by that jurisdiction. Neither the Company nor any
of its Subsidiaries has requested any extension of time within which to file any
Tax Return, which Tax Return has not since been filed. The statute of
limitations for the assessment of U.S. federal income taxes has expired for all
U.S. federal income tax returns and/or years of the Company and each of its
Subsidiaries, or such tax returns have been examined by the Internal Revenue
Service ("IRS") for all periods through December 31, 1998 There are no
outstanding waivers or consents given by the Company or any of its Subsidiaries
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns (except with respect to tax years for which the federal
statute of limitations has expired). No federal, state, local or foreign audits
or other administrative proceedings or court proceedings are presently pending
with regard to any Taxes or Tax Returns. No deficiency for any Taxes has been
proposed, asserted or assessed by a Governmental Entity in writing against the
Company or any of its Subsidiaries which has not been resolved and paid in full.
-22-
(c) Neither the Company nor any of its Subsidiaries (i) is a party to any
agreement providing for the allocation, sharing or indemnification of Taxes;
(ii) is required to include in income any adjustment pursuant to Section 481(a)
of the Code by reason of a voluntary change in accounting method initiated by
the Company or any Subsidiary, nor does the Company have any knowledge that the
IRS has proposed any such adjustment or change in accounting method; or(iii) has
entered into a closing agreement pursuant to Section 7121 of the Code or any
predecessor provision thereof or any similar provision of state, local or
foreign law with respect to the Company or any of its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries has filed a consent
pursuant to Section 341(f) of the Code, or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries. No property of the Company or any of its Subsidiaries is property
that the Company, any of its Subsidiaries or any party to this transaction is or
will be required to treat as being owned by another person pursuant to Section
168(f)(8) of the Code (prior to its amendment by the Tax Reform Act of 1986) or
is "tax-exempt use property" within the meaning of Section 168(h) of the Code.
No indebtedness of the Company or any of its Subsidiaries is "corporate
acquisition indebtedness" within the meaning of Section 279(b) of the Code.
Neither the Company nor any of its Subsidiaries has constituted a "distributing
corporation" or a "controlled corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of shares qualifying for tax-free
treatment under Section 355 of the Code (i) in the two years prior to the date
of this Agreement or (ii) in a distribution that could otherwise constitute part
of a "plan" or "series of related transactions" (within the meaning of Section
355(e) of the Code) in conjunction with this acquisition. Neither the Company
nor any of its Subsidiaries is subject to a private letter ruling from any
taxing authority.
(e) There is no contract, agreement, plan or arrangement covering any
Person that, individually or collectively, could give rise to, nor will the
consummation of the transactions contemplated hereby obligate the Company or any
of its Subsidiaries to make, the payment of any amount that would not be
deductible by the Company or any Subsidiary thereof by reason of Section 280G of
the Code.
4.14 Affiliate Transactions. Except as set forth in Section 4.14 of the
Sellers' Disclosure Schedule, no director, officer, Affiliate or "associate" (as
such term is defined in Rule 12b-2 under the Exchange Act of the Company or any
of its Subsidiaries (i) has outstanding any indebtedness, liabilities or other
similar obligations to the Company or any of its Subsidiaries other than
indebtedness to any individual less than $10,000 in connection with expense
advances and similar arrangements, (ii) to the knowledge of the Company, owns
any direct or indirect interest of any kind in (excepting less than 5% stock
holdings in securities of publicly traded companies), or is a director, officer,
employee, partner, Affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management, operations or
profits of, any Person which is (A) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company or any of its
Subsidiaries, or (B) participated in any transaction to which the Company or any
of its Subsidiaries is a party, or (iii) is otherwise a party to any Contract,
arrangement or understanding with the Company or any of its Subsidiaries or has
or claims to have any interest in the Intellectual Property Rights or Patent
Rights of the Company and its Subsidiaries.
-23-
4.15 Employees. Neither the Company nor any of its Subsidiaries (a) is a
party to any collective bargaining agreements with any labor organization and
(b) has agreed to recognize any union or other collective bargaining unit and no
union or other collective bargaining unit has been certified as representing any
of the employees of the Company or any of its Subsidiaries. To the knowledge of
the Sellers, there is no union representation or organizing effort pending or
threatened against the Company or any of its Subsidiaries. Neither the Company
nor any of its Subsidiaries is the subject of any Litigation asserting that the
Company or any of its Subsidiaries has committed an unfair labor practice (as
defined in the National Labor Relations Act or other applicable Law). Neither
the Company nor any of its Subsidiaries has been, during the last twelve months
prior to the date hereof, the subject of any pending or, to the knowledge of the
Company, threatened labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving the Company or any of its Subsidiaries.
4.16 Employee Benefits. (a) Schedule 4.16 to Sellers' Disclosure Schedule
contains a true and complete list of each deferred compensation and each
incentive compensation, equity compensation plan, "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or program
(within the meaning of section 3(2) of ERISA); each employment, termination or
severance agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that together
with the Company would be deemed a "single employer" within the meaning of
section 4001(b) of ERISA, or to which the Company or an ERISA Affiliate is
party, whether written or oral, other than statutorily required benefit plans,
fund programs, agreements or arrangements for the benefit of any employee or
former employee of the Company or any of its Subsidiaries (the "Plans").
(b) With respect to each Plan, the Company has heretofore delivered or made
available to Buyer a true and complete copy of each Plan and any amendments
thereto (or if such Plan is not a written Plan, a description thereof), any
related trust or other funding vehicle, any reports or summaries required under
ERISA or the Code and the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to qualify under
section 401 of the Code.
(c) No liability under Title IV or section 302 of ERISA has been incurred
by the Company or any ERISA Affiliate that has not been satisfied in full, and
neither the Company nor any ERISA Affiliate made, or was required to make,
contributions to any plan subject to Title IV of ERISA (a "Title IV Plan") on
the last day of the most recent Title IV Plan year ended prior to the Closing
Date.
(d) Each Plan has been operated and administered in all material respects
in accordance with its terms and applicable law, including but not limited to
ERISA and the Code.
-24-
(e) Each Plan intended to be "qualified" within the meaning of section
401(a) of the Code is so qualified and the trusts maintained thereunder are
exempt from taxation under section 501(a) of the Code.
(f) No Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or any of its Subsidiaries for periods extending beyond their retirement
or other termination of service, other than coverage mandated by applicable Law.
(g) To the knowledge of the Sellers, there is no pending or threatened
Litigation by or on behalf of any Plan, by any employee or beneficiary covered
under any such Plan, or otherwise involving any such Plan (other than routine
claims for benefits).
4.17 Property. (a) The Company and its Subsidiaries have good (and in the
case of real property, marketable) title to, or in the case of leased property,
have valid leasehold interests in all property and assets (whether real or
personal, tangible or intangible) reflected on the Balance Sheet or acquired or
leased after the Balance Sheet Date, except for property or assets sold or
transferred since the Balance Sheet Date in the ordinary course of business
consistent with past practices. Such property and assets, together with the
assets to be acquired by the Company pursuant to Section 6.6 of this Agreement,
constitute all of the property and assets used in or necessary for the conduct
of the Business as presently conducted on or prior to the date hereof. None of
such property or assets (except (i) such property or assets sold or transferred
in the ordinary course of business consistent with past practices or (ii) the
assets to be acquired pursuant to Section 6.6 of this Agreement) is subject to
any Liens, except for Permitted Liens.
(b) All of the real property owned by the Company or any of its
Subsidiaries (the "Owned Real Property") is set forth in Section 4.17(b) of the
Sellers' Disclosure Schedule. Except as set forth in Section 4.17(b) of the
Sellers' Disclosure Schedule, no Person, other than the Company or its
Subsidiaries has any right to occupy or possess any portion of the Owned Real
Property. To the knowledge of the Sellers, neither the Company nor any of its
Subsidiaries has received any written notice of any pending or threatened
condemnation proceeding affecting any of the Owned Real Property or any party
thereof or of any sale or other disposition of any of the Owned Real Property or
any part thereof in lieu of condemnation.
(c) A list of the real property leased by the Company or any of its
Subsidiaries (the "Leased Real Property") is set forth in Section 4.17(c) of the
Sellers' Disclosure Schedule. A list of the leases pursuant to which the Company
or any of its Subsidiaries leases the Leased Real Property (the "Real Property
Leases") is set forth in Section 4.17(c) of the Sellers' Disclosure Schedule.
Each of the Company or any of its Subsidiaries has good leasehold interest in
the Leased Real Property. The Real Property Leases are in full force and effect
and neither the Company nor any of its Subsidiaries has received any written
notice that any default, or condition which with the passage of time would
constitute a default, exists under the Real Property Leases, except such notices
as to which the alleged defaults have been cured or otherwise resolved or except
such defaults that would not have, individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole.
-25-
(d) All property and assets owned or utilized by the Company and the
Subsidiaries of the Company are in good operating condition and repair (except
for ordinary wear and tear), free from any defects (except such minor defects as
do not interfere with the use thereof in the conduct of the normal operations),
have been maintained consistent with the standards generally followed in the
industry and are sufficient to carry on the business of the Company and the
Subsidiaries of the Company as presently conducted. All buildings, plants and
other structures owned or otherwise utilized by the Company and the Subsidiaries
of the Company are in good condition and repair (except for ordinary wear and
tear).
4.18 Environmental Matters. (a) Except as set forth in Section 4.18 of the
Sellers' Disclosure Schedule,
(i) Each of the Company and its Subsidiaries possess all Environmental
Permits (as defined below) currently required under applicable
Environmental Laws (as defined below) and material to conduct their
business and are, and within applicable statutes of limitation, have been,
in material compliance with the terms and conditions of such Environmental
Permits, nor has the Company received written notice that any Environmental
Permits possessed by the Company or any of its Subsidiaries and material to
their business will be revoked, suspended or will not be renewed;
(ii) to the Company's knowledge, the execution and delivery of this
Agreement and the consummation by the Company of the transactions
contemplated hereby will not affect the validity or require the transfer of
any Environmental Permits, and will not require any notification,
registration, reporting, filing, investigation, or remediation under any
Environmental Law;
(iii) the Company and each of its Subsidiaries are currently in
material compliance, and within applicable statues of limitation, have been
in material compliance, with all applicable Environmental Laws;
(iv) the Company has not received notice of any civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, notice or demand letter, or request for information in each
case that is pending or, to the best of the Company's knowledge, threatened
under any Environmental Law against the Company or any of its Subsidiaries;
and neither the Company nor any of its Subsidiaries has received written
notice of actual or potential liability under any Environmental Law that
has not been resolved, including, but not limited to, any liability that
the Company or any of its Subsidiaries may have retained or assumed either
contractually or by operation of law;
(v) as of the date hereof, no property or facility currently, or to
the best of the Company's knowledge, formerly owned, operated or leased by
the Company or any present or former Subsidiary of the Company, or by any
respective predecessor in interest, is listed or proposed for listing on
the National Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both promulgated under the
United States Comprehensive Environmental Response, Compensation, and
Liability Act, as amended ("CERCLA"), or on any comparable foreign or state
list established under any Environmental Law;
-26-
(vi) to the best of the Company's knowledge, (i) there has been no
disposal, spill, discharge or release of any Hazardous Material (as defined
below) generated, used, owned, stored or controlled by the Company, any of
its Subsidiaries or respective predecessors in interest, on, at, or under
any property presently or formerly owned, leased or operated by the
Company, any of its Subsidiaries, or any predecessor in interest, except
for such disposals, spills, discharges and releases that would not be
expected to result, either individually or in the aggregate, in material
costs to the Company or any of its Subsidiaries; and (ii) there are no
Hazardous Materials located in, at, on, or under such facility or property,
or at any other location, in either case that could reasonably be expected
to require investigation, removal, remedial or corrective action by the
Company or any of its Subsidiaries or that would reasonably likely result
in material liabilities of, or material losses, damages or costs to the
Company or any of its Subsidiaries under any Environmental Law;
(vii) there has not been any underground storage tank or other
underground storage receptacle or related piping, or any impoundment or
other disposal area in each case containing Hazardous Materials located on
any facility or property currently, or to the best of the Company's
knowledge, formerly owned, leased or operated by the Company, any of its
Subsidiaries, or respective predecessors in interest except in material
compliance with Environmental Laws during the period of such ownership,
lease or operation, and no asbestos or polychlorinated biphenyls have been
used or disposed of, or have been located at, on, or under any such
facility or property during the period of such ownership, lease or
operation, except in material compliance with applicable Environmental
Laws; and
(viii) to the best of the Company's knowledge, no Lien has been
recorded against any properties, assets or facilities currently owned,
leased or operated by the Company or any of its Subsidiaries under any
Environmental Law.
(b) the Company has provided to Buyer and its authorized representatives
all records and files, including but not limited to, all assessments, reports,
studies, analyses, audits, tests and data available to the Company and its
Subsidiaries concerning the existence of Hazardous Materials or any other
environmental concern at properties, assets or facilities currently or formerly
owned, operated or leased by the Company or any present or former Subsidiary of
the Company or predecessor in interest, or concerning compliance by the Company
and its Subsidiaries with, or liability under, any Environmental Laws.
-27-
(c) For purposes of this Section 4.18:
(i) "Environmental Law" shall mean CERCLA, the Resource Conservation
and Recovery Act of 1976, as amended, and any other applicable federal,
state, local, or foreign statute, rule, regulation, order, judgment,
directive, decree or common law as now or previously in effect and
regulating, relating to, or imposing liability or standards of conduct
concerning air emissions, water discharges, noise emissions, the release or
threatened release or discharge of any Hazardous Material into the
environment, the generation, handling, treatment, storage, transport or
disposal of any Hazardous Material, or otherwise concerning pollution or
the protection of the outdoor or indoor environment, and employee or human
health or safety.
(ii) "Environmental Permit" shall mean any permit, license, approval,
consent or other authorization by a federal, state, local or foreign
government or regulatory entity pursuant to any Environmental Law.
(iii) "Hazardous Material" shall mean any pollutant, contaminant or
hazardous, toxic, biohazardous, or dangerous waste, substance, constituent
or material, defined or regulated as such in, or for purposes of, any
Environmental Law, including, without limitation, any asbestos, any
petroleum, oil (including crude oil or any fraction thereof), any
radioactive substance, any polychlorinated biphenyls, any toxin, chemical,
microbial matter, and any other substance that may give rise to liability
under any Environmental Law.
4.19 Brokers. Except for Deutsche Bank Securities Inc., there is no
investment banker, broker, finder, financial advisor or other Person which has
been retained by or is authorized to act on behalf of the Company or any of the
Sellers who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
4.20 Reorganization. Each of the Sellers and the Company has no knowledge
of any fact or circumstance that would prevent the Merger, if effected in
accordance with this Agreement, from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
4.21 [INTENTIONALLY OMITTED]
4.22 Products Liability. (a) The Company and the Subsidiaries of the
Company have no knowledge of any facts that indicate that the reserves for
product liability claims of the Company and the Subsidiaries of the Company in
the aggregate reflected in the Financial Statements are understated based upon
the Company's and its Subsidiaries' historical method of establishing such
reserves.
-28-
(b) To the knowledge of the Company, Section 4.22 of the Sellers'
Disclosure Schedule contains, in all material respects, a list as of June 30,
2002, of all the Company's or its Subsidiaries' pending and threatened product
liability litigation and written product liability claims, except for immaterial
claims as to which such parties maintain no records. Section 4.22 of the
Sellers' Disclosure Schedule also specifies all pending or threatened product
liability litigation which involves any claim for punitive damages.
4.23 Insurance. Section 4.23 of the Sellers' Disclosure Schedule sets forth
a complete and accurate list of all policies of fire, liability, product
liability, workers compensation, health and other forms of insurance currently
in effect and/or covering the Company or any of its Subsidiaries for any prior
period with respect to the business and properties of the Company and its
Subsidiaries taken as a whole. All such insurance is in full force and effect,
and no notice of cancellation or termination, or reduction of coverage or
intention to cancel, terminate or reduce coverage, has been received with
respect to any policy for such insurance. Except as set forth in Section 4.23 of
the Sellers' Disclosure Schedule, the insurance coverage provided by such
policies or insurance will not terminate or lapse by reason of the transactions
contemplated by this Agreement and, following the Closing Date, the Company and
its Subsidiaries will continue to be covered under such policies for events
occurring prior to the Closing Date. Except as set forth in Section 4.23 of the
Sellers' Disclosure Schedule, no such policy provides for or is subject to any
currently enforceable retroactive rate or premium adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or partially
out of events arising prior to the date hereof. The Company has delivered or
made available to the Buyer true and correct copies of all the insurance
policies set forth in Section 4.23 of the Sellers' Disclosure Schedule.
4.24 Intellectual Property. The Company and each of its Subsidiaries has
valid, legal rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
similar intellectual property rights (collectively, the "Intellectual Property
Rights") which are necessary to, or used in, its business, which Intellectual
Property Rights owned by the Company are set forth on Section 4.24 of the
Sellers' Disclosure Schedule. Section 4.24 of the Sellers' Disclosure Schedule
sets forth a list of all inventions which are the subject of issued patent
letters or an application therefor and all trade and service marks which have
been registered or for which an application for registration is pending, in each
case which are owned and used or held for use exclusively by the Company or any
of its Subsidiaries (the "Patent Rights"). Except as set forth on Section 4.24
of the Sellers' Disclosure Schedule, neither the Company nor any of its
Subsidiaries (i) are a defendant in any claim, suit, action or proceeding
relating to its business which involves a claim of infringement of any patents,
trademarks or service marks, (ii) have any knowledge of any existing
infringement by another person of any of the Patent Rights belonging to the
Company or any of its Subsidiaries or (iii) has received written notice of the
infringement by the Company or any of its Subsidiaries of any infringement of
the patent, trademark, copyright or other intellectual property rights of a
third party.
4.25 Takeover Statutes. No "fair price," "moratorium," "control share
acquisition," or other similar antitakeover statute or regulation enacted under
the State of Washington or federal laws in the United States applicable to the
Company or any of its Subsidiaries is applicable to the Merger, this Agreement,
or the transactions contemplated hereby and thereby.
-29-
4.26 Accounts Receivable; Inventory. (a) All accounts receivable of the
Company and its Subsidiaries that are reflected on the Financial Statements or
are generated between the date hereof and the Closing Date represent or will
represent valid obligations arising from bona fide transactions and sales made
in the ordinary course of business. Except as set forth on Section 4.26(a) of
the Sellers' Disclosure Schedule, there has not been any material adverse change
in the collectability of accounts receivable of the Company and its Subsidiaries
since the date of the Restated Financial Statements.
(b) Except as set forth in Section 4.26(b) of the Sellers' Disclosure
Schedule, the inventory of the Company and its Subsidiaries is of a quality
usable in the ordinary course of business, and in amounts usable consistent with
past practices, of the Company and its Subsidiaries in all material respects,
except for obsolete, damaged, defective or otherwise unusable items as to which
a provision, determined in accordance with GAAP, has been made on the books of
the Company or its Subsidiaries, as the case may be. The value of all inventory
items, including finished goods, work-in-process and raw materials, has been
recorded on the books of the Company and its Subsidiaries in the manner set
forth in GAAP.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to each of the Sellers:
5.1 Corporate Existence and Power. Each of Buyer and Acquisition Subsidiary
is a corporation duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation. Each of Buyer and Acquisition
Subsidiary has full corporate power and authority to own, lease and operate its
respective properties and assets and to conduct its respective businesses as now
being conducted and to carry out its responsibilities under this Agreement. Each
of Buyer and Acquisition Subsidiary is duly qualified to do business and is in
good standing in each jurisdiction where such qualification is necessary, except
for those jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, a Material Adverse Effect on Buyer or
Acquisition Subsidiary. Each of the subsidiaries required to be listed in the
periodic reports of Buyer pursuant Item 601(b) of Regulation S-K of the
Securities Act (the "Buyer Subsidiaries") is duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its formation and has
full corporate or other applicable power to own, lease and operate its property
and to conduct its business as presently conducted.
5.2 Authorization. Each of Buyer and Acquisition Subsidiary has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The Buyer has all requisite
corporate power and authority to enter into the Registration Rights Agreement
and the Escrow Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of this Agreement, the Registration Rights
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Agreement and the Escrow Agreement and the consummation of all transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of each of Buyer and Acquisition Subsidiary to the
extent it is a party thereto. To the extent either Buyer or Acquisition Sub is a
party thereto, the respective Boards of Directors of Buyer or Acquisition
Subsidiary, as the case may be, have approved this Agreement, the Merger, the
Registration Rights Agreement and the Escrow Agreement and no other action on
the part of Buyer or Acquisition Subsidiary is necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby other than the filing of the Articles of
Merger referred to in Section 2.2. This Agreement has been, and the Registration
Rights Agreement and the Escrow Agreement to which Buyer is to be a party, will
be at the Closing, duly executed and delivered by each of Buyer and Acquisition
Subsidiary, as appropriate, and, assuming the due execution and delivery by each
of the Sellers and the Company, this Agreement is, and the Registration Rights
Agreement and the Escrow Agreement will at Closing be, valid and legally binding
obligations of Buyer and Acquisition Subsidiary to the extent either Buyer or
Acquisition Sub is a party thereto, enforceable in accordance with their
respective terms except as (a) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting the
enforcement of creditors' rights generally and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
5.3 Governmental Authorization. Except as listed in Section 5.3 of the
Buyer Disclosure Schedule, no consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Buyer and Acquisition Subsidiary in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (a) the filing of the Articles of
Merger with the Secretary of State, (b) such consents, waivers, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws; and (c) such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the HSR Act or the competition
Laws or regulations of the European Union of any foreign supranational authority
in any jurisdiction in which the Company or the Buyer (directly or through
Subsidiaries, in each case) has assets or conducts business.
5.4 Non-Contravention. The execution, delivery and performance of this
Agreement by each of Buyer and Acquisition Subsidiary does not and will not (a)
violate Buyer's certificate of incorporation, bylaws or any other organizational
documents or agreements of any of their respective Subsidiaries, (b) assuming
compliance with the matters referred to in Section 5.3, violate any Law or
Judgment applicable to Buyer, Acquisition Subsidiary or any of their respective
Subsidiaries, (c) result in the creation or imposition of any Lien on any of the
property held by Buyer or any of its Subsidiaries, or (d) require any consent or
other action by any Person under, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or give
rise to any right of termination, cancellation, modification or acceleration of
any right or obligation of Buyer or Acquisition Subsidiary or a loss of any
benefit to which Buyer or Acquisition Subsidiary is entitled under any note,
bond, mortgage, indenture, deed of trust, license, agreement, lease, permit,
franchise or other instrument or obligation to which Buyer or any of its
Subsidiaries is a party or by which Buyer, any of its Subsidiaries or their
respective properties are bound or affected, except, in the case of clauses (b),
(c) or (d) of this Section 5.4, where the violation, conflict, breach, default,
acceleration, termination, modification, creation or imposition, would not have,
individually or in the aggregate, a Material Adverse Effect on Buyer and its
Subsidiaries, taken as a whole.
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5.5 Capital Structure. Section 5.5 of the Buyer Disclosure Schedule sets
forth as of June 30, 2002, the authorized and issued capital stock of Buyer and
all Rights in respect thereof. Buyer has no other outstanding Capital Securities
or Rights in respect of such Capital Securities and there are no existing
contracts, commitments, understandings or arrangements by which Buyer may become
bound to issue additional Capital Securities or Rights in respect of such
Capital Securities. There are no outstanding contracts, commitments,
understandings or arrangements by which Buyer may become bound to issue
additional Capital Securities or Rights in respect of such Capital Securities.
Buyer has, as of the date hereof, and will have, as of the Closing Date,
sufficient authorized Buyer Common Stock to satisfy its obligations under
Sections 2.4, 7.6 and 7.7 hereof. All of the Buyer Common Stock which will be
issued as Stock Consideration pursuant to this Agreement including, without
limitation, pursuant to Sections 7.6 and 7.7, will be, when issued, duly
authorized, validly issued, fully paid and non-assessable.
5.6 SEC Documents; Buyer Financial Statements. Buyer has furnished or made
available (except to the extent such documents are publicly available via the
SEC's XXXXX system or the Buyer's website) to the Sellers and the Company true
and complete copies of all reports or registration statements filed by it with
the SEC since January 1, 2001, all in the form so filed (all of the foregoing
being collectively referred to as the "SEC Documents"). As of their respective
filing dates or as of the date of the last amendment therof, if amended after
filing and prior to the date hereof, the SEC Documents complied in all material
respects with the requirements of the Securities Act and the Exchange Act as the
case may be, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading. The financial statements of Buyer,
including the notes thereto, included in the SEC Documents (the "Buyer Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP consistently
applied (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and present fairly
the consolidated financial position of Buyer at the dates thereof and the
consolidated results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal audit adjustments).
There have been no changes in Buyer accounting policies except as described in
the notes to Buyer Financial Statements. The SEC Documents contained an audited
consolidated balance sheet of Buyer as of December 31, 2001 (the "Buyer Balance
Sheet") and the related audited consolidated statements of income and cash flow
for the fiscal year then ended.
5.7 No Material Adverse Effect. Since the date of the Buyer Balance Sheet,
there has not occurred any event or condition of any character that has had a
Material Adverse Effect on Buyer.
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5.8 Availability of Funds. Buyer has sufficient immediately available funds
in cash or cash equivalents and will at the Closing have sufficient immediately
available funds, in cash, to pay the Cash Consideration and to pay any other
amounts payable pursuant to this Agreement and to effect the transactions
contemplated hereby.
5.9 Brokers. Neither Buyer nor any Buyer Subsidiary has incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
5.10 Information Supplied. Other than with respect to information supplied
or to be supplied by the Sellers in writing specifically for inclusion or
incorporation by reference in the Registration Statement, the Registration
Statement will, at the time the Registration Statement becomes effective under
the Securities Act and, except as otherwise advised pursuant to the Registration
Rights Agreement, for so long as the Registration Statement remains so
effective, shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Registration Statement will comply as to
form in all material respects with the requirements of the Securities Act and
the rules and regulations thereunder, except that no representation or warranty
is made by Buyer with respect to statements made or incorporated by reference
therein based on information supplied by the Sellers in writing specifically for
inclusion or incorporation by reference in the Registration Statement.
5.11 Reorganization. None of Buyer nor any of its Subsidiaries has any
knowledge of any fact or circumstance that would prevent the Merger, if effected
in accordance with this Agreement, from qualifying as a reorganization within
the meaning of Section 368(a) of the Code.
5.12 Buyer Acknowledgement. In entering into this Agreement, each of Buyer
and Acquisition Subsidiary acknowledges that it has relied, and shall be
entitled to rely, solely upon the representations, warranties, covenants and
other terms, conditions and provisions set forth in this Agreement as modified
by the Sellers' Disclosure Schedule (and subject to the limitations contained in
this Agreement).
ARTICLE VI
COVENANTS OF THE SELLERS AND THE COMPANY
Each of the Company and the Sellers agrees that:
6.1 Conduct of the Company. Except as set forth in this Agreement or
Section 6.1 of the Sellers' Disclosure Schedule, from the date hereof until the
Closing Date, the Company and each of its Subsidiaries shall, and the Sellers
shall cause the Company and each of its Subsidiaries to conduct its businesses
in the ordinary course consistent with past practice and to use its commercially
reasonable efforts to preserve intact its business organizations and
relationships with third parties and to keep available the services of its
present officers and key employees and to maintain their properties, machinery
and equipment in sufficient operating condition and repair to enable them to
operate their businesses in all material respects in the manner in which the
businesses are currently operated and to continue all material existing
insurance policies (or comparable insurance) of or relating to the Company or
its Subsidiaries in full force and effect. Without limiting the generality of
the foregoing, except as set forth in Sections 6.7 or 7.10 of this Agreement or
in Section 6.1 of the Sellers' Disclosure Schedule, from the date hereof until
the Closing Date, neither the Company nor any of its Subsidiaries will, and the
Sellers will not, cause the Company or any of its Subsidiaries to, without the
prior written consent of Buyer:
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(a) adopt or propose any change in the Company Articles or the
organizational documents of any Subsidiaries of the Company other than the
transactions contemplated by Section 7.10;
(b) merge or consolidate with any other Person, sell, transfer or otherwise
dispose of any assets of the Company or its Subsidiaries, or acquire a material
amount of assets from any other Person outside the ordinary course of business;
(c) effect any issuance, redemption, repurchase, combination, split or
reclassification of any capital stock of the Company or any of its Subsidiaries
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of capital stock of the Company
other than the transactions contemplated by Section 7.10;
(d) declare, set aside, make or pay any dividend or any other distributions
(whether in cash, securities or other property) on any equity security, or
extend any credit to any officer, director or stockholder;
(e) incur, issue or assume any debt to the extent such incurrence, issuance
or assumption of debt would result in the Closing Debt to exceed the Target
Debt;
(f) enter into any transactions with Affiliates that call for expenditures
or transfers by the Company of more than $1,000,000;
(g) terminate or materially amend any of its Contracts, except in the
ordinary course of business;
(h) enter into any new Contract or incur any obligation, the terms of which
would be violated by the consummation of the transactions contemplated herein;
(i) enter into any written employment agreement with any employee providing
for annual cash compensation in excess of $50,000 or increase the compensation
of any of its officers or other key employees, except for such increases as are
required under existing plans or agreements as set forth on Section 6.1(i) of
the Sellers' Disclosure Schedule;
(j) adopt, grant, extend or increase the rate or terms of any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
to, for or with any of its officers or employees, except (i) increases required
by any applicable Law and (ii) increases required under existing plans or
agreements as set forth on Section 6.1(j) of the Sellers' Disclosure Schedule;
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(k) make any changes in any of its present financial accounting methods and
practices, except as required by changes in GAAP;
(l) make, authorize or enter into any agreement with respect to, any
capital expenditures other than capital expenditures not exceeding $500,000
individually or $1,000,000 in the aggregate;
(m) settle or compromise any Tax liability or make any Tax election;
provided, that Buyer's consent to such a settlement, compromise or election
shall not be unreasonably withheld or delayed;
(n) issue, sell, pledge or transfer, or propose to issue, sell, pledge or
transfer, any shares of its capital stock, or securities convertible into or
exchangeable or exercisable for, or options with respect to, or warrants to
purchase or Rights for, any shares of its capital stock;
(o) make any loans, advances or capital contributions to, or investments
in, any other Person other than in the ordinary course of business;
(p) mortgage or pledge any of its assets or properties, tangible or
intangible, or create any Lien with respect to any such asset or property;
(q) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization other
than the transactions contemplated by Section 7.10;
(r) discount or factor receivables or auction or sell assets below cost
other than in the ordinary course of business consistent with past practice; or
(s) agree or commit to do any of the foregoing.
6.2 Certain Actions. From the date hereof until the Effective Time, each of
the Sellers and the Company agree that it shall not, without the written consent
of Buyer (such consent not to be unreasonably withheld or delayed), knowingly
take any action that is intended or is reasonably likely to result in (a) any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any respect at any time at or prior to the Closing, (b) any of the
conditions to the Merger set forth in Article IX not being satisfied, or (c) a
breach or violation of any provision of this Agreement.
6.3 Access to Information. From the date hereof until the Closing Date, the
Company will (a) give, and will cause each of the Company's Subsidiaries to
give, Buyer, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to the offices,
properties, books and records, contracts, agreements, accountants, consultants
and other personnel of the Company and its Subsidiaries, (b) permit, and will
cause each of the Company's Subsidiaries to permit, Buyer and its authorized
representatives to conduct the inspections set forth on Exhibit K attached
hereto, (c) furnish, and will cause each of the Company's Subsidiaries to
furnish, to Buyer, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information relating to the Company or any of its Subsidiaries as such Persons
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may reasonably request including but not limited to, assessments, reports,
audits, studies, and data not previously provided to the Buyer concerning the
existence of Hazardous Materials at facilities or properties presently or
formerly owned, operated, leased, or used by the Company or any present or
former Subsidiary of the Company, or concerning compliance by the Company and
its Subsidiaries with, or liability under, any Environmental Laws and (d)
instruct the employees, counsel and financial advisors of the Company or any of
its Subsidiaries to cooperate with Buyer in their investigation of the Company
or any of its Subsidiaries. All such information and access shall be subject to
the Confidentiality Agreement dated as of April 11, 2002, between the Sellers
and Buyer in accordance with its terms (the "Confidentiality Agreement"). Any
investigation pursuant to this Section 6.3 shall be conducted in such manner as
not to interfere unreasonably with the conduct of the business of the Company or
its Subsidiaries. Buyer's obligations pursuant to the Confidentiality Agreement
shall survive the termination of this Agreement pursuant to Article X.
6.4 Notices of Certain Events. Each of the Company and the Sellers, as the
case may be, shall promptly notify Buyer and Buyer shall promptly notify the
Company of:
(a) Any written notice or other written communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;
(b) Any written notice or other written communication from any Governmental
Entity in connection with the transactions contemplated by this Agreement;
(c) Any material Litigation, involving or otherwise affecting the Company,
the Sellers, the Buyer or their Subsidiaries, as the case may be; and
(d) The occurrence of a Material Adverse Effect on the Company or the Buyer
or any of their Subsidiaries, as the case may be.
6.5 No Solicitation. From and after the date hereof until the Effective
Time or the termination of this Agreement, each of the Company and its
Subsidiaries and the Sellers shall not, and shall direct and cause their
respective officers, directors, employees, representatives, agents or Affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its Subsidiaries or the Sellers) not to,
directly or indirectly, initiate, solicit or knowingly encourage (including by
way of furnishing non-public information or assistance), or take any other
action to facilitate, any inquiries or the making or submission of any
Acquisition Proposal or enter into or maintain or continue discussions or
negotiate with any person or group in furtherance of such inquiries or to obtain
or induce any person or group to make or submit an Acquisition Proposal or agree
to or endorse any Acquisition Proposal or assist or participate in, facilitate
or knowingly encourage, any effort or attempt by any other Person or group to do
or seek any of the foregoing or authorize any of its officers, directors or
employees or any of its subsidiaries or Affiliates or any investment banker,
financial advisor, attorney, accountant or other representative or agent
retained by it or any of its subsidiaries to take any such action.
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6.6 Pre-Closing Transfer. Prior to the Closing, the parties shall have
executed a Stock Purchase Agreement in the form attached hereto as Exhibit F to
effect, as of the Closing, the sale, conveyance, assignment and delivery to a
newly formed Subsidiary of the Buyer those stock certificates of Go Credit
Corporation listed in Section 6.6 to the Sellers' Disclosure Schedule.
6.7 Award Program of the Company. The Company shall take all necessary
action (including, but not limited to, setting up a rabbi trust (the "Trust")
and fulfilling its tax withholding obligations) to implement and operate the
Deferred Stock Incentive Plan (substantially in the form attached to Section 6.7
of the Sellers' Disclosure Schedule), satisfactory to Buyer and subject to
Buyer's approval; provided, however, that such approval shall not be withheld
unless the Trust or Deferred Stock Incentive Plan materially differs from those
described in the PriceWaterhouseCoopers memorandum attached hereto as Exhibit L,
or would otherwise have a Material Adverse Effect to Buyer.
6.8 Share Holdback. (a) Subject to the terms of Article XI, in order to
provide a nonexclusive source of indemnification of the Buyer pursuant to
Article XI, the Sellers and the Company agree that the Sellers shall deposit the
number of shares of Buyer Common Stock equal to the quotient of (i) $20,000,000
divided by (ii) the Buyer Price (the "Escrow Shares") in an Escrow Account (the
"Escrow Account") pursuant to an Escrow Agreement substantially in the form
attached hereto as Exhibit G (the "Escrow Agreement") on the Closing Date.
Subject to any releases from escrow pursuant to the Escrow Agreement, such
Escrow Shares shall be held in the Escrow Account during such period of time as
set forth in the Escrow Agreement. In addition, at any time after the Closing
Date, the Sellers shall be permitted to substitute cash for Escrow Shares in
accordance with the terms of the Escrow Agreement. Any dividends or
distributions with respect to the Escrow Shares while held in the Escrow Account
shall be delivered to the Sellers through the Sellers' Representative pursuant
to the Escrow Agreement. Any payments made from the Escrow Shares on account of
any breach of this Agreement or otherwise pursuant to this Section 6.8 shall be
made at such time as set forth in the Escrow Agreement, and the value per share
of such Escrow Shares shall be the Terex FMV (subject to adjustment for any
stock splits, reverse splits, recapitalizations or similar transactions
occurring after the Closing) (as adjusted, the "Offset Price").
(b) Notwithstanding the foregoing, the Escrow Shares held in the Escrow
Account shall not be deemed the sole source of recourse by the Buyer for
indemnification under this Agreement, and the Sellers remain jointly and
severally liable in accordance with the terms of Article XI.
6.9 Closing Debt. On the Closing Date, the Closing Debt shall not be
greater than the Target Debt. In the event that the Closing Debt is greater than
the Target Debt, Buyer shall have the right to proceed to Closing, in which
event the Cash Consideration shall be reduced by amount equal to the difference
between the Closing Debt and the Target Debt.
6.10 Non-Competition. As an inducement for Buyer to execute this Agreement,
each of Xxxxxx Xxxxxxxxx, X. Xxxx Xxxxxxxx and F. Xxxxx Xxxxx has agreed with
Buyer that: (i) Xxxxxx Xxxxxxxxx shall execute a non-competition and
confidentiality agreement substantially the form attached as Exhibit H-1 hereto,
and (ii) each of X. Xxxx Bushnell and F. Xxxxx Xxxxx shall enter into amendments
to their change in control agreements in substantially the form attached hereto
as Exhibit H-2. In addition, the Sellers agree to use their reasonable efforts
to cause all other individuals who are a party to a change in control agreement
with the Company to enter into amendments to such change in control agreements,
each amended agreement in substantially the form attached as Exhibit H-3 hereto.
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6.11 Lease Agreements. The Company shall execute amendments to the Lease
Agreements in substantially the form attached as Exhibit I hereto.
6.12 Financial Information. The Sellers and the Company shall provide all
information, financial information and other data regarding the Company which is
necessary for Buyer to prepare, file and render effective the Registration
Statement.
6.13 Quarterly Financial Statements. Prior to the Closing, the Company
shall have delivered to Buyer (i) the Restated First Quarter Financial
Statements and (ii) the Second Quarter Financial Statements.
ARTICLE VII
COVENANTS OF BUYER
Buyer agrees that:
7.1 Certain Actions. From the date hereof until the Effective Time, Buyer
agrees that it shall not, without the written consent of the Sellers (such
consent not to be unreasonably withheld or delayed), knowingly take any action
that is intended or is reasonably likely to result in (a) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any respect at any time at or prior to the Closing, (b) any of the
conditions to the Merger set forth in Article IX not being satisfied, or (c) a
breach or violation of any provision of this Agreement.
7.2 Obligations Regarding Acquisition Subsidiary. Upon the terms and
subject to the conditions of this Agreement, Buyer shall cause Acquisition
Subsidiary to consummate the Merger hereunder and agrees that prior to the
Closing, Acquisition Subsidiary shall have no business and shall not conduct any
operations nor incur any liabilities of any kind or nature other than in
connection with the transactions contemplated by this Agreement.
7.3 Access To Records. Following the Closing, Buyer will (a) provide each
of the Sellers, their counsel, financial advisors and other authorized
representatives reasonable access during normal business hours to any applicable
properties, offices, records, files, documents and the like relating to the
Company and its Affiliates during the period prior to Closing that are
reasonably necessary in connection with Litigation involving any of the Sellers,
with any legal obligation owed by any of the Sellers to any Governmental Entity
or any present or former customer or account of the Company or its Affiliates
during the period prior to the Closing and (b) instruct the employees, counsel
and financial advisors of the Surviving Entity or any of its Subsidiaries to
cooperate with Sellers in their investigation; provided, that the above
contained in this Section 7.3 shall be subject to the execution and delivery by
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the Sellers of a confidentiality agreement substantially in the form of the
Confidentiality Agreement and that any investigation pursuant to this Section
7.3 shall be conducted in such manner as not to unreasonably interfere with the
conduct of the business of Buyer and the Surviving Entity.
7.4 Preparation of the Form S-3. Upon the later of (i) 10 Business Days
after Closing and (ii) seven Business Days after the date the Company provides
all information either requested by Buyer or otherwise required by the SEC for
inclusion in the Registration Statement, Buyer shall prepare and file with the
SEC the Registration Statement in connection with the resale of Stock
Consideration issued under this Agreement pursuant to the terms of the
Registration Rights Agreement. Each of the Sellers and Buyer shall use their
commercially reasonable efforts to have the Registration Statement declared
effective under the Securities Act as soon as practicable after the filing
thereof. Buyer shall take all reasonable and necessary action required to be
taken under any applicable securities Laws in connection with the issuance of
the Stock Consideration and the Sellers and the Company shall furnish all
information concerning the Company and the holders of Shares as may be
reasonably requested in connection with any such action.
7.5 Employee Arrangements. (a) Section 7.5 of the Sellers' Disclosure
Schedule sets forth, with respect to each employee of the Company and its
Subsidiaries, such employee's name, current and 2001 compensation (including
salary and any bonus), length of employment with the Company or its Subsidiary,
as the case may be, and his/her position with the Company or its Subsidiary.
Following the Effective Time, Buyer shall provide individuals who are employed
by the Company and its Subsidiaries as of the Effective Time and who remain
employed with Buyer or any Subsidiary of Buyer ("Affected Employees"), for so
long as such Affected Employees remain employed by Buyer or any Subsidiary of
Buyer, with employee benefits pursuant to employee benefit plans, programs,
policies or arrangements maintained by Buyer or any Subsidiary of Buyer
providing coverage and benefits which, in the aggregate, are no less favorable
than those provided to employees of Buyer or its Subsidiaries in positions
comparable to positions held by Affected Employees with Buyer or its
Subsidiaries from time to time after the Effective Time.
(b) Buyer will, or will cause a Subsidiary of Buyer to, give Affected
Employees full credit for purposes of eligibility, vesting and the determination
of the level of benefits under any employee benefit plans or arrangements
maintained by Buyer or any of its Subsidiaries for such Affected Employees'
service with the Company or any Subsidiary of the Company to the same extent
recognized by the Company immediately prior to the Effective Time; provided,
however, such service need not be credited to benefit accrual under any defined
benefit pension plan and to the extent that it would result in a duplication of
benefits.
(c) Buyer will, or will cause a Subsidiary of Buyer to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Affected
Employees under any welfare benefit plans that such employees may be eligible to
participate in after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such employees and that have
not been satisfied as of the Effective Time under any welfare plan maintained
for the Affected Employees immediately prior to the Effective Time, and (ii)
provide each Affected Employee with credit for any co-payments and deductibles
paid prior to the Effective Time in the year in which the Effective Time occurs
for purposes of satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time.
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(d) Following the Effective Time, Affected Employees will have the
opportunity to participate in Buyer's incentive plans (i) to the same extent as
employees of Buyer in positions comparable to positions held by the Affected
Employees are entitled to participate and (ii) in accordance with Buyer's
internal policies and in accordance with the terms, restrictions and eligibility
requirements of such plans.
(e) Following the Effective Time, Buyer will, or will cause a Subsidiary of
Buyer to, provide Affected Employees, for so long as such Affected Employees
remain employed with Buyer or any of its Subsidiaries, with annual base salaries
or rates of base pay comparable to the annual base salaries or rates of base pay
provided by Buyer or any of its Subsidiaries to employees of Buyer or any of its
Subsidiaries in positions comparable to positions held by Affected Employees
with Buyer or its Subsidiaries from time to time after the Effective Time.
7.6 Contingent Payment. (a) Subject to Section 7.6(d) below, if on any
Qualifying Date the Average Buyer Common Stock Price for the ten day period
ending on the applicable Qualifying Date is less than the Buyer Common Stock
Guaranteed Value, Buyer will pay the Sellers fully paid and nonassessable shares
of Buyer Common Stock, in an amount equal to the quotient of (A) the amount in
US dollars to be paid in accordance with Sections 7.6(b)(ii) or (iii), as the
case may be, divided by (B) the respective Average Qualifying Date Buyer Common
Stock Price for the ten day period ending on the applicable Qualifying Date
(each of which is hereinafter referred to as a "Contingent Payment"), in each
case, within thirty days after the applicable Qualifying Date. Subject to the
provisions of this Section 7.6, each Seller shall receive a portion of the
Contingent Payment equal to such Seller's Pro Rata Portion.
(b) The respective amount of any Contingent Payment shall be determined as
follows:
(i) If the Qualifying Date Multiple for the respective Qualifying Date
is equal to or greater than 1.15, then the Sellers shall not receive a
Contingent Payment for such Qualifying Date.
(ii) If the Qualifying Date Multiple for the respective Qualifying
Date is equal to or less than 1.00, then the Sellers shall receive the
Maximum Contingent Payment for the respective Qualifying Date.
(iii) If the Qualifying Date Multiple for the respective Qualifying
Date exceeds 1.00 but is less than 1.15, then the Contingent Payment shall
be calculated on the basis of the following formula:
MCPx[1.00-((QDM-1.00)/0.15)]
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(c) In the event that on or prior to the twenty-four month anniversary of
the Closing or during one of the time periods during which the Average
Qualifying Date Buyer Common Stock Price is calculated, Buyer (i) splits or
combines Buyer Common Stock outstanding; (ii) merges or consolidates with any
corporation in a transaction in which the other corporation is the surviving
entity; (iii) reorganizes, recapitalizes or reclassifies any of the shares of
Buyer Common Stock; or (iv) effects any transaction having a similar effect, the
parties shall co-operate in order to replace the calculation method set forth in
this Section 7.6 by another calculation method, which corresponds to the sense
and purpose of the calculation method initially set forth in this Section 7.6.
(d) Notwithstanding any other provision in this Section 7.6, the MCP for
each Qualifying Date shall be reduced in accordance with this Section 7.6(d), if
at any time prior to such Qualifying Date (each, a "Reduction Event"):
(i) the Buyer delivers a Release Notice to each of the Sellers or the
Sellers' Representative and the Sellers sell such Buyer Common Stock that
was the subject of such Release Notice, provided that the MCP shall only be
reduced with respect to those shares of Buyer Common Stock sold after the
delivery of the Release Notice;
(ii) the Buyer delivers a Release Notice and the Average Qualifying
Date Buyer Common Stock Price for any consecutive ten day period during the
Release Period exceeds the Buyer Common Stock Guaranteed Value, provided
that the MCP shall only be reduced with respect to those shares of Buyer
Common Stock which were the subject of such Release Notice;
(iii) the Sellers sell, transfer, convey, pledge or otherwise dispose
of shares of Buyer Common Stock pursuant to Section 8.4(b)(i), provided
that the MCP shall only be reduced with respect to those shares of Buyer
Common Stock which were transferred, conveyed, pledged or otherwise
disposed of pursuant to Section 8.4(b)(i); or
(iv) the Sellers enter into any hedging transaction permitted under
Section 7.6(g) and such transaction assures an amount per share of Buyer
Common Stock in excess of the Buyer Common Stock Guaranteed Value, provided
that the MCP shall only be reduced with respect to those shares of Buyer
Common Stock which were the subject of such hedging transaction.
In the event of a Reduction Event, the MCP for such Qualifying Date shall
be reduced by a fraction, the numerator of which is the total number of shares
of Buyer Common Stock which are the subject of the Reduction Event for such
Qualifying Date and the denominator of which is the total number of Restricted
Shares for such Qualifying Date.
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(e) For purposes of this Section 7.6, any shares of Buyer Common Stock sold
after the delivery of a Release Notice shall be deemed to relate first to the
next Qualifying Date and then to the next Qualifying Date thereafter.
(f) In calculating the amounts due under this Section 7.6, all numbers
shall be rounded to the nearest thousandth.
(g) During the five Trading Days immediately prior to and the ten Trading
Days during each period in which the Average Qualifying Date Buyer Common Price
is calculated (the "Trading Restriction Period"), each Seller agrees that
neither it nor its Affiliates or related entities will sell, transfer, assign,
convey, pledge or otherwise dispose of any Buyer Common Stock, or engage in any
form of hedging transaction related to Buyer Common Stock, including but not
limited to the purchase or sale of any puts, calls or enter into any transaction
that has the effect of or is equivalent to engaging in Short Sales. For purposes
hereof, a "Short Sale" by a Seller or its Affiliate or related entity shall mean
a sale of Buyer Common Stock by such person that is made at any time, whether or
not there is an equivalent offsetting long position in the Buyer Common Stock
held by such person. Notwithstanding the foregoing, the Sellers may enter into
hedging transactions, including a (i) loan or (ii) pledge of such Buyer Common
Stock in connection with such hedging transaction, at any time other than during
the Trading Restriction Period.
7.7 Acces Industrie Receivable Contingent Payment. (a) Following the
Closing and irrespective of any indemnification payment made pursuant to Section
11.2(f), Buyer shall, or shall cause its Affiliates to, use its commercially
reasonable efforts to collect the Acces Industrie Receivable outstanding as of
the Closing Date; provided, however, that Buyer shall not be required to pursue
collection of the Acces Industrie Receivable through Litigation. Within 20 days
following the end of each Post-Closing Calendar Half (as defined below), Buyer
shall deliver to the Sellers a certificate (the "Receivables Certificate"),
executed by an officer of Buyer, setting forth (i) the amount of the Acces
Industrie Receivable collected during the previous Post-Closing Calendar Half,
(ii) the amount of any Acces Foreclosure Proceeds received by Buyer during the
previous Post-Closing Calendar Half, (iii) the amount of the Acces Industrie
Receivable then-outstanding, (iv) the amount, if any, of the Acces Industrie
Receivable past due, and (v) the amount, if any, of the Acces Industrie
Receivable which is more than 90 days past due (the "Access Receivable Past Due
Amount"). Any dispute as to the contents of a Receivables Certificate shall be
satisfied by the parties as if it were a "claim" in accordance with Section
11.4.
(b) Within 10 Business Days following the delivery of each Receivable
Certificate, Buyer shall issue to Sellers (the "Acces Receivable Contingent
Payment") a number of fully paid and nonassessable shares of Buyer Common Stock
equal to the quotient of (A) the Sellers' Applicable Percentage times the sum of
(i) the amount in US dollars collected during such Post-Closing Calendar Half
with respect to the Acces Industrie Receivable and (ii) the amount in US dollars
of any Acces Foreclosure Proceeds received by Buyer during such Post-Closing
Calendar Half, each as set forth on the Receivables Certificate, divided by (B)
the average of the closing prices of Buyer Common Stock on the NYSE, as reported
by The Wall Street Journal (national edition) (or if not reported thereby, as
reported by any other authoritative source) for ten consecutive Trading Days
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ending on the last day of such Post-Closing Calendar Half; provided, however,
that in no event shall the Sellers receive any amount in excess of the Sellers'
Applicable Percentage of the outstanding amount due under the Acces Industrie
Receivable as of the Closing Date. To the extent that, following the Closing,
Buyer or the Company forgives any amount due under the Acces Industrie
Receivable and receives an economic benefit (other than a Tax benefit) for such
forgiveness, such amounts shall be deemed to have been collected for purposes of
this Section 7.7, but only to the extent of such economic benefit; provided,
that the indemnity provided for in Section 11.2(f) will not be deemed to be an
economic benefit for purposes of this Section 7.7(b). Subject to the provisions
of this Section 7.7, each Seller shall receive a portion of the Acces Industrie
Receivable Contingent Payment equal to the Seller's Pro Rata Portion. For
purposes of this Section 7.7, "Post-Closing Calendar Half" means each six-month
period ending during the period which begins after the Closing Date and which
ends prior to, or includes, the last date on which payments are due under the
Acces Industrie Receivable, provided that the first Post-Closing Calendar Half
shall be deemed to begin on the Closing Date.
7.8 Officers' and Directors' Indemnification. The Buyer shall indemnify and
hold harmless to the fullest extent permitted under the Company Articles as of
the Closing Date each present and former director and officer of the Company and
its Subsidiaries, determined as of the Closing (the "Covered D&O Indemnitees"),
against any costs and expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages (including, but not limited to,
punitive, aggravated or exemplary) or liabilities incurred in their capacities
as such in connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of or
pertaining to matters existing or occurring prior to or at the Closing
(including as a result of the consummation of the transactions contemplated
hereby), whether asserted or claimed prior to, or after the Closing, provided
that the Covered D&O Indemnitees shall not be indemnified for any claim, action,
suit, proceeding or investigation which (i) is brought by or on behalf of a
Seller or (ii) arises out of a Covered D&O Indemnitee's gross negligence,
willful misconduct or fraud.
7.9 Tax Matters. Buyer shall not take any Prohibited Action.
Notwithstanding any other cause of action or claim Sellers may have, in the
event Buyer takes any Prohibited Action, then Sellers' Damages resulting
therefrom, whether pursuant to this Agreement, any certification or
representations made by Buyer, any tax opinion received by Sellers or otherwise
shall be governed solely by this Section 7.9. Notwithstanding anything in this
Agreement, any other agreement, any certification or representations made by
Buyer, any tax opinion received by Sellers, or any other cause of action or
claim Sellers may have, in the event Buyer takes one or more Prohibited Actions
and obtains a Tax Opinion relating to such Prohibited Action then the maximum
Damages payable by Buyer to Sellers, in the aggregate, as a result of the taking
of such Prohibit Action shall not exceed $1,000,000. In the event Buyer does not
obtain a Tax Opinion, the Sellers reserve all rights (contractual or otherwise)
to which they are entitled as a matter of Law arising from such Prohibited
Action.
7.10 Recapitalization. Notwithstanding any other provision in this
Agreement to the contrary, at any time prior to the Closing the Company shall
have the right to recapitalize its outstanding capital stock into Class A Shares
(the "Class A Shares") and Class B Shares (the "Class B Shares") and to exchange
all or a portion of the Class A Shares for Class B Shares on a share for share
basis (the "Recapitalization"). Following the Recapitalization, any reference in
this Agreement to "Seller Shares" shall mean "Class A Shares," any reference to
"Trust Shares" shall mean "Class B Shares," and any reference to "Shares" shall
mean, collectively, Class A Shares and Class B Shares.
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ARTICLE VIII
COVENANTS OF BUYER AND THE SELLERS
Each of the Sellers and Buyer agree that:
8.1 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of Buyer, Acquisition Subsidiary, the Sellers and the Company
shall use their reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
desirable under applicable Laws and agreements to consummate as promptly as
practicable the transactions contemplated by this Agreement, and each shall
cooperate fully with the other parties hereto to that end.
8.2 Certain Filings. (a) Buyer and each of the Sellers shall, and the
Sellers shall cause the Company and its Subsidiaries to, cooperate with one
another (i) in determining whether any action by or in respect of, or filing
with, any Governmental Entity is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any material contracts or
agreements, in connection with the consummation of the transactions contemplated
by this Agreement and (ii) in taking such actions or making any such filings,
furnishing information required in connection therewith and, as soon as
practicable after the date hereof, seeking to obtain any such actions, consents,
approvals or waivers.
(b) As soon as practicable following the date hereof, Buyer and, to the
extent legally required, each of the Sellers shall file, and the Sellers shall
cause the Company to cooperate with Buyer in filing, with the Department of
Justice, the filings necessary under the HSR Act.
8.3 Public Announcements. Neither Buyer, on the one hand, nor any of the
Sellers, on the other hand, shall, and the Sellers shall not permit the Company
and its Subsidiaries to, without the consent of the other, issue any press
release or make any public statement with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other,
except for, communications with employees of the Company and its Subsidiaries
and except as may be required by applicable Law, any rule or regulation of any
Governmental Entity, or any listing agreement with any national securities
exchange.
8.4 Lock-up; Registration Rights Agreement. (a) Unless otherwise agreed to
in writing by Buyer in the form of a Release Notice or subject to clause (b) of
this Section 8.4, during the twenty-four month period immediately following the
Closing Date (the "Restriction Period"), none of the Sellers or the Trust shall
be permitted to sell, transfer, convey, pledge or otherwise dispose of any of
shares of Buyer Common Stock received by them pursuant to this Agreement.
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(b) Notwithstanding the foregoing, during the Restriction Period, each of
the Sellers shall be permitted to sell, transfer, convey, pledge or otherwise
dispose of its Pro Rata Portion of: (i) the number of shares of Buyer Common
Stock (rounded down to the nearest whole share) equal to the quotient of (A) the
difference between $25 million less the total Cash Consideration divided by (B)
the Buyer Price, (ii) up to one-half of the Stock Consideration following the
twelve month anniversary of the Closing Date, (iii) up to three quarters of the
Stock Consideration (taking into account the amount of Stock Consideration
released pursuant to clause (ii) above) following the eighteen month anniversary
of the Closing Date and (iv) all of the Stock Consideration following the
twenty-four month anniversary of the Closing Date. The operative agreement of
the Trust shall provide that the Trust is not permitted to sell, transfer,
convey, pledge or otherwise dispose of the Trust Consideration until the
twenty-four month anniversary of the Closing Date, at which point the Trust
Consideration will no longer be subject to the restrictions set forth in this
Section 8.4.
(c) At the Closing, Buyer and each of the Sellers shall enter into the
Registration Rights Agreement, substantially in the form of Exhibit A hereto
(the "Registration Rights Agreement").
(d) Notwithstanding anything to the contrary in Section 8.4(a), Sellers
shall not be subject to the restrictions set forth in Section 8.4(a), and such
restrictions shall terminate in their entirety, upon the Buyer taking a
Prohibited Action without obtaining a Should Opinion with respect to such
Prohibited Action.
(e) Notwithstanding the provisions set forth in Section 8.4(a), in the
event the Sellers are required to indemnify a Buyer Indemnitee pursuant to
Article XI, the restrictions set forth in Section 8.4(a) shall terminate, but
only with respect to the number of shares of Buyer Common Stock in the Escrow
Account necessary to enable the Sellers to pay the indemnification obligations
pursuant to Article XI.
8.5 Confidentiality. Prior to the Closing Date and after any termination of
this Agreement, the Confidentiality Agreement will remain in effect.
8.6 Tax Representation Letter. Officers of the Buyer, Acquisition
Subsidiary and the Company and each of the Sellers shall execute and deliver to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to the Company, a certificate
substantially in the form attached hereto as Exhibit C, D or E, as applicable,
and other appropriate representations at such time or times as may be reasonably
requested by Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, including
contemporaneously with the execution of this Agreement and at the Effective
Time, in connection with the delivery of the tax opinion delivered by Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP. None of the Buyer, Acquisition Subsidiary and
the Company shall take or cause to be taken any action which would cause to be
untrue (or fail to take or cause not to be taken any action which would cause to
be untrue) any of such Person's certificates or representations.
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ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Party's Obligation to Effect the Merger. The respective
obligation of each of Buyer and the Sellers to effect the Merger is subject to
the fulfillment or written waiver by Buyer and each of the Sellers prior to the
Closing of each of the following conditions:
(a) Governmental and Regulatory Consents. All approvals and authorizations
of, filings and registrations with, and notifications to, all Governmental
Entities required for the consummation of the Merger shall have been obtained or
made and shall be in full force and effect and all waiting periods required by
Law shall have expired, including the expiration or termination of any
applicable waiting period under the HSR Act.
(b) No Injunction. No Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute or Judgment
(whether temporary, preliminary or permanent) that is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(c) Go Credit. The sale, conveyance, assignment and delivery of the stock
of Go Credit Corporation as set forth in the Stock Purchase Agreement, in the
form attached hereto as Exhibit F, shall have been consummated in the manner
described therein.
9.2 Further Conditions to Obligation of the Sellers and the Company. The
obligation of each of the Sellers and the Company to consummate the Merger is
also subject to the fulfillment or written waiver by each of the Sellers,
individually and on behalf of the Company, prior to the Closing of each of the
following conditions:
(a) Representations and Warranties. The representations and warranties of
Buyer set forth in this Agreement (disregarding all references in such
representations and warranties to "materiality," "material adverse change,"
"Material Adverse Effect" and "in all material respects" or similar expressions)
shall be true and correct at and as of the Closing as though such
representations and warranties were made at and as of such date (except to the
extent expressly made as of an earlier date, in which case, as of such date),
except (i) changes specifically permitted by this Agreement or resulting from
any transaction expressly consented to in writing by the Sellers and (ii) where
the failure of such representations and warranties to be so true and correct
does not have a Material Adverse Effect on Buyer.
(b) Performance of Obligations of Buyer. Buyer shall have performed the
obligations required to be performed by it under this Agreement in all material
respects at or prior to the Closing, and the Sellers shall have received a
certificate, dated the Closing Date, signed on behalf of Buyer by an appropriate
officer of Buyer to such effect.
(c) Officer's Certificate. Buyer shall have delivered to the Sellers an
officer's certificate to the effect that each of the conditions specified above
in Sections 9.2(a) and 9.2(b) is satisfied in all respects.
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(d) Registration Rights Agreement. Buyer shall have duly executed and
delivered the Registration Rights Agreement substantially in the form attached
hereto as Exhibit A.
(e) Tax Opinion. There shall have been, after the date hereof, no changes
in Law (including the Code, the Treasury Regulations, revenue rulings or other
written administrative or judicial interpretations but excluding private letter
rulings and technical advice memoranda except to the extent they are clearly
applicable because their facts and circumstances are substantially similar to
the facts and circumstances of the Merger) that would prevent Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, counsel to the Company, from rendering an opinion
substantially to the effect that the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, provided, that if there have
been any such changes of Law after the date hereof, the parties hereto shall use
commercially reasonable efforts to make changes to the transactions contemplated
by this Agreement so that Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP can render
its opinion, provided further, that no party shall be required to accept any
changes to the transactions contemplated by this paragraph (e) if such changes
alter in more than an insignificant manner the economics of the transactions
contemplated by this Agreement or the covenants, representations or restrictions
on Buyer or Acquisition Subsidiary contained within this Agreement. In rendering
such opinion, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP shall be entitled to rely
upon representations, covenants and warranties of Buyer, Acquisition Subsidiary,
Sellers and the Company as set forth in Exhibits C, D and E.
(f) Tax Certificate. An officer of the Buyer and an officer of Acquisition
Subsidiary shall have delivered a duly executed certificate, dated as of the
Closing Date, reaffirming the accuracy of the statements on the certificate
(attached hereto as Exhibit C) executed by an officer of the Buyer and an
officer of Acquisition Subsidiary as of the date hereof.
9.3 Further Conditions to Obligation of Buyer and Acquisition Subsidiary.
The obligation of Buyer to effect the Merger and to cause Acquisition Subsidiary
to do so is also subject to the fulfillment or written waiver by Buyer prior to
the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Sellers and the Company set forth in this Agreement (disregarding all
references in such representations and warranties to "materiality," "material
adverse change," "Material Adverse Effect" and "in all material respects" or
similar expressions) shall be true and correct at and as of the Closing as
though such representations and warranties were made at and as of such date
(except to the extent expressly made as of an earlier date, in which case, as of
such date) except (i) changes specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Buyer and
(ii) where the failure of such representations and warranties to be so true and
correct does not have, in the aggregate, a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole.
(b) Performance of Obligations of the Sellers. The Sellers and the Company
shall have performed the obligations required to be performed by them under this
Agreement in all material respects at or prior to the Closing, and Buyer shall
have received, prior to the Closing, a certificate, dated the Closing Date,
signed by each of the Sellers and the Company to such effect.
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(c) Officer's Certificate. Each of the Sellers and the Company shall have
delivered to Buyer an officer's certificate to the effect that each of the
conditions specified above in Sections 9.3(a) and 9.3(b) is satisfied in all
respects and certifying the Closing Debt of the Company.
(d) Escrow Agreement. Each of the Sellers shall have duly executed and
delivered the Escrow Agreement in the form attached hereto as Exhibit G.
(e) Amended Lease Agreements. The Sellers and the Company shall have
executed amendments to the Lease Agreements in substantially the form attached
hereto as Exhibit I.
(f) Non-Competition Agreement; Termination of Employment Agreement. Xxxxxx
Xxxxxxxxx shall have executed: (i) a non-competition and confidentiality
agreement substantially in the form attached hereto as H-1 and (ii) an agreement
or other documentation either superceding or terminating his existing employment
agreement with Genie Holdings, Inc., such agreement or documentation to be in a
form reasonably satisfactory to Buyer.
(g) Amended Change in Control Agreements. X. Xxxx Xxxxxxxx and F. Xxxxx
Xxxxx shall have executed amendments to their change in control agreements, each
amendment to be substantially in the form attached hereto as Exhibit H-2. In
addition, at least five of the seven employees set forth in Section 2.5 of the
Sellers Disclosure Schedule shall have executed amendments to their change in
control agreements, each substantially in the form attached hereto as Exhibit
H-3.
(h) Non-Foreign Status. Each Seller shall have provided Buyer with an
affidavit of non-foreign status, in form and substance reasonably acceptable to
Buyer, that complies with the requirements of Section 1445 of the Code.
(i) Merger Opinion. The Buyer shall have received an executed opinion from
Xxxxxxx Coie LLP, dated as of the Closing Date, addressing the opinions set
forth on Exhibit M attached hereto.
(j) Trust Lock-Up. The operative agreement of the Trust shall provide that,
prior to the second anniversary of the Closing Date, the Trust is prohibited
from selling, transferring, conveying, pledging or otherwise disposing of the
Trust Consideration.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated and the transaction
contemplated hereby may be abandoned at any time prior to the Closing Date:
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(a) by mutual written agreement of Buyer and the Sellers (any action under
this clause (a) by the Sellers to be made upon the written direction of the
Sellers' Representative);
(b) at any time prior to the Closing, by Buyer or the Sellers (any action
under this clause (b) by the Sellers to be made upon the written direction of
the Sellers' Representative) in the event of either: (i) a breach by Buyer, on
the one hand, or the Sellers or the Company, on the other hand, of any
representation or warranty contained herein such that the conditions set forth
in Section 9.2(a) or 9.3(a), respectively, would not be satisfied, and which
breach cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach, or (ii) a breach by Buyer,
on the one hand, or the Sellers or the Company, on the other hand, of any of the
covenants or agreements contained herein such that the conditions set forth in
Section 9.2(b) or 9.3(b), respectively, would not be satisfied, and which breach
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach;
(c) by any of Buyer or the Sellers (any action under this clause (c) by the
Sellers to be made only upon the written notice of the Sellers' Representative)
if there shall be any final Law enacted that makes consummation of the
transactions contemplated hereby illegal or otherwise prohibited or if
consummation of the transactions contemplated hereby would violate any
nonappealable Judgment of any court or Governmental Authority having competent
jurisdiction;
(d) by any of Buyer or the Sellers (any action under this clause (d) by the
Sellers to be made only upon the written notice of the Sellers' Representative)
if the Merger shall not have been consummated on or before November 30, 2002;
provided, however, that the right to terminate this Agreement under this Section
10.1(d) shall not be available to (i) the Sellers or the Company, if the Sellers
or the Company has breached any of their respective representations, warranties
or covenants hereunder in any material respect and such breach has been the
cause of or resulted in the failure of the Closing to occur on or before such
date or (ii) Buyer, if Buyer or Acquisition Subsidiary has breached any of their
respective representations, warranties or covenants hereunder in any material
respect and such breach has been the cause of or resulted in the failure of the
Closing to occur on or before such date;
(e) at any time prior to the Closing, by the Sellers (any action under this
clause (e) shall be made only upon written notice by the Sellers through the
Sellers' Representative) if the average closing price of Buyer Common Stock on
the NYSE as reported in The Wall Street Journal (national edition) during any
consecutive ten day period is less than 25% below the Lowest Buyer Price;
provided, that Buyer may agree to provide additional shares of Buyer Common
Stock on the Closing Date in order to maintain the economics of the transaction
at 25% of the Lowest Buyer Price or greater; or
(f) at any time prior to the Closing, by the Buyer if the average closing
price of Buyer Common Stock on the NYSE as reported in The Wall Street Journal
(national edition) during any consecutive ten day period is more than 25% above
the Highest Buyer Price' provided that Seller may agree to forfeit shares of
Buyer Common Stock on the Closing Date in order to maintain the economics of the
transaction at 25% of the Highest Buyer Price or less.
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The party desiring to terminate this Agreement pursuant to Sections
10.1(b), 10.1(c), 10.1(d), 10.1(e) or 10.1(f) shall give written notice of such
termination to the other parties and this Agreement shall forthwith terminate
and shall become null and void and of no further effect, and the transactions
contemplated hereby shall be abandoned without further action by the parties;
provided that each party shall redeliver all documents, work papers and other
materials of the other parties relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same, and all confidential information received by any party
hereto with respect to the other party shall be treated in accordance with the
existing Confidentiality Agreement between the parties; and all filings,
applications and other submissions made pursuant hereto shall, to the extent
reasonably practicable, be withdrawn from the agency or other person to which
made.
10.2 Effect of Termination. If this Agreement is terminated as permitted by
Section 10.l, this Agreement shall forthwith become void, there shall be no
liability under this Agreement on the part of any of the parties hereto or any
of their respective stockholders, directors, officers, agents and counsel and
all rights and obligations of each party hereto shall cease except as set forth
in Section 12.1; provided, however, that nothing herein shall relieve any party
from liability for, or eliminate the rights of any other party relating to, any
willful breach of this Agreement.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.1 Survival. Each of the representations and warranties of the parties
hereto contained in this Agreement or in any certificate or other writing
required to be delivered pursuant hereto shall survive the Closing and continue
until 5:00 p.m. Pacific Time, on the date which is twenty-four months following
the Closing Date; provided that the representations and warranties contained in
Sections 3.1, 3.2, 3.4, 4.2, 4.13(a), 4.13(e) and 5.2 shall survive
indefinitely; provided further that the representations and warranties contained
in Section 4.18 shall survive until the three-year anniversary of the Closing
Date. After the expiration of such period, any claim by a party hereto based
upon any such representation or warranty shall be of no further force and
effect, except to the extent a party has asserted a claim in accordance with
this Article XI for breach of any such representation or warranty prior to the
expiration of such period, in which event any representation or warranty to
which such claim relates shall survive with respect to such claim until such
claim is resolved as provided in this Article XI. This Section 11.1 shall not
limit any covenant or agreement of the parties that contemplates performance
after the Closing.
11.2 Indemnification. (a) Subject to the limitations and procedures
described herein, the Sellers, jointly and severally, shall indemnify and hold
harmless Buyer and the Surviving Entity and their respective Affiliates,
directors, officers, employees, agents and controlling Persons (other than the
Sellers), and each of the heirs, executors, successors and assigns of any of the
foregoing (each, a "Buyer Indemnitee" and, collectively, the "Buyer
Indemnitees"), against and from any and all Damages incurred or suffered by
Buyer Indemnitees (i) as a result of a breach of any of the representations and
warranties of any or all of the Sellers set forth in Article III and IV of this
Agreement or (ii) as a result or arising out of a breach by any or all of the
Sellers of any covenant or agreement of any or all of the Sellers contained in
this Agreement not waived in writing by Buyer.
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(b) Following the Closing, except in the case of common law fraud or with
respect to matters for which the remedy of specific performance, injunctive
relief or other nonmonetary equitable remedies are available, the sole and
exclusive remedy of Buyer with respect to any and all Claims arising from breach
of this Agreement by any Seller shall be pursuant to the indemnification
provisions set forth in this Article XI.
(c) No Buyer Indemnitee shall be entitled to indemnity under Section
11.2(a)(i) until the aggregate amount of the Damages for which all Buyer
Indemnitees would, but for this Section 11.2(c), be entitled exceeds an amount
equal to $2,000,000 (other than Damages arising out of or resulting from
Sections 3.1, 3.2, 4.2, 4.13(a) or 4.13(e)), and then only to the extent of any
such excess and in no event shall the Sellers' aggregate obligation to indemnify
Buyer Indemnitees with respect to claims under this Agreement exceed
$20,000,000. Notwithstanding anything to the contrary in this Agreement, the
Sellers shall have no obligation to indemnify any Buyer Indemnitee for (i)
incidental, consequential, special or punitive damages except to the extent such
damages are awarded by a court or Governmental Entity, or (ii) Damages arising
out of such Buyer Indemnitee's gross negligence or willful misconduct.
(d) Buyer shall not have the right to withhold and deduct any sum that may
be owed to any Buyer Indemnitee under this Article XI from amounts otherwise
payable by Buyer to Sellers pursuant to Sections 6.8, 7.5 or 7.7.
(e) The Buyer and Acquisition Subsidiary, on the one hand, and the Company
and the Sellers, on the other hand, have agreed that for purposes of determining
Damages incurred or suffered by the Buyer Indemnitees as a result of a breach of
Sections 4.13(a) and 4.13(e) (the "Tax Representations"), the Tax
Representations shall be construed as if they were not qualified by the terms
"material," "materially" and "Material Adverse Effect".
(f) (i) In the event that there exists any Acces Receivable Past Due
Amount, the Sellers shall indemnify and hold harmless Buyer and the Surviving
Entity and the Buyer Indemnitees, in an amount equal to the lesser of (A) $4.5
million and (B) the Buyer's Applicable Percentage multiplied by the Acces
Receivable Past Due Amount and such indemnification amounts paid hereunder shall
be included in the calculation of the maximum indemnity of $20,000,000 as set
forth in Section 11.2(c), provided further that this Section 11.2(f) shall not
be subject to any other limitations set forth in Sections 11.2(a), (b) and (c).
The Sellers shall be obligated to pay to Buyer and the Surviving Entity and the
Buyer Indemnitees the Acces Receivable Past Due Amount within five Business Days
of receipt of the Receivables Certificate; provided, however, that the initial
payment pursuant to this Section 11.2(f) shall be made no earlier than the first
anniversary of the Closing, provided, further, such payments shall not be made
more frequently than once every six months thereafter.
(ii) Buyer hereby agrees that, in the event that Sellers make any
indemnification payments to Buyer pursuant to Section 11.2(f)(i) with respect to
any Acces Receivable Past Due Amount and Buyer subsequently receives any amount
with respect to any Acces Receivable Past Due Amount (the "Subsequent Collection
Amount"), Buyer shall pay to the Sellers the amount (the "Rebate") equal to the
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excess, if any, of (A) the amount of Seller's total indemnity payments under
Section 11.2(f) with respect to any such Access Receivable Past Due Amount,
minus (B) the amount Sellers' indemnity payments would have been under Section
11.2(f)(ii) if such amount had been timely paid by Acces Industrie (or its
Affiliates). The Rebate shall increase the then remaining amount of the
$20,000,000 overall cap on Sellers' aggregate obligation to indemnify the Buyer
Indemnitees under Section 11.2(c). In connection with determining the amount
that the Sellers would be entitled to receive pursuant to this Section
11.2(f)(ii), any Acces Foreclosure Proceeds shall be treated as a Subsequent
Collection Amount.
11.3 Indemnification Procedures. (a) Any party claiming a right to
indemnification hereunder shall give the other party from whom indemnification
is sought prompt written notice of any claim, demand, action, suit, proceeding
or discovery of fact (each, a "Claim") upon which the indemnified party intends
to base a Claim for indemnification under this Section 11.3, provided, however,
that no failure to give such notice shall excuse any indemnifying party from any
obligation hereunder except to the extent the indemnifying party is materially
prejudiced by such failure.
(b) Promptly after receipt by a Buyer Indemnitee under this Section of
notice of the commencement of any action, such Buyer Indemnitee will, if a Claim
in respect of such action is to be made against any indemnifying party under
this Section, notify the Sellers' Representative in writing of the commencement
of such action. Such notice shall include the amount of such Claim and a
reasonably detailed statement as to the basis for the assertion of the Claim.
Upon receipt of such notice the indemnifying party or parties shall have the
right to assume and control the defense of such action with counsel of its
choice; provided, however, the indemnifying party or parties shall not have the
right to assume and control the defense of any actions which include a Claim for
equitable relief; provided, further, however, in the case of any matter for
which the Buyer Indemnitees shall be entitled to assume and control the defense,
the indemnifying party shall have the right to participate in the defense of any
action and to be represented by counsel of its or their own selection in
connection with such actions and to be kept fully and completely informed by the
indemnifying party and its counsel as to the status of the action at all stages
of the proceedings in such action, at the indemnifying party's cost and expense.
The Sellers hereby agree that the Sellers' Representative shall at all times be
primarily responsible for the assumption and control of any such defense on
behalf of the Sellers; provided, however, that the foregoing shall not create
any individual liability on the part of the Sellers' Representative for any such
indemnification Claim nor make such representative responsible for advancing
costs or legal fees in connection with any such defense. The Buyer Indemnitee
shall have the right to participate in the defense of any action and to be
represented by counsel of its or their own selection in connection with such
action and to be kept fully and completely informed by the indemnifying party
and its counsel as to the status of the action at all stages of the proceedings
in such action, all at the Buyer Indemnitee's cost and expense. The Buyer
Indemnitee shall cooperate with the indemnifying party in any defense which the
indemnifying party assumes. Buyer shall be entitled to settle any action solely
for monetary damages with respect to which it controls the defense; provided
that the Sellers shall have no indemnification obligation with respect to any
such settlement made without the Sellers' Representative's prior written consent
which consent shall not be unreasonably withheld. Except as provided above, the
Buyer Indemnitees shall not be entitled to admit any liability with respect to,
or settle, compromise or discharge any Claim or consent to the entry of any
Judgment with respect thereto without the Sellers' Representative's prior
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written consent, which consent shall not be unreasonably withheld The Sellers'
Representative shall be entitled to settle any action solely for monetary
damages with respect to which they control the defense, provided that such
settlement includes as an unconditional term thereof the delivery by claimant or
plaintiff to the Buyer Indemnitee of a written release from all liability in
respect of such Claim.
(c) The Buyer Indemnitees shall make available to the Sellers'
Representative and its counsel and accountants, all books and records of the
Buyer Indemnitees relating to any action, suit or proceeding and the parties
agree to render to each other such assistance as may reasonably be requested in
order to insure the proper and adequate defense of any action, suit or
proceeding including reasonable access to employees and officers.
(d) Notwithstanding anything to the contrary in Section 11.3(b) hereof, if
a Claim with respect to Taxes is to be made against any indemnifying party under
this Section:
(i) The Sellers' Representative shall have the sole right to represent
the Company's and each of the Company's Subsidiary's interests in any such
Claim relating to Taxes that relates to taxable periods ending on or before
the Closing Date and to employ counsel of its choice at its expense,
provided, however, that Sellers' Representative may not agree to any
settlement or compromise thereof that affects (or that might reasonably be
expected to affect) Buyer's, the Company's or any Company Subsidiary's
liability for Taxes for any period after the Closing Date without the prior
written consent of Buyer, which consent shall not be unreasonably withheld
or delayed. The Buyer Indemnitee shall have the right to participate in the
defense of any action and to be represented by counsel of its or their own
selection in connection with such action and to be kept fully and
completely informed by the indemnifying party and its counsel as to the
status of the action at all stages of the proceedings in such action, all
at the Buyer Indemnitee's cost and expense. With the written consent of
Seller, Buyer may assume control of such entire Tax Claim (at Buyer's
expense).
(ii) Buyer shall have the sole right to represent the Company's and
each of the Company Subsidiaries' interests in any such Claim relating to
Taxes that relates to a Straddle Period or a taxable period beginning on or
after the Closing Date and to employ counsel of its choice at its expense,
provided, however, that Sellers' Representative shall have the right to be
kept fully and completely informed by Buyer and its counsel as to the
status of the action at all stages of the proceeding and, with the written
consent of Buyer, at Sellers' expense, may assume control of such entire
Tax Claim and provided further that Sellers' Representative, at its sole
expense, shall have the right to participate in the defense of any action
(and be represented by counsel of its own selection in connection with such
action) if such action (A) relates in any material part to Taxes
attributable to the portion of such Straddle Period deemed to end on or
before the Closing Date, or (B) relates to the tax treatment of the Merger
as a "reorganization" within the meaning of Section 368(a) of the Code.
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(iii) None of Buyer, any of its Affiliates and Subsidiaries, the
Company or any Company Subsidiary may agree to any settlement or compromise
of any such Claim that affects (or might reasonably be expected to affect)
Sellers' liability for Damages relating to Taxes under this Agreement
without the prior written consent of the Sellers' Representative, which
consent shall not be unreasonably withheld or delayed.
(iv) Notwithstanding anything to the contrary in Sections 11.3(d)(ii)
or (iii), with respect to any particular Claim relating to Taxes (other
than any Claim that relates to the tax treatment of the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code), Buyer
may, after receipt of a 30-day letter or other written proposed adjustment
to Taxes by a taxing authority, elect to fix Sellers' liability for Damages
related to Taxes (even though the underlying Tax matter has not been
finally settled or otherwise closed with the applicable tax authority) by
submitting in writing a proposed settlement amount (the "Proposed
Settlement") to Sellers' Representative. If such Proposed Settlement amount
is accepted by Sellers' Representative within 10 Business Days of receipt
thereof, then it shall become final and binding on the Sellers, the Company
and the Buyer and otherwise have the effects described in the last two
sentences of this clause (iv), below. If Sellers' Representative fails to
respond to Buyer within 10 Business Days of receipt of the Proposed
Settlement, then no acceptance will be presumed. If Sellers' Representative
does not timely accept in writing such Proposed Settlement, then a "Big
Four" independent accounting firm mutually acceptable to the Sellers and
Buyer shall determine within 20 Business Days the amount, if any, that
should be paid by Seller to Buyer in satisfaction of that particular Tax
Claim; provided, however, that in no case shall such amount exceed the
amount set forth in the Proposed Settlement. The fees and expenses of such
accounting firm (i) in the case of Proposed Settlement amounts greater than
or equal to $100,000, shall be borne equally by the Sellers and Buyer, and
(ii) in the case of Proposed Settlement amounts less than $100,000, shall
be borne equally by the Sellers and Buyers unless the Final Settlement (as
defined below) is less than 85% of the Proposed Settlement, in which case
Buyer shall pay all such fees and expenses. Upon written determination of
the final settlement (whether by consent of Buyer and Sellers'
Representative or by resolution by the independent accounting firm) (the
"Final Settlement"), Buyer's Claim for Damages under this Article XI with
respect to that particular Claim relating to Taxes shall be treated as
resolved in the amount set forth in the Final Settlement, shall be final
and binding, and Sellers shall pay such amount to Buyer or Buyer shall
enforce its Claim for such amount against Sellers. Furthermore, after such
Final Settlement, Sellers shall have no consent rights or other rights as
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to the settlement, compromise or other disposition of the underlying Tax
matter giving rise to the Claim, provided, that Buyer shall report the
ultimate outcome of any such Claim to the Sellers' Representative in
writing within 20 Business Days of such Claim's settlement or other
disposition with a Governmental Entity or judicial court, and if the Claim
is ultimately settled or otherwise resolved for an amount that is less than
the amount of the Final Settlement, then Buyer shall promptly transfer to
Seller's Representative an amount in cash equal to the difference between
the amount of the Final Settlement and the amount of the settlement,
judgment or other resolution.
11.4 Claims Resolution Procedure. The parties shall act in good faith as
expeditiously as possible to resolve any and all Claims. To the extent any
Claims are made (by written notice to the Sellers' Representative) but not
Finally Resolved (as defined in the Escrow Agreement) on or before the
appropriate survival date as identified in Section 11.1 (the "Claims Resolution
Date"), then such claims and any other disputes, controversies or claims,
arising out of or relating to this Agreement or the breach, termination or
validity thereof, whether such claims arise in contract, tort or otherwise
("Disputes") shall, on the demand of any party, be resolved in accordance with
the following arbitration procedure:
(a) The arbitration shall be held and the award shall be issued in New
York, New York in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") then in effect (the "Rules") by three
neutral and impartial arbitrators. Subject to Section 11.4(c) below, each of
Buyer, on the one hand, and the Sellers, on the other hand, shall select and
appoint an arbitrator within thirty (30) days after the receipt by respondent of
a copy of the demand for arbitration, and shall promptly give the other party
notice of such appointment. The two arbitrators so selected shall select a third
arbitrator, who shall serve as chair of the arbitral tribunal, within fifteen
days after the appointment of the second arbitrator, and shall promptly give
written notice to the parties hereto and the AAA of such selection within ten
(10) days after the Claims Resolution Date. No arbitrator shall be an officer,
director, employee, Affiliate or relative of, or have any prior business or
personal relationship with either the Buyer or any Subsidiary thereof, any of
their respective officers and directors, the Company, its Subsidiaries or the
Sellers.
(b) The arbitrators shall render an award within one hundred and twenty
days after the appointment of the third arbitrator. Such time period maybe
extended with the consent of the parties or by the arbitrators for good cause
shown. The award shall be in writing, shall state the findings of fact and
conclusions of law on which it is based, and shall be signed by each of the
arbitrators. The award shall be final and binding on the parties and may be
enforced in any court having jurisdiction. Once the award is made, a Claim shall
be Finally Resolved for purposes of the Escrow Agreement.
(c) If either party shall refuse or neglect to select and appoint an
arbitrator within ten days after the Claims Resolution Date in accordance with
Section 11.4(a), then the second arbitrator shall be appointed by the AAA in
accordance with the listing, ranking and striking procedure in the Rules. Any
arbitrator-chair appointed by the AAA shall be a retired judge or a practicing
attorney with no less than fifteen years of experience and an experienced
arbitrator.
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(d) The parties shall initially bear their own costs and legal fees and the
fees and expenses of the arbitrators shall be initially shared equally by Buyer,
on the one hand, and the Sellers, on the other, provided that the arbitrators
may, in their own discretion, award reasonable legal fees and expenses and the
costs of arbitration to the prevailing party or parties in the arbitration. The
parties hereto agree that they will cooperate to allow any arbitration hereunder
to occur promptly and be concluded as expeditiously as is reasonably possible.
(e) Judgment of any arbitration conducted hereunder may be entered on the
arbitrators' award in any court having jurisdiction, and each party hereby
consents to the jurisdiction of the federal and New York state courts sitting in
New York County for this purpose.
11.5 Satisfaction of Indemnity Claims. Subject to the limitations in this
Article XI and the Escrow Agreement, any claim for indemnification shall be
settled in the following manner:
(a) Buyer shall deliver a Claim Notice (as defined in the Escrow Agreement)
in accordance with the terms of the Escrow Agreement. The Claim Notice shall
include the amount of any claim for indemnification, the calculation of such
amount in reasonable detail and the grounds for such indemnification.
(b) upon receipt of a Claim Notice, the Sellers shall have the right to
elect to satisfy any claim for indemnification with cash or other property in
lieu of a sale or substitution of Escrow Shares in accordance with the terms of
the Escrow Agreement, which election must be made by delivery of a notice by the
Sellers' Representative to the Buyer within ten days of receipt of a Claim
Notice or the time the applicable Claim is Finally Resolved, whichever is later;
(c) in the event the Sellers elect to satisfy such claim for
indemnification with cash or other property, the Sellers shall deliver, through
the Sellers' Representative, such cash or other property in an amount equal to
the Damages within ten Business Days' of the Claim being Finally Resolved, in
which case the number of Escrow Shares equal to the Damages divided by the
Offset Price shall be released to Sellers' Representative and Buyer shall
deliver to the Sellers' Representative a Release Notice releasing such Escrow
Shares from the Lock-up Provisions;
(d) in the event the Sellers do not elect to satisfy such claim for
indemnification with cash or property pursuant to clause (c), then after such
Claim is Finally Resolved, the Escrow Agent shall reduce the Escrow Fund and
deliver to Buyer cash equal to the Damages, if the Sellers have elected to
effect a substitution in accordance with the terms of the Escrow Agreement or
shall reduce the Escrow Fund by the amount of Escrow Shares equal to the Damages
divided by the Offset Price and such Escrow Shares shall be sold in accordance
with the terms of the Escrow Agreement and the proceeds therefrom delivered by
the Escrow Agent to Buyer; provided, however, that if the amount of Damages
exceeds the amount represented by the Escrow Shares remaining in the Escrow
Fund, then the Sellers, through the Sellers' Representative, shall deliver cash
or other property in the amount equal to (i) the Damages minus (ii) the amount
determined by multiplying the Offset Price by the number of Escrow Shares
remaining in the Escrow Account.
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11.6 Adjustment to Merger Consideration. For Tax purposes, any payment by
Buyer or the Sellers under this Agreement will be an adjustment to the Merger
Consideration.
ARTICLE XII
MISCELLANEOUS
12.1 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the termination of this Agreement if
this Agreement is terminated prior to the Closing; provided, however, if this
Agreement is terminated prior to the Closing, the agreements of the parties
contained in Confidentiality Agreement and in Section 10.2 and in this Article
XII shall survive such termination.
12.2 Notices. All notices, consents, requests, approvals and other
communications to any party hereunder shall be in writing (including fax and
similar writings) and shall be deemed effective and validly given when sent by
fax (with confirmation in writing via first class U.S. mail), upon personal
delivery or on the first Business Day after being sent by reputable overnight
courier service (delivery charges prepaid) to the parties at the fax number or
address set forth below or at such other fax number or address as a party may
designate to the other parties:
(a) if to the Sellers, c/o Sellers' Representative to:
Xxxxxx Xxxxxxxxx
c/o Genie Industries, Inc.
00000 X.X. 00xx Xxxxxx
P.O. Box 97030
Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
and
X. Xxxx Bushnell
c/o Genie Industries, Inc.
00000 X.X. 00xx Xxxxxx
P.O. Box 97030
Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
and
F. Xxxxx Xxxxx
c/o Genie Industries, Inc.
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00000 X.X. 00xx Xxxxxx
P.O. Box 97030
Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
(b) if to the Company, to:
Genie Holdings Inc.
00000 X.X. 00xx Xxxxxx
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
(c) if to Buyer or Acquisition Subsidiary, to:
Terex Corporation
000 Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X Xxxxx, Esq.
with a copy to:
Xxxxx Xxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
12.3 The Sellers' Representative. Each Seller shall execute and deliver an
agreement substantially in the form attached hereto as Exhibit B irrevocably
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appointing the Person set forth in Section 12.3 of the Sellers' Disclosure
Schedule (the "Sellers' Representative") as his agent and true and lawful
attorney-in-fact to act in the name of and for and on behalf of such Seller in
connection with all matters arising out of, resulting from, contemplated by or
related or incident to this Agreement from and after the Closing, Buyer shall
have the absolute right and authority to rely upon the acts taken or omitted to
be taken by the Sellers' Representative on behalf of the Sellers and Buyer shall
have no duty to inquire as to the acts and omissions of the Sellers'
Representative. The Sellers' Representative shall not be liable to any of the
Sellers or their Affiliates for any decisions made or action taken by the
Sellers' Representative in good faith absent gross negligence by the Sellers'
Representative.
12.4 No Waivers; Amendments. (a) No failure or delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(b) Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by all parties hereto.
12.5 Fees and Expenses . All costs and expenses incurred in connection
with, or in anticipation of, this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such cost or expense, provided,
however, the Company shall pay the fees and expenses of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, PriceWaterhouseCoopers and Deutsche Bank Securities Inc., in
each case only to the extent such fees and expenses are incurred in connection
with the transactions contemplated hereby.
12.6 Successors and Assigns. The parties hereto may not assign any of their
rights and obligations hereunder without the prior written consent of the other
parties to this Agreement. This Agreement shall be binding upon the Company, the
Sellers and Buyer and their respective successors and assigns.
12.7 Governing Law. This Agreement shall be governed, enforced and
construed in accordance with the laws of the State of New York without giving
effect to any choice or conflict of laws principles or rules thereof which might
result in the application of the laws of any other jurisdiction, except to the
extent the WBCA shall be mandatorily applicable to the Merger. Each of the
parties hereto expressly and irrevocably (a) consents to submit itself to the
exclusive jurisdiction of any federal court located in the State of New York or
any New York state court in the event any dispute arises out of or relates to
this Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request or leave from any such court, including, without
limitation, a motion to dismiss on the grounds of forum non conveniens, (c)
agrees that it will not bring any action arising out of or relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than a federal court sitting in the State of New York or a New York state
court, and (d) waives any right to a trial by jury with respect to any claim,
counterclaim or action arising out of or in connection with this Agreement or
the transactions contemplated hereby.
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12.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
12.9 Counterparts; Effectiveness. This Agreement may be executed in any
number of counterparts and by fax, each of which when so executed and delivered
shall be deemed an original with the same effect as if the signatures thereto
and hereto were upon the same instrument.
12.10 Interpretation. Throughout this Agreement, nouns, pronouns and verbs
shall be construed as masculine, feminine, neuter, singular or plural, whichever
shall be applicable. Unless otherwise specified, all references herein to
"Section" shall refer to corresponding provisions of this Agreement or the
Disclosure Schedule, as the case may be, whenever the words "include,"
"includes" or including" are used in this Agreement, they are deemed to be
followed by the words "without limitation." The phrase "to the knowledge of the
Sellers" or "to the knowledge of Buyer," or any similar phrase shall mean such
facts and other information that as of the date hereof are actually known to any
executive officer or director of the Company or Buyer, as the case may be, after
reasonable investigation into the matter in question. In the event an ambiguity
or question of either intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement. The parties agree that all amounts payable
hereunder shall be payable in United States dollars.
12.11 Severability. The invalidity or unenforceability of any provisions of
this Agreement in any jurisdiction shall not affect the validity, legality or
enforceability of the remainder of this Agreement in such jurisdiction or the
validity, legality or enforceability of this Agreement, including any such
provision, in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.
12.12 Headings. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
any provisions hereof.
12.13 Entire Agreement. This Agreement (including the Disclosure
Schedules), the Registration Rights Agreement, the Escrow Agreement and the Go
Credit Stock Purchase Agreement constitute the entire agreement and
understanding among the parties hereto and supersede any and all prior
agreements and understandings among or between the parties, both written or
oral, relating to the subject matter hereof.
12.14 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 and immediate injunctive relief, without the necessity of proving the
inadequacy of money damages as a remedy, in addition to any other remedy at law
or equity.
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12.15 No Third-Party Beneficiaries. Unless otherwise stated herein, this
Agreement shall not benefit or create any right of action in or on behalf of any
Person other than the parties hereto; provided, however, that this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and permitted assigns.
-61-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
TEREX CORPORATION
By:
----------------------------
Name
Title:
MAGIC ACQUISITION CORP.
By:
----------------------------
Name
Title:
GENIE HOLDINGS, INC.
By:
----------------------------
Name
Title:
XXXXXX XXXXXXXXX
-----------------------------
X. XXXX XXXXXXXX
-----------------------------
F. XXXXX XXXXX
-----------------------------
XXXXXXXXX LIMITED PARTNERSHIP
-----------------------------
Name:
Title:
BUSHNELL LIMITED PARTNERSHIP
-----------------------------
Name:
Title:
X. XXXXX LIMITED PARTNERSHIP
-----------------------------
Name:
Title:
