EXHIBIT 10.62
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SECURITIES PURCHASE AGREEMENT
among
IMPAC GROUP, INC.,
BT CAPITAL INVESTORS, L.P., and
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
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Dated
January 11, 1999
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GLOSSARY
(Not Part of Agreement)
DEFINED TERM SECTION NUMBER PAGE
"accredited investor" 3.06
"Action" 2.08
"Agreement" Introductory Paragraph
"Benefit Arrangement" 2.11(a)
"BTI" Introductory Paragraph
"Certificate" 2.01(ii)
"Closing" 1.02
"Closing Date" 1.02
"Code" 2.11(a)
"Common Stock" 2.02(a)
"Company" Introductory Paragraph
"Confidential Information" 7.01
"Current Credit Agreement" 7.03(g)
"Disclosure Schedule" Recitals
"Employee Benefit Plan" 2.11(a)
"Environmental Laws" 2.15
"ERISA" 2.11(a)
"ERISA Affiliate" 2.11(a)
"Exchange Act" 7.03(b)
"Existing Financing Arrangements" 7.03(g)
"Existing Restricted Payment Covenants" 7.03(g)
"Extended Returns" 2.14(b)
"Financial Statements" 4.05(a)
DEFINED TERM SECTION NUMBER PAGE
"Financing Arrangements" 7.03(g)
"Foreign Plan" 2.11(a)
"GAAP" 2.09(b)
"group health plan" 2.11(b)(vii)
"Heritage Ownership Amount" 2.02(b)
"Increased Dividend Rate" 7.03(a)
"Indemnification Obligation" 7.03(d)
"Indemnified Party" 7.03(e)
"Indemnifying Party" 7.03(e)
"Indenture" 7.03(g)
"Information Systems and Equipment" 2.29(c)
"Intellectual Property Rights" 2.16(b)
"key person" 4.06
"Liens" 2.12(a)
"Losses" 7.03(b)
"Material Adverse Effect" 2.01(ii)
"Material Contracts" 2.19
"Multiemployer Plan" 2.11(a)
"nonconforming group health plan" 2.11(b)(vii)
"November Balance Sheet" 2.09
"Operative Documents" 2.01(ii)
"Observer" 7.02
"PBGC" 2.11(b)(ii)
"Phoenix" Introductory Paragraph
"Preferred" Recitals
DEFINED TERM SECTION NUMBER PAGE
"Purchaser" Introductory Paragraph
"registered investment company" 2.32
"Registered Rights" 2.16(a)
"Schedule" Recitals
"Securities" Recitals
"Securities Act" 2.05(a)(iv)
"Securities Purchase" 1.01
"Series A Common Stock" 2.02(a)
"Series B Common Stock" 2.02(a)
"Service" 2.11(b)(i)
"significant" 2.24
"Solvent" 2.21
"Stockholders Agreement" Recitals
"Subsidiary" 2.03(a)
"Tax" 2.14(a)
"Taxes" 2.14(a)
"Tax Returns" 2.14(a)
"Trade Secrets" 2.16(c)
"Transfer" 3.08(a)
"United States real property holding
corporation" 2.14(h)
"Violation" 2.30(b)
"Warrant Shares" Recitals
"Warrants" Recitals
"welfare benefit plan" 2.11(b)(viii)
"Year 2000 Complaint" 2.29(b)
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ARTICLE I SALE AND PURCHASE............................................................................ 2
SECTION 1.01. Agreement to Sell and to Purchase; Purchase Price................................ 2
SECTION 1.02. Closing.......................................................................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................ 2
SECTION 2.01. Organization and Standing........................................................ 2
SECTION 2.02. Capital Stock.................................................................... 3
SECTION 2.03. Subsidiaries..................................................................... 3
SECTION 2.04. Authorization.................................................................... 4
SECTION 2.05. Valid Issuances of Shares........................................................ 4
SECTION 2.06. Governmental Consents............................................................ 5
SECTION 2.07. No Violation; Consents........................................................... 5
SECTION 2.08. Litigation....................................................................... 6
SECTION 2.09. Financial Statements; Undisclosed Liabilities.................................... 6
SECTION 2.10. Change in Condition.............................................................. 7
SECTION 2.11. Employee Benefit Plans........................................................... 7
SECTION 2.12. Interests in Real Property....................................................... 9
SECTION 2.13. Compliance with Law.............................................................. 10
SECTION 2.14. Tax Matters...................................................................... 11
SECTION 2.15. Environmental Matters............................................................ 12
SECTION 2.16. Intellectual Property............................................................ 13
SECTION 2.17. Registration Rights.............................................................. 15
SECTION 2.18. Insurance........................................................................ 15
SECTION 2.19. Material Contracts............................................................... 15
SECTION 2.20. Contracts........................................................................ 17
SECTION 2.21. Solvency ........................................................................ 17
SECTION 2.22. Private Offering................................................................. 17
SECTION 2.23. Loans and Advances............................................................... 17
SECTION 2.24. Significant Customers and Suppliers.............................................. 18
SECTION 2.25. Disclosure....................................................................... 18
SECTION 2.26. Officers ........................................................................ 18
SECTION 2.27. Transactions With Affiliates..................................................... 18
SECTION 2.28. Employees........................................................................ 18
SECTION 2.29. Year 2000........................................................................ 19
SECTION 2.30. Labor Relations.................................................................. 19
SECTION 2.31. Absence of Questionable Payments................................................. 20
SECTION 2.32. Investment Company Act........................................................... 21
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ARTICLE III REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PURCHASERS............................... 21
SECTION 3.01. Authorization.................................................................... 21
SECTION 3.02. Consents......................................................................... 21
SECTION 3.03. Purchase Entirely for Own Account................................................ 22
SECTION 3.04. Disclosure of Information........................................................ 22
SECTION 3.05. Investment Experience............................................................ 22
SECTION 3.06. Accredited Investor.............................................................. 22
SECTION 3.07. Restricted Securities............................................................ 22
SECTION 3.08. Transfers of Securities.......................................................... 22
ARTICLE IV COVENANTS OF THE COMPANY..................................................................... 23
SECTION 4.01. Operative Documents.............................................................. 23
SECTION 4.02. Compliance with Conditions....................................................... 23
SECTION 4.03. Consents and Approvals........................................................... 24
SECTION 4.04. Filing of Restated Certificate of Incorporation.................................. 24
SECTION 4.05. Reports.......................................................................... 24
SECTION 4.06. Properties, Business, Insurance.................................................. 24
SECTION 4.07. Reserve for Exercise of Warrants................................................. 25
SECTION 4.08. Corporate Existence.............................................................. 25
SECTION 4.09. Restrictive Agreements Prohibited................................................ 25
SECTION 4.10. Year 2000 Reporting.............................................................. 25
SECTION 4.11. Environmental Authorizations..................................................... 25
ARTICLE V COVENANTS OF THE PURCHASERS.................................................................. 26
SECTION 5.01. Agreement to Take Necessary and Desirable Actions................................ 26
SECTION 5.02. Compliance with Conditions; Best Efforts......................................... 26
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING.............................................................. 26
SECTION 6.01. Conditions to the Company's Obligations.......................................... 26
SECTION 6.02. Conditions To Purchasers' Obligations............................................ 27
ARTICLE VII MISCELLANEOUS................................................................................ 28
SECTION 7.01. Confidentiality.................................................................. 28
SECTION 7.02. Board Visitation Rights.......................................................... 28
SECTION 7.03. Survival; Indemnification........................................................ 28
SECTION 7.04. Assignment; Restrictions on Transfer; No Third Party Beneficiaries............... 32
SECTION 7.05. Counterparts..................................................................... 32
SECTION 7.06. Titles and Subtitles............................................................. 32
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SECTION 7.07. Notices.......................................................................... 32
SECTION 7.08. Payment of Fees and Expenses..................................................... 33
SECTION 7.09. Severability..................................................................... 33
SECTION 7.10. GOVERNING LAW; CONSENT TO JURISDICTION........................................... 33
SECTION 7.11. Entire Agreement................................................................. 34
SECTION 7.12. Waivers and Extensions........................................................... 34
SECTION 7.13. Titles and Headings.............................................................. 34
SECTION 7.14. Exhibits and Schedules........................................................... 34
SECTION 7.15. Press Releases and Public Announcements.......................................... 34
SECTION 7.16. Remedies Cumulative.............................................................. 34
SECTION 7.17. Several Liability of the Purchasers.............................................. 34
SECTION 7.18. Brokers.......................................................................... 35
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EXHIBITS
Exhibit A Form of Warrant
Exhibit B Stockholder Agreement
Exhibit C Certificate
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SECURITIES PURCHASE AGREEMENT
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SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of January
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11, 1999, by and between IMPAC Group, Inc. (the "Company"), a Delaware
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corporation, BT Capital Investors, L.P. ("BTI"), Phoenix Home Life Mutual
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Insurance Company ("Phoenix" and, together with BTI, each a "Purchaser", and
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collectively the "Purchasers").
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W I T N E S S E T H:
WHEREAS, the Purchasers desire to purchase (i) shares of the Company's
Redeemable Preferred Stock (the "Preferred") with an aggregate liquidation
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preference of $20,000,000 at the issuance thereof and (ii) detachable, ten-year
warrants (in the form attached hereto as Exhibit A, the "Warrants" and together
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with the Preferred, the "Securities") to purchase the number of shares of Common
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Stock (as defined in 2.02) representing 3.5% of total Common Stock of the
Company (on a fully diluted basis, calculated as provided in Schedule 2.02) on
the Closing Date (the "Warrant Shares") from the Company, and the Company
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desires to issue and sell the Securities to the Purchasers, in each case upon
the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the parties desire to set forth the objectives and principles
which will govern their relations and responsibilities with respect to each
other by entering into concurrently with the sale and purchase of securities
hereunder a stockholders agreement, in the form attached hereto as Exhibit B
(the "Stockholders Agreement").
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WHEREAS, in connection with the negotiation and preparation of this
Agreement, the Company has prepared and is separately delivering to the
Purchasers a disclosure schedule dated the date hereof (the "Disclosure
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Schedule" with any reference in this Agreement to a "Schedule" being a reference
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to the Disclosure Schedule).
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows.
ARTICLE I
SALE AND PURCHASE
SECTION 1.01. Agreement to Sell and to Purchase; Purchase Price. On
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the Closing Date (as defined in Section 1.02) and upon the terms and subject to
the conditions set forth in this Agreement, the Company shall issue and sell to
each Purchaser, and each Purchaser shall purchase and accept from the Company,
such amount of Securities for the purchase price payable in immediately
available funds, as is indicated on each Purchaser's signature page attached
hereto (the "Securities Purchase").
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SECTION 1.02. Closing. The closing of the sale and purchase of the
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Securities (the "Closing") shall take place at 10:00 a.m., local time, on
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January 11, 1999, or at such other time and date as the parties hereto shall
agree in writing (the "Closing Date"), at the offices of Paul, Hastings,
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Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
place as the parties hereto shall agree in writing. At the Closing, (a) each
Purchaser shall, not later than the Closing Date, deposit into a bank account
designated by the Company, by wire transfer of immediately available funds, an
amount equal to the aggregate purchase price of the Securities being purchased
by such Purchaser from the Company, and (b) the Company shall deliver to each
Purchaser, against payment of the purchase price therefor, stock certificates
and Warrants representing the Securities being purchased by such Purchaser in
definitive form and registered in such Purchaser's name, each in a single
certificate or in such other denominations (including fractional shares) as such
Purchaser shall request not later than three business days prior to the Closing
Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to each Purchaser as
follows:
SECTION 2.01. Organization and Standing. The Company is duly
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incorporated, validly existing and in good standing as a domestic corporation
under the laws of the State of Delaware and has all requisite corporate power
and authority to own its properties and assets and to carry on its business as
it is now being conducted. The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of its business makes such
qualification necessary, except where the failure to so qualify or be in good
standing would not have a material adverse effect on (i) the business,
operations, properties, prospects or financial condition of the Company, as the
case may be or (ii) the Company's ability to perform its obligations under this
Agreement, the
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Stockholders Agreement, the Fourth Amended and Restated Certificate of
Incorporation of the Company (a copy of which is attached hereto as Exhibit C,
the "Certificate"), or the Warrants (collectively, the "Operative Documents") (a
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material adverse effect on clauses (i) or (ii), each, a "Material Adverse
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Effect"). The Company has made available to the Purchasers a correct and
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complete copy of its By-Laws, as amended to the date of this Agreement.
SECTION 2.02. Capital Stock.
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(a) The authorized capital stock of the Company consists on the date
hereof, and will consist at the Closing, of 1,000,000 shares of Series A Common
Stock, $0.001 par value (the "Series A Common Stock"), 100,000 shares of Series
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B Common Stock, par value $0.001 per share (the "Series B Common Stock" and
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together with the Series A Common Stock, the "Common Stock"), of which
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166,158.13 shares will be issued and outstanding immediately following the
Closing (after giving effect to the repurchase of shares of Common Stock
contemplated by the Heritage Repurchase Agreement (as defined in the
Certificate), and 50,000 shares of Preferred, of which 20,000 shares will be
issued and outstanding immediately following the Closing. The outstanding
shares of the Company's Common Stock have been duly authorized, validly issued,
and are fully paid and nonassessable. Except as set forth on Schedule 2.02, at
the date hereof, and immediately following the Closing, there are and will be no
outstanding options, warrants, agreements, conversion rights, preemptive rights
or other rights to subscribe for or to purchase any shares of Common Stock or
other capital stock of the Company. Except as contemplated by the Stockholders
Agreement or as set forth on Schedule 2.02, there are no restrictions upon the
voting or transfer of any shares of the Company's Common Stock pursuant to the
Company's Certificate, By-Laws or other governing documents or any agreement or
other instruments to which the Company is a party or by which the Company is
bound.
(b) On the date hereof, Affiliates of Heritage Partners Management Co.
Inc. d/b/a Heritage Partners, Inc. own 125,871.35 shares of Series A Common
Stock and 4,500 shares of Series B Common Stock (prior to giving effect to the
repurchase of shares of Common Stock contemplated by the Heritage Repurchase
Agreement). After giving effect to the repurchase of shares of Common Stock
contemplated by the Heritage Repurchase Agreement, Affiliates of Heritage
Partners Management Co. Inc., d/b/a Heritage Partners, Inc., will own 100,283.98
shares of Common Stock (the "Heritage Ownership Amount").
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SECTION 2.03. Subsidiaries.
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(a) Schedule 2.03(a) sets forth a complete and correct list of each
corporation (or other entity) of which the Company owns, directly or indirectly,
shares of capital stock (or other shares of equity interests) having in the
aggregate 50% or more of the total combined voting power of the issued and
outstanding shares of capital stock (or other shares of equity interests)
entitled to vote generally in the election of directors (or the analogous
governing body of such an
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entity) of such corporation (hereinafter referred to collectively as
"Subsidiaries" and individually as a "Subsidiary") and the percentage of such
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voting power owned by the Company.
(b) Each of the Subsidiaries is duly incorporated, validly existing
and, except as set forth on Schedule 2.03(b), in good standing under the laws of
its jurisdiction of incorporation and has all requisite corporate power and
authority to own its properties and assets and to conduct its business as now
conducted. Each Subsidiary is duly qualified to do business as a foreign
corporation in every jurisdiction in which the character of the properties owned
or leased by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to so qualify would not have a
Material Adverse Effect. The outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and except for any directors' qualifying shares and except as set
forth on Schedule 2.03(b) are owned of record and beneficially, directly or
indirectly, by the Company, free and clear of any pledges, liens, claims,
charges, security interests or other encumbrances. Except as contemplated by
the Stockholders Agreement or as set forth on Schedule 2.03(b), there are no
outstanding options, warrants, agreements, conversion rights, preemptive rights
or other rights to subscribe for, purchase or otherwise acquire any issued or
unissued shares of capital stock of any Subsidiaries.
SECTION 2.04. Authorization. Except as noted on Schedule 2.04, (A)
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corporate action on the part of the Company, its directors and shareholders
necessary for the authorization, execution and delivery by the Company of the
Operative Documents, the performance of all obligations of the Company hereunder
and thereunder and the authorization, issuance and delivery of the Securities
being sold hereunder, has been taken or will be taken prior to the Closing, (B)
this Agreement and the other Operative Documents constitute valid and legally
binding obligations of the Company, enforceable in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies and (iii) certain indemnification and contribution provisions in the
Stockholders Agreement may be limited by considerations of public policy and (C)
to the best knowledge of the Company, no party to any Operative Document is in
breach of or in default thereunder and no event or circumstance has occurred
which, with or without the giving of notice or lapse of time or both, could
result in a right of termination in respect thereof.
SECTION 2.05. Valid Issuances of Shares.
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(a) The shares of Preferred being purchased hereunder, when issued,
sold and delivered in accordance with the terms hereof for the consideration
expressed herein, will be (i) duly and validly issued, (ii) fully paid and
nonassessable, (iii) free of preemptive or similar rights to subscribe for or to
purchase any capital stock or other securities or equity interests of the
Company, and (iv) free of restrictions on transfer other than those set forth in
this Agreement, the
4
other Operative Documents or federal and state securities laws. The Warrant
Shares have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Warrants, will be (i) duly and validly issued,
(ii) fully paid and nonassessable, (iii) free of preemptive or similar rights to
subscribe for or to purchase any capital stock or other securities or equity
interests of the Company, and (iv) free of restrictions on transfer other than
those set forth in this Agreement, the other Operative Documents or federal and
state securities laws. Based on the representations and warranties of the
Purchasers herein, at the Closing the Securities will have been issued in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "Securities Act") and the
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registration and qualification requirements of all applicable state securities
laws, or in compliance with applicable exemptions therefrom.
(b) Based on the representations and warranties of the holders of the
outstanding capital stock of the Company, such shares of such capital stock, and
all outstanding options and other securities of the Company have been issued in
compliance with the Securities Act and the registration and qualification
requirements of all applicable state securities laws, or in compliance with
applicable exemptions therefrom.
SECTION 2.06. Governmental Consents. Based on the representations and
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warranties of the Purchasers herein, except as set forth in Schedule 2.06, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, local or provincial
governmental authority on the part of the Company is required in connection with
the consummation of the transactions contemplated by this Agreement or any other
Operative Document, other than pursuant to applicable federal and state
securities laws, which filings will be made on or before the required deadline
therefor. The foregoing should not be construed as a representation or warranty
as to the capacity of any Purchaser to purchase the Securities or a limitation
of any Purchaser's representation and warranty pursuant to Section 3.02.
SECTION 2.07. No Violation; Consents. Based on the representations
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and warranties of the Purchase herein, the execution, delivery and performance
by the Company of this Agreement and the other Operative Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby does not and will not contravene the applicable provisions of any law,
statute, rule, regulation, order, writ, injunction, judgment or decree of any
court or other governmental or regulatory instrumentality to which the Company
is bound, except for any such contraventions that could not reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule
2.07, the execution, delivery and performance by the Company of this Agreement
and other Operative Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby (i) will not (A) violate, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any contract, lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which the Company is a party or by
which the Company is bound or
5
to which the Company's properties or assets is subject, or (B) result in the
creation or imposition of any pledge, lien, charge or encumbrance of any kind
whatsoever upon any of the properties or assets of the Company, except for any
such defaults, pledges, liens, charges or encumbrances that could not reasonably
be expected to have a Material Adverse Effect, and (ii) will not violate any
provision of the Certificate or By-Laws of the Company.
SECTION 2.08. Litigation. Except as set forth in Schedule 2.08, there
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is no action, suit, proceeding, claim, arbitration or investigation (each, an
"Action") pending or, to the best of the Company's knowledge, currently
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threatened against the Company or any of its Subsidiaries, any of their
activities, properties or assets or, to the best of the Company's knowledge,
against any officer, director or employee of the Company or any of its
Subsidiaries in connection with such officer's, director's or employee's
relationship with, or actions taken on behalf of the Company or such Subsidiary,
which, if decided adversely to the Company or such Subsidiary or such officer,
director or employee, would have a Material Adverse Effect. By way of example
but not by way of limitation, there are no Actions pending or, to the best of
the Company's knowledge, threatened relating to the prior employment of any of
the Company's or any of its Subsidiaries' employees or consultants, their use in
connection with the Company's or any of its Subsidiaries' business or any
information, technology or techniques allegedly proprietary to any of their
former employers, clients or other parties, or their obligations under any
agreements with prior employers, clients or other parties, except for any such
pending or threatened Action which, if decided adversely to the Company, would
not have a Material Adverse Effect. Except as set forth in Schedule 2.08, none
of the Company or its Subsidiaries is a party to or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality and there is no Action by the Company or any of its
Subsidiaries currently pending or which the Company or any of the Subsidiaries
intends to initiate.
SECTION 2.09. Financial Statements; Undisclosed Liabilities.
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(a) The Company has heretofore delivered to the Purchasers and
included as Schedule 2.09 are the unaudited balance sheet (the "November Balance
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Sheet") and statement of income of the Company as of and for the one month
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period ended November 30, 1998. Such financial statements (a) were prepared in
accordance with the books and records of the Company; (b) subject to the absence
of notes thereto, were prepared in accordance with United States Generally
Accepted Accounting Principles ("GAAP"); (c) fairly present the Company's
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financial condition and the results of its operations as of the date thereof and
the period covered thereby; and (d) include all adjustments which the Company
considers necessary for a fair presentation, subject to normal year-end accruals
and adjustments. Except with respect to the transactions disclosed in Schedule
2.09(d), the Company has no material liabilities and there are no material
contingent liabilities not disclosed in the November Balance Sheet, except
current liabilities incurred in the ordinary course of business subsequent to
November 30, 1998 and any obligations arising under contracts entered into since
November 30, 1998 and listed on
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Schedule 2.11, Schedule 2.12, Schedule 2.18, Schedule 2.19 or Schedule 2.27 and
any other liabilities (including contingent liabilities) that could not
individually or in the aggregate be reasonably expected to have a Material
Adverse Effect.
(b) Attached as Schedule 2.09 (b) is a combined statement of income
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of the Company for the eleven month period ended November 30, 1998 (the
"Combined Statement"). The Combined Statement has been prepared by combining
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the Company's historical income statement for the eleven month period ended
November 30, 1998 with the results of operations for AGI Incorporated for the
period from January 1, 1998 through March 12, 1998 and the results of operations
of Xxxxxxx Robor plc for the period from January 1, 1998 through September 10,
1998. No other adjustments have been made. The Combined Statement is not
necessarily indicative of the Company's results of operations that might have
occurred had the acquisitions of AGI Incorporated and Xxxxxxx Robor plc and the
related financing transactions been completed as of January 1, 1998 and do not
purport to represent what the Company's results of operations might be for any
future period.
SECTION 2.10. Change in Condition. Except as set forth in Schedule
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2.10, since November 30, 1998, the Company has conducted business only in the
ordinary course consistent with past practices and there has been no material
adverse change in the business, operations, properties, prospects or financial
condition of the Company or any of its Subsidiaries, whether or not arising in
the ordinary course of business except as contemplated by this Agreement or any
other Operative Document (including the schedules hereto or thereto).
SECTION 2.11. Employee Benefit Plans.
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(a) Set forth on Schedule 2.11(a) is a list (or, in the case of the
Company's European Subsidiaries, a general description) of each employee benefit
plan, as defined in section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), maintained by the Company (each, except in the
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case of any Multiemployer Plan (as defined below), an "Employee Benefit Plan")
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or any ERISA Affiliate (as defined below), each multiemployer plan as defined in
section 4001 (a) (3) of ERISA to which the Company or any ERISA Affiliate
contributes (each a "Multiemployer Plan"), each collective bargaining agreement
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to which the Company is a party, each employee retirement health, welfare, or
other employee benefit plan, program or scheme subject to the laws of a country
other than the United States (each a "Foreign Plan"), and each other plan,
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policy, trust, employment contract, organization or arrangement providing
benefits to employees of the Company (each a "Benefit Arrangement"). For
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purposes of this Agreement, "ERISA Affiliate" shall mean any person (within the
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meaning of section 3(9) of ERISA) that would be regarded together with the
Company as a single employer under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code").
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(b) Except as disclosed on Schedule 2.11(b):
(i) The Company and each Employee Benefit Plan are in compliance in
all material respects with all applicable provisions of ERISA and the Code with
respect to all Employee Benefit Plans and Benefit Arrangements required to be
disclosed on Schedule 2.11(a), and for each Employee Benefit Plan that is
intended to be qualified under Code section 401(a) either a favorable
determination letter has been issued by the United States Internal Revenue
Service (or any successor agency thereto, the "Service") or a timely
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application for such a letter has been or will be submitted. With respect to
each Employee Benefit Plan, the Company has provided the Purchasers with the
following: a copy of the plan document and all amendments; the three most
recently filed Forms 5500; the most recent determination letter; and all
correspondence relating to any Employee Benefit Plan from the Internal Revenue
Service, U.S. Department of Labor or the Pension Benefit Guarantee Corporation.
(ii) No Employee Benefit Plan (i) is the subject of termination
proceedings under ERISA section 4041, 4041A or 4042, has been or will have been,
within 5 years prior to the Closing Date, completely or partially terminated, or
is or has been within 5 years prior to the Closing Date the subject of a
reportable event as to which notice would be required to be filed with the
Pension Benefit Guaranty Corporation ("PBGC"); and (ii) has incurred or is
----
expected to incur any liability to the PBGC, other than for premiums pursuant to
ERISA Section 4007 that are not yet due, that could result in any material
liability to the Company.
(iii) No Employee Benefit Plan is subject to Title IV of ERISA or
the minimum funding standards of section 412 of the Code or section 302 of
ERISA.
(iv) Neither the Company nor any ERISA Affiliate has any withdrawal
liability (within the meaning of Part I of Subtitle E of Title IV of ERISA) with
respect to any Multiemployer Plan that has or would have a Material Adverse
Effect. In addition, neither the Company nor any ERISA Affiliate has any
withdrawal liability (within the meaning of Part I of Subtitle E of Title IV of
ERISA) with respect to any Multiemployer Plan if it were to cease contributions
to any Multiemployer Plan as of the Closing Date, except any such liability that
could not reasonably be expected to have a Material Adverse Effect.
(v) All contributions or payments required to be made by the Company
or any ERISA Affiliate prior to the Closing Date to any Employee Benefit Plan or
Multiemployer Plan have been paid or made by the due date, except where the
failure to make such contribution or payment could not reasonably be expected to
have a Material Adverse Effect. All contributions, transfers and payments in
respect of any Employee Benefit Plan for which a deduction or credit has been
claimed have been or are fully deductible or allowable as a credit under the
Code, except where the failure for such contributions, transfers or payments to
8
be deductible or allowable as a credit could not reasonably be expected to have
a Material Adverse Effect.
(vi) Except as indicated on Schedule 2.11(b), since January 1, 1998,
there has been no change in any Employee Benefit Plan or adoption of a new
Employee Benefit Plan that materially increases benefits to any employee of the
Company.
(vii) With respect to each Employee Benefit Plan that is a "group
-----
health plan" within the meaning of ERISA section 607(1) or that is subject to
------ ----
Code section 4980B, the Company and ERISA Affiliate has complied in all material
respects with the continuation coverage requirements of Code section 4980B and
Part 6 of Title 1 of ERISA. No Company maintains or contributes to a
"nonconforming group health plan," as defined in section 5000(c) of the Code,
--------------------------------
that has or would have a Material Adverse Effect.
(viii) No Employee Benefit Plan that is a "welfare benefit plan" as
--------------------
defined in section 3(l) of ERISA provides benefits, including without
limitation, death or medical benefits, beyond termination of service or
retirement other than coverage mandated by law.
(ix) The Company and each Foreign Plan are in compliance in all
material respects with all provisions of law applicable to the Foreign Plans,
including non-United States law applicable to the Foreign Plans.
SECTION 2.12. Interests in Real Property.
--------------------------
(a) Schedule 2.12(a) sets forth a list, by deed reference or
otherwise, of all real properties owned or all material real property leased by
the Company and any of its Subsidiaries. Except as set forth on Schedule
2.12(a), each of the Company and any of its Subsidiaries has marketable title in
fee simple to all real properties shown on Schedule 2.12(a) as owned by it and
valid and enforceable leasehold interests in all real estate shown on Schedule
2.12(a) as leased by it, except where the invalidity or unenforceability of such
leasehold interests could not reasonably be expected to have a Material Adverse
Effect. None of the real properties (including improvements thereon) owned by,
or the leasehold estates of, the Company or any of its Subsidiaries is subject
to any liens, mortgages or encumbrances ("Liens") (except for real estate taxes
-----
and other matters as set forth in Schedule 2.12(a) and except for any
encumbrances that do not affect in any material respect the marketability, use
or value of the real property); and none of such real properties is subject to
any easements, rights of way, licenses, grants, building or use restrictions,
exceptions, reservations, limitations or other impediments of record which
materially adversely affect the value thereof, taken as a whole, or which
interfere with or impair the present and continued use thereof, taken as a
whole, in the usual and normal conduct of the business of the Company or any of
its Subsidiaries. Except as set forth in Schedule 2.12(b), no party has any
right of first offer, right of first refusal or other right to purchase all or
any portion of the real properties owned by the Company or its Subsidiaries and
set forth on Schedule 2.12(a) or the
9
improvements erected thereon. To the Company's best knowledge and except as set
forth on Schedule 2.12(b), there is no pending condemnation or eminent domain
proceeding which affect or would affect all or any portion of the real
properties owned by the Company or its Subsidiaries and set forth on Schedule
2.12(a) or any negotiations for the purchase of all or any portion of thereof in
lieu of condemnation. To the best knowledge of the Company, (A) all improvements
on such real properties and the operations therein conducted conform in all
material respects to all applicable health, fire, environmental, safety, zoning
and building laws, ordinances and administrative regulations (whether through
grandfathering provisions, permitted use exceptions variances or otherwise),
except for possible nonconforming uses or violations (i) which do not and will
not materially interfere with the present use, operation or maintenance thereof
by the Company or any of its Subsidiaries as now used, operated or maintained or
access thereto, and, (ii) in the case of real properties owned by the Company,
which do not and will not materially adversely affect the value thereof and (B)
neither the Company nor any of its Subsidiaries has received written notice of
any violation of or noncompliance with any such laws, ordinances or
administrative regulations from any applicable governmental or regulatory
authority, except for notices of violations or failures so to comply, if any,
that could not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 2.12(b), (i) neither the Company
nor any of its Subsidiaries is in breach of or default (and no event has
occurred which, with due notice or lapse of time or both, may constitute such a
breach or default) under any lease set forth on Schedule 2.12(a), and (ii) no
party to any Lease has given the Company or any of its Subsidiaries written
notice of or made a claim with respect to any breach or default by the Company
or any of its Subsidiaries party thereto, the consequences of which, in either
case (i) or (ii), individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
SECTION 2.13. Compliance with Law. Except as set forth on Schedule
-------------------
2.13, the operations of the Company and its Subsidiaries have been conducted in
accordance with all applicable laws, regulations, orders and other requirements
of all courts and other governmental or regulatory authorities having
jurisdiction over the Company, any of its Subsidiaries and their respective
assets, properties and operations, including, without limitation, all such laws,
regulations, orders and requirements promulgated by or relating to consumer
protection, currency exchange, equal opportunity, health, environmental
protection, conservation, wetlands, architectural barriers to the handicapped,
fire, zoning and building, occupation safety, pension, securities and trading
with the enemy matters, except for violations or failures so to comply, if any,
that could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Except as set forth in Schedule 2.13, neither the
Company nor any of its Subsidiaries has received notice of any violation of or
noncompliance with any applicable laws, regulations, orders or other
requirements from any applicable governmental or regulatory authority, except
for notices of violations or failures so to comply, if any, that could not
reasonably be expected to have a Material Adverse Effect.
10
SECTION 2.14. Tax Matters.
-----------
(a) As used in this Agreement, the term "Taxes" shall mean all taxes,
-----
however denominated, including all charges, fees, imposts, levies, or other
assessments, including, without limiting the generality of the foregoing, all
income taxes, payroll and employee withholding taxes, unemployment insurance,
social security, sales and use taxes, excise taxes, franchise taxes, gross
receipts taxes, occupation taxes, real and personal property taxes, stamp taxes,
transfer taxes, workmen's compensation taxes, estimated taxes, together with any
interest, penalties or additions to tax that may become payable in respect
thereof, imposed by any governmental taxing authority (domestic or foreign) and
other obligations of the same or a similar nature, whether arising before, on or
after the Closing Date; and "Tax" shall mean any one of them. As used in this
---
Agreement, the term "Tax Returns" shall mean any return, report, information
--- -------
return, statement, schedule or other document (including any related or
supporting information) filed or required to be filed with any governmental
taxing authority in connection with the determination, assessment, collection or
administration of any Taxes, and any amendments thereof.
(b) Except as set forth on Schedule 2.14(b), each of the Company and
its Subsidiaries has duly and timely filed, or will duly and timely file (or
there has been, or will be, duly and timely filed on its behalf), with the
appropriate governmental taxing authorities all Tax Returns in respect of Taxes
required to be filed through the date as of which this representation is made
(taking into account extensions). Except as set forth on Schedule 2.14(b), the
information filed on behalf of the Company and its Subsidiaries was complete and
correct in all material respects, other than any such incomplete or incorrect
information which could not, when considered in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule
2.14(b), neither the Company nor any of its Subsidiaries has requested any
extension of time within which to file Tax Returns ("Extended Returns") in
-------- -------
respect of any Taxes, other than Extended Tax Returns which have since been
filed and other than Extended Tax Returns for which the Company has either paid
all Taxes due or created a reserve on its books for all Taxes due, except for
any Taxes where the failure to pay or create a reserve for such Taxes in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 2.14(c), all Taxes of the Company
and its Subsidiaries due to be paid on or prior to the Closing Date (taking into
account extensions) have been paid or will be paid prior to the Closing Date or
an adequate reserve has been (or, with respect to periods for which financial
reports have not yet been prepared, will be) established therefor in accordance
with GAAP. Except as set forth on Schedule 2.14(c), to the best of the
Company's knowledge the Company and its Subsidiaries do not have any material
liability for Taxes in excess of such amounts so paid or reserves so
established.
(d) Except as set forth on Schedule 2.14(d), all Taxes that the
Company and each of its Subsidiaries are or were required by law to withhold or
collect during the period from
11
January 1, 1998 through the Closing Date have been duly withheld or collected
and, to the extent required, have been paid to the proper governmental body.
Except as set forth on Schedule 2.14(d), there are no Liens (arising during the
period from January 1, 1998 through the Closing Date) with respect to Taxes upon
any of the properties or assets, real or personal, tangible or intangible, of
the Company or any of its Subsidiaries, except for statutory liens for Taxes not
yet due or delinquent.
(e) Except as set forth in Schedule 2.14(e), no waivers or extensions
of a statute of limitations relating to Taxes is currently in effect with
respect to the Company or any of its Subsidiaries, other than any such waivers
or extensions which could not, when considered in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(f) Except as set forth on Schedule 2.14(f), no material deficiencies
for Taxes have been claimed in writing, proposed in writing or assessed in
writing by any governmental taxing authorities against the Company or its
Subsidiaries for any taxable year ended subsequent to December 31, 1993, other
than any which have since been paid. Except as set forth on Schedule 2.14(f),
there are no pending or, to the best of the Company's knowledge, threatened
audits, investigations or claims for or relating to any material additional
liability in respect of Taxes against the Company or its Subsidiaries, and there
are no matters under discussion between the Company or any of its Subsidiaries
or any officers or directors of the Company or any of its Subsidiaries and any
governmental taxing authority with respect to Taxes that are likely to result in
a material additional liability for Taxes for the Company or any of its
Subsidiaries.
(g) Except as set forth in Schedule 2.14(g), neither the Company nor
any of its Subsidiaries has any tax-sharing agreements or similar arrangements
with any person other than any of the Company and its Subsidiaries. Neither the
Company nor any of its Subsidiaries has any liability for Taxes of any person
other than any of the Company and its Subsidiaries under Treasury Regulation
Section 1502-6 (or any similar provision of state, local or foreign law).
(h) Except as set forth on Schedule 2.14(h), the Company is not now
and has never been a "United States real property holding corporation," as
------ ------ ---- -------- ------- -----------
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
SECTION 2.15. Environmental Matters. Except as set forth on Schedule
---------------------
2.15, the Company and each of its Subsidiaries have obtained and maintained in
effect all licenses, permits and other authorizations required under all
applicable laws, regulations and other requirements of governmental or
regulatory authorities relating to pollution or to the protection of the
environment ("Environmental Laws") and, except as set forth on Schedule 2.15,
------------- ----
have been and are in compliance with all Environmental Laws and with all such
licenses, permits and authorizations, except where the failure to obtain and
maintain such licenses, permits and other
12
authorizations or any such noncompliance could not reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 2.15, neither
the Company nor its Subsidiaries has performed or suffered any act which could
give rise to, or has otherwise incurred or expressly assumed by contract or
operation of law, liability to any person (governmental or not) under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
(S) 9601 et seq. or any other Environmental Laws, nor has the Company or any of
-- ---
of its Subsidiaries received notice of any such liability or any claim therefor
or submitted written notice pursuant to Section 103 of such Act to any
governmental agency with respect to any of their respective assets, except for
any of the foregoing which could not reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 2.15, to the best knowledge of
the Company no hazardous substance, hazardous waste, contaminant, pollutant or
toxic substance (as such terms are defined in any applicable Environmental Law)
and no asbestos-containing material has been released, placed, dumped or
otherwise come to be located on, at, beneath or adjacent to any of the assets or
properties owned, leased or otherwise operated by the Company or each of its
Subsidiaries, or any other person, or any surface waters or groundwaters thereon
or thereunder, except (i) in compliance with applicable Environmental Law or
(ii) for any of the foregoing which could not reasonably be expected to have a
Material Adverse Effect, considering all of the foregoing individually and in
the aggregate. Except as set forth on Schedule 2.15, none of the Company or any
of its Subsidiaries owns or operates an underground storage tank containing a
regulated substance, as such term is defined in Subchapter IX of the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6991 et seq. Except as set forth
-- ---
in Schedule 2.15, neither the Company nor any of its Subsidiaries has Treated,
Stored or Disposed of any Hazardous Waste (as such capitalized terms are
respectively defined in the Resource Conservation and Recovery Act, 42 U.S.C.
(S) 6901 et seq.), except where such Treatment, Storage or Disposal (i) was in
-- ---
compliance with applicable Environmental Law or (ii) was in the ordinary course
of business, and then only in such quantities as are reasonable for the ordinary
conduct of the business, and could not reasonably be expected to have a Material
Adverse Effect, considering all such Treatment, Storage or Disposal in the
aggregate.
SECTION 2.16. Intellectual Property.
---------------------
(a) Schedule 2.16(a) contains a true, complete and accurate list and
description of all United States and foreign patents and patent applications;
all United States and foreign trademark, service xxxx, trade name and copyright
registrations and applications for registration; and all renewals, affidavits of
use, extensions, divisions, continuations, continuations-in-part, issues and
reissues with respect to the foregoing; owned, used, claimed or developed by the
Company or any of its Subsidiaries (collectively, the "Registered Rights"), or
---------- ------
in which the Company or any of its Subsidiaries has an interest. All Registered
Rights are valid and subsisting.
(b) Except as set forth in Schedule 2.16(b), the Company and each of
its Subsidiaries own and/or have the exclusive and unrestricted right to use all
patents, trademarks,
13
service marks, trade names, copyrights, "Trade Secrets" (as defined below) and
----- -------
other intellectual property rights, including without limitation the Registered
Rights, and licenses and claims for past, present or future infringement under
any thereof, used or developed in the businesses or operations of the Company
and/or each of its Subsidiaries, as such businesses or operations are now
conducted or as heretofore conducted (collectively, the "Intellectual Property
------------ --------
Rights"), except any failures to own and/or have such rights which,
------
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 2.16(b), all
Intellectual Property Rights are free and clear of all liens (other than liens
contemplated by any of the documents or instruments listed in Schedule 2.19),
claims, restrictions and encumbrances (including without limitation of any
former employer of the Company's and/or any of its Subsidiaries' employees), and
do not infringe upon or otherwise act adversely to the right or claimed right of
any third party, except for any of the foregoing which could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Except for the agreements and licenses set forth in Schedule 2.19, neither the
Company nor its Subsidiaries are obligated or under any liability whatsoever to
make any payments by way of royalties, fees or otherwise to any owner or
licensee of, or other claimant to, any patent, trademark, service xxxx, trade
name, copyright or other intangible asset, with respect to the use of any of the
Intellectual Property Rights, in connection with the ownership of their
respective assets, the conduct of their respective businesses or otherwise,
except for any such obligations or liabilities that could not reasonably be
expected to have a Material Adverse Effect.
(c) The Company and each of its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their respective trade secrets, "know-how," inventions, discoveries, designs,
processes, formulae, customer lists, supplier lists, marketing strategies,
research and development data, processes, computer programs (including source
code), technical data, confidential data and other information (collectively,
"Trade Secrets"), except where the failure to take such measures could not
----- -------
reasonably be expected to have a Material Adverse Effect. Except as set forth
in Schedule 2.16(c), the Company's and each of its Subsidiaries' employees and
other persons who either alone or in concert with others developed, invented,
discovered, derived, programmed or designed any of the Trade Secrets have
entered into a written agreement with the Company and/or its Subsidiaries
providing that such Trade Secrets and other information are proprietary to the
Company and/or its Subsidiaries and are not to be divulged or misused, and
transferring to the Company and/or its Subsidiaries, without any further
consideration being given therefor, all of such employee's or other person's
right, title and interest in and to such Trade Secrets and other information,
and to all Intellectual Property Rights relating to such Trade Secrets and
information.
(d) Except as set forth on Schedule 2.16(d), neither the Company nor
its Subsidiaries have any knowledge, or have received any communication
alleging, that the Company and/or the Subsidiaries have infringed or violated
or, by using the Intellectual Property Rights or conducting their respective
businesses as now conducted, would infringe or violate any of the patents,
licenses, trademarks, service marks, trade names, copyrights, Trade Secrets or
14
other proprietary rights of any person or entity. Except as set forth on
Schedule 2.16(d), neither the Company nor its Subsidiaries is aware of any third
party that is infringing upon or violating any of the Company's or any of its
Subsidiaries' Intellectual Property Rights, Trade Secrets or other proprietary
rights.
SECTION 2.17. Registration Rights. Except as contemplated by the
-------------------
Stockholders Agreement and as set forth on Schedule 2.17, the Company is not
under any obligation to register any of its outstanding securities pursuant to
the Securities Act.
SECTION 2.18. Insurance. Schedule 2.18 lists (except as noted on
---------
Schedule 2.18) all policies of title, fire, liability, casualty, business
interruption, workers' compensation and other forms of insurance including, but
not limited to, directors and officers insurance, required to be maintained by
the Company and each of its Subsidiaries by Section 4.07(c) of the Indenture,
and as of the date hereof all such policies are in full force and effect in
accordance with their terms. Neither the Company nor any of its Subsidiaries is
in default in any material respect under any provisions of any such policy of
insurance and neither has received notice of cancellation of any such insurance.
SECTION 2.19. Material Contracts. Except for the agreements
------------------
identified in the Schedule 2.19 (the "Material Contracts"), none of the Company
-------- ---------
or any of its Subsidiaries are party to or otherwise bound by any written or
oral contract or instrument or other restriction of the following type:
(a) contract or agreement which is not terminable on less than ninety
(90) days' notice without cost or other liability to the Company or any of its
Subsidiaries (except for contracts which, in the aggregate, are not material to
the business of the Company or any of its Subsidiaries);
(b) contract with any labor union;
(c) contract or other commitment with any supplier of goods or
services containing any provision permitting any party other than the Company or
one of its Subsidiaries to renegotiate the price or other terms, or containing
any rebate or other similar provision, upon the occurrence of a failure by the
Company or any of its Subsidiaries to meet its obligations under the contract
when due or the occurrence of any other event, except for such contracts or
commitments with suppliers of goods or services entered into in the ordinary
course of business;
(d) contract for the future purchase of fixed assets or for the future
purchase of materials, supplies or equipment, in either case in excess of the
Company's or any of its Subsidiaries' normal operating requirements;
15
(e) contract for the employment of any officer, employee or other
person (whether of a legally binding nature or in the nature of informal
understandings) on a full-time or consulting basis which is not terminable on
notice without cost or other liability to the Company or any of its
Subsidiaries, except normal severance arrangements and accrued vacation pay;
(f) agreement or indenture relating to the borrowing of money or to
the mortgaging or pledging of, or otherwise placing a lien or security interest
on, any asset of the Company or any of its Subsidiaries;
(g) guaranty of any obligation for borrowed money or otherwise (other
than the endorsement of checks in the ordinary course of business);
(h) voting trust or agreement, stockholders' agreement, pledge
agreement, buy-sell agreement or first refusal or preemptive rights agreement
relating to any securities of the Company or any of its Subsidiaries other than
the Operative Documents;
(i) agreement, or group of related agreements with the same party or
any group of affiliated parties, under which the Company or any of its
Subsidiaries has advanced or agreed to advance money or has agreed to lease any
property as lessee or lessor, except for leases of real or personal property not
requiring the payment of more than $20,000, individually, or $5,000,000, in the
aggregate, in annual lease payments;
(j) agreement or obligation (contingent or otherwise) to issue, sell
or otherwise distribute or to repurchase or otherwise acquire or retire any
share of its capital stock or any of its other equity securities, other than the
Operative Documents;
(k) assignment, license or other agreement with respect to any form of
intangible property other than software licenses pursuant to which the Company
or its Subsidiaries licenses commercially available software;
(l) agreement under which it has limited or restricted its right to
compete with any person in any respect;
(m) except for contractual indemnities provided to customers in
connection with the sale of goods or services in the ordinary course of
business, agreement requiring indemnification by the Company or any of its
Subsidiaries with respect to infringements of proprietary rights; or
(n) any other contract or group of related contracts with the same
party involving more than $250,000 or continuing over a period of more than one
(1) year from the date or dates thereof (including renewals or extensions
optional with another party), which contract or group of contracts is not
terminable by the Company or any of its Subsidiaries without penalty upon
16
notice of thirty (30) days or less, except for purchase orders and similar
agreements with customers and suppliers entered into in the ordinary course of
business, which may exceed $250,000 individually or when aggregated for a
particular customer or vendor; or
(o) any other contract that would be considered a Material Contract of
the Company as of the date hereof under Item 601(b)(10) of Regulation S-K
promulgated by the Securities Exchange Commission.
SECTION 2.20. Contracts. All Material Contracts to which the Company
---------
and any of its Subsidiaries is a party are in full force and effect on the date
hereof. None of the Company or any of its Subsidiaries is in default in respect
of any Material Contract, and no event has occurred which, with due notice or
lapse of time or both, would constitute such a default, except for any such
defaults which could not reasonably be expected to have a Material Adverse
Effect. To the best knowledge of the Company, no other party to any Material
Contract is in default in respect thereof, and no event has occurred which, with
due notice or lapse of time or both, would constitute such a default, except for
any such defaults which could not reasonably be expected to have a Material
Adverse Effect.
SECTION 2.21. Solvency. The Company and its Subsidiaries on a
--------
consolidated basis are Solvent. For purposes of this Agreement, "Solvent" means,
-------
when used with respect to (A) the Company or a Subsidiary (other than subject to
clause (B)), that (a) the fair saleable value of the assets of the Company or
such Subsidiary is in excess of the total amount of the present value of its
liabilities (including for purposes of this definition all liabilities
(including loss reserves as determined by such person), whether or not reflected
on a balance sheet prepared in accordance with GAAP and whether direct or
indirect, fixed or contingent, secured or unsecured, disputed or undisputed, (b)
the Company or such Subsidiary is able to pay its debts or obligations in the
ordinary course as they mature and (c) the Company or such Subsidiary does not
have unreasonably small capital to carry out its business as conducted and as
proposed to be conducted and (B) for any such Subsidiary incorporated in England
and Wales, on a particular date, on that date such Subsidiary has the ability to
pay its debts as and when they fall due and could not be deemed to be insolvent
for the purposes of the Insolvency Act of 1986 of the United Kingdom.
SECTION 2.22. Private Offering. Based on the Purchasers'
----------------
representations in Article III, the sale of the Company's Securities hereunder
is exempt from the registration and prospectus delivery requirements of the
Securities Act.
SECTION 2.23. Loans and Advances. Except as set forth on Schedule
------------------
2.23, none of the Company or any of its Subsidiaries has any outstanding loans
or advances to any person and is not obligated to make any such loans or
advances, except, in each case, for advances to employees of the Company or any
of its Subsidiaries in respect to reimbursable business expenses anticipated to
be incurred by them in connection with their performance of
17
services for the Company or any of its Subsidiaries.
SECTION 2.24. Significant Customers and Suppliers. Except as set
-----------------------------------
forth on Schedule 2.24, no customer or supplier which was "significant" to the
-----------
Company or any of its Subsidiaries during the period covered by the eleven-month
period ended November 30, 1998, has terminated, materially reduced or threatened
to terminate or materially reduce its purchases from or provision of products or
services to the Company or any of its Subsidiaries, as the case may be. For the
purposes of this Section 2.24, "significant" customers and suppliers means (i)
-----------
any customer to which five (5) percent or more of the Company's revenues during
the eleven-month period ended November 30, 1998 could be attributed or (ii) any
supplier from which five (5) percent or more of the Company's raw materials
and/or components were purchased during the eleven-month period ended November
30, 1998, respectively.
SECTION 2.25. Disclosure. Neither this Agreement, nor the Schedules
----------
or Exhibits to this Agreement, nor the financial statements referenced in
Section 2.09, nor the statements, documents, certificates, or other items
prepared or supplied by the Company with respect to the transactions
contemplated hereby, considering this Agreement, the Schedules and Exhibits
hereto and all such statements, documents, certificates or other items in the
aggregate and taking into account any information supplied by the Company prior
to the Closing which updates or supersedes earlier information, contain an
untrue statement of a material fact or omit a material fact necessary to make
the statements contained herein or therein not misleading.
SECTION 2.26. Officers. Set forth in Schedule 2.26 is a list of the
--------
names of the officers of the Company, together with the title or job
classification of each such person and the total compensation anticipated to be
paid to each such person by the Company in 1998. Except as set forth on
Schedule 2.26 or Schedule 2.19, none of such persons has an employment agreement
or understanding, whether oral or written, with the Company, which is not
terminable on notice by the Company without cost or other liability to the
Company.
SECTION 2.27. Transactions With Affiliates. Except as set forth on
----------------------------
Schedule 2.27 or Schedule 2.19, no director, officer or 5% stockholder of the
Company, or member of the family of any such person, or any corporation,
partnership, trust or other entity in which any such person, or any member of
the family of any such person, is an officer, director, trustee, partner or
holder of more than 5% of the outstanding equity interests thereof, is a party
to any transaction with the Company, including any contract, agreement or other
arrangement providing for the employment of, furnishing of services by, rental
of real or personal property from or otherwise requiring payments to any such
person or firm, other than employment at will arrangements in the ordinary
course of business.
SECTION 2.28. Employees. Except as set forth on Schedule 2.28, each
---------
of the officers of the Company, each key employee and each other employee now
employed by the Company who to the Company's knowledge has access to
confidential information of the
18
Company has executed a confidentiality agreement and a non-competition
agreement, and such agreements are in full force and effect. Except as set forth
on Schedule 2.28, none of the officers or key employees of the Company have
advised the Company (orally or in writing) that he intends to terminate
employment with the Company.
SECTION 2.29. Year 2000.
---------
(a) All Information Systems and Equipment (defined below) are either
Year 2000 Compliant (defined below), or any reprogramming, remediation, or any
other corrective action, including the internal testing of all such Information
Systems and Equipment, will be completed by September 30, 1999, except for any
failure to be Year 2000 Compliant and any reprogramming, remediation or other
corrective action not completed by September 30, 1999, that could not reasonably
be expected to have a Material Adverse Effect. Further, to the extent that such
reprogramming/remediation and testing action is required, the cost thereof (in
excess of the Company's budget to address its Y2K issues, as disclosed in
Schedule 2.29(a)), as well as the cost of the reasonably foreseeable
consequences of failure to become Year 2000 Compliant, to the Company and its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of other systems or equipment) could not reasonably be expected to have
a Material Adverse Effect.
(b) "Year 2000 Compliant" means that all Information Systems and
---- ---- ---------
Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the Year 2000,
as well as same and multi-century dates, or between the years 1999 and 2000,
taking into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise impair in any
material respect the accuracy or functionality of Information Systems and
Equipment.
(c) "Information Systems and Equipment" shall mean all computer
----------- ------- --- ---------
hardware, firmware and software, as well as other information processing
systems, or any equipment containing embedded microchips, whether directly
owned, licensed, leased, operated or otherwise controlled by the Company or any
of its Subsidiaries, including through third-party service providers, and which,
in whole or in part, are used, operated, relied upon, or integral to, the
Company's or any of its Subsidiaries' conduct of their business; provided that
-------- ----
Information Systems and Equipment does not include any of the foregoing of any
third party customer or vendor which is not owned, licensed, leased, operated or
otherwise controlled by the Company.
SECTION 2.30. Labor Relations.
---------------
(a) Neither the Company nor any of its Subsidiaries nor any person
for whom the
19
Company or any of its Subsidiaries is responsible by law or contract, is engaged
in any unfair labor practice that would reasonably be expected to have a
Material Adverse Effect. There is (i) no unfair labor practice charge or
complaint pending or, to the best knowledge of the Company or any of its
Subsidiaries, threatened against the Company or any of its Subsidiaries or any
person for whom the Company or any of its Subsidiaries is responsible by law or
contract, before the National Labor Relations Board or any corresponding state,
local or foreign agency, and no grievance or arbitration proceeding arising out
of or under any collective bargaining agreement is so pending or to the best
knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any person for whom the Company or any of its Subsidiaries is
responsible by law or contract, (ii) no union representation claim existing with
respect to the employees of the Company or any of its Subsidiaries or any person
for whom the Company or any of its Subsidiaries is responsible by law or
contract, and (iii) to the best knowledge of the Company, no union organizing
activities taking place. Except as set forth on Schedule 2.30(b), neither the
Company or any of its Subsidiaries nor any person for whom the Company or any of
its Subsidiaries is responsible by law or contract, is a party to any collective
bargaining agreement. To the best knowledge of the Company, no suit, claim,
action, investigation, or proceeding has been instituted or is pending against
the Company or any of its Subsidiaries or any such person for whom they are
responsible by law or contract in connection with any such collective bargaining
agreement described on Schedule 2.30(b), other than any such suit, claim,
action, investigation or proceeding which could not reasonably be expected to
have a Material Adverse Effect.
(b) Except as disclosed on 2.30(b), none of the Company or any of its
Subsidiaries has violated any applicable federal, state, provincial or foreign
law relating to employment or employment practices or the terms and conditions
of employment, including, without limitation, discrimination in the hiring,
promotion or pay of employees, wages, hours of work, plant closings and layoffs,
collective bargaining, immigration and occupational safety and health (each a
"Violation"), except to the extent such a Violation would not reasonably be
---------
expected to have a Material Adverse Effect. Except as set forth in Schedule
2.30(b), to the best knowledge of the Company, no charges with respect to or
relating to the Company or any of its Subsidiaries are pending before the Equal
Employment Opportunity Commission or any other corresponding state agency, and
the Company and each of its Subsidiaries has at all times been in material
compliance with all federal and state laws and regulations prohibiting
discrimination in the workplace including, without limitation, laws and
regulations that prohibit discrimination and/or harassment on account of race,
national origin, religion, gender, disability, age, immigration status, workers
compensation status or otherwise, except to the extent such non-compliance
would not reasonably be expected to have a Material Adverse Effect.
SECTION 2.31. Absence of Questionable Payments. Neither the Company,
--------------------------------
any of its Subsidiaries, or any director, officer, agent, employee or other
person acting on behalf of the Company or any of its Subsidiaries, has used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to
20
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of Section 30A of the
Exchange Act. Neither the Company nor to the best of the Company's knowledge any
current director, officer, agent, employee, or other person acting on behalf of
the Company or any of its Subsidiaries, has accepted or received any unlawful
contributions, payments, gifts or expenditures.
SECTION 2.32. Investment Company Act. Neither the Company nor any
----------------------
Subsidiary nor any affiliate thereof is a "registered investment company"
---------- ---------- -------
within the meaning of the Investment Company Act of 1940, as amended.
ARTICLE III
REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PURCHASERS
Each Purchaser severally as to itself only, and not jointly, hereby
represents and warrants to the Company as follows:
SECTION 3.01. Authorization.
-------------
(a) Such Purchaser has full power and authority to enter into this
Agreement and each other Operative Document to which such Purchaser is a party.
This Agreement and each other Operative Document to which such Purchaser is a
party constitute valid and legally binding obligations of such Purchaser,
enforceable against such Purchaser in accordance with their terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies and (iii) certain
indemnification and contribution provisions in the Stockholders Agreement which
may be limited by considerations of public policy.
(b) The execution, delivery and performance by such Purchaser of the
terms and provisions of this Agreement and each other Operative Document and the
consummation of the transactions contemplated hereby and thereby do not and will
not violate any provision of any agreement or instrument to which such Purchaser
is a party or by which it is bound, or to which any of their respective
properties or assets is subject, or of any law, statute, rule, regulation,
injunction, writ, order, judgment or decree of any court or other governmental
or regulatory authority to which such Purchaser is subject. Such Purchaser has
duly executed and delivered this Agreement and, at the Closing, will have duly
executed and delivered each other Operative Document to which it is a party.
SECTION 3.02. Consents. No consent, authorization or order of, or
--------
filing or registration with, any court or United States governmental agency or
other person is required to
21
be obtained or made by such Purchaser for the execution, delivery and
performance by such Purchaser of this Agreement or any other Operative Document
to which it is a party or the consummation of any of the transactions
contemplated hereby or thereby.
SECTION 3.03. Purchase Entirely for Own Account. Such Purchaser is
---------------------------------
acquiring the Purchaser's Securities for investment for such Purchaser's own
account, not as a nominee or agent, and not with a view to, or for the resale or
distribution of any part thereof. Such Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser further represents that such Purchaser does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Securities.
SECTION 3.04. Disclosure of Information. Such Purchaser has received
-------------------------
all of the information which such Purchaser considers necessary or appropriate
for deciding whether to purchase the Securities. Such Purchaser further
represents that such Purchaser has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Securities. The foregoing, however, does not limit or modify
the representations and warranties of the Company in Article II of this
Agreement or the right of such Purchaser to rely thereon.
SECTION 3.05. Investment Experience. Such Purchaser (i) fully
---------------------
understands that an investment in the Company is highly speculative and that
such Purchaser may lose his or its entire investment in the Purchaser's
Securities; (ii) is experienced in evaluating and investing in companies such as
the Company, (iii) is capable of evaluating the merits and risks of such
Purchaser's investment in the Purchaser's Securities; (iv) is able to bear the
economic risk of a loss of the entire amount of its investment in the
Purchaser's Securities; and (v) is prepared to hold the Purchaser's Securities
for an indefinite period of time.
SECTION 3.06. Accredited Investor. Such Purchaser is an "accredited
------------------- ----------
investor" within the meaning of Rule 501 of Regulation D under the Securities
--------
Act.
SECTION 3.07. Restricted Securities. Such Purchaser acknowledges
---------------------
that, because they have not been registered under the Securities Act, such
Purchaser's Securities must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is available.
Such Purchaser is aware of and familiar with the provisions of Rule 144 under
the Securities Act which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions.
SECTION 3.08. Transfers of Securities. (a) Each Purchaser agrees
-----------------------
that it will not offer to sell, assign, transfer or otherwise dispose of
("Transfer") any of the Securities except in transactions exempt from
--------
registration under the Securities Act or in a sale registered under the
Securities Act. In connection with any proposed Transfer pursuant to such an
exemption, the
22
Purchasers agree that the Company may request an opinion of the Purchaser's
counsel that such Transfer is not in violation of the registration requirements
of the Securities Act, or other applicable law.
(b) Each certificate representing the Securities shall bear legends in
or substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NO TRANSFER, SALE OR OTHER
DISPOSITION OF THESE SHARES MAY BE MADE UNLESS A REGISTRATION STATEMENT
WITH RESPECT TO THESE SHARES HAS BECOME EFFECTIVE UNDER SAID ACT, OR THE
COMPANY HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) BTI agrees that so long as any shares of Series A Preferred Shares
are outstanding it will own and retain the right to vote at least a majority of
such shares; provided, however, that BTI may Transfer any shares of Series A
-------- -------
Preferred Stock (and thereby fail to own and retain the right to vote such
shares) to the extent necessary to comply with Regulation Y (12 C.F.R. PART 225)
of the Board of Governors of the Federal Reserve System. Prior to any such
sale, at the request of the Company BTI and its counsel will meet with the
Company to review and discuss BTI's analysis of its non-compliance with
Regulation Y.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. Operative Documents. The Company agrees to execute and
-------------------
deliver the Operative Documents and such other documents, certificates,
agreements and other writings and to take such other actions as may be
necessary, desirable or reasonably requested by the Purchasers in order to
consummate or implement expeditiously the transactions contemplated hereby.
SECTION 4.02. Compliance with Conditions. The Company will use
--------------------------
commercially reasonable efforts to cause all of the obligations imposed upon the
Company or any of its Subsidiaries in this Agreement to be duly complied with
and to cause all conditions precedent to the obligations of the Purchasers to be
satisfied. Upon the terms and subject to the conditions of this Agreement, the
Company will use commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable consistent with applicable law to consummate and make effective in the
most expeditious manner practicable the transactions contemplated hereby.
23
SECTION 4.03. Consents and Approvals. The Company (a) shall use
----------------------
commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all governmental and regulatory authorities,
domestic and foreign, and of all other persons, firms or corporations required
in connection with the execution, delivery and performance by them of this
Agreement, any other Operative Document or any of the transactions contemplated
hereby or thereby, and (b) shall diligently assist and cooperate with the
Purchasers in preparing and filing all documents required to be submitted by the
Purchasers to any governmental or regulatory authority, domestic or foreign, in
connection with such transactions and in obtaining any governmental consents,
waivers, authorizations or approvals which may be required to be obtained by the
Purchasers in connection with such transactions (which assistance and
cooperation shall include, without limitation, timely furnishing to the
Purchasers all information concerning the Company which counsel to the
Purchasers determine is required to be included in such documents or would be
helpful in obtaining any such required consent, waiver, authorization or
approval).
SECTION 4.04. Filing of Restated Certificate of Incorporation. The
-----------------------------------------------
Company shall file the Certificate with the Secretary of State of the State of
Delaware.
SECTION 4.05. Reports. So long as any of the Preferred remains
-------
outstanding, (a) within ninety (90) days after the end of each fiscal year, the
Company shall deliver to each Purchaser an audited balance sheet and statements
of income and cash flow (each prepared in accordance with GAAP and,
collectively, the "Financial Statements") for such fiscal year, (b) within
--------- ----------
forty-five (45) days after the end of each fiscal quarter, the Company shall
deliver to each Purchaser unaudited Financial Statements for such fiscal
quarter, (c) no more than twenty (20) days prior to the beginning of each fiscal
year, the Company will provide a copy of such plan to each Purchaser and (d)
such Purchaser shall have the right, upon reasonable notice, during the
Company's regular business hours to inspect, for any purpose reasonably related
to such Purchaser's interest as a holder of Securities of the Company, the
Company's books and records and to make copies thereof at the Company's expense;
provided, however, that any Purchaser acquiring information pursuant to this
-------- -------
Section 4.05 shall keep such information strictly confidential in accordance
with Section 7.01.
SECTION 4.06. Properties, Business, Insurance. So long as any of the
-------------------------------
Preferred remains outstanding, the Company shall maintain and so long as they
remain Subsidiaries cause each of its Subsidiaries to maintain as to their
respective properties and business, with financially sound and reputable
insurers, insurance against such casualties and contingencies and of such types
and in such amounts as is customary for companies similarly situated, which
insurance shall be deemed by the Company to be sufficient. So long as any
shares of Preferred remain outstanding, the Company shall and shall use
commercially reasonable efforts to cause Xxxxxxx Xxxxx (so long as he remains an
employee of the Company) to (i) execute and deliver all documents, (ii) provide
all information and (iii) take or forbear from all such action as may be
reasonably necessary and appropriate to allow any Purchaser to purchase "key
---
person" life
------
24
insurance policies, payable to such Purchaser, on the life of Xxxxxxx Xxxxx (so
long as he remains an employee of the Company).
SECTION 4.07. Reserve for Exercise of Warrants. The Company shall at
--------------------------------
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, for the purpose of effecting the exercise of the Warrants and
otherwise complying with the terms of this Agreement, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the exercise
of the Warrants from time to time outstanding or otherwise to comply with the
terms of this Agreement. If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the exercise of the
Warrants or otherwise to comply with the terms of this Agreement, the Company
will forthwith take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes. The Company will obtain any authorization,
consent, approval or other action by or make any filing with any court or
administrative body that may be required under applicable state securities laws
in connection with the issuance of shares of Common Stock upon exercise of the
Warrants.
SECTION 4.08. Corporate Existence. So long as any of the Preferred
-------------------
remains outstanding, the Company shall maintain, and so long as they remain
Subsidiaries shall cause each of its Subsidiaries to maintain, their respective
corporate existence, rights and franchises in full force and effect.
SECTION 4.09. Restrictive Agreements Prohibited. Except as set forth
---------------------------------
in Schedule 4.09, neither the Company nor any of its Subsidiaries shall become a
party to any agreement which by its terms restricts the Company's performance of
this Agreement or any other Operative Document, other than any agreement, the
terms of which would not be excluded by Section 7.03(g) hereof and Section
5.6(g) of the Certificate.
SECTION 4.10. Year 2000 Reporting. The Company will ensure that its
-------------------
and its Subsidiaries' Information Systems and Equipment are Year 2000 Compliant
at all times after September 30, 1999, except insofar as the failure to do so
could not reasonably be expected to result in a Material Adverse Effect, and
shall notify the Purchasers promptly upon detecting any material failure of the
Information Systems and Equipment to be Year 2000 Compliant. In addition, the
Company shall provide the Purchasers with such information about its year 2000
computer readiness (including, without limitation, information as to contingency
plans, budgets and testing results) as the Purchasers shall reasonably request.
SECTION 4.11. Environmental Authorizations. The Company shall use
----------------------------
commercially reasonable efforts to secure as soon as is reasonably practicable
any authorizations necessary for air emissions to be made in compliance with all
applicable laws by each facility operated by the Company or one of its
Subsidiaries in the following locations: Swindon, England; Slough, England;
Birmingham, England; and Rustington, England.
25
ARTICLE V
COVENANTS OF THE PURCHASERS
SECTION 5.01. Agreement to Take Necessary and Desirable Actions. Each
-------------------------------------------------
Purchaser agrees to execute and deliver each of the Operative Documents to which
it is party and such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary, desirable or
reasonably requested by the Company in order to consummate or implement
expeditiously the transactions contemplated hereby.
SECTION 5.02. Compliance with Conditions; Best Efforts. Each
----------------------------------------
Purchaser will use its best efforts to cause all of the obligations imposed upon
it in this Agreement to be duly complied with, and to cause all conditions
precedent to the obligations of the Company and the Purchasers to be satisfied.
Upon the terms and subject to the conditions of this Agreement, each Purchaser
will use its best efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
SECTION 6.01. Conditions to the Company's Obligations. The
---------------------------------------
obligations of the Company hereunder required to be performed on the Closing
Date shall be subject, at their election, to the satisfaction or waiver (which
waiver, if so requested by the Purchasers, shall be made in writing), at or
prior to the Closing, of the following conditions:
(a) The representations and warranties of each Purchaser contained in
this Agreement shall have been true and correct in all material respects when
made and, in addition, shall be repeated and true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date.
(b) Each Purchaser shall have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants, contained in this Agreement, to be performed and complied with by
such Purchaser at or prior to the Closing Date.
(c) Each Purchaser shall have furnished the Company with a certificate
executed by such Purchaser or on its behalf by a duly authorized representative
of such Purchaser, dated the Closing Date, to the effect that such Purchaser has
fulfilled the conditions specified in this Section 6.01.
26
(d) The Company shall have received such other certificates,
instruments and documents in furtherance of the transactions contemplated by
this Agreement as the Company or their counsel may reasonably request.
SECTION 6.02. Conditions To Purchasers' Obligations. The obligations
-------------------------------------
of each Purchaser hereunder required to be performed at the Closing shall be
subject, at their respective elections, to the satisfaction or waiver (which
waiver, if so requested by the Company, shall be made in writing), at or prior
to the Closing, of the following conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall have been true and correct in all respects when made and,
in addition, shall be repeated and true and correct in all respects on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date.
(b) The Company shall have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants, contained in this Agreement, to be performed and complied with by
them at or prior to the Closing Date.
(c) There shall be no litigation, proceeding or other action seeking
an injunction or other restraining order, damages or other relief from a court
or administrative agency of competent jurisdiction pending or threatened which,
in the reasonable judgment of the Purchasers, would materially adversely affect
the consummation of the transactions contemplated by the Operative Documents and
there shall be no litigation, proceeding or other action (including, without
limitation, relating to environmental and pension matters) pending or threatened
against the Company which is reasonably likely to have a Material Adverse
Effect.
(d) All governmental and regulatory approvals and clearances and all
third party consents necessary for the Operative Documents shall have been
obtained and shall be in full force and effect, and the Purchasers shall be
reasonably satisfied that the Operative Documents do not and will not contravene
any applicable provision of any law, statute, regulation, order, writ,
injunction or decree of any court or governmental instrumentality, except to the
extent any contravention or contraventions, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on the
business, operations, prospects, properties, earnings, assets, liabilities or
condition (financial or other) of the Company.
(e) All authorizations, permits and approvals (including Board of
Directors and stockholder approvals) required for the Company's consummation of
the transactions contemplated hereby as of the date of the Closing shall have
been received. The Company shall have delivered an officer's certificate
confirming that the conditions set forth in this Section 6.02(a) and (b) have
been satisfied in all material respects.
27
(f) The Company shall have filed the Certificate with the Secretary of
State of the State of Delaware.
(g) The Purchasers shall have received such other certificates,
instruments and documents in furtherance of the transactions contemplated by
this Agreement as they may reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Confidentiality. Confidential or proprietary
---------------
information disclosed by any Purchaser or the Company, as well as the terms of
this Agreement, shall be considered confidential information (the "Confidential
------------
Information"). The Confidential Information shall not be disclosed by the
-----------
Company or any Purchaser or any other party to this Agreement to any third
party; provided that, from and after the Closing Date, (i) such restriction
-------- ----
shall not apply to any Confidential Information required to be disclosed by law
or regulation provided that the disclosing party gives the other party prior
notice and a reasonable opportunity to contest or minimize the requirement for
such disclosure and (ii) the Company may disclose the existence of this
Agreement, the terms of the sale and issuance of the Securities, solely to the
Company's investors, investment bankers, lenders, accountants, legal counsel,
business partners, and bona fide prospective investors, employees, lenders and
business partners, in each case only where such persons or entities are under
appropriate nondisclosure obligations. The Company shall have the right to
disclose to third parties any information disclosed by any Purchaser in a press
release or other public announcement.
SECTION 7.02. Board Visitation Rights. So long as any Preferred
-----------------------
remains outstanding, the Purchasers shall have the right to designate, by the
vote of holders of shares of Preferred representing 662/3% of the aggregate
liquidation preference then outstanding, one person to attend meetings of the
Board of Directors of the Company or any committee thereof as a non-voting
observer (an "Observer"). The Company shall provide such Observer with notice
--------
of the time, place and manner for the holding of any meeting of the Board of
Directors or any committee thereof in the same manner and at the same time as it
provides such notice to the members of such board and committees. The Company
will pay all reasonable out-of-pocket fees and expenses incurred by the
Observer, in connection with the Observer's exercise of its right to observe any
meeting of the Board of Directors or any committee thereof.
SECTION 7.03. Survival; Indemnification.
-------------------------
(a) All representations, warranties, covenants and agreements (except
covenants and agreements which are expressly required to be performed and are
performed in full on or
28
before the Closing Date) contained in this Agreement or delivered hereunder made
by the Company and the Purchasers shall be deemed represented and made by such
party on the Closing Date as if made at such time and shall survive the Closing
(but shall not in any manner be deemed to be repeated on any other date) for
three years, and other covenants and agreements which, in accordance with their
terms, extend beyond such date shall also survive in accordance with their
terms. With respect to claims asserted by an Indemnifying Party pursuant to this
Section 7.03, before the expiration of the applicable representation or
warranty, such claims shall survive until the date they are finally liquidated
or otherwise resolved. All statements as to factual matters contained in any
certificate executed and delivered by the parties pursuant hereto shall be
deemed to be representations, warranties, covenants and agreements by such party
hereunder. No claim may be commenced with respect to any representation or
warranty under this Section 7.03 (or otherwise) following expiration of the
applicable period of survival, and upon such expiration the Indemnifying Party
(as defined in Section 7.03(e) below) shall be released from all liability with
respect to claims with respect to any representation or warranty under this
Section 7.03 not previously made by the Indemnified Party (as defined in Section
7.03(e) below). No right of indemnity against any claim of a third party shall
arise from any representation, warranty, covenant or agreement of an
Indemnifying Party herein contained, unless such third-party claim is asserted,
served, filed, overtly threatened, or lodged against the Indemnified Party on or
prior to the expiration of the applicable period of survival provided above, and
all other conditions hereunder are satisfied. A claim shall be made or commenced
hereunder by the Indemnified Party by delivering to the Indemnifying Party a
written notice specifying in reasonable detail the nature of the claim, the
amount claimed (if known or reasonably estimable), and the factual basis for the
claim. Except for the availability of dividends at the "Increased Dividend
Rate" as provided in the Certificate, the indemnification provided for in this
Section 7.03 shall be the sole remedy of the Purchasers for breach by the
Company of any such representations, warranties, covenants or agreements
contained in this Agreement, the Warrants, the Stockholders Agreement, the
Certificate or the certificate furnished by the Company pursuant to Section
6.02(e) of this Agreement or in connection with the issuance and sale of the
Preferred and the Warrants to the exclusion of any other remedy at law or equity
(including recision but excluding injunctive relief).
(b) The Company agrees to indemnify and hold harmless each of the
Purchasers and their respective partners, affiliates, officers, directors,
employees and duly authorized agents and each of their affiliates and each other
person controlling the Purchasers or any of their affiliates within the meaning
of either Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and any partner of any of
-------- ---
them against any loss, claim, liability, cost, expense or damage (including,
without limitation, reasonable counsel fees and disbursements and court costs)
(collectively, "Losses") arising from (i) the breach of any of the
------
representations or warranties made by the Company in this Agreement, the
Warrants, the Stockholders Agreement or the certificate furnished by the Company
at the Closing pursuant to Section 6.02(e) of this Agreement or (ii) the breach
or failure of the Company duly to perform or observe any covenant or agreement
on the part of the
29
Company to be performed or observed by the Company pursuant to the terms of this
Agreement, the Warrants, the Stockholders Agreement, the Certificate or the
certificate furnished by the Company at the Closing pursuant to Section 6.02(e)
of this Agreement or in connection with the issuance and sale of the Preferred
and the Warrants that has not been waived by the other party, whether or not
involving a claim, suit, action or proceeding brought by a third party
(including any governmental entity). The Purchasers acknowledge that, with
respect to any claims for indemnification under this Section 7.03 not involving
a claim, suit, action or proceeding brought by a third party, Losses are
intended to be limited to any decrease in value of the Purchasers' investment in
the Securities allegedly caused by the breach or failure of the Company giving
rise to such claim for indemnification.
(c) The Purchasers, severally and not jointly, agree to indemnify and
hold harmless the Company and its respective partners, affiliates, officers,
directors, employees and duly authorized agents and each of their affiliates and
each other person controlling the Company or any of its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act and any partner of any of them against any loss, claim, liability, cost,
expense or damage (including, without limitation, reasonable counsel fees and
disbursements and court costs) accruing from or resulting by reason of (i) the
breach of any of the representations or warranties made by the Purchasers in
this Agreement or in any certificate or other document or instrument furnished
by the Purchasers pursuant to this Agreement or (ii) the breach or failure of
any Purchaser duly to perform or observe any covenant or agreement on the part
of such Purchaser to be performed or observed that has not been waived by the
other party.
(d) If the indemnification provided for in this Section 7.03 (the
"Indemnification Obligation") is unavailable to or insufficient to hold
--------------- ----------
harmless an Indemnified Party under subsection (b) or (c) above in respect of
any loss, claim, liability, cost, expense or damage (or actions in respect
thereof) referred to therein, then each Indemnifying Party that would otherwise
have liability pursuant to subsection (b) or (c) above shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, liability, cost, expense or damage in such proportion as is appropriate
to reflect the relative benefits received by the Indemnifying Party on the one
hand and the Indemnified Party on the other from the sale and purchase of the
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the Indemnified Party failed
to give the notice required under subsection (e) below, then each Indemnifying
Party shall contribute to such amount paid or payable by such Indemnified Party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Indemnifying Party on the one hand and the
Indemnified Party on the other in connection with the statements, omissions or
actions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations.
(e) If a person entitled to indemnity hereunder (an "Indemnified
-----------
Party") asserts that any party hereto (the "Indemnifying Party") has become
----- ------------ -----
obligated to the Indemnified Party
30
pursuant to subsection (b) or (c) above, or if any suit, action, investigation,
claim or proceeding is begun, made or instituted as a result of which the
Indemnifying Party may become obligated to the Indemnified Party hereunder, the
Indemnified Party agrees to notify the Indemnifying Party promptly and to
cooperate with the Indemnifying Party, at the Indemnifying Party's expense, to
the extent reasonably necessary for the resolution of such claim or in the
defense of such suit, action or proceeding, including making available any
information, documents and things in the possession of the Indemnified Party
which are reasonably necessary therefor.
Notwithstanding the foregoing notice requirement, the right to
indemnification hereunder shall not be affected by any failure to give, or delay
in giving, notice unless, and only to the extent that, the rights and remedies
of the Indemnifying Party shall have been materially prejudiced as a result of
such failure or delay.
(f) The Indemnifying Party shall have the right to investigate,
defend, settle or otherwise handle, with the aforesaid cooperation, any claim,
suit, action or proceeding brought by a third party in such manner as the
Indemnifying Party may in its sole discretion deem appropriate; provided, that
--------
the Indemnifying Party will not consent to any settlement imposing any material
obligations on any other party hereto other than financial obligations for which
such party will be indemnified hereunder, unless such party has consented in
writing to such settlement. Notwithstanding anything to the contrary contained
herein, the Indemnifying Party may retain one firm of counsel to represent all
Indemnified Parties in such claim, action or proceeding; provided, however, that
-------- -------
in the event that the defendants in, or targets of, any such claim, action or
proceeding include more than one Indemnified Party, and any Indemnified Party
shall have reasonably concluded, based on the opinion of its own counsel, that
there exist one or more legal defenses available to it which are in conflict
with those available to any other Indemnified Party, then such Indemnified Party
may employ separate counsel to represent or defend it or any other person
entitled to indemnification and reimbursement hereunder with respect to any such
claim, action or proceeding in which it or such other person may become involved
or is named as defendant and the Indemnifying Party shall pay the reasonable
fees and disbursement of such counsel. Notwithstanding the Indemnifying Party's
election to assume the defense or investigation of such claim, action or
proceeding, the Indemnified Party shall have the right to employ separate
counsel and to participate in the defense or investigation of such claim, action
or proceeding, and the Indemnifying Party shall bear the expense of such
separate counsel, if (i) the Indemnifying Party shall not have employed counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party within a reasonable time after notice of the assertion of any such claim
or institution of any such action or proceeding or (ii) the Indemnifying Party
shall authorize the Indemnified Party to employ separate counsel at the
Indemnifying Party's expense.
(g) Notwithstanding the foregoing, in the event the Company is the
Indemnifying Party and is unable, pursuant to the terms of (i) the "Existing
--------
Financing Arrangements" (as defined in the Certificate), (ii) any of the
--------- ------------
Existing Financing Arrangements, as amended, waived
31
or supplemented after the Closing Date, but without giving effect to any such
amendments, waivers or supplements to the extent they have the effect of further
restricting in any material respect, as compared to the restrictions imposed by
Section 8.11 of the "Current Credit Agreement" (as defined in the Certificate)
and Section 4.07 of the "Indenture" (as defined in the Certificate) (the
"Existing Restricted Payment Covenants"), as determined in good faith by the
-------------------------------------
Company's Board of Directors, the Company's ability to satisfy its
Indemnification Obligations under this Section 7.03, or (iii) any new "Financing
Arrangements" (as defined in the Certificate) entered into by the Company or its
Subsidiaries after the Closing Date, but only to the extent such new Financing
Arrangements do not have the effect of further restricting in any material
respect, as compared to the restrictions imposed by the Existing Restricted
Payment Covenants, as determined in good faith by the Company's Board of
Directors, the Company's ability to satisfy its Indemnification Obligations
under this Section 7.03, the Company shall satisfy such obligations by issuing
to the Indemnified Party shares of Series A Preferred Stock with an aggregate
Liquidation Preference equal to 115% of the amount finally determined to be owed
with respect to such Indemnification Obligation or other obligation, as
applicable.
SECTION 7.04. Assignment; Restrictions on Transfer; No Third Party
----------------------------------------------------
Beneficiaries. This Agreement and rights, duties and obligations hereunder may
-------------
not be assigned, delegated or otherwise Transferred by the Company without the
prior written consent of the other parties hereto, except for a grant of
security interest in favor of senior lenders. Subject to compliance with Section
3.08, any Purchaser may assign, delegate or Transfer any or all of the Preferred
and/or Warrants owned by such Purchaser and all of their rights and obligations
hereunder to any transferee of Preferred or Warrants, and the assignee(s),
transferee(s), or recipient(s) shall have, to the extent of such assignment,
delegation or Transfer, the same rights and obligations and benefits as it would
if it (or they) were a Purchaser (or Purchasers) with respect to such Preferred
and/or Warrants. This Agreement and the provisions hereof shall be binding upon
and shall inure to the benefit of each of the parties and their respective
successors and permitted assigns. This Agreement is not intended to confer any
rights or benefits on any persons (other than the parties hereto) other than as
set forth in this Section 7.04.
SECTION 7.05. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original by the party
executing the same, but all of which together shall constitute one and the same
instrument.
SECTION 7.06. Titles and Subtitles. The titles and subtitles used in
--------------------
this Agreement are used for convenience and are not to be considered in
construing or interpreting this Agreement.
SECTION 7.07. Notices. Unless otherwise provided, any notice required
-------
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given (a) upon personal delivery to the party to be notified, (b)
three (3) days after deposit with the United States Post Office, by registered
or certified mail, postage prepaid, or (c) when received if
32
given by telecopier or email, in each case, addressed to the party to be
notified at the address indicated for each party hereto on the signature pages
hereof, or at such other address or number as such party may designate by ten
(10) days' advance written notice to the other parties.
SECTION 7.08. Payment of Fees and Expenses. The Company will pay (i)
----------------------------
at the Closing Date, all reasonable out-of-pocket fees and expenses, including
all reasonable legal fees of the Purchasers incurred in connection with the
negotiation and preparation of the Operative Documents (including the
transactions contemplated hereby and thereby) and due diligence expenses, (ii)
at the Closing Date, $420,000.00 to BTI and $180,000.00 to Phoenix as placement
fees and (iii) as and when incurred, (a) the reasonable costs and expenses
incurred by the Purchasers in connection with the insolvency or bankruptcy of
the Company or any Subsidiary or in connection with any work-out or
restructuring of the transaction contemplated hereby and by the other Operative
Documents and (b) all reasonable legal fees of the Purchasers, with respect to
any amendment, modification or waiver, at any later date, of any of the terms or
provisions of this Agreement or any other Operative Documents. If any action at
law or in equity is necessary to enforce or interpret the terms of this
Agreement (including Section 7.03), the Warrant or the Certificate, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
SECTION 7.09. Severability. If one or more provisions of this
------------
Agreement is held to be unenforceable under applicable law, such provision shall
be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms unless the effect thereof would be to alter materially
the effect of this Agreement on the parties hereto.
SECTION 7.10. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
--------------------------------------
SHALL BE GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CHOICE-OF-
LAW PROVISIONS THEREOF. THE PARTIES AGREE TO SUBMIT TO THE PERSONAL AND
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SERVING THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK WITH RESPECT TO THE ENFORCEMENT OR
INTERPRETATION OF THIS AGREEMENT OR THE PARTIES' OBLIGATIONS HEREUNDER. EACH
PARTY HERETO IRREVOCABLY WAIVES, TO THE FULL EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
33
SECTION 7.11. Entire Agreement. This Agreement and the documents
----------------
referred to herein constitute the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
SECTION 7.12. Waivers and Extensions. Any party to this Agreement
----------------------
may waive any right, breach or default which such party has the right to waive,
provided that such waiver will not be effective against the waiving party unless
it is in writing, is signed by such party, and specifically refers to this
Agreement. Waivers may be made in advance or after the right waived has arisen
or the breach or default waived has occurred. Any waiver may be conditional.
No waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof nor of any other
agreement or provision herein contained. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts. Notwithstanding the
foregoing, the Company may, with the affirmative written consent of the holders
of shares of Preferred representing over 66 2/3% of the aggregate liquidation
preference then outstanding, amend any provision of this Agreement.
SECTION 7.13. Titles and Headings. Titles and headings of sections
-------------------
of this Agreement are for convenience only and shall not affect the construction
of any provision of this Agreement.
SECTION 7.14. Exhibits and Schedules. Each of the exhibits and
----------------------
Schedules referred to herein is an integral part of this Agreement and is
incorporated herein by reference.
SECTION 7.15. Press Releases and Public Announcements. Public
---------------------------------------
announcements or disclosures which contain references to the names of the
Purchasers or any of their affiliates or the involvement by the Purchasers or
any of their affiliates in the transactions contemplated by this Agreement shall
be made only if mutually agreed upon by the Company and the Purchasers, except
to the extent required by law or by stock exchange regulation, provided, that
--------
any such required disclosure shall only be made after consultation with the
Purchasers.
SECTION 7.16. Remedies Cumulative. The remedies provided herein
-------------------
shall be cumulative and shall not preclude the assertion by any party hereto of
any other rights or the seeking of any remedies against the other party hereto,
except as provided in Section 7.03.
SECTION 7.17. Several Liability of the Purchasers. Nothing in this
-----------------------------------
Agreement shall be construed to impose on any Purchaser any liability for any
action or failure to act of any other Purchaser.
34
SECTION 7.18. Brokers. Each of the parties agrees to indemnify and
-------
hold the others harmless from and against any and all claims, liabilities or
obligations with respect to any fees or expenses arising in connection with such
indemnifying party's (or their affiliates') use of a broker or other
intermediary which is asserted by any person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
35
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
IMPAC GROUP, INC.
/S/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
36
Securities Purchase Agreement Signature Page
BT CAPITAL INVESTORS, L.P.
/S/ Xxxxxx Xxxx
By: --------------------------
Name: Xxxxxx Xxxx
Title: Senior Managing Director
The above Purchaser hereby purchases (i) 12,000 shares of Series A Preferred
Stock with an aggregate liquidation preference of $12,000,000.00 and (ii) one
Warrant to purchase 4,147.998 shares of Series A Common Stock at a price of
$12,000,000.00.
Address for Notices:
-------------------
BT CAPITAL INVESTORS, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy sent to (which copy shall not constitute notice):
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
37
Securities Purchase Agreement Signature Page
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
/s/ Xxxxxxxxxxx Xxxxxx
By: --------------------------
Name: Xxxxxxxxxxx Xxxxxx
Title: Vice President
The above Purchaser hereby purchases (i) 8,000 shares of Series A Preferred
Stock with an aggregate liquidation preference of $8,000,000 and (ii) one
Warrant to purchase 2,765.332 shares of Series A Common Stock at a price of
$8,000,000.00.
Address for Notices:
-------------------
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
c/o Phoenix Investment Partners Limited
00 Xxxxxxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxx, XX 00000
Attention: Private Placements Division
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy sent to (which copy shall not constitute notice):
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
38
