Exhibit 99.1
EXECUTION
COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF July 8, 2004
among
XXXXXXXXX TECHNOLOGIES CORPORATION
(a Delaware corporation)
and
XXXXXXXXX TECHNOLOGIES HOLDINGS LIMITED
(a U.K. corporation)
and
ESTERLINE ACQUISITION SUB, INC.
(a Delaware corporation)
and
XXXXX HOLDING CORPORATION
(a Delaware corporation)
and
XXXXXX XXXXX
as Shareholder Representative
Table of Contents
Page #
Article 1. DEFINITIONS............................................................................................1
Section 1.01 Certain Defined Terms.......................................................................1
Section 1.02 Interpretation.............................................................................10
Article 2. THE MERGER AND RELATED MATTERS........................................................................11
Section 2.01 The Merger.................................................................................11
Section 2.02 Effective Time.............................................................................11
Section 2.03 Effect of the Merger.......................................................................11
Section 2.04 Certificate of Incorporation; By-laws......................................................11
Section 2.05 Directors and Officers.....................................................................11
Section 2.06 Stockholders' Approval.....................................................................12
Section 2.07 Shareholder Representative.................................................................12
Section 2.08 Purchaser Representative...................................................................13
Article 3. CONVERSION OF SHARES; PAYMENT.........................................................................13
Section 3.01 Conversion of Purchaser Shares.............................................................13
Section 3.02 Conversion of and Payment for Company Shares...............................................14
Section 3.03 Remaining Shares; Dissenting Shares........................................................14
Section 3.04 Estimated Closing Date Balance Sheet.......................................................15
Section 3.05 Closing; Payment of Merger Consideration...................................................15
Section 3.06 Final Net Working Capital Payments.........................................................16
Section 3.07 Surrender of Shares........................................................................19
Section 3.08 Tax Withholding............................................................................20
Article 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................21
Section 4.01 Organization...............................................................................21
Section 4.02 Capital....................................................................................21
Section 4.03 Authority and Enforceability...............................................................22
Section 4.04 No Conflict................................................................................23
Section 4.05 Consents and Approvals.....................................................................23
Section 4.06 Financial Information......................................................................23
Section 4.07 Absence of Change..........................................................................23
Section 4.08 Employment Contracts.......................................................................25
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Section 4.09 Sales Representatives, Dealers and Distributors............................................25
Section 4.10 Brokers....................................................................................25
Section 4.11 Litigation.................................................................................25
Section 4.12 Title to Properties........................................................................26
Section 4.13 Personal Property Leases...................................................................26
Section 4.14 Inventory..................................................................................26
Section 4.15 Customers..................................................................................27
Section 4.16 Contracts..................................................................................27
Section 4.17 Permits....................................................................................27
Section 4.18 Accounts Receivable........................................................................28
Section 4.19 Environmental Matters......................................................................28
Section 4.20 Intellectual Property......................................................................29
Section 4.21 Tax Matters................................................................................30
Section 4.22 Employment Matters.........................................................................32
Section 4.23 Employee Benefit Matters...................................................................33
Section 4.24 Insurance..................................................................................35
Section 4.25 Compliance with Laws.......................................................................36
Section 4.26 Real Estate................................................................................36
Section 4.27 Warranty and Product Liability Matters.....................................................37
Section 4.28 Corporate Books and Records................................................................37
Section 4.29 Government Contracts.......................................................................37
Section 4.30 Absence of Unlawful Payments...............................................................38
Section 4.31 Bank Accounts..............................................................................38
Section 4.32 Previous Conduct of the Business...........................................................38
Section 4.33 Medical Device Administration Matters......................................................38
Section 4.34 Discontinued Operations....................................................................39
Article 5. REPRESENTATIONS AND WARRANTIES OF PARENT, INTERMEDIATE PARENT AND PURCHASER...........................39
Section 5.01 Organization...............................................................................39
Section 5.02 Authority and Enforceability...............................................................39
Section 5.03 No Conflict................................................................................40
Section 5.04 Consents and Approvals.....................................................................40
Section 5.05 Financial Resources........................................................................40
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Section 5.06 Brokers....................................................................................40
Section 5.07 Solvency...................................................................................40
Section 5.08 Litigation.................................................................................40
Article 6. OBLIGATIONS BEFORE CLOSING............................................................................40
Section 6.01 Company's Covenants........................................................................40
Section 6.02 Parent, Intermediate Parent and Purchaser Covenants........................................44
Section 6.03 Insurance and Indemnification..............................................................45
Section 6.04 Filing Fees................................................................................45
Section 6.05 Affirmative Covenants of the Company and the Parent........................................45
Section 6.06 Confidential Information...................................................................46
Section 6.07 Public Announcement........................................................................47
Section 6.08 280G Vote..................................................................................47
Section 6.09 Transfer Taxes.............................................................................47
Section 6.10 Asbestos Testing...........................................................................47
Article 7. CONDITIONS PRECEDENT TO COMPANY'S PERFORMANCE.........................................................48
Section 7.01 Representations and Warranties of the Parent, the Intermediate Parent and the Purchaser....48
Section 7.02 Performance of the Parent, the Intermediate Parent and the Purchaser.......................48
Section 7.03 Absence of Litigation......................................................................48
Section 7.04 Parent, Intermediate Parent and Purchaser Certificates.....................................48
Section 7.05 Consents and Approvals.....................................................................48
Section 7.06 Certificate of Merger......................................................................48
Section 7.07 Escrow Agreement...........................................................................48
Section 7.08 Legal Opinion..............................................................................48
Section 7.09 Approvals..................................................................................49
Section 7.10 Corporate Approval by the Company..........................................................49
Section 7.11 Other Documents............................................................................49
Article 8. CONDITIONS PRECEDENT TO PARENT'S, INTERMEDIATE PARENT'S AND PURCHASER'S PERFORMANCE..................49
Section 8.01 Representations and Warranties.............................................................49
Section 8.02 Performance of the Company and the Subsidiaries............................................49
Section 8.03 Absence of Litigation......................................................................49
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Section 8.04 Certificate of the Company.................................................................50
Section 8.05 Good Standing Certificate..................................................................50
Section 8.06 Consents and Approvals.....................................................................50
Section 8.07 Certificate of Merger......................................................................50
Section 8.08 Escrow Agreement...........................................................................50
Section 8.09 Legal Opinion..............................................................................50
Section 8.10 Approvals..................................................................................50
Section 8.11 Corporate Approval.........................................................................50
Section 8.12 Other Documents............................................................................50
Section 8.13 Stock Option Plan..........................................................................51
Section 8.14 Bank Debt..................................................................................51
Section 8.15 Resignations...............................................................................51
Section 8.16 Nonforeign Affidavit.......................................................................51
Section 8.17 Employment Agreements......................................................................51
Section 8.18 Consulting Agreement.......................................................................51
Section 8.19 Success Payments...........................................................................51
Section 8.20 Pension Plans..............................................................................51
Article 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...........................................52
Section 9.01 Survival of Representations and Warranties.................................................52
Section 9.02 Shareholders' Indemnity....................................................................52
Section 9.03 Parent, Intermediate Parent, Purchaser and Surviving Corporation Indemnity.................53
Section 9.04 Joint and Several Obligation...............................................................54
Section 9.05 Procedure for Indemnification..............................................................54
Section 9.06 Claims Between Parent or Surviving Corporation and Stockholders............................55
Section 9.07 Payment....................................................................................55
Section 9.08 Certain Limitations as to Amounts of Recovery..............................................56
Section 9.09 Exclusive Remedy...........................................................................56
Section 9.10 Exclusion of Certain Damages...............................................................57
Section 9.11 Defense of Certain Disputes................................................................57
Section 9.12 Dispute Indemnity..........................................................................57
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Section 9.13 Payment of Dispute Losses..................................................................57
Section 9.14 Dispute Proceeds...........................................................................58
Article 10. BROKERS AND EXPENSES.................................................................................59
Section 10.01 Company's Broker...........................................................................59
Section 10.02 Purchaser's Broker.........................................................................59
Section 10.03 Expenses...................................................................................59
Article 11. MISCELLANEOUS........................................................................................59
Section 11.01 Further Documents or Actions...............................................................59
Section 11.02 Headings...................................................................................59
Section 11.03 Modification and Waiver....................................................................59
Section 11.04 Counterparts...............................................................................59
Section 11.05 Severability...............................................................................59
Section 11.06 XX Xxxx Balance. .........................................................................60
Section 11.07 Taxpayer Identification Numbers............................................................60
Article 12. PARTIES..............................................................................................60
Section 12.01 Rights of Parties..........................................................................60
Section 12.02 Assignment.................................................................................60
Article 13. NOTICES..............................................................................................60
Section 13.01 Notices....................................................................................60
Article 14. ARBITRATION AND GOVERNING LAW........................................................................63
Section 14.01 Arbitration and Governing Law..............................................................63
Section 14.02 Exclusive Means for Dispute Resolution.....................................................63
Article 15. TERMINATION..........................................................................................64
Section 15.01 Termination................................................................................64
Section 15.02 Effect of Termination......................................................................64
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Schedules
---------
Schedule 1.01 Disputes
Schedule 4.01(b) Subsidiary Exceptions
Schedule 4.02(a) Capitalization of the Company
Schedule 4.02(b)(i) Capitalization of the Wholly-Owned Subsidiaries
Schedule 4.02(b)(ii) Capitalization of the Majority-Owned Subsidiary
Schedule 4.04 No Conflict
Schedule 4.05 Company Consents and Approvals
Schedule 4.07 Absence of Change
Schedule 4.08 Employment Contracts
Schedule 4.09 Sales Representatives, Dealers and Distributors
Schedule 4.11 Litigation
Schedule 4.12 Title to Properties
Schedule 4.13 Personal Property Leases
Schedule 4.14 Inventory
Schedule 4.15 Customers
Schedule 4.16 Contracts
Schedule 4.17 Permits
Schedule 4.18 Accounts Receivable
Schedule 4.19 Environmental Matters
Schedule 4.20 Intellectual Property
Schedule 4.21(a) Filing of Tax Returns; Taxes Owed
Schedule 4.21(b) Tax Audits
Schedule 4.21(g) Net Operating Losses, Unused Foreign Tax Credits and Excess Charitable Contributions
Schedule 4.21(i) Parachute Payments
Schedule 4.21(k) Classification of Foreign Subsidiaries
Schedule 4.22 Employment Matters
Schedule 4.23(a)(i) Employment Benefit Plans
Schedule 4.23(a)(ii) Obligations for Additional Employee Benefit Plans; Modifications to Existing Plans
Schedule 4.23(a)(iii) Material Increase in Employee Benefit Plan Expense
Schedule 4.23(e) Title IV Plans
Schedule 4.23(j) Unfunded Plan Liabilities
Schedule 4.24 Insurance
Schedule 4.26(a) Owned Properties
Schedule 4.26(b) Leased Properties
Schedule 4.27 Warranty and Product Liability Matters
Schedule 4.31 Bank Accounts
Schedule 4.32 Previous Conduct of the Business
Schedule 4.34 Discontinued Operations
Schedule 5.04 Parent, Intermediate Parent and Purchaser Consents and Approvals
Schedule 7.09 Antitrust Approvals
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Exhibits
--------
Exhibit 1.01 Net Working Capital Calculation
Exhibit 2.02 Certificate of Merger
Exhibit 3.02(a) Affidavit of Lost Certificate
Exhibit 3.05(c) Escrow Agreement
Exhibit 3.05(d) Option Payments in Respect of Tax Gross-Up
Exhibit 3.05(e) Success Payments
Exhibit 7.04 Parent, Intermediate Parent and Purchaser Certificates
Exhibit 7.08 Form of Opinions of Counsel to Parent, Intermediate Parent and Purchaser
Exhibit 8.04 Company Officer's Certificate
Exhibit 8.09 Form of Opinion of Counsel to the Company
Exhibit 8.11 Company Officer's Certificate
Exhibit 8.16 Foreign Investment in Real Property Tax Act Affidavit
Exhibits 8.17(i) - (vi) Employment Agreements
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 8, 2004 (this
"Agreement") by and among Xxxxxxxxx Technologies Corporation, a Delaware
corporation (the "Parent"), Xxxxxxxxx Technologies Holdings Limited, a U.K.
corporation and wholly-owned subsidiary of Parent (the "Intermediate Parent"),
Esterline Acquisition Sub, Inc., a Delaware corporation and indirect wholly-
owned subsidiary of the Parent (the "Purchaser"), Xxxxx Holding Corporation, a
Delaware corporation (the "Company"), and Xxxxxx Xxxxx, as Shareholder
Representative.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and its Subsidiaries are in the business of
(i) medical device contract manufacturing for electromechanical products and
(ii) manufacturing power-switching devices primarily for the aerospace industry
(collectively, the "Business");
WHEREAS, the Boards of Directors of the Parent, the Intermediate
Parent, the Purchaser and the Company have each determined that it is in the
best interests of their respective stockholders for the Parent to acquire the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of
Directors of the Parent, the Intermediate Parent, the Purchaser and the Company
have each approved the merger (the "Merger") of the Purchaser with and into the
Company in accordance with the General Corporation Law of the State of Delaware
(the "DGCL") or other applicable law and upon the terms and subject to the
conditions set forth herein; and
WHEREAS, upon the approval of the Merger and adoption of this
Agreement by the Stockholders, the Shareholder Representative shall be appointed
as the true and lawful representative, proxy, agent and attorney-in-fact for
each Stockholder, to act for and on behalf of the Stockholders in connection
with the consummation of the transactions contemplated hereunder, to the extent
and in the manner provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, agreements and covenants hereinafter set forth, the
parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
-----------
SECTION 1.01 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings unless the
context otherwise requires:
"Actual Future Expenses" shall mean the actual fees, expenses,
taxes and other payments made by the Shareholder Representative on behalf of the
Company, the Stockholders or the Shareholder Representative following the
Effective Time in connection with the Merger and the consummation of all other
transactions contemplated in this Agreement and the other Transaction Documents,
including any payments required pursuant to Section 9.11 and Section 9.13.
"Affidavit of Lost Certificate" shall have the meaning assigned to
such term in Section 3.02(a).
"Affiliate" of any Person shall mean any other Person controlling,
controlled by or under common control with such first person, where "control"
means the possession, directly or indirectly, of the power solely or on a shared
basis to direct the management and policies of a person, whether through the
ownership of voting securities or otherwise.
"Agreement" shall have the meaning assigned to such term in the
preliminary statements hereof.
"Antitrust Filings" shall have the meaning assigned to such term in
Section 6.05(a).
"Appraisal Consideration" shall have the meaning assigned to such
term in Section 3.07(c).
"Appraisal Percentage" shall have the meaning assigned to such term
in Section 3.07(c).
"Appraisal Premium" shall have the meaning assigned to such term in
Section 9.02(f).
"Balance Sheet Review Period" shall have the meaning assigned to
such term in Section 3.06(a).
"Bank Debt" shall mean all amounts outstanding as of the Closing
under the Credit Agreements together with interest, fees and expenses which are
required to be paid to the Lender, Xxxxx Fargo Bank, National Association and
any other creditor under a Credit Agreement in connection with the final payment
and termination of the Credit Agreements.
"Business" shall have the meaning assigned to such term in the
preliminary statements of this Agreement.
"CERCLA" shall have the meaning assigned to such term in Section
4.19(a)(i).
"Certificate of Merger" shall have the meaning assigned to such
term in Section 2.02.
"Clean Water Act" shall have the meaning assigned to such term in
Section 4.19(a)(i).
"Closing" shall have the meaning assigned to such term in Section
3.05.
"Closing Date" shall have the meaning assigned to such term in
Section 3.05.
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"Closing Date Balance Sheet" shall have the meaning assigned to
such term in Section 3.06(a).
"Closing Merger Consideration" shall have the meaning assigned to
such term in Section 3.02(a)(i)(A).
"Code" shall mean the Internal Revenue Code of 1986, as amended
through the date hereof, and the rulings and regulations promulgated thereunder.
"Company" shall have the meaning assigned to such term in the
preliminary statements of this Agreement.
"Company Common Stock" shall mean the common stock, $.10 par value
per share, of the Company.
"Company IP" shall have the meaning assigned to such term in
Section 4.20(a).
"Confidential Information" shall have the meaning assigned to
such term in Section 6.06.
"Credit Agreements" shall mean (i) that certain Credit Agreement,
dated as of November 20, 1998, as amended, between the Company, certain
subsidiaries of the Company as guarantors thereunder, and the Lender; (ii) that
certain Promissory Note dated as of March 26, 2002, executed by LIC in favor of
Xxxxx Fargo Bank, National Association and associated documentation; and (iii)
any other credit agreement or debt facility (other than trade debts incurred in
the ordinary course of business) to which the Company or any Subsidiary is a
party or by which its assets are encumbered.
"DGCL" shall have the meaning assigned to such term in the
preliminary statements of this Agreement.
"Disclosing Party" shall have the meaning assigned to such term in
Section 6.06.
"Discontinued Operations" shall mean any entity in which the
Company or a Subsidiary owned more than fifty percent (50%) of such entity's
outstanding voting securities (other than an equity interest owned by the
Company or a Subsidiary in publicly traded companies held in money market and
similar short-term investment accounts), or any operating division of the
Company or any Subsidiary, in either case owned within the three (3) years prior
to the date of this Agreement, which the Company or such Subsidiary, as the case
may be, no longer owns (whether because of a sale of such equity interest, sale
of its assets, liquidation or dissolution of such entity or other means).
"Dispute Indemnified Party" shall have the meaning assigned to such
term in Section 9.12.
"Dispute Losses" shall have the meaning assigned to such term in
Section 9.12.
"Dispute Notice" shall have the meaning assigned to such term in
Section 3.06(a).
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"Dispute Proceeds" shall have the meaning assigned to such term in
Section 9.14.
"Disputes" shall mean those disputes between certain Subsidiaries
and Xxxxxx Laboratories, Escatec SDN BHD and Xxxx Molding, as further described
on Schedule 1.01.
"Dissenting Shares" shall have the meaning assigned to such term in
Section 3.03(a).
"Dissenting Stockholders" shall have the meaning assigned to such
term in Section 3.03(a).
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Effective Time" shall have the meaning assigned to such term in
Section 2.02.
"Environmental Law" shall have the meaning assigned to such term in
Section 4.19(a)(i).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended through the date hereof, and the rulings and regulations
promulgated thereunder.
"Escrow Agent" shall have the meaning assigned to such term in
Section 3.05(c).
"Escrow Agreement" shall have the meaning assigned to such term in
Section 3.05(c).
"Escrow Amount" shall have the meaning assigned to such term in
Section 3.05(c).
"Escrow Fraud Payment" shall have the meaning assigned to such term
in Section 9.08(b).
"Estimated Closing Date Balance Sheet" shall have the meaning
assigned to such term in Section 3.04.
"Estimated Final Net Working Capital" shall have the meaning
assigned to such term in Section 3.04.
"Estimated Future Expenses" shall mean all fees, expenses, taxes
and other payments which are or may be required to be made by or on behalf of
the Company, the Stockholders or the Shareholder Representative in connection
with the Merger and the consummation of all other transactions contemplated in
this Agreement and the other Transaction Documents, including any payments
required pursuant to Section 9.11 and Section 9.13, in the sole opinion of the
Shareholder Representative.
"Excess Appraisal Shares" shall have the meaning assigned to such
term in Section 9.02(f).
"Expiration Date" shall have the meaning assigned to such term in
Section 9.01.
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"FDA" shall have the meaning assigned to such term in Section 4.33.
"Final Net Working Capital" shall have the meaning assigned to such
term in Section 3.06(a).
"Financial Expert" shall have the meaning assigned to such term in
Section 3.06(b).
"Financial Statements" shall have the meaning assigned to such term
in Section 4.06.
"Fraud" shall mean actual fraud.
"GAAP" shall mean United States generally accepted accounting
principles and practices in effect from time to time.
"Governmental Authority" shall mean any United States federal,
state or local or any foreign government, governmental, regulatory or
administrative authority, agency or commission, or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hazardous Substances" shall mean any toxic, hazardous or noxious
substance, material or waste, the treatment, handling, storage, transportation
or Release of which is regulated by any Governmental Authority, including, but
not limited to, petroleum or constituents thereof, asbestos or any asbestos-
containing material of any kind or character which is now or may become friable
and polychlorinated biphenyls, or any other materials or substances designated
as "hazardous substances" pursuant to Section 311 of the Clean Water Act,
defined as "hazardous waste" pursuant to Section 1004 of RCRA, or defined as
"hazardous substances" pursuant to Section 101 of CERCLA.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rulings and regulations promulgated thereunder.
"Indemnifying Party" shall have the meaning assigned to such term
in Section 9.05.
"Indemnitee" shall have the meaning assigned to such term in
Section 9.05.
"Indemnity Claim" shall have the meaning assigned to such term in
Section 9.13(a).
"Indemnity Claim Notice" shall have the meaning assigned to such
term in Section 9.13(a).
"Initial Escrow Deposit" shall have the meaning assigned to such
term in Section 3.05(c).
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"Intellectual Property" shall have the meaning assigned to such
term in Section 4.20(d).
"Intermediate Parent" shall have the meaning assigned to such term
in the preliminary statements of this Agreement.
"JV Distribution" shall have the meaning assigned to such term in
Section 11.06.
"Leases" shall have the meaning assigned to such term in Section
4.26(b).
"Lender" shall mean Wachovia Bank, National Association as
successor-in-interest to First Union National Bank.
"LIC" shall mean Xxxxx International Corporation.
"Lien" means any encumbrance, hypothecation, infringement, lien,
mortgage, pledge, restriction, security interest, title retention or other
security arrangement, or any other adverse right or interest, charge or claim of
a similar nature of or on any asset, property or property interest; provided,
however, that the term "Lien" shall not include (a) liens for Taxes or
assessments which are not delinquent; (b) mechanics', landlords',
warehousemen's, materialmen's, contractors', workmen's, repairmen's and
carriers' liens, and other similar liens arising or incurred in the ordinary
course of business to secure amounts that are not past due; (c) the rights of
third-party suppliers or other vendors having possession of manufacturing
equipment; (d) rights of lessees, licensees and other third parties having a
right to possess or use assets in the ordinary course of business; (e) rights of
lessors, licensors and other third parties in property owned by them which is
leased to another Person or which another Person has a right to use or possess;
(f) with respect to real property, easements, rights-of-way, restrictions, minor
defects, encroachments or irregularities in title and other similar charges or
encumbrances not interfering with the use of such real property in the ordinary
course of business; (g) liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods in the ordinary course of business to secure
amounts that are not past due; and (h) liens for water and sewer charges.
"XXXXX" shall mean Xxxxx International Europe S.A.
"LIG" shall mean Xxxxx International Germany GmbH.
"LIUK" shall mean Xxxxx International U.K. Limited.
"Losses" shall have the meaning assigned to such term in
Section 2.07(b).
"LRE" shall mean LRE Technology Partner GmbH.
"Majority-Owned Subsidiary" shall have the meaning assigned to
such term in Section 4.02(b).
"March 31 Balance Sheet" shall mean the audited consolidated
balance sheet of the Company for the fiscal year ended March 31, 2004, and
accompanying notes.
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"Material Adverse Effect" shall mean a material adverse effect
upon the business, operations, assets, liabilities or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole.
"Material Contracts" shall have the meaning assigned to such term
in Section 4.16(a).
"Merger" shall have the meaning assigned to such term in the
preliminary statements of this Agreement.
"Merger Consideration" shall have the meaning assigned to such
term in Section 3.02(a).
"Minimum Indemnity Threshold" shall have the meaning assigned to
such term in Section 9.08(a).
"Net Working Capital" shall mean the total current assets of the
Company (excluding cash) less the total current liabilities of the Company.
The calculation of Net Working Capital as of the Valuation Date is attached as
Exhibit 1.01.
"Objection" shall have the meaning assigned to such term in Section
9.13(b).
"Objection Notice Period" shall have the meaning assigned to such
term in Section 9.13(b).
"Option Payments" shall have the meaning assigned to such term in
Section 3.05(d).
"Options" shall have the meaning assigned to such term in Section
4.02(a).
"Other Filings" shall have the meaning assigned to such term in
Section 6.05(a).
"Owned Real Property" shall have the meaning assigned to such
term in Section 4.26(a).
"Parent" shall have the meaning assigned to such term in the
preliminary statements of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" means all permits, authorizations, variances, notices,
approvals, registrations, certificates of completion or legal status,
certificates of occupancy, orders or other approvals or licenses granted by any
Governmental Authority.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, Governmental Authority, or other entity of any
kind.
"Plan" or "Plans" shall have the meaning assigned to such term in
Section 4.23(a).
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"Post-Closing Merger Consideration" shall have the meaning assigned
to such term in Section 3.02(a)(i)(B).
"Post-Closing Net Working Capital Upward Adjustment" shall have the
meaning assigned to such term in Section 3.06(c).
"Purchaser" shall have the meaning assigned to such term in the
preliminary statements of this Agreement.
"Purchaser Common Stock" shall mean the common stock, $0.01 par
value per share, of the Purchaser.
"Purchaser Indemnified Party" shall have the meaning assigned to
such term in Section 9.02.
"Purchaser Losses" shall have the meaning assigned to such term in
Section 9.02.
"RCRA" shall have the meaning assigned to such term in Section
4.19(a)(i).
"Real Property" shall mean the real property used by the Company
or by any Subsidiary in the conduct of the Business as currently conducted,
including the Owned Real Property.
"Receivables" shall have the meaning assigned to such term in
Section 4.18.
"Receiving Party" shall have the meaning assigned to such term in
Section 6.06.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment of Hazardous Substances (including without
limitation, the abandonment or disposal of barrels, containers or other
receptacles containing any Hazardous Substances).
"Remaining Shares" shall have the meaning assigned to such term in
Section 3.03(a).
"Remaining Stockholders" shall have the meaning assigned to such
term in Section 3.03(a).
"Representatives" shall have the meaning assigned to such term in
Section 6.06.
"Sales Representative Agreements" shall have the meaning assigned
to such term in Section 4.09.
"Shareholder Indemnified Party" shall have the meaning assigned to
such term in Section 9.03.
"Shareholder Losses" shall have the meaning assigned to such term
in Section 9.03.
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"Shareholder Representative" shall have the meaning assigned to
such term in Section 2.07(a).
"Shares" shall mean shares of Company Common Stock.
"Solvent" shall mean, as to any Person at any time, that (a)
the fair value of the property of such Person is greater than the amount of such
Person's liabilities (including probable contingent liabilities) as such value
is established and liabilities evaluated for purposes of Section 101(31) of the
Bankruptcy Code and for purposes of the Uniform Fraudulent Transfer Act, (b) the
present fair saleable value of the property of such Person is not less than the
amount that will be required to pay the probable liabilities of such Person on
its debts as they become absolute and mature considering all financing
alternatives and potential asset sales reasonably available to such Person, (c)
such Person is able to realize upon its property and pay its debts and other
liabilities (including probable contingent liabilities) as they mature in the
ordinary course of business, (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature and (e) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital with which to conduct its present or presently proposed business.
"Stock Option Plan" means the Company's Non-Qualified Stock Option
Plan.
"Stockholders" shall mean all holders of Shares (and all
holders of Options under the Stock Option Plan as of the Closing Date to the
extent such holders and the Company have agreed to exercise their Options and be
treated as Stockholders, whether or not any Shares are issued to such Option
holder), except that Dissenting Stockholders and Remaining Stockholders shall
not be considered Stockholders to the extent that the rights, powers and
obligations provided to such Persons under Section 262 of the DGCL are
inconsistent with the rights, powers and obligations of Stockholders hereunder.
"Subsidiaries" or "Subsidiary" shall have the meanings assigned to
such terms in Section 4.02(b).
"Success Payments" shall have the meaning assigned to such term in
Section 3.05(e).
"Surviving Corporation" shall have the meaning assigned to
such term in Section 2.01.
"Tax" or "Taxes" shall mean (a) any federal, state, local, or
foreign income, gross receipts, business and occupation, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code ss. 59A), customs duties, capital
stock, franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not, and (b) liability in respect of any items
described in clause (a) payable by reason of contract assumption, transferee
liability, operation of law or Treasury Regulation Section 1.1502-6(a).
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"Tax Authority" shall mean the Internal Revenue Service and
any other domestic or foreign Governmental Authority responsible for the
administration of any Taxes.
"Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Termination Payment" shall have the meaning set forth in Section
15.02(a).
"Title IV Plan" shall have the meaning set forth in Section
4.23(e).
"to the knowledge of the Company" or words of similar import
shall mean the actual knowledge of Xxxxxx Xxxxx, Xxxx Xxxx, Xxxx-Xxxxxx Sigaud,
Xxxxxx Xxxxxxxxx, Xxxxxxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxxx Bauthian, Jorg
Xxxxxx, Xxxxxx Xxx, Xxxxxxx Key, and Xxxxxx Xxxxxx and, solely with respect to
the representations contained in Section 4.22 and Section 4.23, Xx Xxxx Xxxx
with respect to LIC only and Xxxxxxx Xxxxxxx with respect to LRE only.
"Transaction Documents" shall mean this Agreement, the Escrow
Agreement and each of the other agreements, documents and instruments required
to be delivered by any of the parties at or before the Closing in accordance
with the terms and provisions hereof.
"Unlawful Payment" shall have the meaning set forth in Section
4.30.
"Valuation Date" shall mean December 31, 2003.
"Valuation Date Exchange Rate" shall mean the exchange rate or
rates used to convert foreign currency amounts into Dollars in calculating the
Valuation Date Net Working Capital.
"Valuation Date Net Working Capital" shall mean the Net
Working Capital of the Company as of the Valuation Date, as reflected in the
interim consolidated balance sheet of the Company for the period ended on the
Valuation Date.
"Wholly-Owned Subsidiaries" shall have the meaning assigned to
such term in Section 4.02(b).
SECTION 1.02 Interpretation.
(a) Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
(b) References to "Article", "Section", "subsection" or "Exhibit"
shall be to Articles, Sections, subsections or Exhibits, respectively, of this
Agreement, unless otherwise specifically provided.
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(c) Any reference to a document includes any amendments or
supplements to, or replacements of, such document, but excludes all amendments,
supplements or replacements made in violation of this Agreement.
ARTICLE 2.
THE MERGER AND RELATED MATTERS
------------------------------
SECTION 2.01 The Merger. Upon the terms and subject to the
conditions of this Agreement, and in accordance with the DGCL, at the Effective
Time the Purchaser shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of the Purchaser shall cease and the
Company shall continue as the surviving corporation of the Merger (the Company
from and after the Effective Time hereinafter referred to as the "Surviving
Corporation").
SECTION 2.02 Effective Time. Upon the terms and subject to the
conditions of this Agreement, as soon as practicable on or after the Closing
Date the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") substantially in the form
attached hereto as Exhibit 2.02 with the Secretary of State of the State of
Delaware, in such form as is required by, and executed in accordance with the
applicable provisions of, the DGCL (the date and time of such filing being
hereinafter referred to as the "Effective Time").
SECTION 2.03 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement and the applicable
provisions of the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and the Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities, obligations and duties of the
Company and the Purchaser shall become the debts, liabilities, obligations and
duties of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation; By-laws.
(a) At the Effective Time, the certificate of incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended in accordance with the applicable provisions of the DGCL and such
certificate of incorporation, and subject to Section 6.03 hereof.
(b) At the Effective Time, the by-laws of the Purchaser, as in
effect immediately prior to the Effective Time, shall be the by-laws of the
Surviving Corporation until thereafter amended in accordance with the applicable
provisions of the DGCL, the certificate of incorporation and such by-laws, and
subject to Section 6.03 hereof.
SECTION 2.05 Directors and Officers. The directors and officers of
the Purchaser immediately prior to the Effective Time shall be the initial
directors and officers of the Surviving Corporation, each to hold office in
accordance with the certificate of incorporation and by-laws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified.
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SECTION 2.06 Stockholders' Approval. The Company, acting through
its Board of Directors, shall, in accordance with the DGCL and the Company's
certificate of incorporation and by-laws, as soon as is reasonably practicable:
(a) seek to obtain approval of the Merger by the vote or the consent of
Stockholders as required by the DGCL and its certificate of incorporation and
by-laws, (b) subject to its fiduciary duties under applicable laws, recommend
to the Stockholders approval of the Merger, and (c) distribute to the
Stockholders appropriate materials to facilitate the surrender of the
certificates representing the Shares. The Company will provide the Parent copies
of all disclosure materials delivered to Stockholders in the solicitation of
Stockholders' approval of the Merger.
SECTION 2.07 Shareholder Representative.
(a) In the event that the Merger is approved by the Stockholders,
and effective upon such approval without further act of any Stockholder,
Xxxxxx Xxxxx shall be appointed as their true and lawful representative, proxy,
agent and attorney-in-fact (the "Shareholder Representative") for a term that
shall be continuing and indefinite and without a termination date except as
otherwise provided herein, to act for and on behalf of the Stockholders in
connection with or relating to the Transaction Documents and the Merger and in
accordance with the procedures approved by the Stockholders, including, without
limitation, to give and receive notices and communications, to receive and
accept service of legal process in connection with any proceeding arising under
the Transaction Documents or in connection with the Merger, to review and
confirm the amount of the Final Net Working Capital, to receive and deliver
amounts comprising the Closing Merger Consideration and the Post-Closing Merger
Consideration, to authorize delivery of cash from the Escrow Amount in
satisfaction of claims by a Purchaser Indemnified Party pursuant to Article 9
hereof, to object to or accept any claims by a Purchaser Indemnified Party
pursuant to Article 9 hereof, to agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such amounts or claims, to make any
payment to a Dispute Indemnified Party pursuant to Article 9, and to take all
actions necessary or appropriate in the sole opinion of the Shareholder
Representative for the accomplishment of the foregoing. Such agency may be
changed at any time and from time to time by the action of Stockholders holding
more than fifty percent (50%) of the issued and outstanding Shares that approved
the Merger, and shall become effective upon not less than thirty (30) days prior
written notice to the Parent. Except as provided in the foregoing sentence, in
the event that for any reason the most recent Shareholder Representative shall
no longer be serving in such capacity, including, without limitation, as a
result of the death, resignation or incapacity of the Shareholder
Representative, the outgoing Shareholder Representative shall appoint a
successor Shareholder Representative, and if the outgoing Shareholder
Representative fails or is unable to appoint a successor, then the Stockholders
holding more than fifty percent (50%) of the issued and outstanding Shares that
approved the Merger shall appoint such successor, such that at all times there
will be a Shareholder Representative with the authority provided hereunder. Any
change in the Shareholder Representative pursuant to the foregoing sentence
shall become effective upon delivery of written notice of such change to the
Parent. The Shareholder Representative shall receive such compensation as shall
be determined by the Board of Directors of the Company or by any one or more
individuals authorized to determine the same. Notices or communications to or
from the Shareholder Representative by or to any of the parties to the
Transaction Documents shall constitute notice to or from each of the
Stockholders.
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(b) The Shareholder Representative shall not be liable for any act
done or omitted hereunder as Shareholder Representative in the absence of gross
negligence and willful misconduct on his or her part (which shall be deemed not
to exist if the Shareholder Representative acted in good faith). The
Stockholders shall jointly and severally indemnify the Shareholder
Representative and hold the Shareholder Representative harmless from and against
any and all damages, actions, proceedings, demands, liabilities, losses, taxes,
fines, penalties, costs, claims and expenses (including, without limitation,
reasonable fees of counsel) of any kind or nature whatsoever (whether or not
arising out of third-party claims and including all amounts paid in
investigation, defense or settlement of the foregoing) (collectively, "Losses")
which may be sustained or suffered by the Shareholder Representative in
connection with the administration of its duties hereunder, except where such
Losses arise from or are the result of the Shareholder Representative's gross
negligence or willful misconduct (which shall be deemed not to exist if the
Shareholder Representative acted in good faith).
(c) Any decision, act, consent or instruction taken or given by the
Shareholder Representative pursuant to this Agreement shall be and constitute a
decision, act, consent or instruction of all Stockholders and shall be final,
binding and conclusive upon each such Stockholder, and the Escrow Agent and the
Parent may rely upon any such decision, act, consent or instruction of the
Shareholder Representative as being the decision, act, consent or instruction of
each and every Stockholder. The Escrow Agent and the Parent are hereby relieved
from any liability to any Person for any acts done by them in accordance with
such decision, act, consent or instruction of the Shareholder Representative;
provided that such acts are taken in good faith and absent gross negligence and
willful misconduct on the part of the Escrow Agent and the Parent respectively.
SECTION 2.08 Purchaser Representative. The Company and the
Shareholder Representative acknowledge and agree that the Purchaser and the
Intermediate Parent have appointed the Parent to give, take or make any consent,
demand, request, waiver, approval, notice or other action which may or must be
given, taken or made by or on behalf of the Purchaser or the Intermediate
Parent, and following the Merger, the Surviving Corporation, pursuant to this
Agreement. The Purchaser or the Intermediate Parent may, at any time and from
time to time revoke such designation and designate a different Person to act in
such capacity by thirty (30) days prior written notice to the Company and the
Shareholder Representative.
ARTICLE 3.
CONVERSION OF SHARES; PAYMENT
-----------------------------
SECTION 3.01 Conversion of Purchaser Shares. At the Effective Time,
by virtue of the Merger and without any action on the part of the Parent, the
Intermediate Parent, the Purchaser, the Company or the Stockholders, each share
of Purchaser Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock, $0.01 par value per share, of the Surviving
Corporation. Each certificate evidencing ownership of shares of Purchaser Common
Stock shall evidence ownership of such shares of capital stock of the Surviving
Corporation.
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SECTION 3.02 Conversion of and Payment for Company Shares. At the
Effective Time, by virtue of the Merger and without any action on the part of
the Parent, the Intermediate Parent, the Purchaser, the Company or the
Stockholders:
(a) each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section
3.02(b), any Remaining Shares and any Dissenting Shares) shall be cancelled and
converted automatically into the right to receive a pro rata portion of the
Closing Merger Consideration (less amounts reserved for payment for Estimated
Future Expenses in accordance with Section 3.07(b)) and the Post-Closing Merger
Consideration (collectively, the "Merger Consideration"), such pro rata portion
to be equal to one (1) divided by the total number of Shares outstanding as of
the Closing Date; and each Stockholder (except for the Remaining Stockholders
and the Dissenting Stockholders) shall thereafter cease to have any rights as a
Stockholder, other than (i) those rights to receive the Closing Merger
Consideration (less amounts reserved for payment for Estimated Future Expenses
in accordance with Section 3.07(b)) and the Post-Closing Merger Consideration,
upon surrender of the certificate or certificates evidencing such Shares or the
execution and delivery to the Company of an affidavit of lost certificate in the
form attached hereto as Exhibit 3.02(a) (the "Affidavit of Lost Certificate"),
subject to Section 3.07(e), and (ii) any rights granted to the Stockholders
pursuant to this Agreement and the other Transaction Documents.
(i) For purposes of this Agreement:
(A) "Closing Merger Consideration" shall be equal to One
Hundred and Forty Five Million Dollars ($145,000,000),
increased by the amount, if any, by which Estimated Final Net
Working Capital exceeds Valuation Date Net Working Capital and
reduced by (A) the Initial Escrow Deposit, (B) the Bank Debt,
(C) the amount, if any, by which Valuation Date Net Working
Capital exceeds Estimated Final Net Working Capital, (D) the
Option Payments and (E) the Success Payments; and
(B) "Post-Closing Merger Consideration" shall be equal
to the sum of (A) all amounts delivered to the Shareholder
Representative by the Escrow Agent for distribution to the
Stockholders, (B) the Post-Closing Net Working Capital Upward
Adjustment, if any, (C) the amounts, if any, by which Estimated
Future Expenses exceed Actual Future Expenses, and (D) all
Dispute Proceeds;
(b) each Share held in the treasury of the Company immediately
prior to the Effective Time shall be cancelled without any conversion thereof
and no payment or distribution shall be made with respect thereto.
SECTION 3.03 Remaining Shares; Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, Shares that are outstanding immediately prior to the Effective Time
and which are held by Stockholders who have not provided their written consent
to the Merger on or prior to the Effective Time in accordance with the DGCL and
the Company's certificate of incorporation and by-laws
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(collectively, the "Remaining Stockholders" and such shares, the "Remaining
Shares") shall not be converted into or represent the right to receive a pro
rata portion of the Merger Consideration. Remaining Stockholders who shall have
demanded properly in writing an appraisal of their Shares (the "Dissenting
Shares") in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Stockholders") shall be entitled to receive payment of the appraised
value of the Dissenting Shares held by them in accordance with the provisions of
such Section 262; provided, however, that all (i) Remaining Stockholders who are
not Dissenting Stockholders and (ii) Dissenting Stockholders who shall have
failed to perfect or who effectively have withdrawn or lost their rights to
appraisal of their Dissenting Shares under such Section 262, shall thereupon be
deemed to be Stockholders who have consented to the Merger and this Agreement,
they shall no longer be deemed Remaining Stockholders or Dissenting
Stockholders, their Shares shall no longer be deemed Dissenting Shares or
Remaining Shares and such Stockholders shall thereupon have the right to receive
a pro rata portion of the Merger Consideration pursuant to Section 3.02(a)
hereof, without any interest thereon, upon surrender of the certificate or
certificates evidencing such Shares or the execution and delivery to the Company
of an Affidavit of Lost Certificate, subject to Section 3.07(e).
(b) The Company shall give the Parent: (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments related thereto served pursuant to the DGCL and received
by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL. The Company
shall not, except with the prior written consent of the Parent, make any payment
with respect to any demands for appraisal or offer to settle or settle any such
demands.
SECTION 3.04 Estimated Closing Date Balance Sheet. No later than
two (2) business days prior to the Closing Date, the Company, in good faith,
shall prepare and deliver to the Purchaser an estimate of the Closing Date
Balance Sheet (the "Estimated Closing Date Balance Sheet"), including an
estimate of the consolidating balance sheets from each Subsidiary used in
creating the Estimated Closing Date Balance Sheet, based on the Company's and
its Subsidiaries' books and records and other information then available, to
determine an estimate of the Final Net Working Capital, provided that in the
preparation of such estimate, any monetary amount in a currency other than
Dollars shall be translated into Dollars using the Valuation Date Exchange Rate
(the "Estimated Final Net Working Capital"). The Company will prepare the
Estimated Closing Date Balance Sheet and the Estimated Final Net Working Capital
consistent with the methodology used in calculating the Valuation Date Balance
Sheet and the Valuation Date Net Working Capital, which calculation is set forth
in Exhibit 1.01.
SECTION 3.05 Closing; Payment of Merger Consideration. The closing
of the Merger (the "Closing") shall take place at 10:00 a.m. New York City time
at the offices of Xxxxxx, Xxxxxx-Xxxxxxx, Colt & Mosle LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, xx the third business day after all conditions to Closing shall
have been satisfied or waived or at such other time or on such other date or at
such other place as the parties hereto may mutually agree upon in writing (the
day on which the Closing takes place being the "Closing Date"); provided,
however, that in no event shall the Closing Date occur after August 30, 2004. At
Closing, the Parent, Intermediate Parent or the Purchaser shall:
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(a) pay to the Shareholder Representative, for distribution to the
Stockholders in accordance with and subject to Section 3.07, the Closing Merger
Consideration;
(b) pay to the Lender, Xxxxx Fargo Bank, National Association and
any other creditor under any Credit Agreement, the Bank Debt;
(c) deposit an aggregate amount of Twelve Million Five Hundred
Thousand Dollars ($12,500,000) (the "Initial Escrow Deposit") in escrow with
JPMorgan Chase Bank as escrow agent (the "Escrow Agent"), pursuant to the terms
of an escrow agreement substantially in the form of Exhibit 3.05(c) hereto (the
"Escrow Agreement"), among the Parent, the Shareholder Representative and the
Escrow Agent, as security for the Stockholders' indemnification obligations
arising under Article 9 hereof, for payments to the Parent pursuant to Section
3.06(d), if any, and as satisfaction for other amounts contemplated by this
Agreement. The amount held in escrow by the Escrow Agent at any time and from
time to time shall be referred to as the "Escrow Amount". Six (6) months after
the Closing Date, the Escrow Agent shall release and deliver to the Shareholder
Representative for distribution to the Stockholders a portion of the Escrow
Amount equal to the Escrow Amount at such time, if any, less the amount of any
pending indemnification claims properly made by a Purchaser Indemnified Party
pursuant to Article 9, less Seven Million Five Hundred Thousand Dollars
($7,500,000). Eighteen (18) months after the Closing Date, the Escrow Agent
shall release and deliver to the Shareholder Representative for distribution to
the Stockholders the remaining portion of the Escrow Amount at such time, if
any, less the amount of any pending indemnification claims properly made by a
Purchaser Indemnified Party pursuant to Article 9. As any pending
indemnification claims are resolved, the Escrow Agent shall, after making any
payment related to such claims, release and deliver to the Shareholder
Representative for distribution to the Stockholders any amounts remaining from
the amounts reserved for such claims. All amounts delivered to the Shareholder
Representative by the Escrow Agent for distribution to the Stockholders shall be
Post-Closing Merger Consideration or additional Appraisal Consideration, as the
case may be, and allocated among the Stockholders by the Shareholder
Representative pro rata in accordance with Section 3.02(a) or paid to the
Surviving Corporation as Appraisal Consideration in accordance with Section
3.07(c);
(d) pay to the holders of the Options such amounts as the Company
has negotiated in consideration of the termination of any rights to tax gross-up
payments with respect to the Options, as set forth on Exhibit 3.05(d) hereto
(the "Option Payments"); and
(e) pay to officers, directors or employees of the Company or any
Subsidiary any amounts that are due upon the Closing Date as success fees,
special bonuses or other amounts pursuant to written agreements between such
individuals and the Company or its Subsidiaries, as the case may be, less any
such amounts which are subject to Stockholder vote pursuant to Section 6.08
hereof and are not approved by the Stockholders, as set forth on Exhibit 3.05(e)
hereto (the "Success Payments").
SECTION 3.06 Final Net Working Capital Payments.
(a) As soon as is reasonably practicable, (i) the Surviving
Corporation shall cause Deloitte & Touche LLP, at the Surviving Corporation's
expense, to perform an audit of the
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special purpose balance sheet of the Company and the Subsidiaries as of the
Closing Date, including consolidating balance sheets for each Subsidiary (the
"Closing Date Balance Sheet"), prepared on a basis consistent with the
consolidated balance sheet of the Company as of the Valuation Date, provided,
that any monetary amount in a currency other than Dollars shall be translated
into Dollars using the Valuation Date Exchange Rate and (ii) not later than
sixty (60) days following the Closing Date, the Parent shall provide the
Shareholder Representative with a copy of the Closing Date Balance Sheet,
accompanied by the report of Deloitte & Touche LLP stating that the Closing Date
Balance Sheet was prepared on a basis consistent with the balance sheet of the
Company as of the Valuation Date, provided, that any monetary amount in a
currency other than Dollars shall be translated into Dollars using the Valuation
Date Exchange Rate. The Closing Date Balance Sheet provided to the Shareholder
Representative shall be accompanied by consolidating balance sheets for each
Subsidiary and by detailed schedules setting forth the Net Working Capital of
the Company as of the Closing Date (the "Final Net Working Capital"), as
reflected in the Closing Date Balance Sheet and as calculated in accordance with
Exhibit 1.01. The Parent shall, at the Shareholder Representative's request,
provide the Shareholder Representative and his representatives access at all
reasonable times to the Surviving Corporation's and the Company's accountants,
personnel, properties, books and records, work papers, schedules and
calculations relating to the Closing Date Balance Sheet and the Final Net
Working Capital. On or before the thirtieth (30th) day following the Shareholder
Representative's receipt of the Closing Date Balance Sheet and such detailed
schedules (the "Balance Sheet Review Period"), the Shareholder Representative
shall be required to notify the Parent and the Surviving Corporation in writing
of any disputed items with respect to the Closing Date Balance Sheet or the
Final Net Working Capital. If the Parent or the Surviving Corporation receives
such notice on or before the last day of the Balance Sheet Review Period (the
"Dispute Notice"), the Parent and the Surviving Corporation shall negotiate with
the Shareholder Representative in good faith to resolve such dispute, such
negotiation to begin as soon as practicable (but in any case, no later than
thirty (30) days) after the Shareholder Representative has provided the Dispute
Notice; provided, however, that any and all amounts not then in dispute as set
forth in the Dispute Notice shall be paid promptly by the owing party hereto.
(b) Any dispute arising from the Closing Date Balance Sheet and the
calculation of the Final Net Working Capital of the Company that cannot be
resolved within such thirty (30) day period shall be submitted to a mutually
agreed upon accounting firm of recognized national standing (the "Financial
Expert") within five (5) days following the expiration of such thirty (30) day
period. The Financial Expert shall resolve all such items in dispute within
thirty (30) days after the Financial Expert has been given such dispute to
resolve. The decision of the Financial Expert shall be final and binding on the
parties hereto. Within five (5) days of the resolution of such dispute (whether
by agreement between the parties or as a result of a decision by the Financial
Expert) the Parent shall cause the Surviving Corporation to make any required
adjustments to the Closing Date Balance Sheet and the calculation of the Final
Net Working Capital and such adjusted Closing Date Balance Sheet and the
calculation of the Final Net Working Capital shall be final and binding on the
parties hereto.
If the Dispute Notice sets forth a definitive figure for the Final Net
Working Capital, as determined by the Shareholder Representative, and the Final
Net Working Capital, as determined by the Financial Expert is greater than or
equal to the figure determined by the Shareholder Representative, all fees and
expenses of the Financial Expert shall be borne by the Parent.
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If the Dispute Notice sets forth a definitive figure for the Final Net
Working Capital, as determined by the Shareholder Representative, and the Final
Net Working Capital, as determined by the Financial Expert is less than or equal
to the figure determined by the Surviving Corporation, all fees and expenses of
the Financial Expert shall be borne by the Shareholder Representative.
If the Dispute Notice sets forth a definitive figure for the Final Net
Working Capital, as determined by the Shareholder Representative, and the Final
Net Working Capital, as determined by the Financial Expert, is greater than the
figure determined by the Surviving Corporation but less than the figure
determined by the Shareholder Representative, the fees and expenses of the
Financial Expert shall be shared by the Shareholder Representative and the
Parent in proportion to the amount by which the Financial Expert's figure
differed from the figure calculated by the Shareholder Representative and the
Surviving Corporation, respectively. By way of example only, if the Final Net
Working Capital, as determined by the Surviving Corporation is Ten Dollars
($10), and the Final Net Working Capital, as determined by the Shareholder
Representative is Twenty Dollars ($20) and the Final Net Working Capital, as
determined by the Financial Expert is Seventeen Dollars ($17), the Shareholder
Representative would bear Thirty Percent (30%) of the fees and expenses of the
Financial Expert and the Parent would bear the remainder of such fees and
expenses.
If the Dispute Notice does not set forth a definitive figure for the Final
Net Working Capital, as determined by the Shareholder Representative, the fees
and expenses of the Financial Expert shall be allocated between the Shareholder
Representative and the Parent by the Financial Expert in accordance with the
principles set forth in the foregoing three (3) paragraphs.
(c) If the Final Net Working Capital is greater than the Estimated
Final Net Working Capital, then the Parent shall cause the Surviving Corporation
to pay the amount of such excess net of any Appraisal Consideration, to the
Shareholder Representative for distribution to the Stockholders in cash (the
"Post-Closing Net Working Capital Upward Adjustment").
(d) If the Final Net Working Capital is less than the Estimated
Final Net Working Capital, then the Escrow Agent shall pay the amount of such
shortfall to the Parent from the Escrow Amount.
(e) Any payment to the Parent or the Shareholder Representative, as
the case may be, based on the Final Net Working Capital shall be made within ten
(10) business days following agreement on or final determination of the Closing
Date Balance Sheet and the Final Net Working Capital. If a payment due under
this subsection (e) is not made within such ten (10) business day period,
interest shall accrue on such unpaid amounts at a rate of twelve percent (12%)
per annum. Any Post-Closing Net Working Capital Upward Adjustment paid to the
Shareholder Representative for distribution to the Stockholders shall be
Post-Closing Merger Consideration and allocated by the Shareholder
Representative among the Stockholders pro rata in accordance with Section
3.02(a).
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SECTION 3.07 Surrender of Shares.
(a) Pursuant to Section 3.05, the Parent, the Intermediate Parent
or the Purchaser shall pay to the Shareholder Representative on the Closing
Date, for the benefit of the Stockholders, the Closing Merger Consideration, in
immediately available funds to the account designated by the Shareholder
Representative or his designee. Each Stockholder whose Shares were converted
pursuant to Section 3.02(a) or who are deemed to be Stockholders who have
consented to the Merger pursuant to Section 3.03 shall thereafter surrender to
the Shareholder Representative or his designee the certificate representing such
Shares or an Affidavit of Lost Certificate. Upon the delivery of such
certificate or Affidavit of Lost Certificate, the Shareholder Representative
shall pay to the holder of such Shares in exchange therefor the amount due such
holder as set forth in Section 3.02(a) by check or wire transfer to the account
designated in writing by such holder subject to subsection (e) below.
(b) Prior to each distribution of Merger Consideration the
Shareholder Representative shall pay or set aside and reserve that amount which
the Shareholder Representative determines in his sole opinion is or may be
required to meet Estimated Future Expenses. In the event the amount of such
reserve exceeds Actual Future Expenses, the Shareholder Representative shall
distribute the excess to those Stockholders entitled to receive Merger
Consideration on a pro rata basis in accordance with Section 3.02(a), at the
times determined by the Shareholder Representative in his sole opinion, and such
amounts shall be deemed to be Post-Closing Merger Consideration. In no event
shall the Shareholder Representative, the Parent, the Intermediate Parent or the
Surviving Corporation be liable for Actual Future Expenses.
(c) In the event that appraisal and payment rights with respect to
the Dissenting Shares are duly exercised pursuant to Section 262 of the DGCL:
(i) the Shareholder Representative shall promptly deliver to
the Surviving Corporation that portion of the Merger Consideration (whether
received as Closing Merger Consideration or Post-Closing Merger Consideration)
which is equal to the product of (i) the percentage of the Shares outstanding at
Closing represented by the Dissenting Shares (the "Appraisal Percentage") and
(ii) the Merger Consideration;
(ii) in the event that the Shareholder Representative is
entitled to receive Post-Closing Merger Consideration from the Parent from time
to time, the Parent shall be entitled to withhold the portion of such
consideration that is equal to the product of (i) the Appraisal Percentage and
(ii) such consideration, if any; and
(iii) if the Post-Closing Merger Consideration is received
from a third party, including from the Escrow Agent, the Shareholder
Representative shall promptly deliver to the Surviving Corporation the portion
of such consideration that is equal to the product of (i) the Appraisal
Percentage and (ii) such consideration, if any;
(any amounts delivered or withheld pursuant to subsections (c)(i), (c)(ii) and
(c)(iii) collectively referred to hereinafter as the "Appraisal Consideration").
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The Surviving Corporation shall be solely responsible for payment
of all amounts in the event that appraisal and payment rights with respect to
the Dissenting Shares are duly exercised pursuant to Section 262 of the DGCL
(including amounts in excess of the Appraisal Consideration) and shall indemnify
the Shareholder Representative and the Stockholders and hold the Shareholder
Representative and the Stockholders harmless from and against any and all Losses
relating to, or arising as a result of a claim by, Dissenting Stockholders.
(d) At the Closing Date, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
any Shares thereafter on the records of the Company. From and after the
Effective Time, the holders of certificates evidencing ownership of Shares
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by applicable
law. If, after the Effective Time and through the eighteen (18) month
anniversary of the Effective Time, certificates of the Company or Affidavits of
Lost Certificates therefore are presented to the Surviving Corporation, they
shall be delivered to the Shareholder Representative and canceled and exchanged
for any cash payment due from the Shareholder Representative as provided in this
Section 3.07. No Stockholder shall be entitled to receive interest on any cash
payable upon the surrender of certificates representing Shares or the execution
and delivery of Affidavits of Lost Certificates.
(e) If any Stockholder (except any Dissenting Stockholder)
fails to surrender and exchange certificate(s) evidencing such Shares by
the eighteen (18) month anniversary of the Effective Time, the Shareholder
Representative shall deliver to the Surviving Corporation that portion of the
Merger Consideration (including any interest received with respect thereto)
which had been delivered to the Shareholder Representative for disbursement to
such holders, and thereafter such holders shall only be entitled to look to the
Surviving Corporation as general creditors thereof (subject to abandoned
property, escheat or similar laws) to receive amounts payable upon due surrender
of the certificates representing their Shares or the execution and delivery of
Affidavits of Lost Certificates, and shall not be entitled to receive any
interest thereon. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Shareholder Representative shall be liable to any
Stockholder for amounts to which such Stockholder is entitled under Section
3.02(a) which have been delivered to a public official pursuant to the
requirements of applicable abandoned property, escheat or similar law.
SECTION 3.08 Tax Withholding. The Parent, the Intermediate Parent
or the Purchaser, as the case may be, shall be entitled to deduct and withhold
from the consideration otherwise payable with respect to any Stockholder
pursuant to this Agreement (including, without limitation, any amount paid to
the Shareholder Representative for the benefit of any Stockholder) such amounts
that the Parent, the Intermediate Parent or the Purchaser, as the case may be,
may be required to deduct and withhold with respect to the making of such
payment under any provision of law. If the Parent, the Intermediate Parent or
the Purchaser, as the case may be, withholds any such amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
Stockholder in respect of which the Parent, the Intermediate Parent or the
Purchaser, as the case may be, made such deduction and withholding. On or prior
to the Closing Date, the Shareholder Representative shall provide the Parent
with any information reasonably requested by the Parent in writing regarding the
exercise or cancellation of any Option for which the full amount of withholding
taxes has not been paid in cash by the holder of such Option, including, without
limitation, the method of exercise and the number of Shares issued (or deemed
issued) to such Option holder.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE COMPANY
--------------
Except with respect to the Discontinued Operations, with respect to
which the Company only makes the representations and warranties set forth in
Section 4.34, the Company represents and warrants that:
SECTION 4.01 Organization.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and duly
authorized to carry on the business presently conducted by it. The Company is
qualified to do business in every other jurisdiction in which the nature of its
business or location of its properties requires such qualification, except where
the failure to so qualify could not reasonably be expected to have a Material
Adverse Effect. The copies of the Company's certificate of incorporation and
by-laws which have been furnished to the Purchaser are correct and complete and
reflect all amendments made thereto at any time prior to the date of this
Agreement.
(b) Except as set forth on Schedule 4.01(b), each of the
Subsidiaries is duly organized, validly existing and in good standing under the
laws its state or country of organization (or, to the extent applicable, the
equivalent status in such jurisdiction), and duly authorized to carry on the
business presently conducted by it. Each of the Subsidiaries is qualified to do
business in every other jurisdiction in which the nature of its business or
location of its properties requires such qualification, except where the failure
to so qualify could not reasonably be expected to have a Material Adverse
Effect. Except as set forth on Schedule 4.01(b), the copies of each of the
Subsidiaries' constituent documents, which have been furnished to the Purchaser,
are correct and complete and reflect all amendments made thereto at any time
prior to the date of this Agreement.
SECTION 4.02 Capital.
(a) Company. The authorized capital stock of the Company consists
of Two Million Shares (2,000,000) Shares. As of the date hereof Eight Hundred
and Five Thousand Two Hundred and Seventy Six (805,276) Shares are issued and
outstanding, all of which are duly authorized and validly issued, fully paid and
nonassessable and were issued in compliance with all applicable federal, state
and foreign securities laws, except for such instances of noncompliance which
could not reasonably be expected to have a Materially Adverse Effect. As of the
date hereof, the Company had reserved an aggregate of Ninety Thousand Five
Hundred and Fifty Six (90,556) Shares for issuance pursuant to the Stock Option
Plan. Stock options granted under the Stock Option Plan are referred to in this
Agreement as "Options". As of the date hereof, there were outstanding Options,
all of which are fully vested, to purchase an aggregate of Fifty Five Thousand
Two Hundred and Eighty (55,280) Shares. The outstanding Shares are the sole
outstanding shares of capital stock of the Company and except for the
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Options, there are no outstanding options, warrants, agreements, conversion
rights, preemptive rights, or other rights issued by the Company which may
permit or require any Person, now or in the future to subscribe for, purchase or
otherwise acquire any other securities of the Company. All Shares subject to
issuance upon exercise of the Options, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Schedule 4.02(a) lists
for each holder of Options as of the date hereof: (i) the name of such holder,
(ii) the number of Options held by such holder and (iii) the exercise price of
the Options.
(b) Subsidiaries. The Company owns, directly or indirectly, all of
the issued and outstanding capital stock of the companies listed on Schedule
4.02(b)(i) (collectively, the "Wholly-Owned Subsidiaries"). Except as set forth
on Schedule 4.02(b)(i), such capital stock is owned free and clear of all Liens,
and no other Person has any interest whatsoever in any of the capital stock of
the Wholly-Owned Subsidiaries. All of the shares of each of the Wholly-Owned
Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with all applicable federal,
state and foreign securities laws, except for such instances of noncompliance
which could not reasonably be expected to have a Materially Adverse Effect.
There are no other outstanding securities of the Wholly-Owned Subsidiaries and
there are no outstanding options, warrants, agreements, conversion rights,
preemptive rights, or other rights which may permit or require any Person, now
or in the future, to subscribe for, purchase or otherwise acquire any securities
of the Wholly-Owned Subsidiaries. The Company owns, directly or indirectly, the
equity participation in the company set forth on Schedule 4.02(b)(ii) (the
"Majority-Owned Subsidiary"). Except as set forth on Schedule 4.02(b)(ii), such
capital stock is owned free and clear of all Liens. The equity participation in
the Majority Owned Subsidiary owned by the Company has been duly authorized and
validly issued, is fully paid and nonassessable and has been issued in
compliance with all applicable federal, state, and foreign securities laws,
except for such instances of noncompliance which could not reasonably be
expected to have a Materially Adverse Effect. The remaining equity participation
in the Majority-Owned Subsidiary is owned by the party set forth in Schedule
4.02(b)(ii), and except as set forth on Schedule 4.02(b)(ii), there are no
outstanding options, warrants, agreements, conversion rights, preemptive rights,
or other rights issued by the Majority-Owned Subsidiary which may permit or
require any Person, now or in the future, to subscribe for, purchase or
otherwise acquire any securities of the Majority-Owned Subsidiary. The
Wholly-Owned Subsidiaries and the Majority-Owned Subsidiary are collectively
referred to as the "Subsidiaries" and individually as a "Subsidiary".
SECTION 4.03 Authority and Enforceability. The Company has all
necessary corporate power and authority to execute and deliver the Transaction
Documents, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery of the Transaction
Documents by the Company, the performance of its obligations thereunder, and the
consummation by the Company of the transactions contemplated thereby have been
duly authorized by all requisite corporate action on the part of the Company
(other than, with respect to the Merger, the approval of the Merger and the
adoption of this Agreement by the Stockholders). The Transaction Documents have
been duly executed and delivered by the Company, and (assuming due
authorization, execution and delivery by the Parent, the Intermediate Parent,
the Purchaser and the Shareholder Representative and approval by the
Stockholders) constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
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terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
SECTION 4.04 No Conflict. Except as set forth on Schedule 4.04, the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby do
not and will not (i) conflict with or violate any provisions of its certificate
of incorporation or by-laws, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to any other Person any rights of termination, amendment, acceleration
or cancellation of, any material agreement, indenture or instrument to which the
Company or any of the Subsidiaries is a party, or by which any property or asset
of the Company or any of the Subsidiaries is bound, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any Governmental Authority to which the Company or any of
the Subsidiaries is subject, or by which any property or asset of the Company or
any of the Subsidiaries is bound.
SECTION 4.05 Consents and Approvals. Except as set forth on
Schedule 4.05, the execution, delivery and performance of this Agreement by the
Company does not require, as a condition to its validity or effectiveness, any
consent, authorization, filing with, approval, notification or registration to
or with any Person by the Company or any Subsidiary which has not been obtained
or made.
SECTION 4.06 Financial Information. The Company has provided to the
Parent complete copies of the audited consolidated balance sheet of the Company
and the Subsidiaries for each of the fiscal years ended as of March 31, 2002,
March 31, 2003, and March 31, 2004, and the related audited statements of
income, retained earnings, stockholders' equity, consolidating balance sheets
with respect to each Subsidiary and changes in financial position of the
Company, together with all related notes and schedules thereto, accompanied by
the reports thereon of Deloitte & Touche LLP (collectively referred to herein as
the "Financial Statements"). The Financial Statements (i) present fairly the
financial condition and results of operations of the Company and the
Subsidiaries as of the dates thereof or for the periods covered thereby, and
(ii) have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved. As of the dates of the Financial Statements,
neither the Company nor any Subsidiary has any liability or obligation of any
nature (absolute, accrued or contingent) that is not fully reflected, accrued or
disclosed in the Financial Statements, to the extent required in accordance with
GAAP. The Company and each of its Subsidiaries maintain systems of accounting to
permit preparation of financial statements in conformity with GAAP, including
maintenance of proper books and records.
SECTION 4.07 Absence of Change. Except as set forth in Schedule
4.07 or as otherwise expressly provided in this Agreement and the other
Transaction Documents, since March 31, 2004, there has not been:
(a) any declaration, setting aside or payment of any dividend on,
or other distribution (whether in cash, stock or property) in respect of, any of
the capital stock of the Company, or any purchase, redemption or other
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acquisition by the Company of any of the Company's capital stock or any other
securities of the Company or the Subsidiaries, or any issuance of any options,
warrants, calls or rights to acquire any such shares or other securities, except
for the issuance of Shares pursuant to the exercise of Options, if any;
(b) any split, combination or reclassification of any of the
capital stock of the Company or the Subsidiaries;
(c) any material change or alteration in the policy of the Company
relating to the granting of stock options to its employees, directors and
consultants;
(d) any purchase or sale or other disposition, or any agreement
or other legally binding arrangement for the purchase, sale or other
disposition, of any of the properties or assets of the Company or the
Subsidiaries, other than in the ordinary course of business;
(e) any damage, destruction or loss, not covered by insurance,
of any material asset of the Company and the Subsidiaries;
(f) any change by the Company in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP (or
the applicability thereof);
(g) any oral or written notice that there has been or will be a
loss of, or contract cancellation by, any current customer, supplier or
licensor of the Company or any Subsidiary, which loss or cancellation would
result in lost annual revenues to the Company or such Subsidiary of at
least Five Hundred Thousand Dollars ($500,000);
(h) any agreement to enter into any material transaction,
agreement or commitment other than in the ordinary course of business by the
Company or any Subsidiary;
(i) forgiveness or cancellation of any indebtedness owed to the
Company or any Subsidiary or waiver by the Company or any Subsidiary of any
claims or rights of material value (including, without limitation, any
indebtedness owed by any shareholder, officer, director, employee or affiliate
of the Company or any Subsidiary) other than in the ordinary course of business;
(j) other than in the ordinary course of business and consistent
with past practice of the Company or any Subsidiary, grant of any increase in
the compensation of officers, directors, employees or consultants of the Company
or any Subsidiary;
(k) any (i) borrowing of funds, assuming or becoming subject to,
whether directly or by way of guarantee or otherwise, any liabilities or
obligations (absolute, accrued or contingent), or incurring any liabilities or
obligations (absolute, accrued or contingent) except borrowings, liabilities and
obligations incurred in the ordinary course of business and consistent with past
practice, or (ii) any change in the method of calculating, any bad debt,
contingency or other reserves except as required by concurrent changes in GAAP,
in each case by the Company or any Subsidiary;
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(l) payment, discharge or satisfaction of any claims, liabilities
or obligations (absolute, accrued or contingent) other than the payment,
discharge or satisfaction in the ordinary course of business and consistent
with past practice of claims, liabilities and obligations reflected or reserved
against in the Financial Statements or incurred in the ordinary course of
business and consistent with past practice since the date of the Financial
Statements; or
(m) any agreement or understanding whether in writing or otherwise,
by the Company or the Subsidiaries to take any of the actions specified in
subsections (a) through (l) above.
SECTION 4.08 Employment Contracts. Schedule 4.08 contains a
complete and accurate list of all of the employees of the Company and the
Subsidiaries (with the exception of XXXXX, LRE, LIUK and LIG) as of the date
indicated thereon (which date shall be not more than thirty (30) days prior to
the date of this Agreement) (including each employee on leave of absence or
layoff status), including such employee's name, job title, current compensation,
a list of any written employment agreement to which he or she is a party and the
nature of such employee's participation in any Plans. With respect to XXXXX,
LRE, LIUK and LIG, Schedule 4.08 sets forth salary ranges and the nature of
participation in any Plans per the employee categories specified in Schedule
4.08 for each of these Subsidiaries as of the date indicated thereon (which date
shall be not more than thirty (30) days prior to the date of this Agreement).
Except as set forth in Schedule 4.08, neither the Company nor any Subsidiary has
any oral or written employment agreement or arrangements with any Person.
SECTION 4.09 Sales Representatives, Dealers and Distributors.
Except as set forth in Schedule 4.09 and as of the date indicated thereon
(which date shall be no more than thirty (30) days prior to the date of this
Agreement), neither the Company nor any Subsidiary is a party to any contract or
agreement with any Person under which such other Person is a sales agent,
representative, dealer or distributor of any of the products or services of the
Company or of any Subsidiary (collectively the "Sales Representative
Agreements"), as the case may be, which by its terms either (i) cannot be
terminated on less than ninety (90) days prior notice or (ii) requires an
additional payment as a result of termination, and there has been no change in
the rate of compensation paid or payable to any such Person since March 31,
2004, other than in the ordinary course of business and consistent with past
practice of the Company or any Subsidiary. The parties acknowledge and agree
that applicable local law may require additional notice or termination payments
that are not reflected in the terms of the Sales Representative Agreements, and
no such requirement, nor the failure to disclose such requirement on Schedule
4.09, shall result in a breach of this Section 4.09.
SECTION 4.10 Brokers. Except for Wachovia Capital Markets, LLC, no
broker, finder or investment bank is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
SECTION 4.11 Litigation. Except as set forth in Schedule 4.11,
there is no action, suit, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary before or by any Governmental Authority that (i) relates to or
challenges the legality, validity or enforceability of this Agreement,
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(ii) could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, or (iii) could, individually or in the aggregate,
reasonably be expected to impair the ability of the Company to perform on a
timely basis its obligations under this Agreement. To the knowledge of the
Company, there is no valid basis for any claim described in the preceding
sentence. Except as set forth on Schedule 4.11, as of the date hereof, neither
the Company nor any Subsidiary is subject to any outstanding Governmental Order.
SECTION 4.12 Title to Properties. Except as set forth on Schedule
4.12, each of the Company and the Subsidiaries has good and marketable title,
free and clear of all Liens, to its respective owned personal property and
assets (other than the Real Property and Leases which are addressed in Section
4.26) shown on the March 31 Balance Sheet or acquired after March 31, 2004,
except for (i) assets that have been disposed of since March 31, 2004 in the
ordinary course of business and (ii) Liens reflected in the March 31 Balance
Sheet.
SECTION 4.13 Personal Property Leases. Except as set forth in
Schedule 4.13, all of the personal property leased to the Company or the
Subsidiaries are subject to leases which are valid and in full force and effect
assuming due authorization, execution and delivery by the counterparties to such
leases, and to the knowledge of the Company no event has occurred which, with
notice or lapse of time or both, would constitute a material default under any
of these leases.
SECTION 4.14 Inventory. The inventories of items shown on the March
31 Balance Sheet and any other inventory acquired by the Company or the
Subsidiaries, respectively, since the date thereof, up to but not including the
date of this Agreement, consist of items of a quality, quantity and condition
useable or salable in the ordinary course of business by the Company or by the
Subsidiaries, except for all obsolete, unusable, not readily salable or
below-standard quality items, all of which have been either written-off or
written down to net realizable value or for which adequate reserves have been
established in the March 31 Balance Sheet or on the books of the Company or the
Subsidiaries, as the case may be, all in accordance with GAAP. All items
included in the inventories on the March 31 Balance Sheet are the property of
the Company or of the Subsidiaries, as the case may be, free and clear of all
Liens, except for items sold in the ordinary course of business since March 31,
2004, and for each of these sales either the purchaser of the items has made
full payment therefor or the purchaser's liability to make payment is reflected
in the books of the Company or the Subsidiary, as the case may be. Except as set
forth on Schedule 4.14, all items included in the inventories have been priced
at cost on a first-in, first-out basis in accordance with the established
practice of the Company for at least the two (2) most recent fiscal years.
Except as set forth in Schedule 4.14 or the March 31 Balance Sheet, no items
included in the inventories on the March 31 Balance Sheet have been pledged as
collateral, held by the Company or by the Subsidiaries on consignment from
others or otherwise subject to any Liens. Except as set forth on Schedule 4.14,
the Company has no knowledge of any condition which as of the date of this
Agreement is adversely affecting the quality or supply of raw materials,
intermediates, supplies, parts and other materials available to the Company and
the Subsidiaries that are necessary to manufacture, package or label the
Company's or Subsidiaries' products or are otherwise used in the Business,
except for any adverse conditions that could not reasonably be expected to have
a Material Adverse Effect.
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SECTION 4.15 Customers. Schedule 4.15 sets forth a complete and
current list of each customer of any of LRE, XXXXX or LIC that accounted for
more than five percent (5%) of the gross revenues of such company for the fiscal
year ended March 31, 2004 (including for this purpose, sales of any Subsidiary
of such companies, except that gross revenues and customers of XXXXX are not
included as part of LIC's gross revenues or customers). To the knowledge of the
Company, except as indicated in Schedule 4.15, none of these customers intends
to cease doing business or materially and adversely modify its business
relationship with the Company or any of the Subsidiaries.
SECTION 4.16 Contracts.
(a) Schedule 4.16 sets forth a true and complete list as of the
date indicated thereon (which date shall be no more than thirty (30) days prior
to the date of this Agreement) of any agreement, other than the Leases, Credit
Agreements and intercompany contracts to which the Company or any Subsidiary is
a party or by which the Company or the Subsidiaries or any of their respective
assets or properties are bound, which requires future payments to or from either
or any of them in excess of either (i) Two Hundred and Fifty Thousand Dollars
($250,000) per annum or (ii) Two Hundred Thousand Euros ((euro)200,000) per
annum, as the case may be, and which by its terms either (i) cannot be
terminated by the Company or a Subsidiary on less than ninety (90) days prior
notice or (ii) requires an additional payment as a result of termination
("Material Contracts"). The Company has provided true and correct copies of each
of the Material Contracts to the Purchaser except purchase orders, which have
not been so provided. Related purchase orders between the Company or any
Subsidiary and the same third party which have been issued under the same
contract will be aggregated for purposes of determining whether the Material
Contract threshold has been satisfied.
(b) To the knowledge of the Company, all Material Contracts are
valid, binding and enforceable in accordance with their terms against each party
thereto and are in full force and effect. Other than as set forth on Schedule
4.16, neither the Company nor any Subsidiary is in violation or in default of,
or has failed to perform any material obligation under, any Material Contract,
and nothing has occurred and is continuing that with lapse of time or the giving
of notice or both would constitute a breach or default of a Material Contract by
the Company or the Subsidiaries. To the knowledge of the Company, no material
breach or default by any other party to any such Material Contract of any
provision thereof, nor any condition or event that, with notice or lapse of time
or both, would constitute such a breach or default, has occurred and is
continuing.
(c) Except as set forth on Schedule 4.16, neither the Company nor
any Subsidiary has any powers of attorney outstanding (other than those issued
in the ordinary course of business (i) with respect to Tax or Intellectual
Property matters, (ii) that are customary in connection with customs and export
and import matters, or (iii) that are customary in Germany with respect to LRE
or LIG).
SECTION 4.17 Permits. Schedule 4.17 lists all material Permits
issued to the Company and the Subsidiaries which are in effect and the Permits
listed on such schedule constitute all of the material Permits required as of
the date hereof for the Company and the Subsidiaries to conduct the Business as
currently conducted. There are no defaults existing under such Permits and
neither the Company nor any Subsidiary has received any notice nor does the
Company have any knowledge that the issuer of any such Permit intends to
suspend, withdraw, limit in any form or terminate any such Permit.
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SECTION 4.18 Accounts Receivable. All accounts receivable (the
"Receivables") of the Company and of the Subsidiaries reflected on the March 31
Balance Sheet and those incurred thereafter represent amounts due for services
performed or sales actually made by the Company and the Subsidiaries. Except as
set forth in Schedule 4.18 and as of the date indicated thereon (which date
shall be no more than thirty (30) days prior to the date of this Agreement),
there are no individual Receivables which are more than sixty (60) days past
due. Except as set forth in Schedule 4.18 or as disclosed in the March 31
Balance Sheet, no agreement for deduction, free goods, discount or other
deferred price or quantity adjustment has been made with respect to any such
Receivables. The bad debt reserves and allowances reflected in the Financial
Statements are adequate in the judgment of the Company in light of its loss
history and the Company's knowledge regarding its account debtors.
SECTION 4.19 Environmental Matters. To the knowledge of the
Company, and except as set forth in Schedule 4.19:
(a) the properties, facilities and assets owned and leased by the
Company and by the Subsidiaries, respectively, and the operations conducted
thereon by the Company or the Subsidiaries and the use, maintenance, or
operation of such properties, facilities and assets:
(i) have been and are in compliance in all material respects
with any applicable federal, state, local or foreign laws, regulations and
ordinances concerning health and safety, pollution or protection of the
environment, including by way of illustration and not by way of limitation, the
Clean Air Act, 42 U.S.C. ss. 7401 et seq., the Federal Water Pollution Control
Act of 1972, 33 U.S.C. ss. 1251 et seq., (the "Clean Water Act"); the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. ss. 6901 et seq.,
("RCRA"); the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq., ("CERCLA"); the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Oil Pollution Act of
1990, 33 U.S.C. ss. 2701 et seq.; the Emergency Planning and Community Right-to-
Know Act, 42 U.S.C. ss. 11001 et seq.; the Pollution Prevention Act of 1990, 42
U.S.C. ss. 1301 et seq.; the Federal Hazardous Materials Transportation Law, 49
U.S.C. ss. 5101 et seq.; and the Safe Drinking Water Act, 42 U.S.C. xx.xx.
300(f) through 300(j); the Occupational Safety and Health Act of 1970, 29 U.S.C.
ss. 651 et seq. (including any amendments or extensions thereof, and rules,
regulations, standards or guidelines pursuant to any of the foregoing) (each
hereinafter an "Environmental Law");
(ii) are not subject to any existing, pending or threatened
investigation, inquiry or proceeding by any Governmental Authority for any
material liability (absolute, contingent or otherwise) or obligations under any
Environmental Law; and
(iii) do not contain asbestos that is friable or must
otherwise be encapsulated or removed pursuant to Environmental Law;
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(b) no Hazardous Substances have been disposed of or otherwise
Released by the Company or by the Subsidiaries except in compliance in all
material respects with Environmental Laws and in a manner which has not and is
not reasonably likely to give rise to any material liability (absolute,
contingent or otherwise) under Environmental Law;
(c) neither the Company nor the Subsidiaries has any material
liability (absolute, contingent or otherwise) in connection with any Release of
any Hazardous Substances into the environment or arising under Environmental Law
including, but not limited to, (i) Releases on property currently or formerly
owned or leased by the Company or the Subsidiaries; and (ii) Releases in
connection with the transportation, storage, treatment, recycling, handling or
disposal of any Hazardous Substances to or at any off-site location, or the
arrangement with a third party for such transportation, storage, treatment,
recycling, handling or disposal;
(d) the Company has furnished or provided the Purchaser with access
to all environmental audits, reports and other material environmental documents
relating to the current or former operations, properties or facilities of the
Company and of the Subsidiaries which are in its possession, custody or control
and which were prepared since December 31, 2000; and
(e) from December 31, 2000 to the date hereof, (i) no request for
information or notice of any liability, potential liability or obligation under,
or any violation of, any Environmental Law has been received by the Company or
by the Subsidiaries, and (ii) neither the Company nor any Subsidiary has been
named as a "potentially responsible party" or received a request for information
in connection with any litigation, investigation or similar matter arising under
Environmental Laws.
SECTION 4.20 Intellectual Property.
(a) Schedule 4.20 contains a true and complete list of all material
(A) patents and patent applications, (B) trademarks, trademark registrations and
applications, (C) service marks, service xxxx registrations and applications,
(D) proprietary computer software, (E) copyright registrations and applications,
and (F) Internet domain names, which in each case is used in connection with the
Business as currently conducted (collectively, the "Company IP"), together with
any and all licenses related to the foregoing.
(b) The Company and the Subsidiaries own, or are licensed,
authorized, or, to the knowledge of the Company, otherwise possess legally
enforceable rights to use the Company IP. To the knowledge of the Company, and
except as set forth on Schedule 4.20, no other Person has any rights in, to or
under any of the Company IP owned by the Company or the Subsidiaries. Except as
set forth on Schedule 4.20, each of the Company and the Subsidiaries has caused
its employees to execute such invention assignment and/or confidentiality
agreements, if any, as may be necessary under applicable law to secure to the
Company or the relevant Subsidiary all rights in any inventions developed, in
development or to be developed in the future with respect to the Business and to
ensure the confidentiality of all proprietary information of the Company or such
Subsidiary (it being understood that no such invention assignments or
confidentiality agreements have been executed by the employees of XXXXX, LRE or
LIG because the Company has determined that such agreements are not required
under applicable law). The manufacture, use, importation, sale or offer to sell
in the United States of any medical device currently produced by any of the
Subsidiaries would not infringe any of the patents transferred to TriVirix
Minneapolis, Inc. pursuant to that certain Asset Purchase Agreement dated as of
December 5, 2003, to which the Company and UMM Electronics Inc. was party.
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(c) Except as set forth in Schedule 4.20, all grants, registrations
and applications for the Company IP owned by the Company or the Subsidiaries (A)
are valid, subsisting, in proper form and to the extent applicable, enforceable,
and have been duly assigned and maintained, including the submission of all
necessary filings and fees in accordance with the legal and administrative
requirements of the appropriate jurisdictions, (B) have not lapsed, expired or
been abandoned, and (C) are not the subject of any legal or administrative
adversarial proceeding before any Governmental Authority in any jurisdiction.
(d) To the knowledge of the Company, all patents, trademarks, trade
names, and service marks, and good will associated therewith, logos, insignia,
art work, copyrights, and any applications therefor, inventions, formulae,
research and development, technical notes, technical information, technology,
know-how, trade secrets, inventory, products, ideas, algorithms, processes,
methods, computer software programs or applications (other than commercially
available software programs or applications), and tangible or intangible
proprietary information or material (collectively the "Intellectual Property")
owned or licensed by the Company and the Subsidiaries pursuant to an exclusive
license agreement and used in the Business is not being infringed by any third
party. To the knowledge of the Company, the conduct of the Business as currently
conducted does not conflict with or infringe in any way on any Intellectual
Property of any third party. Except as set forth on Schedule 4.20, there is no
claim, suit, action or proceeding pending or, to the knowledge of the Company,
threatened against the Company or the Subsidiaries (A) alleging any such
conflict or infringement with any third party's Intellectual Property, or (B)
challenging the ownership, use, license, validity or enforceability of the
Company IP.
(e) To the knowledge of the Company, neither the Company nor the
Subsidiaries is, nor will it be as a result of the execution and delivery of
this Agreement or the performance of its obligations under this Agreement, in
breach of any license, sublicense or other agreement relating to the Company IP.
SECTION 4.21 Tax Matters. Except as set forth in Schedule 4.21:
(a) The Company and the Subsidiaries have timely filed with the
appropriate Tax Authority all U.S. federal income Tax Returns and all other
material Tax Returns and to the knowledge of the Company, the Company and the
Subsidiaries have timely filed all other Tax Returns, in each case that such
Persons were required to file, and such Tax Returns are true, correct and
complete in all material respects. All Taxes due and owing by the Company and
the Subsidiaries (whether or not reflected on any Tax Return) have been paid.
The Company and each Subsidiary has duly and timely withheld from employee
salaries, or wages or other compensation (whether or not paid in cash) and other
amounts paid to creditors, independent contractors and other third parties and
paid over to the appropriate Governmental Authority all amounts required to be
so withheld and paid over for all periods under all applicable Tax or other
laws.
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(b) No audits are pending with regard to any Taxes or Tax Returns
of the Company or the Subsidiaries and there are no outstanding deficiencies or
assessments asserted in writing by any Tax Authority. The Company has provided
to the Parent correct and complete copies of all income Tax Returns of the
Company and each Subsidiary for which the statute of limitations has not
expired, and all examination reports and statements of deficiencies assessed
against or agreed to by the Company or any Subsidiary.
(c) There are no outstanding agreements, consents or waivers
extending the statutory period of limitations applicable to the assessment of
any Taxes or deficiencies against the Company or the Subsidiaries, and neither
the Company nor any Subsidiary is a party to any agreement providing for the
allocation or sharing of Taxes.
(d) Neither the Company nor any Subsidiary has filed a consent to
the application of Section 341(f) of the Code.
(e) Neither the Company nor any Subsidiary is or has ever been a
United States real property holding corporation (as defined in Section 897(c)(2)
of the Code) during the applicable period specified in Section 897(c)(1)(ii) of
the Code.
(f) The unpaid Taxes of the Company and the Subsidiaries did not,
as of the March 31 Balance Sheet, exceed the reserve for tax liability set forth
on the face of the March 31 Balance Sheet, and will not exceed that reserve as
adjusted for operations and transactions through the Closing Date in accordance
with the past custom and practice of the Company and the Subsidiaries in filing
their Tax Returns.
(g) There has been no ownership change, as defined in Section
382(g) of the Code (or any comparable provision of state or local law), with
respect to the Company or any Subsidiary during or after any taxable period in
which the Company or any Subsidiary incurred a net operating loss. No net
operating loss of the Company or any Subsidiary relates to a separate return
limitation year within the meaning of Treasury Regulations Section 1.1502-1(f).
Schedule 4.21(g) sets forth the amount of any net operating loss, unused foreign
tax credit or excess charitable contribution allocable to the Company and each
Subsidiary for taxable periods ending on or prior to March 31, 2003 and provides
the Company's reasonable estimate of each such item for taxable periods ending
March 31, 2004.
(h) Neither the Company nor any Subsidiary (A) has been a member of
any affiliated group within the meaning of Code Section 1504 of the Code (or any
similar group defined under a similar provision of state or local law) filing a
consolidated federal income Tax Return (other than a group the common parent of
which was the Company) nor (B) has any liability for the Taxes of any person
(other than any of the Company or the Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any comparable provision of state or local law), as a
transferee or successor, by contract, or otherwise. Since January 1, 2001, with
respect to the Company and each Subsidiary, no claim has ever been made by a Tax
Authority in a jurisdiction where the Company or any of its Subsidiaries has
material business operations and does not file Tax Returns that the Company or
any of its Subsidiaries is or may be subject to taxation by such jurisdiction.
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(i) Neither the Company nor any Subsidiary has made any payment or
payments, is obligated to make any payment or payments, nor is a party to (or
participating employer in) any agreement or employee benefit plan that could
obligate it or Purchaser to make any payment or payments, either (i) to a U.S.
citizen or U.S. resident taxpayer or (ii) for services rendered in the U.S., as
a result of the consummation of the transactions contemplated by this Agreement
that would constitute an "excess parachute payment," as defined in Section 280G
of the Code (or any comparable provisions of state, foreign or local law).
(j) Neither the Company nor any Subsidiary has a permanent
establishment in any country other than the country under the laws of which the
Company or such Subsidiary was formed, as defined in any applicable Tax treaty
or convention.
(k) Schedule 4.21(k) sets forth the classification (i.e., as a
corporation, partnership or disregarded entity) under Treasury Regulations
Section 301.7701-3 of each foreign Subsidiary and provides the effective date of
any election filed pursuant to such section.
(l) Neither the Company nor any Subsidiary has participated in or
cooperated with an international boycott within the meaning of Section 999 of
the Code.
(m) Neither the Company nor any Subsidiary has engaged in any
intercompany transactions in respect of which gain was and continues to be
deferred under Treasury Regulations Section 1.1502-13.
(n) All transactions between the Company and any Subsidiary, or
between one or more Subsidiaries, comply and have complied with the requirements
of Section 482 of the Code (and any similar provisions of state, local or
foreign law).
(o) For purposes of this Section 4.21, (i) any reference to the
Company or any Subsidiary shall include a reference to any entity that is a
predecessor to or has been liquidated or merged into the Company or such
Subsidiary and (ii) except with respect to subsections (c), (e), (g) and (m),
all representations relate to periods of time for which the applicable statute
of limitations has not yet expired.
SECTION 4.22 Employment Matters. Except as set forth on Schedule
4.22, neither the Company nor any Subsidiary is currently experiencing or has
experienced any material strikes, collective labor grievances or other
collective bargaining disputes in the last five (5) years. Schedule 4.22 sets
forth a list of all of the collective bargaining agreements to which the Company
and/or the Subsidiaries are a party. The Company and the Subsidiaries have
delivered, or caused to be delivered, to the Purchaser true and complete copies
of each of the collective bargaining agreements described in Schedule 4.22. To
the knowledge of the Company, there is no other organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Company or the Subsidiaries. The Company and the Subsidiaries
have each complied with all applicable laws relating to employment, employment
discrimination and employment practices, including wage and hours regulations,
laws relating to equal opportunity, workplace safety, workers' compensation and
similar laws, except where the failure(s) to so comply could not reasonably be
expected to result in claims, penalties, fees or other liabilities, individually
or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000).
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SECTION 4.23 Employee Benefit Matters.
(a) Schedule 4.23(a)(i) lists all employee benefit plans (as
defined in Section 3(3) of ERISA) and all bonus, stock option, stock purchase,
profit sharing, savings, disability, incentive, deferred compensation,
retirement, severance and other employee benefit plans, programs or arrangements
(i) sponsored, maintained or contributed to by the Company or any Subsidiary or
to which the Company or any Subsidiary is a party or (ii) with respect to which
the Company or any Subsidiary has (or could have) any obligation or liability
individually, a "Plan", and collectively, the "Plans"). Except as set forth on
Schedule 4.23(a)(ii), neither the Company nor any Subsidiary has any agreement,
understanding, commitment or obligation to create, enter into or contribute to
any additional employee benefit plan (other than a Plan), or to modify or amend
any existing Plan. Except as set forth on Schedule 4.23(a)(iii), there has been
no amendment, interpretation or other announcement (written or oral) by the
Company, any Subsidiary or any other Person relating to, or change in
participation or coverage under, any Plan that, either alone or together with
other such items or events, could materially increase the expense of maintaining
such Plan (or the Plans taken as a whole) above the level of expense incurred
with respect thereto for the most recent fiscal year included in the Financial
Statements.
(b) With respect to each Plan, the Company has made available to
the Purchaser true and complete copies of (i) all plan documents, as in effect
on the date hereof, (ii) the latest Internal Revenue Service determination
letter, if applicable, (iii) the last filed Form 5500, if applicable, (iv)
summary plan descriptions, if any, and all modifications thereto communicated to
employees, (v) all coverage, nondiscrimination, top heavy and Code Section 415
tests performed with respect to such Plan for the last three (3) years, if
applicable, and (vi) the most recent actuarial report, if any, prepared for such
Plan.
(c) All Plans are (and at all times for which any applicable
statute of limitations has not barred claims associated with such Plans)
established, maintained, administered, operated and funded in compliance in all
material respects with their terms and all requirements prescribed by applicable
laws, statutes, orders, rules and regulations, including without limitation
ERISA and the Code, and the Company and the Subsidiaries (and, to the knowledge
of the Company, all other Persons, including without limitation, all
fiduciaries) have properly performed all material obligations required to be
performed by them under (or with respect to), and are not in any material
respect in default under or in violation of, any of the Plans or any of the
legal requirements applicable thereto, including without limitation any
reporting, disclosure or notification obligations.
(d) None of the Company, any Subsidiary, or to the knowledge of the
Company, any other Person has, with respect to any Plan, subject to ERISA,
engaged in or been a party to any "prohibited transaction", as such term is
defined in Section 4975 of the Code or Section 406 of ERISA, which could result
in the imposition of either a penalty assessed pursuant to Section 502(i) of
ERISA or a Tax imposed by Section 4975 of the Code.
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(e) There are no pending or, to the knowledge of the Company,
threatened claims, lawsuits or arbitrations (other than routine claims for
benefits), relating to any of the Plans, which have been asserted or instituted
against the Company, any Plan or the assets of any trust for any Plan, nor, to
the knowledge of the Company, is there a basis for any such claim, lawsuit or
arbitration. No Plan is currently under investigation, audit or review, directly
or indirectly, by any Governmental Authority, and, to the knowledge of the
Company, no such action is contemplated or under consideration by any
Governmental Authority. No Plan, which is subject to ERISA, is a "multiemployer
plan" (as defined in Section 3(37) of ERISA) or, except as disclosed in Schedule
4.23(e), is subject to Section 412 of the Code or Section 302 or Title IV of
ERISA (each such Plan, a "Title IV Plan").
(f) Neither the Company nor any Subsidiary has incurred any
liability (that will not be satisfied prior to the Closing Date) under Title IV
of ERISA. Solely with respect to the periods for which any applicable statute of
limitations has not barred claims associated with such Plans, with respect to
any Title IV Plan that the Company or any Subsidiary has ever sponsored,
maintained or contributed (or been obligated to sponsor, maintain or contribute
to): (i) the Company and each Subsidiary have made all contributions that each
of them has ever been required to make by operation of law or by contract to
such Title IV Plan; (ii) neither the Company nor any Subsidiary has
withdrawn from such Title IV Plan during a plan year in which it was a
"substantial employer" (within the meaning of Section 4001(a)(2) of ERISA);
(iii) neither the Company nor any Subsidiary has terminated such Title IV Plan,
filed a notice of intent to terminate such Title IV Plan, or adopted any
amendment to treat such Title IV Plan as terminated; (iv) neither the PBGC nor
any other Person has instituted proceedings, or has notified the Company or any
Subsidiary or such Title IV Plan that it intends to institute proceedings, to
terminate (or to appoint a trustee to administer) such Title IV Plan nor, to the
knowledge of the Company, is there a reasonable basis for the commencement of
any such proceeding by the PBGC or any other Person; (v) no reportable event (as
described in Section 4043 of ERISA) has occurred, or to the knowledge of the
Company is threatened or about to occur (including without limitation as a
result of the transactions contemplated by this Agreement); (vi) all required
premium payments to the PBGC have been paid when due; (vii) no amendment with
respect to which security is required under Section 307 of ERISA or Section
401(a)(29) of the Code has been made, or is reasonably expected by the Company
or any Subsidiary to be made, to such Title IV Plan; (viii) such Title IV Plan
has been funded in accordance with sound actuarial assumptions and practices,
which have been consistently applied; (ix) the most recent actuarial report
prepared for such Title IV Plan fairly presents the financial condition and the
results of operations for such Title IV Plan as of the date of such report; (x)
the assets of such Title IV Plan do not exceed the "benefit liabilities," as
defined in Section 4001(a)(16) of ERISA, due under such Title IV Plan upon
termination of such Title IV Plan by a material amount; (xi) no accumulated
funding deficiency, whether or not waived, exists; (xii) no condition has
occurred or exists that with the passage of time could result in an accumulated
funding deficiency (as of the last day of the current plan year) (other than the
payment of future minimum required contributions and other than with respect to
the underfunded status of the Xxxxx International Corporation Retirement Plan);
and (xiii) none of the Company, any Subsidiary or any other Person to which any
of them is a successor or parent corporation (within the meaning of Section
4069(b) of ERISA) has engaged in a transaction that could reasonably be expected
to result in a liability to the Company or any Subsidiary under Section 4069 of
ERISA.
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(g) The Company and each Subsidiary have complied in all material
respects with the provisions of Section 4980B of the Code and Part 6 of Subtitle
B of Title I of ERISA.
(h) Each Plan that is intended to be qualified under Section 401(a)
of the Code is (and at all times for which any applicable statute of
limitations has not barred claims associated with such Plans) so qualified and
its related trust is (and at all times for which any applicable statute of
limitations has not expired has been) exempt from taxation under Section 501(a)
of the Code. Each such Plan (i) is the subject of an unrevoked favorable
determination letter from the IRS with respect to such Plan's qualified status
under the Code, as amended by the Tax Reform Act of 1986 and all subsequent
legislation, including, without limitation, that legislation commonly referred
to as "GUST" and "EGTRRA," or (ii) has remaining a period of time under the Code
or applicable Treasury regulations or IRS pronouncements in which to request,
and make any amendments necessary to obtain, such a letter from the IRS. To the
knowledge of the Company, nothing has occurred or, with respect to actions taken
or omitted by the Company or any Subsidiary, is reasonably expected to occur,
that could adversely affect the qualification or exemption of any such Plan or
its related trust.
(i) Except with respect to the Subsidiaries, the Company is not,
and during ten (10) years prior to the date hereof has not been, a member
of (i) a controlled group of corporations, within the meaning of Section 414(b)
of the Code, (ii) a group of trades or businesses under common control, within
the meaning of Section 414(c) of the Code, (iii) an affiliated service group,
within the meaning of Section 414(m) of the Code, or (iv) any other group of
Persons treated as a single employer under Section 414(o) of the Code.
(j) Except as set forth on Schedule 4.23(j) (which disclosure
includes the amount of unfunded liabilities as of the dates indicated
thereon), no Plan that covers or benefits any current or former officer,
employee, agent, director or independent contractor of the Company or any
Subsidiary (or any dependent or beneficiary of any such individual) who performs
(or performed) services for the Company or any Subsidiary outside the United
States has unfunded liabilities, determined in accordance with GAAP, that have
not been fully accrued on the Financial Statements or will not be fully offset
by insurance.
SECTION 4.24 Insurance. Set forth on Schedule 4.24 is a true and
complete list of all policies of fire, liability, workmen's compensation
and other similar forms of insurance of the Company and the Subsidiaries, which
policies are in full force and effect, and no notice of cancellation or
termination has been received with respect to any such policy. Except as set
forth on Schedule 4.24, the Company and the Subsidiaries maintain (a) insurance
on all of their property (including leased premises) that insures against loss
or damage by fire or other casualty and (b) insurance against liabilities,
claims and risks of a nature and in such amounts which the Company and the
Subsidiaries reasonably believe are prudent. Such policies or binders are
sufficient for compliance with all requirements of law currently applicable to
the Company or the respective Subsidiary and of all agreements to which the
Company or such Subsidiary is a party, will remain in full force and effect
until the respective expiration dates of such policies or binders, without the
payment of additional premiums, other than premiums scheduled to be paid in
accordance with the terms of such policies, and will not in any way be affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Agreement. Since January 1, 1997, neither the Company nor any Subsidiary has
been refused any insurance with respect to its respective assets or operations,
nor has its coverage been limited by any insurance carrier to which it has
applied for any such insurance or with which it has carried insurance. Except as
set forth on Schedule 4.24, no dispute with respect to coverage under any
insurance policy exists with respect to any insurance carrier.
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Section 4.25 Compliance with Laws. Other than (i) matters governed
by Environmental Law, (ii) Tax matters, (iii) Real Property matters, (iv)
matters related to Unlawful Payments, and (v) with respect to any Plans (which
clauses (i) - (v) are addressed elsewhere in this Agreement), the Company and
the Subsidiaries have complied and remain in compliance with all applicable
laws, regulations and zoning ordinances of any Governmental Authority, including
export control laws and regulations, except for those instances of
non-compliance that could not reasonably be expected, individually or in the
aggregate, to result in liability in excess of One Hundred Thousand Dollars
($100,000), and the Company has no knowledge of and has not received any notice
alleging any such violation of any such laws, regulations or zoning ordinances.
SECTION 4.26 Real Estate.
(a) Owned Properties. Schedule 4.26(a) sets forth the address and
description of each parcel of Real Property owned by the Company or the
Subsidiaries (the "Owned Real Property"), and indicates which entity owns such
Owned Real Property. With respect to each parcel of Owned Real Property, except
as set forth on Schedule 4.26(a) or (b):
(A) the Company or the Subsidiaries have good and marketable
title, free and clear of all Liens;
(B) neither the Company nor any Subsidiary has leased or
otherwise granted to any Person the right to use or occupy such
Owned Real Property or any portion thereof; and
(C) there are no outstanding options, rights of first offer
or rights of first refusal to purchase such Owned Real Property
or any portion thereof or interest therein.
(b) Leased Properties. Schedule 4.26(b) sets forth a list of all of
the leases and subleases for Real Property and all amendments,
modifications and supplements thereto, if any ("Leases"), in which the Company
or the Subsidiaries have a leasehold or subleasehold interest. The Company and
the Subsidiaries have delivered, or caused to be delivered, to the Purchaser
true and complete copies of each of the Leases described in Schedule 4.26(b).
With respect to each Lease listed in Schedule 4.26(b) and except as set forth in
Schedule 4.26(b), (i) each Lease is legal, valid, binding, and enforceable, and
in full force and effect assuming due authorization, execution and delivery by
the counterparties to such Leases; (ii) neither the Company nor any Subsidiary
is in violation or in default of, in any material respect, or has failed to
perform any material obligation under, any Lease, and nothing has occurred that
with lapse of time or the giving of notice or both would constitute such a
breach or default of any Lease by the Company or the Subsidiaries; (iii) to the
knowledge of the Company no other party to such Leases is in violation or in
default of, in any material respect, or has failed to perform any material
obligation under, any Lease and nothing has occurred that with the lapse of time
or the giving of notice or both would constitute such a breach or default of any
Lease by such other party; and (iv) neither the Company nor any Subsidiary has
assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in any Lease.
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(c)General. The Real Property includes all real property used in
the Business. All such offices, manufacturing and production facilities and
other structures are adequate for the uses to which they are being put and there
are no applicable adverse zoning, building or land use codes or rules,
ordinances, regulations or other restrictions relating to zoning or end use that
currently, or to the knowledge of the Company, may prospectively prevent, or
cause the imposition of material fines or penalties as the result of, the use of
all or any portion of the Real Property for the conduct of the Business as
presently conducted. The Company or the relevant Subsidiary has received all
necessary approvals with regard to occupancy and maintenance of the Real
Property, except for such approvals which, if not received, could not reasonably
be expected to have a Material Adverse Effect.
SECTION 4.27 Warranty and Product Liability Matters. Subject only
to the reserve for product warranty claims set forth on the March 31 Balance
Sheet or on the books of the Company or the Subsidiaries, as the case may be, in
accordance with the past practices of the Company and the Subsidiaries, except
as set forth on Schedule 4.27, (i) the products manufactured, sold and delivered
by the Company and the Subsidiaries have conformed in all material respects with
all applicable contractual commitments and all express warranties, and (ii)
neither the Company nor any Subsidiary has any significant liability for
replacement or repair thereof or other damages in connection therewith.
SECTION 4.28 Corporate Books and Records. Except as set forth on
Schedule 4.01(b), the Company and Subsidiaries have furnished to the Parent
copies of (a) the minute books of the Company and each Subsidiary and (b) the
stock transfer books of the Company.
SECTION 4.29 Government Contracts. Neither the Company nor any
Subsidiary has been suspended or debarred from bidding on contracts or
subcontracts for any agency of the United States Government or any foreign
government, nor to the knowledge of the Company has such suspension or debarment
been threatened or action for suspension or debarment been commenced. Neither
the Company nor any Subsidiary is currently being audited, except in the
ordinary course of business or as is customary in the industry or as provided by
the Federal Acquisition Regulations or, to the knowledge of the Company,
investigated by the United States Government Accounting Office, the United
States Department of Justice, the United States Department of Defense or any of
its agencies, the Defense Contract Audit Agency or the Inspector General or
other authorities of any agency of the United States Government, or any foreign
government, nor to the knowledge of the Company, has such audit or investigation
been threatened. To the knowledge of the Company, (i) there is no valid basis
for the Company's or any Subsidiary's suspension or debarment from bidding on
contracts or subcontracts for any agency of the United States Government or any
foreign government and (ii) there is no valid basis for a claim pursuant to an
audit or investigation by the United States Government Accounting Office, the
United States Department of Justice, the United States Department of Defense or
any of its agencies, Defense Contract Audit Agency or other authorities of any
agency
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of the United States Government or any foreign government, or any prime
contractor with any such governmental body. Neither the Company nor any
Subsidiary has had a contract or subcontract terminated for default by the
Company or such Subsidiary and has not been determined to be nonresponsible by
any agency of the United States Government or any foreign government. The
Company does not have any outstanding agreements, contracts or commitments that
require it to obtain or maintain a government security clearance.
SECTION 4.30 Absence of Unlawful Payments. Neither the Company, any
Subsidiary nor any of the directors or officers of the foregoing, or to the
knowledge of the Company, any agents, employees or other Person acting on behalf
of the Company or a Subsidiary has (i) used any funds of the Company or a
Subsidiary for unlawful contributions, payments, gifts or entertainment, or (ii)
made any unlawful expenditures relating to political activity to government
officials or others (any payment pursuant to (i) or (ii) hereinafter referred to
as an "Unlawful Payment"). Neither the Company nor any Subsidiary has received
notice of any Unlawful Payment. The Company and each Subsidiary have adequate
financial controls to prevent such Unlawful Payments. Neither the Company, any
Subsidiary or to the knowledge of the Company any of its current directors or
officers, agents, employees or any other Person acting on behalf of the Company
or a Subsidiary has accepted or received any unlawful contributions, payments,
gifts or expenditures. The Company and its Subsidiaries are in compliance in all
respects and, to the knowledge of the Company, have, during all periods for
which any applicable statute of limitations has not expired, complied with the
applicable provisions of the U.S. Foreign Corrupt Practices Act, as amended, and
other applicable foreign laws and regulations relating to corrupt practices and
similar matters.
SECTION 4.31 Bank Accounts. Schedule 4.31 sets forth the names and
locations of all banks, trust companies, savings and loan associations and
other financial institutions at which the Company or any Subsidiary maintains
safe deposit boxes or accounts of any nature and the names of all Persons
authorized to draw thereon, make withdrawals therefrom or have access thereto.
SECTION 4.32 Previous Conduct of the Business. Except as set forth
on Schedule 4.32, all the transactions of the Company and its Subsidiaries
with third parties have been conducted on an arm's-length basis. Except as set
forth on Schedule 4.32, to the knowledge of the Company, no officer or employee
of the Company (a) has any direct or indirect ownership interest in any
property, real or personal, tangible or intangible, used in or directly
pertaining to the Business, including without limitation, any Intellectual
Property, (b) is a supplier, customer or creditor (other than as an officer or
employee of the Company or its Subsidiaries) of the Company or its Subsidiaries,
or (c) provides any services, produces and/or sells any products or product
lines, or engages in any activity that is competitive with the Business.
SECTION 4.33 Medical Device Administration Matters. Neither the
Company nor any Subsidiary has received any written communication from a
Governmental Authority that alleges that the Company or such Subsidiary is not
in compliance with any federal, state, local or foreign statutes, laws,
ordinances, rules or orders (including without limitation, those relating to or
promulgated by the U.S. Food and Drug Administration (the "FDA")). There is no
action or proceeding by the FDA or any other Governmental Authority, including
but not limited to recall procedures, pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary relating to the safety
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or efficacy of any of the products related to the Company's medical device
business. Neither the Company nor any Subsidiary is subject to debarment and
neither the Company nor any Subsidiary employs in any capacity related to the
medical device business any person who has been debarred pursuant to Section
3.06 of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. ss. 335A, or who is
the subject of a conviction described in such Section.
SECTION 4.34 Discontinued Operations. With respect to the
Discontinued Operations, except as set forth on Schedule 4.34: (i) neither
the Company nor any Subsidiary has any ongoing or future payment, lending,
licensing or other arrangement related to such Discontinued Operations; (ii) the
Company's or such Subsidiary's indemnification obligations with respect to any
representations, warranties, covenants or other obligations with respect to such
Discontinued Operations has ceased; and (iii) there are no lawsuits, claims,
proceedings, arbitrations or other disputes pending, or to the knowledge of the
Company, threatened, by the purchasers of such Discontinued Operations or the
former officers, directors, employees, agents, customers, or suppliers
associated with such Discontinued Operations.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PARENT, INTERMEDIATE PARENT
-------------------------------------------------------------
AND PURCHASER
-------------
The Parent, the Intermediate Parent and the Purchaser hereby
represent and warrant that:
SECTION 5.01 Organization. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Intermediate Parent is a company limited by shares duly organized, validly
existing and in good standing under the laws of the United Kingdom.
SECTION 5.02 Authority and Enforceability. The Parent, the
Intermediate Parent and the Purchaser each have all necessary corporate
power and authority to execute and deliver this Agreement, to perform their
respective obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Parent, the
Intermediate Parent and the Purchaser, the performance of their respective
obligations hereunder, and the consummation by the Parent, the Intermediate
Parent and the Purchaser of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of each of the Parent,
the Intermediate Parent and the Purchaser. This Agreement has been duly executed
and delivered by each of the Parent, the Intermediate Parent and the Purchaser,
and (assuming due authorization, execution and delivery by the Company and the
Shareholder Representative and approval by the Stockholders) constitutes a
legal, valid and binding obligation of the Parent, the Intermediate Parent and
the Purchaser, enforceable against the Parent, the Intermediate Parent and the
Purchaser in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
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SECTION 5.03 No Conflict. The execution, delivery and performance
of this Agreement by the Parent, the Intermediate Parent and the Purchaser
and the consummation by the Parent, the Intermediate Parent and the Purchaser of
the transactions contemplated hereby do not and will not (i) conflict with or
violate any provisions of their respective certificates of incorporation,
by-laws or equivalent documents, (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to any other Person any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which the Parent, the Intermediate Parent or the Purchaser is a party, or by
which any property or asset of the Parent, the Intermediate Parent or the
Purchaser is bound, or (iii) result in a material violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
Governmental Authority to which the Purchaser, the Intermediate Parent or the
Parent is subject, or by which any property or asset of the Purchaser, the
Intermediate Parent or the Parent is bound.
SECTION 5.04 Consents and Approvals. Except as set forth on
Schedule 5.04, the execution, delivery and performance of this Agreement by
the Parent, the Intermediate Parent and the Purchaser does not require any
consent, authorization, filing with, approval, notification or registration to
or with any Person by the Parent, the Intermediate Parent or the Purchaser.
SECTION 5.05 Financial Resources. The Parent, Intermediate Parent
and the Purchaser currently have and will have the financial resources necessary
to perform their obligations under this Agreement.
SECTION 5.06 Brokers. Except for Quarterdeck Investment Partners,
LLC, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Parent, the Intermediate Parent or the Purchaser.
SECTION 5.07 Solvency. Each of the Parent, the Intermediate Parent
and the Purchaser is and will be, after giving effect to the transactions
contemplated hereby, Solvent. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated
hereby with actual intent to hinder, delay or defraud either present or future
creditors of the Parent, the Intermediate Parent or the Purchaser.
SECTION 5.08 Litigation. None of the Parent, the Intermediate
Parent nor the Purchaser is engaged in, or a party to, nor to their
knowledge, is threatened with, any suit, action or legal, administrative,
arbitration or other proceeding or governmental investigation before any
Governmental Authority, which, if adversely determined, would adversely affect
or impede, the consummation of the transactions contemplated hereby.
ARTICLE 6.
OBLIGATIONS BEFORE CLOSING
SECTION 6.01 Company's Covenants. The Company agrees that from the
date of this Agreement until the Closing, unless the Parent agrees otherwise in
writing:
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(a) Closing. The Company will cooperate, will cause each Wholly-
Owned Subsidiary to cooperate, and will use commercially reasonable efforts
to cause the Majority-Owned Subsidiary to cooperate, with the Parent, the
Intermediate Parent and the Purchaser and use its commercially reasonable
efforts to cause the conditions precedent to the obligations of the Parent, the
Intermediate Parent and the Purchaser to close as set forth in Article 8 to be
satisfied.
(b) Access to Information. Upon reasonable request, the Company
shall, shall cause each Wholly-Owned Subsidiary to, and shall use
commercially reasonable efforts to cause the Majority-Owned Subsidiary to,
provide to the Parent and its counsel, accountants, environmental consultants
and other representatives access during normal business hours to all properties,
offices, books, accounts, records, tax returns, contracts, and documents of or
relating to the Company and the Subsidiaries and all officers, directors,
employees, consultants and contractors of the Company and of the Subsidiaries.
In addition, the Company shall request its auditor, Deloitte & Touche LLP, to
provide Parent's auditor, Ernst & Young LLP, access to workpapers and other
materials associated with the audits of the Financial Statements. Further, to
the extent English-language translations or summaries of the constituent
documents of the Company or of any Subsidiary, Material Contracts or other
materials exist, the Company will provide those to the Parent and its
representatives at any time such primary materials are delivered to the Parent
or its representatives.
(c) Business Relationships. The Company shall use commercially
reasonable efforts to, and shall use commercially reasonable efforts to
cause the Subsidiaries to, (i) preserve its business organization and properties
intact, including its present business operations and physical facilities, (ii)
to the extent desired by the Purchaser, maintain until Closing and encourage the
continued relationship after Closing of its present officers, employees and
consultants and (iii) preserve its present relationships with suppliers,
customers, and others having business relationships with it.
(d) Corporate Matters. Each of the Company and the Subsidiaries
shall keep in full force and effect its corporate existence. The Company
will not, shall cause each Wholly-Owned Subsidiary not to, and shall use
commercially reasonable efforts to cause the Majority-Owned Subsidiary not to
(i) amend its certificate of incorporation or by-laws, (ii) issue any shares of
capital stock, other than pursuant to options or other securities or agreements
that are outstanding on the date hereof, (iii) issue or create any warrants,
obligations, subscriptions, options, convertible securities, or other
commitments under which any additional shares of its capital stock of any class
or other securities might be directly or indirectly authorized, issued, or
transferred from treasury, (iv) reclassify, combine, split, subdivide, redeem,
purchase or otherwise acquire, directly or indirectly any of its Stock
(excluding the Options), or (v) agree to do any of the acts listed above.
(e) Employee Compensation. Except as specifically authorized or
contemplated by this Agreement or the Schedules, the Company will not,
shall cause each Wholly-Owned Subsidiary not to, and shall use commercially
reasonable efforts to cause the Majority-Owned Subsidiary not to, do or agree to
do any of the following acts: (i) grant any increase in salaries payable or to
become payable by it to any officer, employee, sales agent or representative,
other than increases given in the ordinary course of business and consistent
with past practices, (ii) increase benefits to any officer, employee, sales
agent or representative under any Plan or other contract or commitment, other
than increases given in the ordinary course of business, or (iii) enter into or
modify any employment agreement or collective bargaining agreement, other than
in the ordinary course of business.
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(f) New Business. The Company will not, shall cause each Wholly-
Owned Subsidiary not to, and shall use commercially reasonable efforts to cause
the Majority-Owned Subsidiary not to, do or agree to do any of the following
acts:
(i) enter into any contract, commitment or transaction other
than in the ordinary course of business and which does not require the
payment (a) by the Company or any Subsidiary of an amount exceeding Two Hundred
and Fifty Thousand Dollars ($250,000) or (b) to the Company or any Subsidiary
exceeding Seven Hundred and Fifty Thousand Dollars ($750,000);
(ii) make any capital expenditures in excess of One Hundred
Thousand Dollars ($100,000) for any single item or enter into any lease of
capital equipment or property under which the annual lease charge is in excess
of One Hundred Thousand Dollars ($100,000);
(iii) make or change any election concerning Taxes or Tax
Returns, change an annual accounting period, adopt or change any accounting
method, file any amended Tax Return, enter into any closing agreement with
respect to Taxes, settle any Tax claim or assessment or surrender any right to
claim a refund of Taxes or obtain or enter into any Tax ruling, agreement,
contract, understanding, arrangement or plan (except for (i) the settlement of
any claims as a result of the ongoing audits of LRE, LIG and XXXXX and (ii) the
impact, if any, of the ongoing audit of J&M Analytische Mess-und Regeltechnik
GmbH on the Tax Returns of LRE, each as further described on Schedule 4.21);
(iv) sell, pledge (or otherwise subject to any Lien) or
dispose of any asset with a net book value in excess of Fifty Thousand
Dollars ($50,000), other than in the ordinary course of business;
(v) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) or form any corporation,
partnership, joint venture, other business organization or division thereof, or
acquire directly or indirectly any material amount of assets, other than in the
ordinary course of business and consistent with past practice;
(vi) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person, or make any
loans or advances, except in the ordinary course of business and consistent with
past practice; or
(vii) enter into or amend any contract, agreement, commitment
or arrangement with respect to any matter set forth in this subsection (f).
(g) Liability and Waiver. The Company will not, shall cause each
Wholly-Owned Subsidiary not to, and shall use commercially reasonable
efforts to cause the Majority-Owned Subsidiary not to, do or agree to do any of
the following acts: (i) waive or compromise any material right or claim of the
Company or any Subsidiary (including with respect to insurance coverage other
than entering into the settlement agreement with CNA (MAOC) with respect to
coverage related to LIC's past operations located at 000 Xxxxx Xxxxxx, Xxxxx,
Xxxxxxxxxx, as further described on Schedule 4.19 and Schedule 4.24) or (ii)
cancel, without full payment, any note, loan, indebtedness, or other obligation
owing to the Company or owing to any Subsidiary, as the case may be, other than
in the ordinary course of business.
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(h) Negotiations. Other than as set forth herein or as contemplated
hereby, the Company and its authorized representatives and agents shall
not, the Company shall cause each Wholly-Owned Subsidiary and their respective
authorized representatives and agents not to, and the Company shall use
commercially reasonable efforts to cause the Majority-Owned Subsidiary and its
respective authorized representatives and agents not to, directly or indirectly,
solicit, initiate, request or encourage any inquiries or proposals from, or
provide any non-public information to, any Person (other than the Purchaser, the
Intermediate Parent, the Parent or its or their respective authorized
representatives and agents) concerning any merger, consolidation, business
combination, sale of substantial assets, purchase or sale of the shares of
capital stock of the Company or of the Subsidiaries or similar transaction
involving the Company or the Subsidiaries. In the event the Company or any
Subsidiary receives an unsolicited offer or indication of interest to acquire a
portion of the stock or assets of the Company or any Subsidiary from any Person,
the Company will provide the Parent notice of such unsolicited offer, but shall
not be obligated to provide any details of such offer.
(i) Agreements. The Company will not make, shall cause each Wholly-
Owned Subsidiary not to make, and shall use commercially reasonable efforts
to cause the Majority-Owned Subsidiary not to make, any material modification or
amendment to, or cancel or terminate any Material Contracts or agree to do any
of those acts.
(j) Business. The Company will, to the extent within its control,
(i) conduct the Company's business and operations, and (ii) cause the
Subsidiaries' businesses and operations to be conducted, in the ordinary course
of business consistent with past practices, including with respect to compliance
with laws, and including, without limitation, maintaining working capital
balances, collecting accounts receivable, paying accounts payable, making repair
and maintenance capital expenditures and managing cash accounts generally;
provided, however, that the Company may, and may cause any Subsidiary, without
obtaining the prior written consent of the Parent, the Intermediate Parent or
the Purchaser, to declare and pay dividends or otherwise distribute funds
consisting of any or all cash of the Company and the Subsidiaries provided that
such dividend(s) or distributions do not cause the Company or any Subsidiary to
have inadequate working capital prior to the Closing Date.
(k) Accounting. The Company will maintain the books, accounts and
records of the Company in accordance with past custom and practice as used
in the preparation of the Financial Statements, will cause the same to occur
with respect to the books, accounts and records of each of the Wholly-Owned
Subsidiaries, and will use commercially reasonable efforts to cause the same to
occur with respect to the books, accounts and records of the Majority-Owned
Subsidiary.
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(l) Insurance. The Company will use commercially reasonable efforts
(i) to continue to maintain and carry its existing insurance and (ii) to
cause each of the Subsidiaries to continue to maintain and carry its existing
insurance. The Company will retain and not distribute to the Stockholders any
amounts received by the Company or the Subsidiaries with respect to any
insurance policy if and to the extent that the associated matter has not been
completely resolved prior to Closing. Any amounts so retained will not affect
the working capital calculations contemplated by Section 3.04 and Section 3.06.
(m) Intellectual Property. The Company will use commercially
reasonable efforts to, and shall use commercially reasonable efforts to
cause the Subsidiaries to, keep in full force and effect all material rights,
franchises and Intellectual Property relating or pertaining to the Business as
currently conducted.
(n) Assets. The Company will use commercially reasonable efforts to
maintain the assets of the Company in good repair, order and condition
(subject to normal wear and tear), consistent with current needs and prior
practice, and shall use commercially reasonable efforts to cause the same to
occur with respect to each of the Subsidiaries.
(o) Supplemental Disclosure. From time to time prior to the Closing
Date, the Company shall disclose in writing on a supplemental schedule
delivered to the Parent, any event, condition, fact or circumstance that
occurred or existed on or prior to the date of this Agreement which disclosure
is necessary to correct or supplement any information contained in a Schedule,
such that without such disclosure a representation or warranty of the Company
would have been breached. Any such supplemental schedule shall, except for the
purposes of determining compliance with Section 8.01, be deemed to modify, amend
or supplement such Schedule for all purposes of this Agreement, including,
without limitation, Article 9.
(p) Covenants. The Company shall notify the Parent promptly after
obtaining knowledge of its failure or any failure by any Subsidiary to
comply in any material respect with any covenant applicable to the Company or
such Subsidiary contained herein.
(q) Stock Option Plan. The Stock Option Plan will be terminated by
the Company on the Closing Date. The Company will use commercially
reasonable efforts to cause each Option to be either cancelled or exercised on
or prior to the Closing Date. The Company shall advise the Parent regarding the
termination of the Stock Option Plan and the structure and timing of the
cancellation or exercise of Options thereunder.
(r) Shareholder Communications. In all communications with the
Stockholders related to the Merger, the Company will provide fair, accurate and
complete disclosure in all material respects such that the Stockholders will
receive adequate information in order to make an informed decision with respect
to approving the transactions contemplated by this Agreement.
SECTION 6.02 Parent, Intermediate Parent and Purchaser Covenants.
The Parent, Intermediate Parent and the Purchaser agree that from the date of
this Agreement until the Closing:
(a) Closing. The Parent, Intermediate Parent and the Purchaser will
each cooperate with the Company and use their commercially reasonable efforts to
cause the conditions precedent to the Company's obligation to close as set forth
in Article 7 to be satisfied.
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(b) Notice. The Parent shall notify the Company promptly after
obtaining knowledge of its failure or any failure by the Intermediate Parent or
the Purchaser to comply in any material respect with, or any breach of, any
representation, warranty, covenant, agreement or obligation applicable to either
of them contained herein.
(c) Supplemental Disclosure. The Purchaser, the Intermediate Parent
or the Parent shall give prompt written notice to the Company upon the
Purchaser, the Intermediate Parent or the Parent obtaining knowledge of any
event, condition, fact or circumstance the existence of which causes a
representation or warranty of the Company to be untrue or inaccurate.
SECTION 6.03 Insurance and Indemnification. Each of the Parent and
the Intermediate Parent agrees that, subject to any limitations imposed by
applicable law, it will honor any exculpatory or indemnification provisions
contained in the Certificate of Incorporation and Bylaws of the Company as they
exist on the Closing Date for the benefit of any individual who has served as a
director or an officer of the Company at any time prior to the Effective Time
with respect to acts or omissions by such individuals occurring prior to the
Effective Time for a period of six (6) years following the Effective Time. The
foregoing limitation will not in any way impact Parent's or Intermediate
Parent's ability to adopt exculpatory or indemnification provisions for the
Surviving Corporation as they relate to post-Closing service as a director or an
officer of the Surviving Corporation that differ from those that exist in the
Company's current Certificate of Incorporation and Bylaws, or amend the same
from time to time. The Parent and the Intermediate Parent will, after Closing,
cause the Subsidiaries to honor the exculpatory and indemnification protections
now existing in the constituent documents of the Subsidiaries or any
indemnification agreements for the benefit of any individual who served as a
director or officer of the Subsidiaries at any time prior to the Effective Time
with respect to acts or omissions by such individuals occurring prior to the
Effective Time for a period of six (6) years following the Effective Time. The
foregoing will in no way impair the Parent's, the Intermediate Parent's, the
Surviving Corporation's or the Subsidiaries' right and ability to amend
exculpatory or indemnification provisions in the constituent documents of the
Subsidiaries as they relate to post-Closing service as a director or officer of
such entities.
SECTION 6.04 Filing Fees. The Parent shall pay all filing fees and
other expenses (other than the Company's legal, accounting and other
professional fees) incurred by the Parent, the Intermediate Parent, the
Purchaser and/or the Company in connection with the Antitrust Filings and the
Other Filings.
SECTION 6.05 Affirmative Covenants of the Company and the Parent.
The Company and the Parent agree that:
(a) As promptly as practicable after the date of this Agreement,
each of the Company and the Parent will use commercially reasonable efforts
to prepare and file (i) with the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice Notification and
Report Forms relating to the transactions contemplated herein as required by the
HSR Act, as well as comparable pre-merger notification forms required by the
merger notification or control laws and regulations of any other applicable
jurisdiction, as agreed to by the parties (collectively the "Antitrust
Filings"), and use commercially reasonable efforts to obtain an early
termination of any applicable waiting period, and (ii) any other filings
required to be made by it under or pursuant to any other applicable law relating
to the Merger and the transactions contemplated by this Agreement (collectively
the "Other Filings").
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(b) The Company and the Parent each shall promptly supply the other
with any information which may be required in order to effect any filings
pursuant to this Section 6.05. Each of the Company and the Parent will notify
the other promptly upon the receipt of any comments from any government
officials in connection with any filing made pursuant hereto and of any request
by any government officials for amendments or supplements to any Antitrust
Filings or Other Filings or for additional information and will supply the other
with copies of all correspondence between such party or any of its
representatives, on the one hand, and any government officials, on the other
hand, with respect to the Merger or any Antitrust Filing or Other Filing. Each
of the Company and the Parent shall respond as promptly as possible to any
inquiries or requests received from any Governmental Authority relating to the
Merger, or any Antitrust Filing or Other Filing. Each of the Company and the
Parent will cause all documents that it is responsible for filing with any
Governmental Authority under this Section 6.05 to comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder.
(c) Whenever any event occurs which is required to be set forth in
an amendment or supplement to any Antitrust Filing or Other Filing, the Company
or the Parent, as the case may be, will promptly inform the other of such
occurrence and cooperate in filing with the Governmental Authority, as
applicable.
SECTION 6.06 Confidential Information. As used herein,
"Confidential Information" means all information generated by, for or on
behalf of any party hereto (the "Disclosing Party") or any of its subsidiaries
or Affiliates, and furnished either orally, electronically or in writing to
another party (the "Receiving Party") or its Representatives or which the
Receiving Party learns during the course of discussions with the Disclosing
Party. Confidential Information does not include information which (a) was
available to the public prior to the time of disclosure or known by the
Receiving Party prior to the date hereof and not subject to any obligation of
confidentiality with respect thereto, (b) becomes available to the public
through no act or omission of the Receiving Party or (c) becomes available to
the Receiving Party from a third party not under any obligation of
confidentiality with respect thereto. The parties hereto agree that the
Receiving Party shall hold the Confidential Information in confidence, shall use
it only to assist it or its designees in consummating the transactions
contemplated hereby and shall not use it for any other purpose whatsoever and
shall not disclose any of it except (a) to its directors, officers, employees,
counsel, financial advisors, lenders, accountants, consultants, agents, and
representatives (collectively, the "Representatives") who need such information
for the purpose of consummating the transactions contemplated hereby (and such
persons shall (i) be informed by the Receiving Party of the confidential nature
of such information and (ii) agree to be subject to all of the terms of this
Section 6.06, and the Receiving Party shall be responsible for any breach of
such terms by any of its Representatives), or (b) as may be required by law in
the judgment of the Receiving Party. In the event of disclosure under clause
(b), the Receiving Party will provide the Disclosing Party with prior notice so
that the Disclosing Party may seek a protective order or other appropriate
remedy, and the Receiving Party shall exercise reasonable efforts to assist the
Disclosing Party in obtaining such order or remedy (at the Disclosing Party's
cost).
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SECTION 6.07 Public Announcement. From the date hereof through the
Closing Date, neither the parties nor their respective directors, officers,
employees, agents, and advisors shall issue or cause the publication of any
press release or public announcement of any kind with respect to the Merger,
this Agreement or the other Transaction Documents, or the other transactions
contemplated hereby or thereby, without the prior written consent of the other
parties (which consent shall not be unreasonably withheld), except as may be
required by law after reasonable efforts have been made to consult with the
other parties prior to such issuance or publication.
SECTION 6.08 280G Vote. The Company shall seek, but shall not be
required to obtain, approval of the Stockholders by the requisite vote under
Section 280G of the Code for the payment(s) described in Schedule 4.21(i).
SECTION 6.09 Transfer Taxes.
(a) Except with respect to Transfer Taxes arising out of, relating
to, or caused by including the Intermediate Parent as a party to this
Agreement which shall be paid entirely by the Parent, all transfer Taxes
resulting from, arising out of, relating to, or caused by this Agreement or any
of the transactions contemplated hereby will be paid one half by the Parent and
one half by the Shareholder Representative.
(b) The Parent will prepare or cause to be prepared and file or
cause to be filed all Tax Returns of the Company and each Subsidiary for
all Tax periods (i) ending on or prior to the Closing Date which are filed after
the Closing Date and (ii) that begin before the Closing Date and end after the
Closing Date. The Parent shall provide the Shareholder Representative with at
least thirty (30) days prior written notice of the filing of any Tax Return and,
upon the request of the Shareholder Representative, shall promptly, but in no
event later than two (2) business days after such request, provide a copy of
such Tax Return to the Shareholder Representative for its review. The Parent
shall discuss in good faith with the Shareholder Representative revisions to
such Tax Returns as are reasonably requested by the Shareholder Representative.
Notwithstanding the foregoing or any other provision in this Agreement, the
Stockholders shall not have any liability hereunder or otherwise with respect to
any Taxes to the extent such Taxes would not have arisen but for the failure by
Parent to incorporate revisions proposed by the Shareholder Representative into
the relevant Tax Return filed by Parent.
(c) The provisions set forth in this Section 6.09 shall survive the
Closing in accordance with Section 9.01 hereof.
SECTION 6.10 Asbestos Testing. The Company will conduct, will cause
to be conducted or will provide Parent and its environmental advisors
access to conduct, a full asbestos survey on the real property disclosed on
Schedule 4.26(a) located in Xxxxxxxx, Xxxxxx xxx Xxxxx, Xxxxxx, as required by
French law. The costs and expenses of such surveys will be borne by Parent.
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ARTICLE 7.
CONDITIONS PRECEDENT TO COMPANY'S PERFORMANCE
---------------------------------------------
The obligation of the Company to consummate the transactions
described herein which are to be consummated on the Closing Date and to perform
the other covenants and agreements in accordance with the terms and conditions
of this Agreement and the other Transaction Documents is subject to the
satisfaction, at or before Closing, of each of the conditions set forth in this
Article 7 (any of which may be waived by the Company in whole or in part, in its
sole and absolute discretion):
SECTION 7.01 Representations and Warranties of the Parent, the
Intermediate Parent and the Purchaser. All representations and warranties
made by or with respect to the Parent, the Intermediate Parent and the Purchaser
contained in this Agreement or in any of the other Transaction Documents shall
be true and complete in all material respects when made and on and as of the
Closing Date as though made as of such date, or if the representation speaks as
of an earlier date, true and complete in all material respects as of the date
indicated.
SECTION 7.02 Performance of the Parent, the Intermediate Parent and
the Purchaser. The Parent, the Intermediate Parent and the Purchaser shall
have each performed, satisfied and complied with all of their respective
covenants and agreements, and satisfied all of their respective obligations and
conditions required by this Agreement to be performed, complied with, or
satisfied by it on or before the Closing, in each case, in all material
respects.
SECTION 7.03 Absence of Litigation. No action, suit or proceeding
before any Governmental Authority seeking to restrain or prohibit the
transactions contemplated by this Agreement shall have been instituted after the
date of this Agreement and not dismissed.
SECTION 7.04 Parent, Intermediate Parent and Purchaser
Certificates. The Company shall have received a certificate from each of
the Parent, the Intermediate Parent and the Purchaser substantially in the form
attached hereto as Exhibit 7.04, dated as of the Closing Date, signed by a duly
authorized officer of each of the Parent, the Intermediate Parent and the
Purchaser respectively, certifying that, to the best of his or her knowledge,
the conditions specified in Section 7.01, Section 7.02 and Section 7.03 have
been fulfilled.
SECTION 7.05 Consents and Approvals. The Parent, the Intermediate
Parent and the Purchaser shall have obtained and delivered to the Company
the consents and approvals required in connection with the transactions
contemplated hereby and requested by the Company as set forth on Schedule 5.04.
SECTION 7.06 Certificate of Merger. The Certificate of Merger shall
have been executed and delivered by the Company.
SECTION 7.07 Escrow Agreement. The Parent and the Escrow Agent
shall have duly executed and delivered the Escrow Agreement to the Company and
the Shareholder Representative.
SECTION 7.08 Legal Opinion. The Company shall have received an
opinion, dated as of the Closing Date, of Xxxxxxx Coie LLP, counsel to the
Parent and the Purchaser, and an opinion, dated as of the Closing Date, of
Eversheds LLP, counsel to the Intermediate Parent, substantially in the forms
attached hereto as Exhibit 7.08.
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SECTION 7.09 Approvals. All waiting periods, if any, under the HSR
Act relating to the transactions contemplated hereby shall have expired or
terminated early and all antitrust approvals required to be obtained prior to
the Merger in connection with the transactions contemplated hereby and listed on
Schedule 7.09 shall have been obtained.
SECTION 7.10 Corporate Approval by the Company. The execution and
delivery of this Agreement and the other Transaction Documents by the
Company, and the performance of its respective covenants and obligations
hereunder and thereunder and the consummation of the Merger, shall have been
duly authorized by all necessary shareholder action on the part of the Company.
SECTION 7.11 Other Documents. The Company shall have received any
other certificates, opinions, or other documents as may be reasonably requested
by the Company or its counsel.
ARTICLE 8.
CONDITIONS PRECEDENT TO PARENT'S,
---------------------------------
INTERMEDIATE PARENT'S AND PURCHASER'S PERFORMANCE
-------------------------------------------------
The obligation of the Parent, the Intermediate Parent and the
Purchaser to consummate the transactions described herein which are to be
consummated on the Closing Date and to perform their other covenants and
agreements in accordance with the terms and conditions of this Agreement and the
other Transaction Documents is subject to the satisfaction, at or before
Closing, of each of the conditions set forth in this Article 8 (any of which may
be waived by the Parent, the Intermediate Parent or the Purchaser in whole or in
part, in its sole and absolute discretion):
SECTION 8.01 Representations and Warranties. All representations
and warranties made by or with respect to the Company or any Subsidiary to
the Purchaser, the Intermediate Parent or the Parent in this Agreement or in any
of the other Transaction Documents shall be true and complete in all material
respects when made and on and as of the Closing Date as though made as of such
date, or if the representation speaks as of an earlier date, true and complete
in all material respects as of the date indicated.
SECTION 8.02 Performance of the Company and the Subsidiaries. The
Company and the Subsidiaries shall have each performed, satisfied, and
complied with all of their respective covenants and agreements and satisfied all
of their respective obligations and conditions required by this Agreement to be
performed, complied with or satisfied by them on or before the Closing, in each
case, in all material respects.
SECTION 8.03 Absence of Litigation. No action, suit or proceeding
before any Governmental Authority seeking to restrain or prohibit the
transactions contemplated by this Agreement shall have been instituted after the
date of this Agreement and not dismissed.
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SECTION 8.04 Certificate of the Company. The Parent shall have
received a certificate substantially in the form attached hereto as Exhibit
8.04, dated as of the Closing Date, signed by a duly authorized officer of the
Company certifying that, to the best of his or her knowledge, the conditions
specified in Section 8.01, Section 8.02 and Section 8.03 have been fulfilled.
SECTION 8.05 Good Standing Certificate. The Parent shall have
received a short form certificate of good standing of the Company in
Delaware, and equivalent certificates, if any, in any other jurisdictions or
countries (to the extent applicable) in which the Subsidiaries are organized.
Each such certificate shall be dated as of a recent date prior to the Closing
Date.
SECTION 8.06 Consents and Approvals. The Company and the
Subsidiaries shall have obtained and delivered to the Parent the consents and
approvals required in connection with the transactions contemplated hereby as
set forth on Schedule 4.05.
SECTION 8.07 Certificate of Merger. The Certificate of Merger shall
have been executed and delivered by the Company.
SECTION 8.08 Escrow Agreement. The Company, the Shareholder
Representative and the Escrow Agent shall have duly executed and delivered the
Escrow Agreement to the Purchaser.
SECTION 8.09 Legal Opinion. The Parent, the Intermediate Parent and
the Purchaser shall have received an opinion, dated as of the Closing Date,
of Xxxxxx, Xxxxxx-Xxxxxxx, Colt & Mosle LLP, counsel to the Company,
substantially in the form attached hereto as Exhibit 8.09.
SECTION 8.10 Approvals. All waiting periods, if any, under the HSR
Act relating to the transactions contemplated hereby shall have expired or
terminated early and all antitrust approvals required to be obtained prior to
the Merger in connection with the transactions contemplated hereby and listed on
Schedule 7.09 shall have been obtained.
SECTION 8.11 Corporate Approval. The execution and delivery of this
Agreement and the other Transaction Documents by the Company, the
performance of its respective covenants and obligations hereunder and thereunder
and the consummation of the Merger shall have been duly authorized by all
necessary Board and shareholder action on the part of the Company, a copy of all
resolutions pertaining to such authorization shall be delivered to Parent, and
the Parent shall have received a certificate signed by a duly authorized officer
of the Company in the form attached hereto as Exhibit 8.11 certifying that such
copy is true, accurate and complete. Such certificate shall also be accompanied
by a certified copy of the Company's Certificate of Incorporation and Bylaws as
in effect as of the Closing Date.
SECTION 8.12 Other Documents. The Parent shall have received any
other certificates, opinions, or other documents as may be reasonably requested
by the Parent or its counsel.
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SECTION 8.13 Stock Option Plan. The Parent shall have received
evidence reasonably satisfactory to it that the Stock Option Plan will be
terminated as of the Closing Date and all Options issued pursuant thereto will
be terminated or exercised as of the Closing Date.
SECTION 8.14 Bank Debt. The Parent shall have received written
payoff instructions from all lenders with respect to the Bank Debt that
indicate the amounts required to be paid at the Closing Date to satisfy all
outstanding obligations under the Bank Debt. The Parent shall also have received
evidence reasonably satisfactory to it that the lenders under the Bank Debt are
prepared to file appropriate termination statements, reconvey pledged stock and
deeds of trust and otherwise release any security interest such lenders may have
in the assets, equity or other property of the Company or any Subsidiary.
SECTION 8.15 Resignations. The Parent shall have received copies of
resignations effective as of the Closing Date of Xxxxxx Xxxxx, Xxxxxxxxxxx
Xxxxx, Xxxxxxxx Xxxxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxx III, Xxxxx Xxxxxx and the
officers of the Company.
SECTION 8.16 Nonforeign Affidavit. The Parent shall have received
from the Company, pursuant to Section 1445 of the Code, a Foreign
Investment in Real Property Tax Act Affidavit in the form attached hereto as
Exhibit 8.16.
SECTION 8.17 Employment Agreements. Xxxx Xxxx, Xxxx-Xxxxxx Sigaud,
Xxxxxx Xxxxxxxxx, Xxxx Xxxxxxx, Xxxxxxxxx Bauthian and Xxxx Xxxxxx shall
have entered into employment agreements in substantially the forms attached
hereto as Exhibits 8.17(i) - (vi) respectively, with such agreements to be
effective as of the Closing Date.
SECTION 8.18 Consulting Agreement. Xxxxxx Xxxxx and Xxxxxxxxxxx
Xxxxx shall have each entered into a Consulting Agreement with the
Surviving Corporation on mutually acceptable terms pursuant to which Xx. Xxxxx
and Xx. Xxxxx agree to make themselves available on an as needed basis for the
six (6) months, in the case of Xx. Xxxxx, and the three (3) months, in the case
of Xx. Xxxxx, following the Closing Date to assist with closing the Company's
financial records, to sign the standard representation letter requested by the
Company's auditors with respect to the Closing Date Balance Sheet, and to attend
to such other transition matters as the Surviving Corporation may reasonably
request from time to time. The Parent, the Intermediate Parent and the Purchaser
hereby acknowledge and agree that Xxxxxx Xxxxx is also acting as the Shareholder
Representative hereunder.
SECTION 8.19 Success Payments. The Parent shall have received
evidence satisfactory to it that the Success Payments will be sufficient to
satisfy all such payment obligations owing to officers, directors and employees
with respect to the consummation of this transaction.
SECTION 8.20 Pension Plans. The Company shall provide a valuation
(of both assets and liabilities) as of the end of the Company's 2004 fiscal
year for each pension plan (as defined in Section 3(2) of ERISA) maintained or
contributed to by it or any of the Subsidiaries. Such valuation will be
conducted in accordance with GAAP and any necessary currency conversions will
occur at the Valuation Date Exchange Rate. The Company will not have
contributed, assigned or otherwise transferred its Buena Park facility and
associated ground lease to any benefit plan or benefit plan trustee in an effort
to satisfy a portion of the Company's underfunded pension obligations.
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ARTICLE 9.
SURVIVAL OF REPRESENTATIONS
---------------------------
AND WARRANTIES; INDEMNIFICATION
-------------------------------
SECTION 9.01 Survival of Representations and Warranties. The
representations and warranties (as modified by any supplemental disclosure
delivered by the Company pursuant to Section 6.01(o)), and the covenants,
obligations and agreements in this Agreement and in the other Transaction
Documents, to the extent that they do not earlier terminate in accordance with
their terms, shall survive the Merger and continue until the date which is
eighteen (18) months following the Closing Date (the "Expiration Date").
Notwithstanding the preceding sentence, (i) any representation, warranty,
covenant, obligation or agreement in respect of which indemnity is sought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence to the extent a notice of a claim for
indemnity has been given prior to the Expiration Date in accordance with the
provisions of, and satisfying all of the requirements of, Section 9.05;
provided, however, that such representation, warranty, covenant, obligation, or
agreement shall survive solely with respect to, and only to the extent necessary
to proceed with, such claim for indemnity; and provided, further, that such
limited survival shall immediately and automatically terminate upon the
resolution of such claim for indemnity; and (ii) the Expiration Date shall not
apply to any breach of a representation, warranty, covenant, obligation or
agreement based on Fraud of the Parent, the Purchaser or the Company or with
respect to Dispute Losses. Claims for Purchaser Losses and Shareholder Losses
based on Fraud may only be made in accordance with the terms of this Article 9
and only until December 31, 2006.
SECTION 9.02 Shareholders' Indemnity. From and after the Closing
Date, the Stockholders shall indemnify, defend and hold harmless the
Purchaser, the Surviving Corporation, the Parent, the Intermediate Parent and
their permitted and respective assigns and Affiliates, and any director,
officer, employee or agent of any of them (each a "Purchaser Indemnified Party")
from and against, and agree to pay or cause to be paid to such Purchaser
Indemnified Party, all Losses ("Purchaser Losses") equal to the sum of:
(a) Representations and Warranties. Any Purchaser Losses that a
Purchaser Indemnified Party may incur or suffer, which arise or result from
any breach of any of the Company's representations or warranties contained in
this Agreement or in the other Transaction Documents;
(b) Covenants and Agreements. Any Purchaser Losses that a Purchaser
Indemnified Party may incur or suffer, which arise or result from any
breach of any of the Company's covenants, obligations or agreements contained in
this Agreement or in the other Transaction Documents;
(c) Specific Environmental Liabilities. Any Purchaser Losses that a
Purchaser Indemnified Party may incur or suffer, which arise or result from
(i) any releases of Hazardous Substances by the Company prior to Closing and any
corrective action required thereby associated with the Company's Anaheim
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facility in excess of Twenty Four Thousand One Hundred and Forty Five Dollars
($24,145), including matters set forth in the Corrective Action Consent
Agreement dated May 14, 2004; and (ii) any claims and costs that are incurred by
the Company in addition to those associated with the Final Remedy for the
Xxxxxxx Park Operable Unit of the San Xxxxxxx Valley Superfund site;
(d) Specific Tax Liabilities. Any Purchaser Losses which a
Purchaser Indemnified Party may incur or suffer related to (i) the failure
to file tax returns and pay Taxes with respect thereto by Xxxxx International
Asia-Pacific Ltd., as further described on Schedule 4.21, (ii) the ongoing
audits of LRE, LIG and XXXXX, as further described on Schedule 4.21, (iii) the
impact, if any, of the ongoing audit of J&M Analytische Mess-und Regeltechnik
GmbH on the Tax Returns of LRE, as further described on Schedule 4.21, and (iv)
any Taxes incurred as a result of any payment or payments to Xxxxxx Xxxxx that
constitute parachute payments pursuant to Section 280G of the Code, irrespective
of disclosure of such matters in the Schedules, it being understood that any
Taxes arising as a result of the loss or lack of a deduction for a Purchaser
Indemnified Party for such payment or payments by reason of the application of
Section 280G of the Code shall not constitute Purchaser Losses for purposes of
this Section 9.02(d)(iv);
(e) Professional Fees. All reasonable professional fees (including
those of attorneys, accountants, consultants and engineers) and other reasonable
expenses incurred by any Purchaser Indemnified Party in connection with any of
the aforesaid matters; and
(f) Dissenting Stockholders. The premium determined by a court
order, if any, paid by the Surviving Corporation to any Dissenting
Stockholder over the amount that would have been paid upon the surrender of such
Shares pursuant to Section 3.07 (the "Appraisal Premium"); provided, however,
that the Stockholders shall only be liable for the Appraisal Premium (i) if and
to the extent the Dissenting Shares constituted more than five percent (5%) of
the Shares (such excess, the "Excess Appraisal Shares"), and (ii) in an amount
equal to the aggregate Appraisal Premium multiplied by a fraction, the numerator
of which is the number of Excess Appraisal Shares and the denominator of which
is the total number of Dissenting Shares.
SECTION 9.03 Parent, Intermediate Parent, Purchaser and Surviving
Corporation Indemnity. The Parent, the Intermediate Parent, the Purchaser,
and after the Effective Time, the Surviving Corporation, hereby agree to
indemnify, defend and hold harmless the Company, the Shareholder Representative
and the Stockholders, and any heir, representative, director, officer,
stockholder, employee, Affiliate or agent of any of them (each a "Shareholder
Indemnified Party") from and against, and agree to pay or cause to be paid to
such Shareholder Indemnified Party all Losses ("Shareholder Losses") equal to
the sum of:
(a) Representations and Warranties. Any Shareholder Losses that a
Shareholder Indemnified Party may incur or suffer, which arise or result
from any breach of any of the Parent's, the Intermediate Parent's or the
Purchaser's representations or warranties contained in this Agreement or in the
other Transaction Documents;
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(b) Covenants and Agreements. Any Shareholder Losses that a
Shareholder Indemnified Party may incur or suffer, which arise or result
from any breach of any of the Parent's, the Intermediate Parent's or the
Purchaser's covenants, obligations or agreements contained in this Agreement or
in the other Transaction Documents;
(c) Specific Liabilities. Any Shareholder Losses that a Shareholder
Indemnified Party may incur or suffer, which arise or result from the
inclusion of the Intermediate Parent as a party to this Agreement; and
(d) Professional Fees. All reasonable professional fees (including
those of attorneys, accountants, consultants and engineers) and other
reasonable expenses incurred by a Shareholder Indemnified Party in connection
with any of the aforesaid matters.
SECTION 9.04 Joint and Several Obligation. All indemnification
obligations of the Parent, the Intermediate Parent, the Purchaser and the
Surviving Corporation pursuant to Section 9.03 shall be joint and several. All
indemnification obligations of the Stockholders for claims arising out of Fraud
subject to the limitations contained in Section 9.08 shall be several, but not
joint.
SECTION 9.05 Procedure for Indemnification. If any party entitled
to indemnification pursuant to Section 9.02 or Section 9.03 (herein, the
"Indemnitee") receives notice from a third party of any matter that may give
rise to a claim for indemnification by a party or parties obligated to provide
indemnification pursuant to Section 9.02 or Section 9.03 (herein, the
"Indemnifying Party"), the procedure set forth below shall be followed:
(a) Notice. The Indemnitee shall give to the Indemnifying Party
written notice of any claim, suit, judgment or matter for which indemnity
may be sought under Section 9.02 or Section 9.03, promptly but in any event
within twenty (20) business days after the Indemnitee receives notice thereof;
provided, however, that any delay in the Indemnitee's delivery of notice to the
Indemnifying Party shall not prejudice the Indemnitee's right to receive
indemnification unless, and then only to the extent that, such delay prejudices
the Indemnifying Party's ability to mitigate or otherwise minimize the Losses or
to contest such claim. The Indemnifying Party shall have a period of twenty (20)
business days to respond thereto. If the Indemnifying Party does not respond
within such twenty (20) business day period, the Indemnifying Party shall be
deemed to have accepted responsibility for such indemnity. The indemnification
period provided for herein shall be tolled for a particular claim for the period
beginning on the date the Indemnifying Party receives written notice of that
claim until the final resolution of such claim.
(b) Defense of a Claim. The Indemnifying Party shall have the
right, at its or their option, to be represented by counsel of its or their
choice, which counsel shall be reasonably acceptable to the Indemnitee, and to
assume the defense or otherwise control the handling of any claim, suit,
judgment or matter for which indemnity is sought, which is set forth in the
notice sent by the Indemnitee, by notifying the Indemnitee in writing to such
effect within twenty (20) business days of receipt of such notice; provided,
however, that the Indemnifying Party may not make such an election to assume and
control the defense of such claim without the Indemnitee's consent unless (i)
the Indemnifying Party acknowledges in writing its obligations to indemnify the
Indemnitee for such claim in accordance with the terms of this Article 9
(provided that such acknowledgment may be subject to obtaining further
information with respect to such claim), and (ii) the suit, action, claim,
liability or obligation does not seek to impose any material liability or
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obligation upon the Indemnitee other than monetary damages. If the Indemnifying
Party elects to assume and control the defense, the Indemnitee shall have the
right to employ counsel separate from counsel employed by the Indemnifying Party
in any such action and to participate in the defense thereof, but the reasonable
fees and expenses of such counsel employed by the Indemnitee shall be paid by
the Indemnitee unless (x) the Indemnifying Party agrees to bear such expense in
writing, (y) the Indemnifying Party has failed to assume the defense and employ
counsel, or (z) the named parties in any such action include both the Indemnitee
and the Indemnifying Party and representation of both parties by the same
counsel would be inappropriate due to actual differing interests between them.
If the Indemnifying Party does not give timely notice in accordance with the
preceding sentence, the Indemnifying Party shall be deemed to have given notice
that it does not wish to assume the defense or control the handling of such
claim, suit or judgment. In the event that the Indemnifying Party does not
assume the defense or otherwise control the handling of such matter, the
Indemnitee may retain counsel, as an indemnification expense, to defend such
claim, suit, judgment or matter.
(c) Final Authority. The parties shall cooperate in the defense of
any such claim or litigation and each shall make available all books and
records which are relevant in connection with such claim or litigation. The
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to any matter which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnitee from all
liability with respect thereto without the prior written consent of the
Indemnitee, which consent shall not be unreasonably withheld or delayed. If the
Indemnitee has assumed the handling of any claim, suit, judgment or matter for
which indemnity is sought, the Indemnitee will not consent to the entry of any
judgment or enter into any settlement with respect thereto without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
SECTION 9.06 Claims Between Parent or Surviving Corporation and
Stockholders. Any claim for indemnification under this Agreement which does
not result from the assertion of a claim by a third party (but excluding any
claim for indemnification that is brought under Section 9.12 hereof) shall be
asserted by written notice given by the Indemnitee to the Indemnifying Party.
The Indemnifying Party shall have a period of twenty (20) business days within
which to respond in writing thereto. If the Indemnifying Party does not respond
in writing within such twenty (20) business-day period, the Indemnifying Party
shall be deemed to have accepted responsibility for such indemnity, and shall
have no further right to contest the validity of such claim. If the Indemnifying
Party does respond in writing within such twenty (20) business-day period and
rejects such claim in whole or in part, the Indemnitee shall be free to pursue
such remedies as may be available to it hereunder.
SECTION 9.07 Payment. In the case of the Stockholders as
Indemnifying Parties, the Shareholder Representative shall cause any
Purchaser Losses due to a Purchaser Indemnified Party pursuant to Section 9.02
or Section 9.13 to be paid by the Escrow Agent from the Escrow Amount to the
extent of funds available thereunder and in accordance with the procedures set
forth in this Article 9 and the Escrow Agreement.
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SECTION 9.08 Certain Limitations as to Amounts of Recovery.
(a) No Purchaser Indemnified Party or Shareholder Indemnified Party
shall be entitled to indemnification in respect of any claim or claims for
Purchaser Losses or Shareholder Losses unless and until the aggregate amount of
all Purchaser Losses for which the Stockholders are liable or Shareholder Losses
for which the Parent, the Intermediate Parent, the Purchaser and the Surviving
Corporation are liable, as the case may be, exceeds an aggregate threshold of
Six Hundred and Fifty Thousand Dollars ($650,000) (the "Minimum Indemnity
Threshold"), in which case the Purchaser Indemnified Parties or Shareholder
Indemnified Parties, as the case may be, shall be entitled to recover the amount
of such claims in excess of the Minimum Indemnity Threshold. Notwithstanding the
foregoing, the following categories of Purchaser Losses and Shareholder Losses
will not be subject to the Minimum Indemnity Threshold: (i) Purchaser Losses
resulting from a breach of the representations and warranties contained in
Section 4.34 with respect to Discontinued Operations, (ii) Purchaser Losses
resulting from the Fraud of the Company or any Wholly-Owned Subsidiary and
Shareholder Losses resulting from the Fraud of the Parent, the Intermediate
Parent or the Purchaser, (iii) Shareholder Losses set forth in Section 9.03(c)
and Section 11.06, and (iv) Dispute Losses.
(b) Except as provided in Section 9.12 hereof and except in the
case of Purchaser Losses resulting from Fraud of the Company or any
Wholly-Owned Subsidiary, notwithstanding anything to the contrary in this
Agreement or the other Transaction Documents, the aggregate liability of the
Stockholders, the Company, and the Shareholder Representative (including any
indemnification with respect to Purchaser Losses) for any breach of the
obligations, covenants, agreements, representations, and warranties set forth in
this Agreement or in any of the other Transaction Documents, or for any other
claims or causes of actions arising out of, relating to or in connection with
the transactions contemplated hereby or thereby, whether based upon breach of
contract, tort or otherwise, shall in no event exceed the Initial Escrow
Deposit, and none of the Stockholders, the Company or the Shareholder
Representative shall have any liability hereunder at any time in excess of the
Escrow Amount at such time. In the event of Purchaser Losses resulting from
Fraud of the Company or any Wholly-Owned Subsidiary, the Purchaser Indemnified
Parties shall have the right to recover such Purchaser Losses first against the
Escrow Amount at such time (an "Escrow Fraud Payment"), and if and only if the
Escrow Amount has been exhausted and is insufficient to pay such Purchaser
Losses, thereafter against any other Persons to which the Purchaser Indemnified
Parties are legally entitled to pursue, provided that in no event shall the
Stockholders have any liability to Purchaser Indemnified Parties for Purchaser
Losses resulting from Fraud of the Company or any Wholly-Owned Subsidiary in
excess of, with respect to each Stockholder on a pro rata basis, fifty percent
(50%) of the Merger Consideration actually received by each Stockholder, less
such Stockholder's pro rata share of the Escrow Fraud Payment made to such
Purchaser Indemnified Party.
SECTION 9.09 Exclusive Remedy. Except as expressly provided in
Section 15.02(a), the indemnification provisions of this Article 9 shall be
the sole and exclusive remedy of the parties for any breach of the obligations,
covenants, agreements, representations and warranties set forth in this
Agreement or in any of the other Transaction Documents, or for any other claims
or causes of actions arising out of, relating to or in connection with the
transactions contemplated hereby or thereby, whether based upon breach of
contract, tort or otherwise, and each party hereby irrevocably waives all
statutory, common law and other claims with respect thereto, other than claims
for indemnification pursuant to this Article 9.
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SECTION 9.10 Exclusion of Certain Damages. Except as provided in
Section 15.02(a), no Indemnifying Party shall be responsible for any
indirect, special, punitive or consequential damages whatsoever, including loss
of profits or goodwill suffered or incurred by an Indemnitee, in connection with
any aspect of this Agreement or the other Transaction Documents.
SECTION 9.11 Defense of Certain Disputes. The parties hereby agree
that the Shareholder Representative shall, in his sole discretion, control
all aspects of the Disputes on behalf of the Company and the Subsidiaries,
including, without limitation, their negotiation, settlement and litigation or
arbitration, and the choice of counsel to represent the Surviving Corporation
and the Subsidiaries; provided, that the Shareholder Representative shall inform
the Parent of the status of the Disputes at least quarterly, and more often upon
reasonable request by the Parent. The Shareholder Representative on behalf of
the Stockholders shall bear all fees and expenses of such counsel. The Parent,
the Intermediate Parent and the Purchaser shall cause the Surviving Corporation
and the Subsidiaries, including their respective officers and employees, to
cooperate in the defense of the Disputes and shall make available to the
Shareholder Representative and its designees all books, records and other
information and documentation which are relevant in connection with the
Disputes. Notwithstanding the foregoing, in the event the Parent reasonably
believes that the Shareholder Representative's actions, negotiation strategy, or
its litigation or arbitration activities are jeopardizing material business
relationships that the Parent wishes to preserve, the Parent may assume control
of the negotiation, settlement, litigation or arbitration, but by doing so,
Parent agrees to forego any indemnification against Dispute Losses with respect
to the Dispute so assumed.
SECTION 9.12 Dispute Indemnity. From and after the Closing Date,
the Stockholders shall indemnify, defend and hold harmless the Purchaser,
the Surviving Corporation, the Parent, the Intermediate Parent and their
permitted and respective assigns and Affiliates, and any director, officer,
employee or agent of any of them (each a "Dispute Indemnified Party") from and
against, and agree to pay or cause to be paid to such Dispute Indemnified Party
all Losses ("Dispute Losses") equal to the sum of:
(a) Liability. Any Dispute Losses that a Dispute Indemnified Party
may incur or suffer, which arise, or result from or are related to the
Disputes or the facts and circumstances underlying the Disputes; and
(b) Professional Fees. All reasonable professional fees (including
those of attorneys, accountants, consultants and engineers) and other
reasonable expenses incurred by a Dispute Indemnified Party in connection with a
breach of this Section 9.12.
SECTION 9.13 Payment of Dispute Losses. The Shareholder
Representative shall cause all Dispute Losses due to a Dispute Indemnified
Party to be paid on behalf of the Stockholders, initially from the Estimated
Future Expenses and then, upon exhaustion of the same, from the Escrow Amount
and finally from the Shareholder Representative personally. In the event that
any Dispute Losses are to be paid to a Dispute Indemnified Party, the parties
shall follow the procedure set forth below:
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(a) If a Dispute Indemnified Party makes a good faith determination
that it has incurred, suffered or has otherwise become subject to Dispute
Losses for which it is entitled to indemnification pursuant to Section 9.12,
such Dispute Indemnified Party shall notify the Shareholder Representative of
its claim (an "Indemnity Claim") by delivering written notice of such claim (an
"Indemnity Claim Notice") to the Shareholder Representative, describing in
detail in such Indemnity Claim Notice the nature of the claim, the amount
thereof, and all relevant facts and information necessary to enable the
Shareholder Representative to verify whether such Dispute Indemnified Party is
entitled to recover such Dispute Losses.
(b) If the Shareholder Representative has a good faith objection to
the release of all or any portion of the amount claimed by a Dispute
Indemnified Party named in an Indemnity Claim Notice, the Shareholder
Representative must deliver written notice of such objection (an "Objection")
within twenty (20) business days of its receipt of such Indemnity Claim Notice
(the "Objection Notice Period").
(c) If the Shareholder Representative does not have an Objection,
the Shareholder Representative shall, promptly following expiration of the
Objection Notice Period, pay to the Purchaser Indemnified Party from the
Estimated Future Expenses the amount claimed in such Indemnity Claim Notice.
(d) If the Shareholder Representative submits an Objection within
the Objection Notice Period, the Dispute Indemnified Party and the
Shareholder Representative shall negotiate in good faith for a period of thirty
(30) days to resolve such Objection, with any dispute which remains thereafter
to be settled by arbitration in accordance with Article 14 hereof.
(e) In the event that any Disputes Losses are to be paid from the
Escrow Amount, the Shareholder Representative shall deliver a joint written
instruction signed by such Dispute Indemnified Party and the Shareholder
Representative to the Escrow Agent, which instruction shall authorize the Escrow
Agent to pay the amount specified therein to such Dispute Indemnified Party.
SECTION 9.14 Dispute Proceeds. The Parent, the Intermediate Parent
and the Purchaser agree, and agree to cause the Surviving Corporation and
the Subsidiaries to, deliver to the Shareholder Representative any and all
judgments, awards, settlement amounts or other proceeds received by any of them
at any time and from time to time as a result of the resolution (including any
settlement) of each of the Disputes, net of any Dispute Losses (the "Dispute
Proceeds"), immediately upon receipt thereof. All Dispute Proceeds shall be
Post-Closing Merger Consideration and allocated among the Stockholders by the
Shareholder Representative pro rata in accordance with Section 3.02(a) or paid
to the Parent as Appraisal Consideration under Section 3.07(c).
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Article 10.
BROKERS AND EXPENSES
--------------------
SECTION 10.01 Company's Broker. The Company shall arrange for the
fees and expenses of Wachovia Capital Markets, LLC to be paid at Closing out of
the Estimated Future Expenses.
SECTION 10.02 Purchaser's Broker. The Purchaser shall arrange for
the fees and expenses of Quarterdeck Investment Partners, LLC to be paid at
Closing.
SECTION 10.03 Expenses. Each of the parties shall pay all costs and
expenses incurred or to be incurred by it in the negotiation and
preparation of this Agreement and the Closing and carrying out the transactions
contemplated by this Agreement, except as otherwise expressly provided for
hereunder.
Article 11.
MISCELLANEOUS
-------------
SECTION 11.01 Further Documents or Actions. The parties, and
after the Effective Time, the Surviving Corporation, will execute,
acknowledge and deliver any further deeds, assignments or conveyances, and any
other assurances, documents, and instruments of transfer, reasonably requested
by a party and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by a party for the purpose of
carrying out the intent of this Agreement and the other Transaction Documents
and the transactions contemplated hereby and thereby.
SECTION 11.02 Headings. The subject headings of the articles,
sections, subsections and clauses of this Agreement are included for purposes of
convenience only, and shall not affect the construction or interpretation of any
of its provisions.
SECTION 11.03 Modification and Waiver. This Agreement, the
Schedules and Exhibits hereto, and the other Transaction Documents
constitute the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification,
or amendment of this Agreement shall be binding unless executed in writing by
all the parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
SECTION 11.04 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
SECTION 11.05 Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
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SECTION 11.06 XX Xxxx Balance. Parent, Intermediate Parent and
Purchaser, and after the Effective Time, the Surviving Corporation, shall
cooperate with, and take any action reasonably requested by, the Shareholder
Representative, in order to cause the Majority-Owned Subsidiary to make a
distribution of cash to the Surviving Corporation in an amount equal to fifty
percent (55%) of the cash balance reflected on the balance sheet of the Majority
Owned-Subsidiary on the Closing Date (the "JV Distribution"). Promptly after
receipt of the JV Distribution by the Surviving Corporation, the Surviving
Corporation shall remit the JV Distribution, less any required withholding or
other Taxes, to the Shareholder Representative for distribution to the
Stockholders pro rata in accordance with Section 3.02(a), at the times
determined by the Shareholder Representative in his sole discretion, and such
distribution shall be deemed to be Post-Closing Merger Consideration.
Shareholder Losses arising from a breach of this Section 11.06 shall not be
subject to the Minimum Indemnity Threshold.
SECTION 11.07 Taxpayer Identification Numbers. The Shareholder
Representative shall deliver to Parent copies of all Forms W-8 or W-9 or
such other tax forms as may be required with respect to persons receiving
payments under the terms of this Agreement for withholding and tax reporting
purposes. If the Shareholder Representative does not deliver such forms to
Parent with respect to any such person, the Shareholder Representative shall
deduct and withhold such amounts as may be required by applicable law from
payments to such persons.
ARTICLE 12.
PARTIES
-------
SECTION 12.01 Rights of Parties. This Agreement shall not confer
any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns; provided, however, that (i) the
provisions in Article 3 concerning payment of the Merger Consideration are
intended for the benefit of the Stockholders, (ii) the provisions in Article 9
concerning the Shareholder Indemnified Parties are intended for the benefit of
the Shareholder Indemnified Parties, (iii) the provisions in Section 6.03
concerning insurance and indemnification are intended for the benefit of the
individuals specified therein and their respective legal representatives, and
(iv) the provisions in Article 9 concerning indemnification for the Purchaser
Indemnified Parties are intended for the benefit of the Purchaser Indemnified
Parties.
SECTION 12.02 Assignment. This Agreement and all of the provisions
hereof will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns; provided that neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned (i) by the Purchaser, the Intermediate Parent or the Parent without the
prior written consent of the Company, or (ii) by the Company without the prior
written consent of the Parent.
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ARTICLE 13.
NOTICES
SECTION 13.01 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed
to have been duly given to the party to whom notice is to be given at the
applicable address or facsimile number set forth below on the date of service if
served personally on the party; on the third day after mailing by first class
mail, registered or certified, postage prepaid; on the date of transmission if
sent by confirmed facsimile during the recipient's normal business hours, or on
the first business day after the date of such transmission if not sent during
the recipient's normal business hours; or on the first business day after the
scheduled delivery date if mailed via overnight courier. Any party may change
its address or facsimile number for purposes of this Section by giving the other
parties written notice of the new address or facsimile number in the manner set
forth above.
If to the Parent or the Intermediate Parent:
Esterline Technologies Corporation
000 000xx Xxxxxx XX, Xxx. 0000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxx., Xxx. 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Purchaser:
Esterline Acquisition Sub, Inc.
c/o Esterline Technologies Corporation
000 000xx Xxxxxx XX, Xxx. 0000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxx., Xxx. 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
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If to the Shareholder Representative:
Xxxxxx Xxxxx
000 Xxx Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Key
c/o X.X. Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xxxxxx, Xxxxxx-Xxxxxxx, Colt & Mosle LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company:
Xxxxxx X. Xxxxxx
c/o X.X. Xxxxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx
c/x Xxxxx Holding Corporation
0 Xxxxxxxxx Xxxxx, Xxx. 000
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Xxxxxx, Xxxxxx-Xxxxxxx, Colt & Mosle LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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ARTICLE 14.
ARBITRATION AND GOVERNING LAW
-----------------------------
SECTION 14.01 Arbitration and Governing Law. Except for any
disputes relating to the Closing Date Balance Sheet or the calculation of
the Final Net Working Capital which are to be resolved pursuant to Section
3.06(b), any dispute which arises pursuant to the terms of this Agreement shall
be settled exclusively by arbitration conducted as provided herein, and in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration shall be administered by the American Arbitration
Association.
(a) The arbitration shall be conducted in New York, New York, by
one (1) arbitrator, jointly selected by the parties, except that if the
parties are unable to agree on a single arbitrator within fifteen (15) business
days of the submission of a dispute to arbitration, the arbitration shall be
conducted by three (3) arbitrators, who shall be selected as follows: one (1)
arbitrator selected by the Parent and one (1) arbitrator selected by the Company
(or, after the Effective Time, the Shareholder Representative), each within ten
(10) business days of the expiration of said fifteen (15) business days, and the
third jointly selected by the Parent and Company (or, after the Effective Time,
the Shareholder Representative), or if the parties are unable to agree within
ten (10) business days after the selection of the first two arbitrators, jointly
by the two (2) arbitrators selected by the parties.
(b) New York law shall apply in determining the rights, obligations
and liabilities of the parties; provided, however, that the arbitrator(s)
shall not have the power to grant any indirect, special, punitive or
consequential damages whatsoever, including loss of profits or goodwill.
(c) The arbitrator(s) shall prepare and deliver a written reasoned
award. Judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof and shall be final and binding upon the
parties.
(d) All costs and fees relating to the arbitration shall be borne
by the losing party, except that if the arbitrator(s) determine that each
party has prevailed in part and lost in part, the costs and fees relating to the
arbitration shall be allocated between the parties as equitably determined by
the arbitrator(s).
SECTION 14.02 Exclusive Means for Dispute Resolution.
(a) The failure or refusal of any party to submit to arbitration or
any of the other dispute resolution mechanisms specified herein shall be
deemed a breach of this Agreement. If any party seeks and secures judicial
intervention requiring enforcement of this Article 14, such party shall be
entitled to recover from the other party in such judicial proceeding all costs
and expenses, including reasonable attorneys' fees, that it was thereby required
to incur.
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(b) Except for the dispute resolution procedure set forth in
Section 3.06(b), the procedures specified in this Article 14, shall be the
sole and exclusive procedures for the resolution of disputes between the parties
arising out of or relating to this Agreement; provided, however, that a party,
without prejudice to the above procedures, may seek a preliminary injunction or
other provisional judicial relief if in its sole judgment such action is
necessary to avoid irreparable damage or to preserve the status quo. Despite
such action, the parties will continue to participate in good faith in the
procedures specified in this Article 14.
ARTICLE 15.
TERMINATION
-----------
SECTION 15.01 Termination. This Agreement may be terminated at any
time prior to Closing:
(a) by mutual written consent of the Parent and the Company;
(b) by written notice delivered by any of the Parent, the
Intermediate Parent or the Purchaser on the one hand or the Company on the
other hand if (i) a representation or warranty was not true and correct in all
material respects when made by the non-terminating party, (ii) the
non-terminating party has failed to perform, satisfy, or comply with all of its
respective covenants and agreements in all material respects, or (iii) the
non-terminating party has failed to satisfy all of its respective obligations
and conditions in all material respects, provided that in the case of (ii) and
(iii), such non-terminating party has received thirty (30) days notice of such
failure and such failure has not been cured within such thirty (30) day period,
or if events have occurred which have made it impossible to satisfy a condition
precedent to the terminating party's obligations to consummate the transactions
contemplated hereby, unless such terminating party's breach of this Agreement
has prevented the condition from being satisfied; or
(c) by written notice delivered by any of the Parent, the
Intermediate Parent and the Purchaser on the one hand or the Company on the
other hand if the Closing has not occurred on or prior to August 30, 2004;
provided that neither the Parent nor the Company shall be entitled to terminate
this Agreement pursuant to this Section 15.01(c), if its willful breach of this
Agreement has prevented the consummation of the transactions contemplated hereby
at or prior to such time; and provided further that, for the purposes of this
Section 15.01(c), any willful breach of this Agreement by the Intermediate
Parent or the Purchaser shall be deemed a willful breach by the Parent.
SECTION 15.02 Effect of Termination.
(a) Notwithstanding anything contained herein to the contrary, if
either (i) as a result of a material breach of a covenant, obligation or
agreement set forth in this Agreement which occurs after the date hereof, which
breach was willful, intentional or committed in bad faith, the non-breaching
party exercises its termination rights pursuant to Section 15.01(b), or (ii) a
party willfully, intentionally or in bad faith does not proceed to close the
transactions contemplated hereby when and as required pursuant to the terms
hereof, then and in either such case, the breaching party (or in the case where
the breaching party is the Intermediate Parent or the Purchaser, the Parent)
shall pay to the non-breaching party the sum of Five Million Dollars
($5,000,000)
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(the "Termination Payment"). The parties acknowledge and agree that, in the
event of such a breach, it would be difficult, costly or impossible to
conclusively establish the actual damages that the parties would have suffered,
and that the Termination Payment shall constitute liquidated damages and
represent a reasonable pre-estimate of the actual costs and damages which would
be sustained by such party in the event of such circumstances and further agree
that such amounts are compensatory only, and not punitive in nature or a
penalty, and are, in any event, just, fair and reasonable.
(b) In the event of termination of this Agreement by the Parent,
the Intermediate Parent, the Purchaser or the Company as provided in
Section 15.01(a) or Section 15.01(c), this Agreement will forthwith become void
and shall automatically terminate with no further force or effect, and, except
as provided in Section 15.02(a) in the event of a termination pursuant to
Section 15.01(b), there will be no liability or obligation on the part of any
party hereto to any other party hereto or its stockholders, members, directors,
managers or officers in respect thereof, except that nothing herein will relieve
any party hereto from liability for any breach of this Agreement prior to such
termination.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties to this Agreement have duly
executed it as of the date set forth above.
XXXXXXXXX TECHNOLOGIES
CORPORATION
By:/s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President, Strategy &
Technology
XXXXXXXXX TECHNOLOGIES HOLDINGS
LIMITED
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Director
ESTERLINE ACQUISITION SUB, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: President
XXXXX HOLDING CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: President
SHAREHOLDER REPRESENTATIVE
/s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx Xxxxx
