Execution Copy
EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
by and among
AAKF Acquisition, Inc.,
as Purchaser,
K&F Industries, Inc.,
as the Company,
and
the other parties listed herein,
as the Stockholders
Dated as of October 15, 2004
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS........................................................................................... 1
SECTION 1.1. Definitions.............................................................................. 1
ARTICLE II. SALE OF SHARES....................................................................................... 17
SECTION 2.1. Purchase and Sale of the Common Stock.................................................... 17
SECTION 2.2. Closing.................................................................................. 18
SECTION 2.3. Subsequent Change of Control............................................................. 19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................................... 22
SECTION 3.1. Organization, Standing and Authority..................................................... 22
SECTION 3.2. Capitalization........................................................................... 22
SECTION 3.3. Subsidiaries............................................................................. 23
SECTION 3.4. Actions and Proceedings.................................................................. 23
SECTION 3.5. No Conflict or Violation................................................................. 24
SECTION 3.6. Governmental Consents and Approvals...................................................... 24
SECTION 3.7. Financial Statements and Statutory Statements............................................ 25
SECTION 3.8. Intellectual Property.................................................................... 26
SECTION 3.9. Compliance with Laws..................................................................... 27
SECTION 3.10. Permits, Licenses and Franchises......................................................... 27
SECTION 3.11. Contracts................................................................................ 27
SECTION 3.12. Absence of Certain Changes............................................................... 28
SECTION 3.13. Environmental Matters.................................................................... 28
SECTION 3.14. Taxes.................................................................................... 29
SECTION 3.15. Employee Benefit Plans; ERISA............................................................ 30
SECTION 3.16. Labor Relations and Employment........................................................... 32
SECTION 3.17. Real Property............................................................................ 33
SECTION 3.18. Affiliated Transactions; Indemnification Agreements...................................... 34
SECTION 3.19. Warranties............................................................................... 35
SECTION 3.20. Inappropriate Payments................................................................... 35
SECTION 3.21. Brokers.................................................................................. 35
SECTION 3.22. Assets................................................................................... 35
SECTION 3.23. Insurance................................................................................ 36
SECTION 3.24. Intercompany Services.................................................................... 36
SECTION 3.25. Government Contracts..................................................................... 36
SECTION 3.26. International Trade and Export Controls.................................................. 37
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS................................................... 38
SECTION 4.1. Ownership of Stock....................................................................... 38
SECTION 4.2. Authorization............................................................................ 38
SECTION 4.3. No Conflict or Violation................................................................. 38
SECTION 4.4. Governmental Consents and Approvals...................................................... 39
SECTION 4.5. Compliance with Laws..................................................................... 39
SECTION 4.6. Obligations of the Company to the Stockholders........................................... 39
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ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................................................... 40
SECTION 5.1. Organization, Standing and Authority..................................................... 40
SECTION 5.2. Authorization............................................................................ 40
SECTION 5.3. Actions and Proceedings.................................................................. 40
SECTION 5.4. No Conflict or Violation................................................................. 41
SECTION 5.5. Governmental Consents and Approvals...................................................... 41
SECTION 5.6. Compliance with Laws..................................................................... 41
SECTION 5.7. Financing................................................................................ 41
SECTION 5.8. Sophisticated Investor................................................................... 42
SECTION 5.9. Other Investment Representations......................................................... 42
SECTION 5.10. Brokers.................................................................................. 43
SECTION 5.11. Information Supplied..................................................................... 43
ARTICLE VI. COVENANTS............................................................................................ 43
SECTION 6.1. Conduct of the Business Pending the Closing.............................................. 43
SECTION 6.2. Certain Transactions..................................................................... 46
SECTION 6.3. Investigations; Pre-Closing Access....................................................... 47
SECTION 6.4. HSR Act Filings; Consents................................................................ 48
SECTION 6.5. Further Assurances....................................................................... 49
SECTION 6.6. Transaction Expenses; Defeasance Costs................................................... 50
SECTION 6.7. Employee Matters......................................................................... 51
SECTION 6.8. Indemnification of Directors and Officers; Releases...................................... 52
SECTION 6.9. Stock Options............................................................................ 53
SECTION 6.10. Custody of Share Certificates............................................................ 54
SECTION 6.11. Notes Tender Offer....................................................................... 54
SECTION 6.12. Estoppel Certificates.................................................................... 57
SECTION 6.13. Certain Tax Matters...................................................................... 57
ARTICLE VII. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO CLOSE.................................... 58
SECTION 7.1. Representations and Warranties........................................................... 59
SECTION 7.2. Compliance with Covenants................................................................ 59
SECTION 7.3. Governmental and Regulatory Consents and Approvals....................................... 59
SECTION 7.4. Injunction............................................................................... 59
SECTION 7.5. Materiality of Conditions................................................................ 60
SECTION 7.6. Financing................................................................................ 60
SECTION 7.7. Notes Satisfaction Condition; Indebtedness and Encumbrances.............................. 60
SECTION 7.8. Documents................................................................................ 60
SECTION 7.9. Opinions of Counsel to the Company....................................................... 61
SECTION 7.10. Termination of Certain Affiliate Agreements.............................................. 61
SECTION 7.11. No Plan Termination...................................................................... 62
SECTION 7.12. Confirmation Letters..................................................................... 62
ARTICLE VIII. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE STOCKHOLDERS TO CLOSE................................ 62
SECTION 8.1. Representations and Warranties........................................................... 62
SECTION 8.2. Compliance with Covenants................................................................ 63
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SECTION 8.3. Governmental and Regulatory Consents and Approvals....................................... 63
SECTION 8.4. Cash Purchase Price...................................................................... 63
SECTION 8.5. Injunction............................................................................... 63
SECTION 8.6. Materiality of Conditions................................................................ 63
SECTION 8.7. Documents................................................................................ 64
SECTION 8.8. Opinion of Counsel to the Purchaser...................................................... 64
ARTICLE IX. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION............................... 64
SECTION 9.1. Survival of Representations, Warranties and Covenants.................................... 64
SECTION 9.2. Indemnification by the Significant Stockholders and the Stockholders..................... 65
SECTION 9.3. Limitations on Indemnification by the Significant Stockholders and the
Stockholders............................................................................ 66
SECTION 9.4. Indemnification by the Purchaser Indemnitors............................................. 68
SECTION 9.5. Limitations on Indemnification by the Purchaser Indemnitors.............................. 68
SECTION 9.6. Procedures............................................................................... 69
SECTION 9.7. Remedies Not Affected by Investigation, Disclosure or Knowledge.......................... 71
SECTION 9.8. Indemnity Escrow Fund.................................................................... 71
SECTION 9.9. Exclusive Remedy; Additional Limitations................................................. 72
SECTION 9.10. Subrogation.............................................................................. 72
SECTION 9.11. Appointment of the Representatives....................................................... 73
ARTICLE X. TERMINATION PRIOR TO CLOSING.......................................................................... 74
SECTION 10.1. Termination of Agreement................................................................. 74
SECTION 10.2. Survival................................................................................. 75
ARTICLE XI. MISCELLANEOUS........................................................................................ 75
SECTION 11.1. Publicity................................................................................ 75
SECTION 11.2. Confidentiality.......................................................................... 76
SECTION 11.3. Notices.................................................................................. 76
SECTION 11.4. Governing Law............................................................................ 77
SECTION 11.5. Entire Agreement......................................................................... 77
SECTION 11.6. Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies............... 78
SECTION 11.7. Binding Effect; Assignment............................................................... 78
SECTION 11.8. Interpretation........................................................................... 78
SECTION 11.9. No Third Party Beneficiaries............................................................. 78
SECTION 11.10. Counterparts............................................................................. 79
SECTION 11.11. Other Agreements, Exhibits and Schedules................................................. 79
SECTION 11.12. Headings................................................................................. 79
SECTION 11.13. Investigation by Purchaser............................................................... 79
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INDEX OF EXHIBITS
Exhibit A - List of Stockholders
Exhibit B - Knowledge Groups
Exhibit C - Form of Indemnity Escrow Agreement
Exhibit D - Commitment Letters
Exhibit E - Form of Employment Agreements
Exhibit F - Form of Joinder Agreement
Exhibit G - Required Permits
Exhibit H - Forms of Opinions of Company's Counsel
Exhibit I - Affiliate Agreements to be Terminated
Exhibit J - Form of Noncompetition Agreement
Exhibit K - Form of Opinion of Purchaser's Counsel
Exhibit L - Form of Custody Agreement
Exhibit M - Form of Option Termination Agreement
Exhibit N - Form of Estoppel Certificate
Exhibit O - Pro Rata Portions
Exhibit P - Defeasance Costs Tax Note
Exhibit Q - Airplane Use and Reimbursement Agreement
INDEX OF SCHEDULES
Schedule 1.1 - Persons Subject to Noncompetition Agreements
Schedule 3.1(b) - Jurisdictions of Foreign Qualification
Schedule 3.2(b) - Capitalization
Schedule 3.3 - Subsidiaries
Schedule 3.4 - Actions or Proceedings
Schedule 3.5 - Conflicts or Violations
Schedule 3.6 - Governmental Consents and Approvals Required
Schedule 3.8 - Exceptions to Intellectual Property
Schedule 3.9 - Alleged Violations of Laws or Regulations
Schedule 3.10 - Permits, Licenses and Franchises
Schedule 3.11 - Contracts
Schedule 3.12 - Material Changes
Schedule 3.13 - Environmental Matters
Schedule 3.14 - Taxes
Schedule 3.15 - Employee Benefit Plans; ERISA
Schedule 3.16 - Labor Relations and Employment
Schedule 3.17 - Real Property
Schedule 3.18 - Affiliated Transactions
Schedule 3.22 - Assets
Schedule 3.21 Brokers
Schedule 3.23 - Insurance
Schedule 3.24 - Intercompany Services
Schedule 3.25 - Government Contracts
Schedule 3.26 - International Trade and Export Controls
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Schedule 4.4 - Governmental Consents and Approvals Required
Schedule 4.6 - Obligations of the Company to the Stockholders
Schedule 4.7 - Ownership of Notes
Schedule 5.4 - Conflicts
Schedule 5.10 - Brokers
Schedule 6.1 - Exceptions to Conduct of the Business Pending the Closing
Schedule 6.1(xii) - Permitted Capital Expenditures
Schedule 6.4 - Required Approvals and Consents
Schedule 6.7(b) - Key Employees
Schedule 6.11 - Certain Indenture Covenants
Schedule 7.7 - Permitted Closing Date Indebtedness
Schedule 9.2(a)(iii) - Certain Environmental Matters
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
October 15, 2004, is entered into by and among AAKF Acquisition, Inc., a
Delaware corporation (the "Purchaser"), K&F Industries, Inc., a Delaware
corporation (the "Company"), and the stockholders of the Company listed on
Exhibit A (each individually a "Stockholder" and collectively, the
"Stockholders").
WHEREAS, the Stockholders own all of the outstanding shares of
common stock, par value $0.01 per share, of the Company (the "Common Stock");
WHEREAS, the Purchaser desires to purchase from the
Stockholders, and the Stockholders desire to sell to the Purchaser, all of the
shares of Common Stock owned by the Stockholders, which number of shares owned
by each Stockholder is set forth opposite such Stockholder's name on Exhibit A,
in each case on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, concurrent with the execution of this Agreement,
Aurora Equity Partners II, L.P., a Delaware limited partnership ("AEP"), and
Aurora Overseas Equity Partners II, L.P., a Cayman Islands limited Partnership
("AOEP" and collectively with AEP, the "Aurora Partnerships"), are executing and
delivering to the Company a Limited Guarantee of even date herewith (the "Aurora
Guarantee") pursuant to which the Aurora Partnerships have severally guaranteed,
until the Closing shall have occurred, certain of the obligations of the
Purchaser under this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS.
The following terms shall have the respective meanings set
forth below throughout this Agreement:
"Accounting Referee" has the meaning set forth in Section
2.3(d).
"Additional Purchaser Stockholder Investment" means, as of any
date, the sum of the Fair Market Value of any additional capital invested in the
Purchaser by any Person for Capital Stock of the Purchaser after the Closing
Date (including the Fair Market Value of any indebtedness exchanged for or
converted into such Capital Stock).
"AEP" has the meaning set forth in the recitals to this
Agreement.
"Affiliate" means, with respect to any Person, at the time in
question, any other Person controlling, controlled by or under common control
with such Person. "Control" means (i) in the case of a corporation, the
ownership, directly or indirectly, of 50% or greater of the capital stock in
that corporation, and the ability to elect 50% or greater of such corporation's
Board of Directors, and (ii) in the case of a Person other than a corporation,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of the Person, whether through the
ownership of a voting equity interest, by contract or otherwise.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Aggregate Purchaser Stockholder Distributions" means, as of
any date, the aggregate Fair Market Value of all amounts of cash, securities or
other property (other than Capital Stock of the Purchaser) paid or distributed
by the Purchaser subsequent to the Closing Date and through such date to the
stockholders of the Purchaser in their capacities as such by way of
distributions, dividends, repurchases of securities or otherwise.
"Airplane Use and Reimbursement Agreement" means the Airplane
Use and Reimbursement Agreement, in the form of Exhibit Q attached hereto,
between the Company and Xxxxxxx X. Xxxxxxxx.
"Amended and Restated Credit Agreement" means the Amended and
Restated Credit Agreement, dated as of December 20, 2002, among Aircraft Braking
Systems Corporation, Engineered Fabrics Corporation and the other parties
thereto.
"Ancillary Agreements" means the Indemnity Escrow Agreement,
the Noncompetition Agreement, the Airplane Use and Reimbursement Agreement, each
of the Employment Agreements, the Custody Agreement, any Joinder Agreement, each
of the Option Termination Agreements, the Defeasance Costs Tax Note and the
Aurora Guaranty.
"Antitrust Division" has the meaning set forth in Section 6.4.
"AOEP" has the meaning set forth in the recitals to this
Agreement.
"Applicable Law" means any foreign, federal, state or local
statute, law, ordinance, regulation, order, writ, injunction, directive,
judgment or decree applicable to the parties hereto, or any of their respective
Affiliates, properties or assets, as the case may be.
"Applicable Limitation Date" has the meaning set forth in
Section 9.1.
"Applicable Indenture" has the meaning set forth in Section
6.11(d).
"Assets" has the meaning set forth in Section 3.22.
"Aurora Guarantee" has the meaning set forth in the recitals
to this Agreement.
"Aurora Partnerships" has the meaning set forth in the
recitals to this Agreement.
"Benefit Plans" has the meaning set forth in 3.15(a).
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"Bid" means any quotation, bid or proposal by the Company or
any of its Subsidiaries which, if accepted or awarded, would lead to a contract
with the U. S. Government or any other Person, including a prime contractor or a
higher tier subcontractor to the U. S. Government, for the design, manufacture
or sale of products or the provision of services by the Company or any of its
Subsidiaries.
"Business Day" means any day other than a Saturday, Sunday, a
day on which banking institutions in the State of New York are permitted or
obligated by law to be closed or a day on which the New York Stock Exchange is
closed for trading.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation), including, without limitation, partnership interests and
membership interests, and any and all warrants, rights or options to purchase or
other arrangements or rights to acquire any of the foregoing.
"Cash Purchase Price" has the meaning set forth in Section
2.1.
"Change of Control" means (a) the Initial Purchaser
Equityholders shall cease to collectively beneficially own and control at least
51%, on a fully diluted basis, of the outstanding Capital Stock of the Purchaser
entitled (without regard to the occurrence of any contingency) to vote for the
election of members of the board of directors (or similar governing body) of the
Purchaser (which term shall, for purposes of this definition, include the
survivor of any merger or consolidation of the Purchaser with or into any one or
more of the Company, Aircraft Braking Systems Corporation or Engineered Fabrics
Corporation), unless the Initial Purchaser Equityholders collectively
beneficially own and control (i) at least 35%, on a fully diluted basis, of the
outstanding Capital Stock of the Purchaser entitled (without regard to the
occurrence of any contingency) to vote for the election of members of the board
of directors (or similar governing body) of the Purchaser and (ii) on a fully
diluted basis, more of the outstanding Capital Stock of the Purchaser entitled
(without regard to the occurrence of any contingency) to vote for the election
of members of the board of directors (or similar governing body) of the
Purchaser than any other Person or "group" (within the meaning of Rules 13d-3
and 13d-5 under the Exchange Act); (b) any Person or "group" (within the meaning
of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Initial
Purchaser Equityholders collectively shall have obtained the power (whether or
not exercised) to elect a majority of the members of the board of directors (or
similar governing body) of the Purchaser; (c) the Purchaser shall cease to
beneficially own and control 100% on a fully diluted basis of the Capital Stock
of the Company, Aircraft Braking Systems Corporation or Engineered Fabrics
Corporation (other than by reason of any merger or mergers or consolidation or
consolidations of any of the Purchaser, the Company, Aircraft Braking Systems
Corporation or Engineered Fabrics Corporation into one or more of the others);
(d) the Purchaser shall sell all or substantially all of the assets of the
Purchaser, the Company, Aircraft Braking Systems Corporation or Engineered
Fabrics Corporation, whether in one transaction or a series of related
transactions; or (e) the majority of the seats (other than vacant seats) on the
board of directors (or similar governing body) of the Purchaser cease to be
occupied by Persons who either (a) were members of the board of directors of the
Purchaser on the Closing Date or (b) were nominated for election by the board of
directors
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of the Purchaser, a majority of whom were directors on the Closing Date or whose
election or nomination for election was previously approved by a majority of
such directors.
"Change of Control Date" means the date as of which a Change
of Control shall occur.
"Closing" has the meaning set forth in Section 2.2(a).
"Closing Date" has the meaning set forth in Section 2.2(a).
"Closing Date Cash Balance" means the sum of all cash and cash
equivalents as defined by GAAP held by the Company and its Subsidiaries as of
the close of business, New York, New York time, one Business Day prior to the
Closing Date.
"Closing Date Cash Purchase Price" means the Cash Purchase
Price minus the Indemnity Escrow Fund.
"Closing Date Indebtedness" means, as of the close of
business, New York, New York time, one Business Day prior to the Closing Date,
the aggregate amount of the principal of, and any accrued but unpaid interest
on, the Indebtedness of the Company and its Subsidiaries outstanding under the 9
1/4% Notes, the 9 5/8% Notes and the Loans (as defined in the Amended and
Restated Credit Agreement).
"COBRA" has the meaning set forth in Section 3.15.
"Code" means the Internal Revenue Code of 1986, as amended,
and any citation to a provision of the Code includes a citation to any successor
provision.
"Common Indemnification Claims" has the meaning set forth in
Section 9.11(a).
"Common Stock" has the meaning set forth in the recitals to
this Agreement.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Indemnified Party" and "Company Indemnified Parties"
have the meanings set forth in Section 6.8(a).
"Company Reports" has the meaning set forth in Section 3.7.
"Company Transaction Expenses" means any fees, costs and
expenses incurred by the Company or any of its Subsidiaries, or by the Company
or any of its Subsidiaries on behalf of any Securityholder, in each case
relating to the Subject Transactions or the proposed sale of the Company as a
result of commitments made prior to the Closing (whether incurred prior to or
after the date hereof), including fees and disbursements of counsel, financial
advisors, consultants, accountants, actuaries and other advisors plus any
special, closing or sale bonuses (exclusive of any bonuses paid in the ordinary
course of business, consistent with past practice, under established Benefit
Plans or written employment agreements), if any, payable at any time by the
Company or any of its Subsidiaries in connection with or as a result of the
consummation
4
of the Subject Transactions, including, without limitation, any such amounts
payable pursuant to the agreements listed on Exhibit I attached hereto or any
other agreement, arrangement or understanding between the Company and its
Subsidiaries, on the one hand, and any Affiliates of the Company and its
Subsidiaries, on the other hand; provided, however, that no Defeasance Costs
shall constitute Company Transaction Expenses. Without limiting the generality
of the foregoing, the Company Transaction Expenses shall include, and the
Company shall reimburse or pay directly, all such fees, costs and expenses of
any of the Significant Stockholders incurred on or before the Closing Date to
the extent provided in Section 6.6.
"Computer Software" means all computer software and databases,
except commercially available software, used in or reasonably necessary for the
conduct of the business of the Company and its Subsidiaries.
"Confidentiality Agreement" means that certain confidentiality
agreement, dated November 14, 2003, by and between the Company and Aurora
Capital Group.
"Consent Date" has the meaning set forth in Section 6.11(b).
"Consent Payment(s)" has the meaning set forth in Section
6.11(b)
"Contracts" means agreements, contracts and commitments of the
following types, to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries or any of their respective
properties or assets is bound (but expressly excluding the Real Property
Leases): (a) any mortgage, indenture, loan or credit agreement, security
agreement, guarantee or other agreement or instrument relating to any
Indebtedness or the deferred purchase price of property (whether incurred,
assumed, guaranteed or secured by any asset) (other than intercompany loans and
vehicle financing contracts entered into in the ordinary course of business),
(b) any collective bargaining agreement, (c) any agreement with any Person
containing any provision or covenant currently or hereafter in effect (i)
limiting the ability of the Company or any of its Subsidiaries to (A) sell any
products or services of or to any other Person, (B) engage in any line of
business, or (C) compete with or obtain products or services from any Person or
(ii) limiting the ability of any Person to compete with or to provide products
or services to the Company or any of its Subsidiaries, in the case of clauses
(i) and (ii), except for confidentiality or marketing and distribution
agreements pursuant to which the Company or any of its Subsidiaries agreed that
it will not use information provided to, or provided by, the Company or any of
its Subsidiaries, (d) all outstanding written proxies, powers of attorney or
similar delegations of authority of the Company or any of its Subsidiaries
(other than those that are immaterial), (e) all agreements with any present
individual officer, director, employee, consultant or other similar
representative of the Company or any of its Subsidiaries or former individual
officer, director, employee, consultant or similar representative thereof
(including for employment or relating to loans), other than any of the foregoing
that are terminable without liability at the option of the Company or its
relevant Subsidiary on written notice of ninety (90) days or less, (f) any other
agreement, contract or commitment which, in any case, requires payment or
incurrence of Liabilities, or the rendering of services, by the Company or any
Subsidiary, subsequent to the date of this Agreement of more than Two Hundred
Fifty Thousand Dollars ($250,000) annually other than purchase orders with
customers and vendors entered into in the ordinary course of business, (g) all
material license, sale, distribution,
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commission, marketing, agent, franchise, technical assistance or similar
agreements relating to or providing for the marketing and/or sale of the
products or services, (h) all material acquisition, partnership, joint venture,
teaming arrangements or other similar contracts, arrangements or agreements
currently in effect, (i) all leases or subleases by the Company or any of its
Subsidiaries, as landlord or sublandlord of the Leased Real Property or Owned
Real Property, (j) all material licenses or other agreements relating to the use
of Intellectual Property, and (k) all other existing agreements not otherwise
covered by clauses (a) through (j) that are material to the conduct of the
business of the Company or any of its Subsidiaries or the loss of which would
result in a Material Adverse Effect.
"Custodian" has the meaning set forth in Section 6.10.
"Custody Agreement" has the meaning set forth in Section 6.10.
"Debt Financing Documents" has the meaning set forth in
Section 5.7.
"Deductible" has the meaning set forth in Section 9.3(b).
"Defeasance Costs" means any prepayment, redemption or
defeasance costs or penalties associated with the redemption, repurchase or
defeasance of the Closing Date Indebtedness incurred on or before the Closing
Date, whether the same is incurred by the Company or any Subsidiary thereof or
the Purchaser, including without limitation, (a) the amount by which the Tender
Offer Consideration for any 9 1/4% Note or any 9 5/8% Note, as applicable,
tendered pursuant to the relevant Tender Offer is greater than the principal of,
and accrued interest on, such 9 1/4% Note or 9 5/8% Note on the Closing Date,
(b) all Consent Payments that may be payable pursuant to the Tender Offers, (c)
all fees and expenses of Persons providing services to the Company in respect of
the Tender Offers, the Proposed Amendments and the Note Defeasances, including
the Company's legal counsel, financial advisors, dealer managers, information
agents and accountants; (d) the printing and mailing costs in respect of the
Tender Offers, the Proposed Amendments and the Note Defeasances, and (e) fees
and expenses of the relevant trustees and their legal counsel under the
indentures for the 9 1/4% Notes or the 9 5/8% Notes, as applicable; provided,
however, that Defeasance Costs shall not include the principal of, or interest
accrued on, the 9 1/4% Notes or the 9 5/8% Notes on the Closing Date or any
costs incurred as a result of a misrepresentation or breach by the Purchaser of
any provision of this Agreement. Defeasance Costs shall also include the amount
by which the amount necessary to covenant defease all 9 1/4% Notes and 9 5/8%
Notes not purchased pursuant to the Tender Offers in accordance with the
applicable provisions of the respective indentures governing the 9 1/4% Notes
and the 9 5/8% Notes is greater than the principal of, and interest accrued
through the Closing Date on, the 9 1/4% Notes and the 9 5/8% Notes not purchased
pursuant to the Tender Offers on the Closing Date; provided, that in calculating
such costs it shall be assumed that the 9 1/4% Notes and the 9 5/8% Notes are
redeemed on the earliest dates following the Closing Date on which they may be
redeemed pursuant to their respective indentures.
"Defeasance Costs Tax Note" shall mean an unsecured promissory
note, substantially in the form attached hereto as Exhibit P, issued on the
Closing Date by the Purchaser to the Representatives for the benefit of the
Stockholders, with the following terms:
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(i) a maturity date of six (6) months from the Closing Date, (ii) interest to
accrue from the Closing Date to the date of payment at a rate equal to the Prime
Rate, and (iii) a principal amount equal to (A) 35.0% of the Defeasance Costs
minus (B) the product of (1) $23,832 multiplied by (2) the number of days from
and including October 1, 2004 through and including the Closing Date.
"Determination Date" has the meaning set forth in Section
2.3(f).
"Disputed Item" has the meaning set forth in Section 2.3(c).
"Employment Agreements" means, collectively, the Employment
Agreements, in substantially the forms attached hereto as Exhibit E.
"Encumbrance" means any lien, encumbrance, easement,
encroachment, right of first refusal, adverse claim or restriction of any kind,
security interest, charge, mortgage, option, pledge or restriction on transfer
(except for restrictions arising under the HSR Act or other antitrust or
competition laws applicable to the Subject Transactions and except, in the case
of shares of Common Stock, for restrictions arising under applicable securities
laws) except for (a) liens or other imperfections of title that do not,
individually or in the aggregate, materially interfere with the ordinary conduct
of the business of the Company or its Subsidiaries as it is being conducted on
the date of this Agreement; (b) liens and encumbrances for taxes, assessments or
other government charges not yet due or payable; (c) zoning, building or other
similar government restrictions that do not, individually or in the aggregate,
materially interfere with the ordinary conduct of the business of the Company or
its Subsidiaries as it is being conducted on the date of this Agreement; (d)
easements, covenants, rights of way or other similar restrictions with respect
to real property which do not, individually or in the aggregate, materially
interfere with the ordinary conduct of the business of the Company or its
Subsidiaries as it is being conducted on the date of this Agreement; and (e)
mechanics', materialmen's and other encumbrances which arise or have arisen in
the ordinary course of business.
"Environmental Laws" means all Applicable Laws, which relate
to: (a) protection of the environment; (b) the Management, Release, Remediation
or exposure of Persons to Hazardous Substances; or (c) occupational health and
safety, including, without limitation: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendment
and Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq.; the Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of
1976 and subsequent Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
Section 6901 et seq.; the Clean Water Act, 22 U.S.C. Section 1251 et seq.; the
Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Toxic Substances Control Act,
15 U.S.C. et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7
U.S.C. Section 136; the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Section 11001 et seq. (Title III of XXXX); and the Occupational
Safety and Health Act of 1970, 29 U.S.C. ss.6901, et seq.
"Environmental Liabilities" means any Losses arising under any
Environmental Laws.
"Equity Financing Documents" has the meaning set forth in
Section 5.7.
7
"Equity Investment" has the meaning set forth in Section 5.7.
"Equity Value" means, as of a Change of Control Date, the sum
of:
(a) the aggregate Fair Market Value of all amounts of cash,
securities or other property received by the stockholders of the Purchaser in
their capacities as such in connection with such Change of Control (including
any such cash, securities or other property received from the Purchaser) and to
the extent that any one or more of the stockholders of the Purchaser immediately
prior to such Change of Control remain as a stockholder of the Purchaser
immediately following such Change of Control, the Fair Market Value of all
Capital Stock of the Purchaser (such Fair Market Value to be determined
immediately after giving effect to such Change of Control) that is held by such
continuing stockholders both immediately before and immediately after giving
effect to such Change of Control; plus
(b) the sum of the Aggregate Purchaser Stockholder
Distributions during the period commencing on the Closing Date and ending on
such Change of Control Date;
provided, however, in no event shall Equity Value be reduced by any fees paid by
the Purchaser, the Company or any of their respective Subsidiaries to any
Affiliate of the Purchaser (other than the Company or a wholly-owned Subsidiary
of the Company) in connection with such Change of Control.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section 3.15.
"Exchange Act" has the meaning set forth in Section 3.7.
"Fair Market Value" means:
(a) in so far as the same relates to cash or cash equivalents,
the amount of such cash and cash equivalents as converted into United States
dollars utilizing the generally prevailing exchange rate as in effect on the
relevant Change of Control Date as reported in the Western Edition of the Wall
Street Journal;
(b) in so far as the same consists of securities of a
corporation or other entity:
(i) if such securities or other securities of the
same class of such corporation or other entity are traded on a
securities exchange, the average of the closing prices of the
securities on such exchange over the thirty (30) day period ending
three (3) trading days prior to such Change of Control Date;
(ii) if such securities or other securities of the
same class of such corporation or other entity are actively traded
over-the-counter, the average of the closing bid or sales prices as
applicable over the thirty (30) day period ending three (3) trading
days prior to such Change of Control Date; and
8
(iii) if there is no active public market for such
securities or other securities of the same class of such corporation or
other entity, the value thereof on such Change of Control Date as
determined in accordance with the procedures set forth in Section 2.3;
and
(c) in so far as the same consists of property other than cash
or cash equivalents or securities of a corporation or other entity, the value
thereof on such Change of Control Date as determined in accordance with the
procedures set forth in Section 2.3.
"Finance Parties" means the parties, other than the Purchaser
or any Affiliate of the Purchaser, to the Debt Financing Documents and the
Equity Financing Documents.
"Financial Statements" has the meaning set forth in Section
3.7.
"Financing" has the meaning set forth in Section 5.7.
"Financing Documents" has the meaning set forth in Section
5.7.
"First Choice" has the meaning set forth in Section 2.3(d).
"FTC" has the meaning set forth in Section 6.4.
"Fully Diluted Share Number" means the sum of (a) the number
of shares of Common Stock outstanding at the time of the Closing and (b) the
number of shares of Common Stock issuable upon the exercise of all Options
outstanding (whether or not then exercisable) at the time of the Closing (before
giving effect to the termination thereof in accordance of the relevant Option
Termination Agreement).
"Final Calculation" has the meaning set forth in Section
2.3(f).
"Fundamental Representations and Warranties" has the meaning
set forth in Section 9.1.
"GAAP" means United States generally accepted accounting
principles consistently applied.
"Goodyear" has the meaning set forth in Section 9.10(a).
"Government Entity" means any federal, state, local,
municipal, county, foreign or other governmental, quasi-governmental,
administrative or regulatory authority, body, agency, court, tribunal,
commission or other similar governmental entity (including any branch,
department, agency or political subdivision thereof) or any self-regulating body
of similar standing.
"Government Contract" means any prime contract, subcontract,
teaming agreement or arrangement, joint venture, basic ordering agreement,
letter contract, purchase order, delivery order, task order, grant, cooperative
agreement, Bid, change order, arrangement or other commitment or funding vehicle
of any kind relating to the business of the Company or
9
any of its Subsidiaries between the Company or any of its Subsidiaries and (a)
the U. S. Government, (b) any prime contractor to the U. S. Government or (c)
any subcontractor with respect to any contract described in clause (a) or (b).
"Hazardous Substance" means any substance or material: (a)
that is defined as a "pollutant," "contaminant," "solid waste," "hazardous
waste," "hazardous material" or "hazardous substance" under any Environmental
Law; (b) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic or mutagenic; or (c) without limiting the foregoing,
that contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenols (PCBs) or asbestos.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for borrowed money, (b)
all obligations (contingent or otherwise) of such Person for the deferred
purchase price of assets, property or services other than trade payables
incurred in the ordinary course of business, (c) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all obligations of such Person as lessee under leases that have been, in
accordance with GAAP, recorded as capital leases, (f) all obligations,
contingent or otherwise, of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of such Person or any warrants,
rights or options to acquire such capital stock, valued, in the case of
redeemable preferred stock, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends, (g) all Indebtedness
of others referred to in clauses (a) through (f) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) to supply funds to or in any manner invest in
the debtor (including any agreement to pay for property or services irrespective
of whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (h) all Indebtedness referred
to in clauses (a) through (f) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Encumbrance on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness, in each case together
with all accrued interest and accrued fees thereon.
"Indemnified Party" has the meaning set forth in Section
9.6(a).
"Indemnifying Party" has the meaning set forth in Section
9.6(a).
10
"Indemnity Escrow Agent" means the escrow agent acting from
time to time under the Indemnity Escrow Agreement.
"Indemnity Escrow Agreement" means the Escrow Agreement, in
substantially the form attached hereto as Exhibit C, to be executed by the
Significant Stockholders, the Purchaser, the Representatives and the Indemnity
Escrow Agent.
"Indemnity Escrow Fund" has the meaning set forth in Section
2.2(e)(i).
"Initial Purchaser Equityholders" means those Persons who
beneficially own and control Capital Stock of the Purchaser on the Closing Date
and their Affiliates.
"Initial Purchaser Stockholder Investment" means the sum of
the Fair Market Value of any capital invested in the Purchaser by any Person for
Capital Stock of the Purchaser on or before the Closing Date (including the Fair
Market Value of any indebtedness exchanged for or converted into such Capital
Stock).
"Intellectual Property" means all trademarks and service
marks, patents, patent applications, registered copyrights and copyright
applications, trade secrets, designs, processes, inventions and invention
disclosures (whether patentable or unpatentable), technology, know-how, Internet
domain names and Computer Software owned or used by the Company or any of its
Subsidiaries in the conduct of their respective businesses.
"Key Employee" has the meaning set forth in Section 6.7.
"Knowledge" shall be interpreted for the purposes of this
Agreement as follows: (a) a matter will be deemed to be within the "Knowledge of
the Company" if such matter is, as of the date of the execution of this
Agreement or as of the Closing Date, as applicable, actually known to any of the
Persons identified in Part I of Exhibit B attached hereto after reasonable
inquiry; and (b) a matter will be deemed to be within the "Knowledge of the
Purchaser" if such matter is, as of the date of the execution of this Agreement
or as of the Closing Date, as applicable, actually known to any of the Persons
identified in Part II of Exhibit B attached hereto after reasonable inquiry.
"Leased Real Property" has the meaning set forth in Section
3.17.
"Xxxxxx Stockholders" means Xxxxxx Brothers Merchant Banking
Portfolio Partnership L.P., Xxxxxx Brothers Offshore Investment Partnership
L.P., Xxxxxx Brothers Offshore Investment Partnership - Japan L.P. and Xxxxxx
Brothers Capital Partners II, L.P.
"Liability" means, with respect to any Person, any liability
or obligation of such Person of any kind, character or description, whether
known or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person in accordance with GAAP or is disclosed on any schedule to this
Agreement.
"Liable Third Party" has the meaning set forth in Section
9.10(b).
11
"LMC" has the meaning set forth in Section 9.10(a).
"Losses" has the meaning set forth in Section 9.2(a).
"Management" means with respect to any Hazardous Substance,
the use, possession, processing, manufacturing, generation, treatment, storage,
recycling, transportation or disposal of such Hazardous Substance.
"Material Adverse Effect" means any circumstance, change in or
effect on the Company or any of its Subsidiaries that, individually or in the
aggregate with all other circumstances, changes in or effects on the Company or
any of its Subsidiaries, is materially adverse to the business, operations,
assets or Liabilities, results of operations or the financial condition of the
Company and its Subsidiaries taken as a whole; provided, however, that any such
adverse effect from and after the date hereof shall not be considered a Material
Adverse Effect unless such effect is unrelated to, and not caused by, the
execution of this Agreement, the Subject Transactions or the announcement of
this Agreement or the Subject Transactions. The following, to the extent
occurring after the date hereof and not affecting the ability of any of the
Stockholders to transfer their Common Stock to the Purchaser on the Closing Date
free and clear of any Encumbrance, shall not be considered in any determination
as to whether a Material Adverse Effect has occurred or may occur: (a) the
effects of changes that are generally applicable to (i) one or more of the
industries in which the Company and its Subsidiaries operate, or (ii) general
economic, political or market conditions including (X) changes after the date of
this Agreement in any Applicable Law or in the interpretation of any Applicable
Law by any Government Entity, (Y) changes in GAAP and (Z) changes in the markets
for equity or debt securities; (b) any facts or circumstances solely relating to
the Purchaser; and (c) acts of terrorism or the effects of any force majeure
event, in either such case not resulting in material physical damage to any
premises occupied by the Company or any of its Subsidiaries.
"Multiemployer Plan" has the meaning set forth in Section
3.15.
"9 1/4% Notes" means the Company's outstanding 9 1/4% Senior
Subordinated Notes due 2007.
"9 1/4% Notes Tender Offer" has the meaning set forth in
Section 6.11(a).
"9 5/8% Notes" means the Company's outstanding 9 5/8% Senior
Subordinated Notes due 2010.
"9 5/8% Notes Tender Offer" has the meaning set forth in
Section 6.11(a).
"Noncompetition Agreement" means the Noncompetition Agreement,
in the form of Exhibit J attached hereto, with Xxxxxxx X. Xxxxxxxx.
"Noteholders" has the meaning set forth in Section 6.11(c).
"Note Defeasance" has the meaning set forth in Section
6.11(f).
"Notes Consents" has the meaning set forth in Section 6.11(b).
12
"Notes" means collectively the 9 5/8% Notes and the 9 1/4%
Notes.
"Notes Consent Condition" shall mean, with respect to either
series of Notes, that the holders of at least a majority in aggregate principal
amount of such Notes entitled to vote on the Proposed Amendments applicable to
such series of Notes shall have validly consented in writing to the Proposed
Amendments.
"Notes Satisfaction Condition" means, contemporaneously with
the Closing:
(a) the Company shall have accepted for purchase all
outstanding 9 5/8% Notes and 9 1/4% Notes that have been validly tendered and
not validly withdrawn pursuant to the Tender Offers; and
(b) with respect to each series of Notes either:
(i) the Notes Consent Condition shall have been
satisfied with respect to the Tender Offer applicable to such series of
Notes and (ii) the Company and the trustee under the Applicable
Indenture shall have executed and delivered a Supplemental Indenture
with respect to such Applicable Indenture and such Supplemental
Indenture shall be in full force and effect and shall become operative
contemporaneously with the Closing; or
(ii) if the Notes Consent Condition has not been
satisfied with respect to the Tender Offer applicable to such series of
Notes, the Company shall have (A) irrevocably deposited with the
applicable trustee the amount required to satisfy the applicable
"covenant defeasance" condition of such series of Notes, after giving
effect to the Company's purchase of such Notes as have been validly
tendered and not withdrawn pursuant to the Tender Offer applicable to
such series of Notes and (B) complied with all other conditions to a
"covenant defeasance" that are capable of being satisfied by the
Closing Date.
"Objection" has the meaning set forth in Section 2.3(c).
"Objection Date" has the meaning set forth in Section 2.3(c).
"Offer to Purchase" means, with respect to each series of
Notes, the Offer to Purchase and Consent Solicitation Statement prepared by the
Company.
"Option" and "Options" have the meanings set forth in Section
2.1.
"Optionholders" means the individuals set forth on Schedule
3.2(b) but shall exclude any such individual who has agreed to be bound by this
Agreement as a Stockholder pursuant to the execution of a joinder agreement in
accordance with Section 6.9.
"Option Plans" has the meaning set forth in Section 2.1.
"Option Termination Agreements" means the option termination
agreements in substantially the form attached hereto as Exhibit M.
13
"Owned Real Property" has the meaning set forth in Section
3.17.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereof.
"Pension Plan" has the meaning set forth in Section 3.15.
"Per Share Cash Purchase Price" has the meaning set forth in
Section 2.1.
"Permits" has the meaning set forth in Section 3.10.
"Person" means any individual, corporation, partnership,
limited liability company, limited liability partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental, judicial or regulatory body, business unit, division or other
entity of any kind or nature.
"Prime Rate" means the "Prime Rate" as listed in The Wall
Street Journal on the Closing Date.
"Proposed Amendments" has the meaning set forth in Section
6.11(b).
"Proposed Calculation" has the meaning set forth in Section
2.3(b).
"Pro Rata Portion" means, with respect to any Significant
Stockholder, the percentage set forth after such Significant Stockholder's name
on Exhibit O attached hereto.
"Purchaser" has the meaning set forth in the preamble to this
Agreement.
"Purchaser Indemnified Parties" has the meaning set forth in
Section 9.2(a).
"Purchaser Indemnifiable Matter" means any matter with respect
to which it is finally determined that any Purchaser Indemnified Party is
entitled to indemnification by the Significant Stockholders or the Stockholders
pursuant to Article IX hereof, or would otherwise be entitled to such
indemnification but for the application of the Significant Stockholders' Cap,
the Deductible and/or the survival periods set forth in Section 9.1 hereof.
"Purchaser Indemnitors" has the meaning set forth in Section
9.4.
"Purchaser Material Adverse Effect" means a material adverse
effect on the Purchaser's ability to consummate the Subject Transactions or to
perform its obligations under this Agreement or any of the Ancillary Agreements.
"Purchaser Tax Group" has the meaning set forth in Section
6.13.
"Purchaser Transaction Expenses" means any fees, costs and
expenses incurred by the Purchaser relating to the Subject Transactions (whether
incurred prior to or after the date hereof), including fees and disbursements of
counsel, financial advisors, consultants, accountants, actuaries and other
advisors, including the filing fees in connection with the
14
notifications and filings by any of the parties hereto made pursuant to Section
6.4(a), but shall not include any Defeasance Costs or Transfer Taxes.
"Purchaser's Cap" has the meaning set forth in Section 9.5(a).
"Real Property" has the meaning set forth in Section 3.17.
"Real Property Leases" has the meaning set forth in Section
3.17.
"Related Party" has the meaning set forth in Section 3.18.
"Release" when used in connection with Hazardous Substances,
shall have the meaning ascribed to that term in 42 U.S.C. 9601(22), but not
subject to the exceptions in Subsection (A) of 42 U.S.C. 9601(22).
"Remediation" means (a) any remedial action, response or
removal as those terms are defined in 42 U.S.C. Section 9601; or (b) any
"corrective action" as that term has been construed by Governmental Entities
having jurisdiction over the Company and its Subsidiaries pursuant to 42 U.S.C.
Section 6924.
"Representatives" has the meaning set forth in Section
9.11(a).
"SEC" means the Securities and Exchange Commission.
"Securities Act" has the meaning set forth in Section 3.7.
"Securityholder" means any Stockholder and any Optionholder.
"Securityholder Parties" has the meaning set forth in Section
9.4.
"Significant Stockholders" means Xxxxxxx X. Xxxxxxxx, The
Xxxxxxx X. Xxxxxxxx 2004 Grantor Retained Annuity Trust No. 2, Xxxxxx Brothers
Merchant Banking Portfolio Partnership L.P., Xxxxxx Brothers Offshore Investment
Partnership L.P., Xxxxxx Brothers Offshore Investment Partnership -- Japan L.P.
and Xxxxxx Brothers Capital Partners II, L.P.
"Significant Stockholders' Cap" means (a) with respect to
claims made on or prior to the 18-month anniversary of the Closing Date, Thirty
Million Dollars ($30,000,000) and (b) with respect to claims made thereafter,
Twenty Million Dollars ($20,000,000) less the excess, if any, of (i) the
aggregate amount of payments made by the Significant Stockholders with respect
to indemnification claims made pursuant to Section 9.2(a) (but excluding
payments made with respect to Losses resulting from breaches of any Fundamental
Representations and Warranties) through the 18-month anniversary date over (ii)
Ten Million Dollars ($10,000,000).
"Stockholders" has the meaning set forth in the preamble to
this Agreement and shall include any Optionholder who has agreed to be bound by
this Agreement as a Stockholder pursuant to the execution of a joinder agreement
in accordance with Section 6.9, but shall not include any other Optionholder.
15
"Straddle Period" means any taxable year or period for any
taxable year or period that commences before and ends after the Closing Date.
"Subject Transactions" means the transactions contemplated by
this Agreement and the Ancillary Agreements (exclusive of the equity financing
and the debt financing of the transactions contemplated by this Agreement and
the Ancillary Agreements).
"Subsidiary" means any corporation, limited liability company,
partnership or other entity as to which the Company owns, directly or
indirectly, at least 50% of the stock, membership interests, partnership
interests or other equity interests.
"Supplemental Indenture" has the meaning set forth in Section
6.11(d).
"Tax Return" means any return, report, claim for refund,
information return or other document (including any schedule attached thereto)
filed, or required to be filed, in connection with the assessment or collection
of any Taxes.
"Tax" (or "Taxes" as the context may require) means all
federal, state, local, foreign, and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, escheat,
unclaimed property, duties or other taxes, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalty, addition to tax or
additional amount with respect thereto imposed by any Taxing Authority.
"Taxing Authority" means any agency or political subdivision
of any foreign, federal, state, local or municipal Government Entity with the
authority to impose any Tax.
"Tax Refund/Reduction" has the meaning set forth in Section
6.13.
"Tender Offer Consideration" has the meaning set forth in
Section 6.11(a).
"Tender Offer Documents" has the meaning set forth in Section
6.11(c).
"Tender Offers" has the meaning set forth in Section 6.11(a).
"Third Party Claim" has the meaning set forth in Section
9.6(a).
"Transfer Taxes" means all excise, sales, use, transfer,
stamp, documentary, filing, recordation and other similar taxes, together with
any interest, additions or penalties with respect thereto and any interest in
respect of such additions or penalties, resulting directly from the Subject
Transactions; provided, however, that Transfer Taxes shall not include any
recordation or other similar Taxes that result solely from the financing of the
Subject Transactions by the Purchaser or any Affiliate of the Purchaser.
"U.S. Government" means any United States governmental entity,
agency or body, including United States Government corporations and
non-appropriated fund activities.
16
ARTICLE II.
SALE OF SHARES
SECTION 2.1. PURCHASE AND SALE OF THE COMMON STOCK.
(a) The Purchaser and the Stockholders hereby severally agree
that at the Closing (as defined below), upon the terms and subject to the
satisfaction or waiver, if permissible, of the conditions hereof, (i) each of
the Stockholders shall sell, transfer and deliver to the Purchaser, and the
Purchaser shall purchase from the Stockholders, all shares of Common Stock owned
by such Stockholder and (ii) each outstanding option to purchase shares of
Common Stock (each, an "Option", and collectively, the "Options") granted under
any of the Company's stock option plans, each as amended (collectively, the
"Option Plans"), whether or not vested or exercisable, shall be cancelled and
converted into the right to receive the consideration set forth herein. The
aggregate "Cash Purchase Price" shall be equal to (A) One Billion Sixty Million
Dollars ($1,060,000,000), (B) plus the Closing Date Cash Balance, (C) minus the
Closing Date Indebtedness, (D) minus the sum of all Defeasance Costs and
Transfer Taxes that have not been paid prior to the determination of the Closing
Date Cash Balance, (E) plus the aggregate amount payable to the Company upon the
exercise of all Options outstanding (whether or not then exercisable) at the
time of the Closing (before giving effect to the termination thereof in
accordance of the relevant Option Termination Agreement) and (F) minus the
amount of any Company Transaction Expenses that have not been paid prior to the
determination of the Closing Date Cash Balance. The aggregate consideration
hereunder shall be the sum of the Cash Purchase Price and the Defeasance Costs
Tax Note. The individual allocations of the Cash Purchase Price amongst the
Stockholders and Optionholders is set forth in Sections 2.1(c) and (d) hereof.
The obligations of the Stockholders hereunder are several obligations; provided,
however, that the Purchaser shall have no obligation to consummate the Subject
Transactions unless all of the shares of Common Stock to be sold by the
Stockholders are transferred and delivered to the Purchaser on the Closing Date
and each Option that is outstanding on the Closing Date is cancelled and
terminated pursuant to an Option Termination Agreement duly executed and
delivered to the Purchaser by the holder thereof.
(b) Immediately after the close of business, New York, New
York time, one (1) Business Day prior to the Closing Date, the Company and the
Purchaser will prepare a schedule of (i) the Closing Date Cash Balance, (ii) the
Closing Date Indebtedness, (iii) a reasonably detailed reconciliation of all
Defeasance Costs (as the same shall exist on the Closing Date after giving
effect to the consummation of the Tender Offers and/or any required "covenant
defeasance" of the 9 5/8% Notes or the 9 1/4% Notes, as applicable), (iv) the
aggregate amount payable to the Company upon the exercise of all Options that
remain outstanding as of such time (whether or not then exercisable), (v) a
detailed reconciliation of all Transfer Taxes, and (vi) a reasonably detailed
reconciliation of all Company Transaction Costs that have not been paid prior to
the determination of the Closing Date Cash Balance (including any Company
Transaction Expenses that will become payable on the Closing Date). The Company
shall provide the Purchaser with such documents, certificates and other
information and evidence as the Purchaser may reasonably request for purposes of
determining and preparing the same.
17
(c) Upon the surrender by a Stockholder of all of such
Stockholder's certificates representing shares of Common Stock at or any time
after the Closing, such Stockholder will be entitled to receive, in accordance
with the terms and conditions of this Agreement, in exchange for each share of
Common Stock surrendered by such Stockholder, an amount (without interest) equal
to (i) the Cash Purchase Price divided by (ii) the Fully Diluted Share Number
(the "Per Share Cash Purchase Price"); provided, however, that the amount to be
paid to each Significant Stockholder shall be reduced by an amount equal to such
Significant Stockholder's Pro Rata Portion of the amount being deposited in the
Indemnity Escrow Fund.
(d) Upon the execution and delivery by an Optionholder to the
Purchaser at or any time after the Closing of an Option Termination Agreement
and any agreements pertaining to the Options held by such Optionholder, such
Optionholder shall be entitled to receive, in accordance with the terms and
conditions of this Agreement, in exchange for the cancellation of each Option
held by such Optionholder (whether or not then exercisable) an amount (without
interest) equal to the product of (i) the number of shares of Common Stock
subject to such Option multiplied by (ii) the amount, if any, by which the Per
Share Cash Purchase Price exceeds the exercise price of the Common Stock subject
to such Option. All payments in respect of the cancellation of Options, whether
payable at or after Closing, shall be net of applicable withholding Taxes.
SECTION 2.2. CLOSING.
(a) The closing of the purchase and sale of the shares of
Common Stock and the other transactions contemplated hereby (the "Closing")
shall be held at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, at 10:00 a.m. eastern standard time on the fifth Business
Day following the satisfaction or waiver of all of the conditions set forth in
Sections 7.3 and 8.3 upon notice by either party of such satisfaction or waiver;
provided, however, that (i) the Closing may occur on such other date or at such
other time and place as the parties may mutually agree in writing and (ii) the
Closing shall not occur prior to the 45th day after the date hereof. The date on
which the Closing actually occurs is hereinafter referred to as the "Closing
Date."
(b) At the Closing, each Stockholder shall:
(i) deliver, or cause the Custodian to deliver, to
the Purchaser stock certificate(s) with appropriate transfer stamps, if
any, affixed thereto, representing the shares of Common Stock owned by
such Stockholder with appropriate stock powers duly endorsed in blank
or accompanied by other duly executed instruments of transfer; and
(ii) deliver all other documents required to be
delivered by such Stockholder on or prior to the Closing Date pursuant
to this Agreement or any Ancillary Agreement to which such Stockholder
is or is required to be a party pursuant to the terms of this
Agreement.
(c) At the Closing, each Optionholder shall:
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(i) deliver, or cause the Custodian to deliver, to
the Purchaser an Option Termination Agreement and any agreements
pertaining to the Options held by such Optionholder; and
(ii) deliver all other documents required to be
delivered by such Optionholder on or prior to the Closing Date pursuant
to this Agreement or such Option Termination Agreement or any Ancillary
Agreement to which such Optionholder is or is required to be a party
pursuant to the terms of this Agreement.
(d) At the Closing, the Company shall deliver to the Purchaser
all documents required to be delivered by the Company on or prior to the Closing
Date pursuant to this Agreement or any of the Ancillary Agreements.
(e) At the Closing, the Purchaser shall:
(i) deposit with the Indemnity Escrow Agent the sum
of Thirty Million Dollars ($30,000,000) (the "Indemnity Escrow Fund")
to be released in accordance with the provisions of Article IX hereof
and the Indemnity Escrow Agreement;
(ii) deliver to each of the Stockholders the amount
to be paid to such Stockholder as determined in accordance with Section
2.1(c), but in each such case subject to the satisfaction of the
conditions specified therein; provided, however, that the amount to be
paid to each Significant Stockholder shall be reduced by an amount
equal to such Significant Stockholder's Pro Rata Portion of the
Indemnity Escrow Fund;
(iii) deliver to each of the Optionholders the amount
to be paid to such Optionholder as determined in accordance with
Section 2.1(d), but in each such case subject to the satisfaction of
the conditions specified therein; and
(iv) deliver all other documents, including without
limitation the Defeasance Cost Tax Note, required to be delivered by
the Purchaser on or prior to the Closing Date pursuant to this
Agreement or any Ancillary Agreement to which the Purchaser is or is
required to be a party pursuant to the terms of this Agreement.
(f) All payments to be made by the Purchaser pursuant to
Section 2.2(e)(ii) and (iii) shall be made by wire transfer of immediately
available funds to such bank account or bank accounts as designated by each
Stockholder or Optionholder at least three (3) Business Days prior to the
Closing Date.
SECTION 2.3. SUBSEQUENT CHANGE OF CONTROL.
(a) The Purchaser agrees that if a Change of Control shall
occur within nine (9) months after the Closing Date, the Purchaser will pay,
within ten (10) Business Days after the Determination Date, to each Stockholder
and Optionholder with respect to the first such Change of Control an amount in
cash (the aggregate of which shall be considered to be additions to the Cash
Purchase Price) equal to:
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(i) the quotient that results when (i) the number of
shares of Common Stock surrendered by such Stockholder to the Purchaser
pursuant hereto or the number of shares of Common Stock subject to the
Options held by such Optionholder that are cancelled pursuant hereto,
as applicable, is divided by (ii) the Fully Diluted Share Number,
is multiplied by
(ii) twenty percent (20%) of the amount, if any, by
which (A) the Equity Value on such Change of Control Date is greater
than (B) the sum of (1) the Initial Purchaser Stockholder Investments
made on or prior to the Closing Date, plus (2) the amount of Additional
Purchaser Stockholder Investments made from the Closing Date through
such Change of Control Date, plus (3) the aggregate of the amounts,
calculated like interest calculated utilizing an annual rate of
interest equal to twenty percent (20%) on the daily amount, for each
day occurring during the period from the Closing Date through such
Change of Control Date, by which the sum of the amounts specified in
clauses (1) and (2) above as of such date is greater than the Aggregate
Purchaser Stockholder Distributions through such date.
(b) Not later than fifteen (15) days after the occurrence of
the first Change of Control Date, the Purchaser shall deliver to the
Representatives a calculation (the "Proposed Calculation") setting forth in
reasonable detail a calculation of the amount of the payments to be made to the
Stockholders and Optionholders pursuant to Section 2.3(a). Such statement shall
be accompanied by the Purchaser's most recent audited or unaudited financial
statements for the most recent period ended prior to or coinciding with such
Change of Control Date unless such financial statements are not relevant to the
determination of the amounts payable by the Purchaser under Section 2.3(a).
(c) The Representatives shall have thirty (30) days from the
date of their receipt of the Proposed Calculation to review the same. Upon
expiration of such thirty (30) day period, the Representatives shall be deemed
to have accepted on behalf of all such Stockholders and Optionholders, and all
such Stockholders and Optionholders shall be bound by, the Proposed Calculation
and the Purchaser's calculation of the amounts due to the Stockholders and
Optionholders pursuant to Section 2.3(a) with respect to such Change of Control,
as applicable, unless the Purchaser has been advised in writing prior to the
expiration of such thirty (30) day period by the Representatives of their
disagreement with the Proposed Calculation (an "Objection"), specifying each of
the disputed items and setting forth in reasonable detail the basis for each
such dispute (each, a "Disputed Item"). The Purchaser shall have twenty (20)
days from the date on which it receives the Objection (the "Objection Date") to
review and respond to such Objection. If the Purchaser and the Representatives
are able to negotiate a mutually agreeable resolution to each Disputed Item, and
sign a certificate to that effect, then the Proposed Calculation, as adjusted to
reflect such agreement, shall be deemed final and binding for purposes of this
Agreement. The Purchaser shall grant the Representatives access at reasonable
times and places to all books, records and employees of the Purchaser reasonably
requested by the Representatives in connection with (i) the Representatives'
review of the Proposed Calculation and (ii) the preparation of any Objection.
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(d) If the Purchaser and the Representatives are not able to
resolve all of their disagreements with respect to the Disputed Items within
thirty (30) days after the Objection Date, then the Disputed Items shall be
referred for final determination to the Accounting Referee (as defined below) to
make a final and non-appealable binding determination as to such Disputed Items.
The "Accounting Referee" shall be PricewaterhouseCoopers (the "First Choice").
If the First Choice notifies the parties that it is not available, the
Accounting Referee shall be such other independent accounting firm of national
reputation selected by the mutual agreement of the Purchaser and the
Representatives within ten (10) days of such notice of unavailability. If the
Purchaser and the Representatives cannot agree on an Accounting Referee within
such ten (10) day period, the parties (or either of them) shall request that it
shall be chosen by the First Choice and shall be a nationally recognized firm.
The Accounting Referee shall be directed to make a determination in accordance
with Section 2.3(e) below of the Disputed Items promptly, but no later than
thirty (30) days, after acceptance of its appointment. The Purchaser and the
Representatives shall make readily available to the Accounting Referee all
relevant books, records and employees of the Purchaser relating to the Proposed
Calculation and all other items reasonably requested by the Accounting Referee
in connection with the Accounting Referee's review of any Disputed Item.
(e) If Disputed Items are referred to the Accounting Referee
for resolution pursuant to Section 2.3(d) above, the Accounting Referee shall
not assign a value to any item greater than the greatest value for such item
claimed by the Purchaser or the Representatives or less than the smallest value
for such item claimed by the Purchaser or the Representatives. Any finding by
the Accounting Referee shall be a reasoned award stating the findings of fact
and conclusions of law (if any) on which it is based, shall be final,
non-appealable and binding upon the parties and shall be the sole and exclusive
remedy between the parties regarding the Disputed Items so presented. The fees
and expenses of the Accounting Referee shall be borne by the Representatives and
the Purchaser in the same proportion that the dollar amount of Disputed Items
which are not resolved in favor of the Representatives or the Purchaser (as
applicable) bears to the total dollar amount of Disputed Items resolved by the
Accounting Referee. For illustration purposes only, (i) if the total amount of
Disputed Items by the Representatives is $1,000,000, and the Representatives are
awarded $500,000 by the Accounting Referee, the Representatives, on the one
hand, and the Purchaser, on the other hand, shall bear the Accounting Referee's
fees and expenses equally; or (ii) if the total amount of Disputed Items by the
Representatives is $1,000,000, and the Representatives are awarded $250,000 by
the Accounting Referee, the Representatives shall bear 75 percent and the
Purchaser shall bear 25 percent of the Accounting Referee's fees and expenses.
Each of the Purchaser and the Representatives shall bear the fees, costs and
expenses of their respective accountants and all of their other respective
expenses incurred in connection with the matters contemplated by this Section
2.3.
(f) The Proposed Calculation, as finally determined pursuant
to this Section 2.3, is referred to herein as the "Final Calculation." The date
upon which the Proposed Calculation, with respect to a Change of Control, is
finally determined is referred to herein as the "Determination Date" with
respect to such Change of Control.
21
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company Reports filed by the
Company with the SEC and publicly available prior to the date of this Agreement
or as set forth in the disclosure schedules referred to herein, the Company
hereby represents and warrants to the Purchaser as follows:
SECTION 3.1. ORGANIZATION, STANDING AND AUTHORITY.
(a) Each of the Company and each Subsidiary is duly
incorporated (or organized), validly existing and in good standing under the
laws of its jurisdiction of incorporation (or organization). The Company and
each Subsidiary (i) has all requisite power and authority to own, operate or
lease all of its properties and assets and to carry on its business as it is now
being conducted. The Company has delivered to the Purchaser a true and complete
copy of the certificate of incorporation (or similar organizational documents)
and all amendments thereto of the Company and each Subsidiary and a true and
complete copy of each such Person's by-laws (or similar organizational
documents) and all amendments thereto, each as in effect on the date hereof.
(b) Each of the Company and each Subsidiary is qualified or
otherwise authorized to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the properties owned or
held by it under lease or license or its business requires such qualification or
authorization, except where the failure so to qualify or be authorized would
not, individually or in the aggregate, have a Material Adverse Effect. All such
jurisdictions in which the Company or any Subsidiary is qualified to do business
are set forth in Schedule 3.1(b).
(c) The Company has full right, power and authority and has
taken all corporate action necessary to execute and deliver this Agreement and
the Ancillary Agreements, to perform its obligations hereunder and thereunder
and to consummate the Subject Transactions. This Agreement has been duly
executed and delivered by the Company and, subject to due authorization,
execution and delivery by the other parties, this Agreement is the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles
(whether considered in proceedings at law or in equity).
SECTION 3.2. CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of the
Company consists of 1,000,000 shares of Common Stock, of which 740,398 shares
are issued and outstanding. All of the outstanding shares of Common Stock are,
as of the date hereof, owned of record by the Stockholders, and have been duly
authorized and validly issued and are fully paid and nonassessable. The issued
and outstanding Common Stock constitutes all of the issued and outstanding
capital stock of the Company.
22
(b) Except for rights created pursuant to this Agreement and
for the Options granted under the Option Plans and evidenced by option
agreements set forth on Schedule 3.2(b), there are currently no outstanding and,
as of the Closing, there will be no outstanding (i) securities convertible into
or exchangeable for any capital stock of the Company, (ii) options, warrants or
other rights to purchase or subscribe to capital stock of the Company or
securities convertible into or exchangeable for capital stock of the Company, or
(iii) except as set forth on Schedule 3.2(b), contracts, commitments,
agreements, understandings, arrangements, calls or claims of any kind relating
to the issuance of any capital stock of the Company. Schedule 3.2(b) identifies,
as of the date hereof, the option holder, the number of shares of Common Stock
subject to each Option, the exercise price, the vesting schedule and the
expiration date of each outstanding Option to purchase capital stock of the
Company. Except as set forth on Schedule 3.2(b), to the Knowledge of the
Company, there are no voting trusts, stockholder agreements, proxies or other
agreements or understandings in effect with respect to the voting or transfer of
any of the Common Stock or as to the election or nomination of any person as a
director of the Company.
(c) Neither the Company nor any of its Subsidiaries has
outstanding, nor will any of them have outstanding on the Closing Date, any
Indebtedness other than the Indebtedness of the Company and its Subsidiaries
outstanding under the 9 1/4% Notes, the 9 5/8% Notes and the Loans (as defined
in the Amended and Restated Credit Agreement).
SECTION 3.3. SUBSIDIARIES.
Schedule 3.3 sets forth a true and complete list of all
Subsidiaries of the Company, listing for each Subsidiary its name, its
jurisdiction of organization, its authorized, issued and outstanding capital
stock and the record and beneficial holders thereof. Except as set forth on
Schedule 3.3, the Company does not, directly or indirectly, own any beneficial
interest in any Person other than its Subsidiaries. Except as set forth on
Schedule 3.3, all issued and outstanding shares of capital stock of each of the
Subsidiaries of the Company are duly authorized and validly issued and are fully
paid and non-assessable, and (i) as of the date hereof, are owned, directly or
indirectly, by the Company, and (ii) as of the Closing will be owned, directly
or indirectly, by the Company, in each case free and clear of all Encumbrances,
except for such Encumbrances which have been created by or on behalf of the
Purchaser. There are currently no outstanding and, as of the Closing, there will
be no outstanding (i) securities convertible into or exchangeable for any
capital stock of any of the Company's Subsidiaries, (ii) options, warrants or
other rights to purchase or subscribe to capital stock of any of the Company's
Subsidiaries or securities convertible into or exchangeable for capital stock of
any of the Company's Subsidiaries, or (iii) contracts, commitments, agreements,
understandings, arrangements, calls or claims of any kind relating to the
issuance of any capital stock of any of the Company's Subsidiaries. There are no
voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of shares
of capital stock or other interests in any Subsidiary.
SECTION 3.4. ACTIONS AND PROCEEDINGS.
Except as set forth on Schedule 3.4, to the Knowledge of the
Company, there are no outstanding orders, decrees or judgments by or with any
Government Entity to which the
23
Company or any of its Subsidiaries is a party or as to which any of their
respective assets are subject that would, individually or in the aggregate, have
a Material Adverse Effect. Except as set forth on Schedule 3.4, there are no
actions, suits, arbitrations or legal, administrative or other proceedings
pending or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries or any of their respective assets, at law or in equity,
by or before any Government Entity, that (a) seek to enjoin or rescind the
Subject Transactions or (b) could reasonably be expected to result in a
Liability or Loss to the Company or any of its Subsidiaries of more than One
Hundred Thousand Dollars ($100,000) for any such action, suit or proceeding.
SECTION 3.5. NO CONFLICT OR VIOLATION.
Except as set forth on Schedule 3.5, in Section 3.6 or on
Schedule 3.6, the execution, delivery and performance by the Company of this
Agreement and the Ancillary Agreements to which it will be a party as of the
Closing Date and the consummation of the Subject Transactions in accordance with
the terms hereof will not (a) violate any provision of the charter, bylaws or
other organizational documents of the Company or its Subsidiaries, (b) violate,
conflict with or result in a breach of any of the terms of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrances on any of the
Common Stock or on any of the assets or properties of the Company or any
Subsidiary pursuant to, any agreement, license or contract to which the Company
or any of its Subsidiaries is a party or by or to which the Company or any of
its Subsidiaries or any of their assets or properties may be bound or subject,
(c) violate any Applicable Law or any order, judgment, injunction, award or
decree of any court, arbitrator or Government Entity against, or binding upon,
the Company or any of its Subsidiaries, (d) violate any statute, law or
regulation of any jurisdiction applicable to the Company or any of its
Subsidiaries or (e) result in a breach or violation of any of the terms or
conditions of, constitute a default under, or otherwise cause an impairment or
revocation of, any Permit, except in the case of each of the foregoing clauses
(b), (c) and (d) for such violations, conflicts, breaches, defaults, impairments
or revocations that would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.6. GOVERNMENTAL CONSENTS AND APPROVALS.
The execution, delivery and performance by the Company of this
Agreement and the Ancillary Agreements to which it will be a party as of the
Closing Date and the consummation of the Subject Transactions in accordance with
the terms hereof do not require the Company or any of its Subsidiaries to obtain
any consent or approval of, make any filing with, or give any notice to, any
Government Entity, except (i) as required under the HSR Act or any competition
law or similar statute or regulation of any foreign jurisdiction, (ii) as
otherwise set forth on Schedule 3.6 and (iii) for such consents, approvals,
filings or notices the failure to obtain, make or give which would not,
individually or in the aggregate, have a Material Adverse Effect.
24
SECTION 3.7. FINANCIAL STATEMENTS AND STATUTORY STATEMENTS.
(a) The Company has delivered or made available to the
Purchaser each form, registration statement, report and document prepared by it
(other than preliminary material) required to be filed by the Company with the
SEC, each in the form (including exhibits and any amendments thereto) filed with
the SEC (collectively, the "Company Reports"). As of their respective dates,
each of the Company Reports complied and, in the case of filings after the date
hereof, will comply as to form in all material respects with the applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the
case may be, and the rules and regulations thereunder. None of the Company
Reports contained (as of their respective filing dates) any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstance under which they were made, not misleading. The Company has filed
with the SEC all forms, reports and documents required to be filed under
Sections 13, 14 and 15(d) of the Exchange Act. None of the Subsidiaries is
required to file any forms, reports, schedules, statements or other documents
with the SEC.
(b) The Company has responded to all comment letters, if any,
received from the SEC since December 31, 2001 relating to the Company Reports
and the SEC has not asserted that any of such responses are inadequate,
insufficient or otherwise non-responsive. The Company has delivered to the
Purchaser correct and complete copies of all such comment letters and related
correspondence with the SEC occurring since December 31, 2001.
(c) The consolidated balance sheets of the Company and the
related statements of operations, cash flows and stockholders equity
(deficiency) included in or incorporated by reference into the Company Reports
and, in the case of annual financial statements, certified by Deloitte & Touche
LLP (the "Financial Statements"), (i) were prepared from and are in accordance
with the books and records of the Company and its consolidated Subsidiaries and
(ii) were prepared in accordance with GAAP consistently applied and on a
consistent basis with prior periods (except as stated in such Financial
Statements). The Financial Statements fairly present in all material respects
the consolidated financial position of the Company and its Subsidiaries as at
the respective dates thereof and the consolidated results of operations, cash
flows and stockholders equity (deficiency) of the Company and its consolidated
Subsidiaries for the periods indicated, except that the unaudited interim
Financial Statements were or are subject to normal and recurring year-end
adjustments (which in the aggregate are not and will not be material in amount).
Except as reflected or reserved against in the Financial Statements included in
the most recent Company Report or as disclosed therein, neither the Company nor
any of its Subsidiaries had as of such date any liability of any nature (whether
accrued, absolute, contingent or otherwise) which would be required in
accordance with GAAP to be disclosed in the Financial Statements and which, in
the aggregate, would be material. The reserves reflected on the balance sheet
included in the most recent Company Report have been calculated in accordance
with GAAP.
(d) None of the information supplied or to be supplied by the
Company or any of the Stockholders specifically for inclusion or incorporation
by reference in the Tender Offer Documents will, at the time the Offer to
Purchase first is mailed to holders of the Notes, at any
25
time it is amended or supplemented or at any time prior to the expiration of the
Tender Offers, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Tender Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act. Notwithstanding the
foregoing, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Tender Offer Documents based
on written information supplied by the Purchaser specifically for inclusion or
incorporation by reference in the Tender Offer Documents.
SECTION 3.8. INTELLECTUAL PROPERTY.
Except as set forth on Schedule 3.8:
(a) to the Knowledge of the Company, the Company and its
Subsidiaries, as applicable, own, free and clear of all Encumbrances and
exclusive licenses, all right, title and interest in and to, or have valid
written licenses to use, all the Intellectual Property that is material to the
conduct of the business of the Company or its Subsidiaries;
(b) Schedule 3.8 sets forth a true, accurate and complete list
of all patents, patent applications, registered trademarks, trademark
applications, domain name registrations and copyright applications and
registrations anywhere in the world owned by the Company or any of its
Subsidiaries;
(c) to the Knowledge of the Company, there are no
infringements of the Intellectual Property by any third party;
(d) there are no claims pending or, to the Knowledge of the
Company, threatened: (i) alleging that the business of the Company or any of its
Subsidiaries as currently conducted infringes upon or constitutes an
unauthorized use or violation of any third party's intellectual property or
other proprietary rights; or (ii) challenging the ownership, validity or
enforceability of any of the Intellectual Property, except for such claims which
would not, individually or in the aggregate, have a Material Adverse Effect,
nor, to the Knowledge of the Company, is there a reasonable basis for any such
claim; and
(e) Schedule 3.8 sets forth a true, accurate and complete list
of all material agreements relating to the Intellectual Property or to the right
of the Company or any of its Subsidiaries to use the intellectual property or
other proprietary rights of any third party. Except as set forth on Schedule
3.8, neither the Company nor any of its Subsidiaries is under any obligation to
pay royalties or other payments in connection with any agreement nor are any of
them restricted from assigning any of their rights respecting Intellectual
Property, nor will the Company or any of its Subsidiaries otherwise be, as a
result of the execution, delivery and performance of this Agreement by the
Stockholders, in breach of any agreement relating to any of the Intellectual
Property, except for such royalties, payments, restrictions on assignment or
breach of agreement that would not, individually or in the aggregate, have a
Material Adverse Effect.
26
SECTION 3.9. COMPLIANCE WITH LAWS.
The business of the Company and its Subsidiaries is not being
conducted in violation of any Applicable Law or any other requirement of any
Government Entity, except for those violations, if any, which would not,
individually or in the aggregate, have a Material Adverse Effect. Except as set
forth on Schedule 3.9, (i) neither the Company nor any of its Subsidiaries has
received any outstanding or uncured written notice alleging any violation of any
such Applicable Law or directing the Company or any of its Subsidiaries to take
any remedial action with respect to any such Applicable Law and (ii) to the
Knowledge of the Company, there are no facts, events or conditions that may
constitute potential defaults or violations of any Applicable Law, except as
would, with respect to (i) or (ii), individually or in the aggregate, not have a
Material Adverse Effect.
SECTION 3.10. PERMITS, LICENSES AND FRANCHISES.
All permits, licenses, approvals, franchises, authorizations,
exemptions, classifications, registrations, and similar documents or instruments
issued by any Government Entity to the Company or any of its Subsidiaries, the
loss, revocation, termination or expiration of which would, individually or in
the aggregate, have a Material Adverse Effect, are listed on Schedule 3.10
(collectively, the "Permits"). Except as set forth on Schedule 3.10, all Permits
are valid and in full force and effect. The Company and its Subsidiaries are in
compliance in all material respects with all terms required for the continued
effectiveness of each such Permit, and there is no pending or, to the Knowledge
of the Company, threatened, revocation or involuntary non-renewal of any such
Permit.
SECTION 3.11. CONTRACTS.
Schedule 3.11 sets forth a true and complete list of all
Contracts to which the Company or any of its Subsidiaries is a party or by which
any of their respective assets may be bound as of the date hereof. The Company
has delivered or made available to the Purchaser copies of all written Contracts
and written descriptions of all oral Contracts listed on Schedule 3.11. Neither
the Company nor any Subsidiary party to any Contract, nor, to the Knowledge of
the Company, any other party thereto, is in breach thereof or default
thereunder, or has given notice of breach or default to any other party
thereunder, except for such breaches or defaults as would not, individually or
in the aggregate, have a Material Adverse Effect. Each such Contract is in full
force and effect and constitutes a legal, valid and binding obligation of the
Company or the relevant Subsidiary, as the case may be (and, to the Knowledge of
the Company, each other party thereto), subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. Except as would not, individually or in the aggregate, have a
Material Adverse Effect, none of the Company nor any of its Subsidiaries has
received any notice, whether written or oral, of termination or intention to
terminate from any other party to any such Contract. Except to the extent that
any consents set forth on Schedule 3.5 are not obtained and except as
contemplated by Section 7.10, the consummation of the Subject Transactions will
not result in any Contract failing to continue in full force and effect after
the consummation of the Subject Transactions without material penalty or other
material adverse consequence.
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SECTION 3.12. ABSENCE OF CERTAIN CHANGES.
Except as contemplated or required by this Agreement or as set
forth on Schedule 3.12, since December 31, 2003, there has been no event which,
individually or in the aggregate, has had or would have a Material Adverse
Effect.
SECTION 3.13. ENVIRONMENTAL MATTERS.
Except as set forth on Schedule 3.13 or as disclosed in those
studies and reports that the Purchaser independently obtained:
(a) The Company and its Subsidiaries have obtained all Permits
under Environmental Laws required for the conduct and operation of their
respective businesses and are in material compliance with the terms and
conditions contained therein and are in material compliance with applicable
Environmental Laws.
(b) There is no environmental condition on any property
currently or formerly owned, leased or operated by the Company or any of its
Subsidiaries or, to the Knowledge of the Company, any of their respective
predecessors in interest whose liability is attributable to the Company or any
of its Subsidiaries as a successor that would reasonably be expected to result
in any Environmental Liabilities for the Company or any of its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has
received any written notice of violation or notice of potential liability from
any Governmental Entity or other Person pursuant to any Environmental Law,
except for those which have either been resolved or which are not material, and
neither the Company nor any of its Subsidiaries is aware of any pending, nor, to
the Knowledge of the Company, is there any threatened, material order, claim,
suit, action, judgment or proceeding by any Governmental Entity or other Person
against the Company or any of its Subsidiaries pursuant to any Environmental
Laws.
(d) No Hazardous Substance has been Released by the Company,
any of its Subsidiaries, or, to the Knowledge of the Company, any of their
respective predecessors in interest whose liability is attributable to the
Company or any of its Subsidiaries as a successor, or any other Person, in
concentrations or volumes requiring Remediation under Environmental Law at, on,
about or under any property now or formerly owned, operated, leased or used as a
waste disposal site by the Company, any of its Subsidiaries or, to the Knowledge
of the Company, any of their respective predecessors in interest whose liability
is attributable to the Company or any of its Subsidiaries as a successor.
(e) The Company has delivered to the Purchaser all
environmental studies and reports (including without limitation, Phase I and
Phase II investigation reports) set forth on Schedule 3.13 (except for those
studies and reports that the Purchaser independently obtained as noted on
Schedule 3.13) and there are no other material reports in the possession of the
Company or any of its Subsidiaries relating to: (i) any facilities or real
property ever owned, operated or leased by the Company, any of its Subsidiaries
or any of their respective predecessors in interest whose liability is
attributable to the Company or any of its Subsidiaries as a successor; or (ii)
any Environmental Liability of the Company or any of its Subsidiaries or any of
their respective
28
predecessors in interest whose liability is attributable to the Company or any
of its Subsidiaries as a successor.
SECTION 3.14. TAXES.
Except as set forth on Schedule 3.14:
(a) the Company and each Subsidiary have filed (or joined in
the filing of) when due all Tax Returns required by Applicable Law to be filed
with respect to the Company and each Subsidiary and all such Tax Returns were
true, correct and complete as of the time of each such filing;
(b) all Taxes required to have been paid by the Company and
each Subsidiary, whether or not shown on any Tax Return, on or before the
Closing Date have been (or will be as of the Closing Date) timely paid (except
for Taxes that are being contested in good faith);
(c) any liability of the Company or any Subsidiary relating to
periods on or before the Closing Date, whether or not shown on any Tax Return,
for Taxes not yet due and payable, or that is being contested in good faith, has
been provided for on the Financial Statements in accordance with GAAP;
(d) all Taxes of the Company and any Subsidiary accrued
following the end of the most recent period covered by the Financial Statements
have been accrued in the ordinary course of business and do not exceed
comparable amounts incurred in similar periods in prior years (taking into
account any changes in operating results of the Company or its Subsidiaries);
(e) there is no action, suit, proceeding, investigation, audit
or claim now pending, nor, to the Knowledge of the Company, likely to be
asserted, against, or with respect to, the Company or any Subsidiary in respect
of any Tax or assessment;
(f) there is no outstanding request by the Company or any
Subsidiary for any extension of time within which to pay any Tax or file any Tax
Return, and there has been no waiver or extension of any applicable statute of
limitations for the assessment or collection of any Tax of the Company or any
Subsidiary;
(g) neither the Company nor any Subsidiary is a party to or
bound by any closing agreement or offer in compromise with any Taxing Authority;
(h) neither the Company nor any Subsidiary is a party to or
bound by any agreement, whether written or unwritten, providing for the payment
of Taxes, payment for Tax losses, entitlements to refunds, indemnity, sharing,
or allocation in respect of Taxes, or similar Tax matters;
(i) neither the Company nor any Subsidiary has any liability
for Taxes as transferee or successor, by contract or otherwise;
29
(j) the Company and each Subsidiary has withheld and paid over
to the applicable Taxing Authority all Taxes required to be withheld in
connection with amounts paid or owing to any employee, creditor, independent
contractor or other third party;
(k) neither the Company nor any Subsidiary has any liability
for Taxes under Treas. Reg. Section 1.1502-6 (or any similar provision of state,
local or foreign law), as a member of any consolidated, combined or unitary
group, other than one for which the Company was the common parent;
(l) there are no liens for Taxes (other than for current Taxes
not yet due and payable) upon the assets of the Company or any Subsidiary;
(m) neither the Company nor any Subsidiary will be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any adjustment under Section 481(a) or Section 263A of the Code
or any comparable provision of state, local or foreign Tax laws by reason of a
change in accounting method or otherwise;
(n) neither the Company nor any Subsidiary is a party to any
agreement, contract, arrangement or plan that (i) has resulted or would result,
separately or in the aggregate, in connection with this Agreement or any Change
of Control of the Company or any Subsidiary, in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code or (ii) could
obligate the making of any payment that will not be fully deductible under
Section 162(m) of the Code;
(o) to the Knowledge of the Company, neither the Company nor
any Subsidiary is a party to any joint venture, partnership, or other
arrangement or contract that could be treated as a partnership for federal
income tax purposes. Schedule 3.14(o) sets forth all elections pursuant to
Treas. Reg. Section 301.7701-3 that have been made by business entities in which
the Company or any Subsidiary owns an equity interest;
(p) neither the Company nor any Subsidiary has been a
"distributing corporation" or a "controlled corporation" in connection with a
distribution described in Section 355 of the Code; and
(q) neither the Company nor any Subsidiary has engaged, at any
time, in a "listed transaction" within the meaning of Treas. Reg. Sections
1.6011-4(b)(2), 301.6111-2(b)(2), and 301.6112-1(b)(2).
SECTION 3.15. EMPLOYEE BENEFIT PLANS; ERISA.
(a) Schedule 3.15(a) sets forth all "employee benefit plans,"
as defined in Section 3(3) of ERISA, and all other material employee benefit
arrangements, programs, policies or payroll practices, including, without
limitation, severance pay, sick leave, vacation pay, salary continuation for
disability, retirement, deferred compensation, bonus, stock purchase, stock
option, hospitalization, medical insurance, cafeteria, life insurance, tuition
reimbursement and scholarship programs, maintained for the benefit of or to
which contributions are made on behalf of current or former employees of the
Company or any Subsidiary (which plans, arrangements,
30
programs, policies and payroll practices are collectively referred to herein as
the "Benefit Plans"). True, correct and complete copies of the following
documents relating to the Benefit Plans, to the extent applicable, have been
delivered or made available to the Purchaser: (i) the plan document and its
related trust instrument, including any amendments thereto, (ii) the most recent
annual report filed on Form 5500, including all related schedules, (iii) any
summary plan description and (iv) the most recent actuarial report.
(b) None of the Benefit Plans is a "multiemployer plan," as
defined in Section 3(37) of ERISA ("Multiemployer Plan"). None of the Company,
any Subsidiary or any trade or business (whether or not incorporated) which is
or has ever been treated as a single employer with the Company or any Subsidiary
under Section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") has
incurred any liability due to a complete or partial withdrawal from a
Multiemployer Plan or due to the termination or reorganization of a
Multiemployer Plan, except for any such liability which has been satisfied in
full, and no events have occurred and no circumstances exist that would result
in any such liability to the Company or any Subsidiary.
(c) Except as set forth on Schedule 3.15(c), none of the
Benefit Plans is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, that is subject to Title IV of ERISA ("Pension Plan"). With respect to
each Pension Plan sponsored by, or to which contributions are required of, the
Company, any Subsidiary or any ERISA Affiliate, there does not exist any
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived. None of the Company, any Subsidiary
or any ERISA Affiliate has any outstanding liability under Section 4062 of ERISA
to the PBGC or to a trustee appointed under Section 4042 of ERISA, and no events
have occurred and no circumstances exist that would result in any such liability
to the Company or any Subsidiary. Except as set forth on Schedule 3.15(c), in
respect of any Pension Plans (i) no Encumbrances have arisen under Section
412(n) of the Code or Section 302(f) of ERISA, (ii) no Liabilities for security
have arisen under Section 401(a)(29) of the Code and (iii) there have been no
agreements or proceedings with the PBGC.
(d) With respect to each Benefit Plan that is intended to
qualify under Code Section 401(a), such Benefit Plan, and its related trust, has
received, has an application pending or remains within the remedial amendment
period for obtaining, a determination letter from the Internal Revenue Service
that it is qualified under Section 401(a) of the Code and that its related trust
is exempt from tax under Section 501(a) of the Code and, to the Knowledge of the
Company, no facts or set of circumstances exist that would affect such
qualification or tax exemption.
(e) All contributions (including all employer contributions
and employee contributions) required to have been made under the Benefit Plans
or by law to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including any valid
extensions).
(f) There has been no violation of ERISA or the Code with
respect to the filing of applicable documents, notices or reports (including,
but not limited to, annual reports filed on Form 5500) relating to the Benefit
Plans with the Department of Labor or the Internal Revenue Service, or the
furnishing of any required documents to the participants or beneficiaries
31
of the Benefit Plans, other than violations which would not, individually or in
the aggregate, have a Material Adverse Effect.
(g) Except as set forth on Schedule 3.15(g), there are no
material pending actions, claims or lawsuits which have been asserted,
instituted or, to the Knowledge of the Company, threatened, against the Benefit
Plans, the assets of any of the trusts under the Benefit Plans or the sponsor or
the administrator of the Benefit Plans, or, to the Knowledge of the Company,
against any fiduciary of the Benefit Plans with respect to the operation of the
Benefit Plans (other than routine benefit claims).
(h) The Benefit Plans have been maintained, in all material
respects, in accordance with their express terms and with all provisions of
ERISA and the Code (including rules and regulations thereunder) and other
applicable federal and state laws and regulations, and, to the Knowledge of the
Company, no "party in interest" or "disqualified person" with respect to any
Benefit Plan has engaged in a non-exempt "prohibited transaction," as defined in
Section 4975 of the Code or Section 406 of ERISA, or taken any actions, or
failed to take any actions, which could reasonably result in any material
liability to the Company or any Subsidiary under ERISA or the Code.
(i) The Company and its Subsidiaries have complied in all
material respects with the notice and coverage continuation requirements of
Section 4980B of the Code and Section 601 of ERISA, and the regulations
thereunder ("COBRA"). Except as set forth on Schedule 3.15(i), none of the
Benefit Plans provide retiree health or life insurance benefits except as may be
required by COBRA (or any applicable state law) or at the expense of the
participant or the participant's beneficiary.
(j) Except as required by Applicable Law or as disclosed on
Schedule 3.15(j), neither the Company nor any of its Subsidiaries provides any
post-employment welfare benefits.
SECTION 3.16. LABOR RELATIONS AND EMPLOYMENT.
(a) Except as set forth on Schedule 3.16, as of the date
hereof (i) to the Knowledge of the Company, there is no labor strike, slowdown,
stoppage or lockout pending or threatened against or affecting the Company or
any of its Subsidiaries; (ii) neither the Company nor any of its Subsidiaries is
a party to or bound by any collective bargaining or similar agreement with any
labor organization applicable to the employees of the Company or any of its
Subsidiaries; and (iii) there are no union organizing campaigns or activities or
representation proceedings in process or, to the Knowledge of the Company,
threatened with respect to any employees of the Company or any of its
Subsidiaries.
(b) Except as set forth on Schedule 3.16, neither the Company
nor any of its Subsidiaries has any pending or, to the Knowledge of the Company,
threatened, any lawsuit, claim, administrative proceeding, arbitration or
governmental investigation relating to any wage and hour claim, unfair labor
practice charge, wrongful termination, or illegal discrimination complaint with
respect to any of their respective employees or former employees and, to the
Knowledge of the Company, there is no basis for such lawsuit, claim, proceeding
or investigation.
32
SECTION 3.17. REAL PROPERTY.
(a) Schedule 3.17(a) sets forth a list of all real properties
owned by any of the Company and its Subsidiaries (the "Owned Real Property"),
such list setting forth for informational purposes only the location of each
parcel of such Owned Real Property, the record owner thereof, the approximate
acreage and a brief description of the improvements thereon and the nature of
the activities conducted on such Owned Real Property. To the Knowledge of the
Company, the Company and/or its Subsidiaries have good and valid fee simple
title to the Owned Real Property that is necessary for the conduct of the
business of the Company or its Subsidiaries, as currently conducted, free of any
Encumbrances other than as set forth in the title reports set forth on Schedule
3.17(a). With respect to each parcel of Owned Real Property, except as set forth
on Schedule 3.17(a), (i) there are no leases, subleases, licenses, or other
agreements granting any Person the right to use or occupy all or any portion of
such Owned Real Property, and (ii) there are no Persons (other than the Company
or its Subsidiaries) in possession of such Owned Real Property.
(b) Schedule 3.17(b) contains a complete and correct list of
all leases of real property, occupancy agreements or similar agreements (the
"Real Property Leases") under which the Company or any of its Subsidiaries is a
lessee, sub-lessee, tenant, licensee or assignee of any real property owned by
any third Person (the "Leased Real Property", and. collectively with the Owned
Real Property, the "Real Property"), such list setting forth for informational
purposes only the location of each parcel of such Leased Real Property, the
landlord thereof, the approximate acreage and a brief description of the
improvements thereon and the nature of the activities conducted on such Leased
Real Property. The Company has delivered to the Purchaser true, correct and
complete copies of each Real Property Lease. Except as set forth on Schedule
3.17(b), with respect to the Real Property Leases, (i) to the Knowledge of the
Company, there exist no defaults under the Real Property Leases by the Company
or any of its Subsidiaries and the Company has not received written notice of
any such defaults; and (ii) to the Knowledge of the Company, there exists no
default by any third party thereunder. Except as set forth on Schedule 3.17(b),
each Real Property Lease is a legal, valid and binding obligation of either the
Company or a Subsidiary, and, to the Knowledge of the Company, each other party
thereto, enforceable against each such other party thereto in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and subject to general principles of equity. Except as set forth on Schedule
3.17(b) hereto, the consummation of the Subject Transactions will not result in
any default, penalty, right to terminate, increase in the amounts payable under
or modification to any Real Property Lease. To the Knowledge of the Company, the
Company and/or its Subsidiaries, as applicable, hold good and valid leasehold
estates in the Leased Real Property that is necessary for the conduct of
business of the Company or its Subsidiaries, as applicable, as currently
conducted, free and clear of all Encumbrances.
(c) Except as set forth on Schedule 3.17(c), (i) none of the
Real Property is subject to any right or option granted by the Company in favor
of any Person to purchase or otherwise obtain title to such property, (ii) there
is no pending or, to the Knowledge of the Company, threatened condemnation (or
similar proceedings) of any part of the Owned Real Property or the Leased Real
Property, (iii) the Company and/or its Subsidiaries, as applicable, have not
assigned their interests under any Real Property Lease to any third party, (iv)
no option
33
has been exercised under any Real Property Lease, except options the exercise of
which have been evidenced by a written document set forth on Schedule 3.17(c),
(v) neither the Company nor any of its Subsidiaries has received written notice
within the last three (3) years asserting that the utilities, access or parking
for any parcel of Real Property are inadequate for the current use and operation
of such parcel, nor does the Company have any Knowledge of any fact or condition
which could reasonably be expected to result in such utilities, access or
parking for any parcel of Real Property becoming inadequate for the current use
and operation of such parcel, which inadequacy, individually or in the
aggregate, would not have a Material Adverse Effect, (vi) to the Knowledge of
the Company, there are no zoning, building code, occupancy restriction or other
land-use regulation proceedings or any proposed change in any Applicable Laws
that could, individually or in the aggregate, result in a Material Adverse
Effect, nor has the Company or any of its Subsidiaries received any notice of
any special assessment proceedings affecting any Real Property, or applied for
any change to the zoning or land use status of any Real Property, (viii) the
Company has no actual knowledge that the landlord named on any of the Real
Property Leases set forth on Schedule 3.17(b) hereto does not have good and
valid fee simple title in each such parcel of real property subject to any
applicable Real Property Lease or that such title is subject to any exceptions
that materially affect the current use or operation thereof or that such title
is subject to any monetary encumbrances, except where the encumbrancer has
granted non-disturbance protection to the lessee under the applicable Real
Property Lease and (ix) the Company has no actual knowledge that there are any
defects, structural or otherwise, with respect to any of the Real Property (or
any improvements located thereon), which could reasonably be anticipated to have
a material adverse impact on the value or utility of any such item of Real
Property.
SECTION 3.18. AFFILIATED TRANSACTIONS; INDEMNIFICATION
AGREEMENTS.
(a) Except as set forth on Schedule 3.18, to the Knowledge of
the Company, no Related Party of the Company or any of its Subsidiaries, either
currently or at any time since December 31, 2001: (i) has or has had any
interest in any property (real or personal, tangible or intangible) that the
Company or any of its Subsidiaries uses or has used in or pertaining to the
business of the Company or any of its Subsidiaries; or (ii) has or has had any
business dealings or a financial interest in any transaction with the Company or
any of its Subsidiaries or involving any assets or property of the Company or
any of its Subsidiaries, other than business dealings or transactions conducted
in the ordinary course of business at prevailing market prices and on prevailing
market terms. For purposes of this Agreement, the term "Related Party" shall
mean as of any time: an executive officer or director, 10% stockholder
(including any executive officers or directors thereof) or Affiliate of the
Company or any of its Subsidiaries at such time, any present or former known
spouse of any such executive officer, director or Affiliate of the Company or
any of its Subsidiaries or any trust or other similar entity for the benefit of
any of the foregoing Persons.
(b) Schedule 3.18(b) sets forth a true and correct list of all
contracts, agreements or arrangements between the Company or any of its
Subsidiaries, on the one hand, and any of their respective officers, directors,
employees or agents or any Securityholder, on the other hand, pursuant to which
the Company or any of its Subsidiaries has agreed to indemnify or hold harmless
any of such Persons.
34
SECTION 3.19. WARRANTIES.
Except as set forth on Schedule 3.19, there are no material
claims pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries with respect to any product alleged to have
been manufactured, distributed or sold by the Company or any of its Subsidiaries
to others, and alleged to have been defective or improperly designed or
manufactured or in breach of any express or implied product warranty, except to
the extent reflected or reserved for in the Financial Statements included in the
Company Report most recently filed with the SEC prior to the date of this
Agreement, and, to the Knowledge of the Company, there is no reasonable basis
for any such suit, inquiry, action, proceeding, investigation or claim. To the
Knowledge of the Company, there exists no latent defect in the design or
manufacture of any of the products of the Company or any of its Subsidiaries.
The Company has heretofore delivered to the Purchaser copies of the Contracts
and other documents describing terms and conditions of sale or lease of the
products and services of the Company and its Subsidiaries (containing applicable
guaranty, warranty and indemnity provisions) and other than such terms and
conditions, there are no express product or service warranties relating to the
businesses of the Company and its Subsidiaries enforceable against the Company
or any of its Subsidiaries.
SECTION 3.20. INAPPROPRIATE PAYMENTS.
Since December 31, 2003, neither the Company nor any of its
Subsidiaries nor, to the Knowledge of the Company, any of their respective
officers, directors, employees, agents or representatives has made, directly or
indirectly, with respect to the Company, any of its Subsidiaries or any of their
respective business activities, any bribes or kickbacks, illegal political
contributions, payments from corporate funds not recorded on the books and
records of the Company or its Subsidiaries, payments from corporate funds to
governmental officials, in their individual capacities, for the purpose of
affecting their action or the action of the government they represent, to obtain
favorable treatment in securing business or licenses or to obtain special
concessions, or illegal payments from corporate funds to obtain or retain
business.
SECTION 3.21. BROKERS.
No broker, investment bank, finder, financial advisor or other
Person has acted as such for, or is entitled to any compensation from, the
Company or any of its Subsidiaries in connection with this Agreement or the
Subject Transactions, except as set forth on Schedule 3.21.
SECTION 3.22. ASSETS.
Except as set forth on Schedule 3.22, the tangible assets
(including real and personal property) of the Company and its Subsidiaries that
are currently used in and are material to the operation of their respective
businesses (the "Assets") are owned or leased by the Company or a Subsidiary and
are in the possession or under the control of the Company or such Subsidiary,
and are operating in the ordinary course of business, subject to normal
maintenance and repair (as applicable).
35
SECTION 3.23. INSURANCE.
Schedule 3.23 sets forth a true and complete list of all
material insurance policies in force with respect to the Company and its
Subsidiaries. The Company has heretofore provided the Purchaser with a brief
summary of the coverage and terms of each such policy. All such policies are in
full force and effect. All premiums with respect thereto have been paid to the
extent due. No notice of cancellation, termination or reduction of coverage has
been received with respect to any such policy. Except as set forth on Schedule
3.23, no claim currently is pending under any such policy involving an amount in
excess of Fifty Thousand Dollars ($50,000). All claims currently pending have
been timely made and no claim has been denied by the insuring party or is being
defended under a reservation of such insuring party's rights.
SECTION 3.24. INTERCOMPANY SERVICES.
Schedule 3.24 sets forth a true and correct description of all
material services provided within the last twelve months to the Company and any
of its Subsidiaries by their respective Affiliates (other than the Company and
its Subsidiaries) and by the Company and its Subsidiaries to their respective
Affiliates (other than the Company and its Subsidiaries), and the charges
assessed for all services provided during such time. Except as set forth on
Schedule 3.11, there are no agreements (oral or written) between the Company or
any of its Subsidiaries, on the one hand, and any Affiliate thereof (other than
Affiliates that are the Company or any of its Subsidiaries), on the other hand.
SECTION 3.25. GOVERNMENT CONTRACTS.
Except as set forth on Schedule 3.25:
(a) To the Knowledge of the Company, with respect to each
executory Government Contract or outstanding Bid to which the Company or any of
its Subsidiaries is a party: (i) the Company and each of its Subsidiaries has
complied in all material respects with all terms and conditions of such
Government Contract or Bid; (ii) the Company and each of its Subsidiaries has
complied in all material respects with all requirements of statute, rule,
regulation, order or agreement with the U.S. Government pertaining to such
Government Contract or Bid; (iii) all representations and certifications
executed, acknowledged or set forth in or pertaining to such Government Contract
or Bid were current, accurate and complete as of their effective date, and the
Company and each of its Subsidiaries has complied in all material respects with
all such representations and certifications; (iv) neither the U.S. Government,
nor any prime contractor, subcontractor or other Person, has notified the
Company or any of its Subsidiaries, in writing, that the Company or any of its
Subsidiaries has breached or violated any statute, rule, regulation
certification, representation, clause, provision or requirement; and (v) no
termination for default has been issued, and no cure notice or show cause notice
has been issued and not resolved or cured. For purposes of this Section 3.25,
"executory Government Contract" means a Government Contract that has not been
closed by the U.S. Government, prime contractor or subcontractor, as
appropriate.
(b) To the Knowledge of the Company: (i) neither the Company
nor any of its Subsidiaries nor any of the Company's or its Subsidiaries'
directors, officers or employees is (or
36
for the last three years has been) under administrative, civil or criminal
investigation, indictment or information, or audit (other than routine contract
audits) or internal investigation with respect to any alleged irregularity,
misstatement or omission arising under or relating to any Government Contract or
Bid; or (ii) neither the Company nor any of its Subsidiaries nor any of the
Company's or its Subsidiaries' directors, officers or employees has made a
Voluntary Disclosure pursuant to the Department of Defense Fraud Voluntary
Disclosure Program with respect to any alleged irregularity, misstatement or
omission arising under or relating to any Government Contract or Bid that has
led or could lead, either before or after the Closing Date, to any of the
consequences set forth in subsection (i) above or any other material damages,
assessment of penalties, recoupment of payment or disallowance of cost.
(c) Neither the Company nor any of its Subsidiaries nor, to
the Knowledge of the Company, any of their respective directors, officers or
employees is (or at any time during the last five years has been) suspended or
debarred from doing business with the U.S. Government or declared nonresponsible
or ineligible for U.S. Government contracting. To the Knowledge of the Company,
there are no matters pending that are believed reasonably likely to lead to the
institution of suspension or debarment proceedings against the Company or any of
its Subsidiaries. Neither the Company nor any Subsidiary has, within the past
five years, been terminated for default under any Government Contract.
SECTION 3.26. INTERNATIONAL TRADE AND EXPORT CONTROLS.
(a) Except as set forth on Schedule 3.26: (i) the Company is
in material compliance with all Applicable Laws concerning the exportation of
any products, technology, technical data and services, including those
administered by, without limitation, the United States Department of Commerce,
the United States Department of State, and the United States Department of the
Treasury; (ii) the Company is in material compliance with United States and
international economic and trade sanctions, including those administered by the
Office of Foreign Assets Control ("OFAC") within the United States Department of
the Treasury; (iii) the Company is in material compliance with the antiboycott
regulations administered by the United States Department of Commerce, the
Foreign Corrupt Practices Act, and all laws and regulations administered by the
Bureau of Customs and Border Protection in the United States Department of
Homeland Security.
(b) To the Knowledge of the Company, no director, officer or
employee of Company or any of its Subsidiaries is identified on any of the
following documents: (i) the Office of Foreign Assets Control of the United
States Department of the Treasury list of "Specially Designated Nationals and
Blocked Persons" ("SDNs"); (ii) the Bureau of Industry and Security of the
United States Department of Commerce "Denied Persons List, " "Entity List" or
"Unverified List"; (iii) the Office of Defense Trade Controls of the United
States Department of State "List of Debarred Parties"; (iv) the Financial
Sanctions Unit of the Bank of England "Consolidated List"; (v) the Solicitor
General of Canada's "Anti-Terrorism Act Listed Entities"; (vi) the Australian
Department of Foreign Affairs and Trade "Charter of the United Nations
(Anti-terrorism - Persons and Entities) List"; (vii) the United Nations Security
Council Counter-Terrorism Committee "Consolidated List"; or (viii) European
Union Commission Regulation No. 1996/2001 of October 11, 2001. To the Knowledge
of the Company, neither the Company nor any of its Subsidiaries is involved in
business arrangements or otherwise engages in
37
transactions with or involving countries subject to economic or trade sanctions
imposed by the United States Government, or with or involving SDNs, in violation
of the regulations maintained by OFAC.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents
and warrants, as to such Stockholder, to the Purchaser as follows:
SECTION 4.1. OWNERSHIP OF STOCK.
Such Stockholder is the owner, beneficially and of record, of
the shares of Common Stock set forth opposite such Stockholder's name on Exhibit
A, free and clear of any Encumbrance. At the Closing, such Stockholder will
transfer good and marketable title to such shares of Common Stock and the shares
of Common Stock, if any, issued to such Stockholder after the date hereof upon
valid exercise of Options, in each case free and clear of any Encumbrance.
SECTION 4.2. AUTHORIZATION.
Such Stockholder has full right, power and authority and has
taken all action necessary to execute and deliver this Agreement and the
Ancillary Agreements to which such Stockholder is to be a party, to perform its
obligations hereunder and thereunder and to consummate the Subject Transactions.
This Agreement has been, and by the Closing Date each Ancillary Agreement to
which such Stockholder is to be a party will have been, duly executed and
delivered by such Stockholder, and, subject to due authorization, execution and
delivery by the other parties, this Agreement is, and each such Ancillary
Agreement to which such Stockholder is to be a party will be, the legal, valid
and binding obligation of such Stockholder, enforceable against such Stockholder
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally, and to general principles
of equity (whether considered in a proceeding at law or in equity).
SECTION 4.3. NO CONFLICT OR VIOLATION.
The execution, delivery and performance by such Stockholder of
this Agreement and the Ancillary Agreements to which such Stockholder is to be a
party and the consummation of the Subject Transactions in accordance with their
terms will not (a) if such Stockholder is not a natural Person, violate any
provision of the charter, bylaws or other organizational documents of such
Stockholder, (b) violate, conflict with or result in a breach of any of the
terms of, or constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of any
Encumbrances on any of the Common Stock pursuant to, any agreement, license or
contract to which such Stockholder is a party or by or to which it or any of its
assets or properties may be bound or subject, (c) violate any order, judgment,
injunction, award or decree of any court,
38
arbitrator or Government Entity against, or binding upon, such Stockholder, (d)
violate any statute, law or regulation of any jurisdiction applicable to such
Stockholder, or (e) result in a breach or violation of any of the terms or
conditions of, constitute a default under, or otherwise cause an impairment or
revocation of, any Permit related to such Stockholder's business or necessary to
conduct such business, except in the case of each of the foregoing clauses (b),
(c), (d) and (e) for such violations, conflicts, breaches, defaults, impairments
or revocations that would not, individually or in the aggregate, have a material
adverse effect on such Stockholder's ability to consummate the Subject
Transactions or to perform its obligations hereunder or under the Ancillary
Agreements to which such Stockholder is to be a party.
SECTION 4.4. GOVERNMENTAL CONSENTS AND APPROVALS.
Except (a) as set forth on Schedule 4.4 and (b) as required
under the HSR Act or any competition law or similar statute or regulation of any
foreign jurisdiction, the execution, delivery and performance by such
Stockholder of this Agreement and the Ancillary Agreements to which such
Stockholder is to be a party, and the consummation of the Subject Transactions
in accordance with their terms, do not require such Stockholder or any of its
Affiliates to obtain any consent or approval of, make any filing with, or give
any notice to, any Government Entity, except for such consents, approvals,
filings or notices the failure to obtain, make or give which, as the case may
be, would not, individually or in the aggregate, have a material adverse effect
on such Stockholder's ability to consummate the Subject Transactions or to
perform its obligations hereunder or under the Ancillary Agreements to which
such Stockholder is to be a party.
SECTION 4.5. COMPLIANCE WITH LAWS.
Except for those violations, if any, which would not,
individually or in the aggregate, have a material adverse effect on such
Stockholder's ability to consummate the Subject Transactions or to perform its
obligations hereunder, such Stockholder is not in violation of any Applicable
Law or any other requirement of any Government Entity. Such Stockholder has not
received any written notice from any Government Entity alleging any violation of
any such Applicable Law or directing such Stockholder to take any remedial
action with respect to such law, ordinance or regulation, in either case which
would have a material adverse effect on such Stockholder's ability to consummate
the Subject Transactions or to perform its obligations hereunder or under the
Ancillary Agreements to which such Stockholder is to be a party.
SECTION 4.6. OBLIGATIONS OF THE COMPANY TO THE STOCKHOLDERS.
Except as set forth on Schedule 4.6, (a) neither such
Stockholder nor any of its Affiliates (other than the Company or any of its
Subsidiaries) is a party to any contract, agreement or arrangement with the
Company or any of its Subsidiaries, and (b) none of the Company or any of its
Subsidiaries has, has ever had or may hereafter have, any obligation or
liability, contingent or otherwise, owing to such Stockholder or any of its
Affiliates (including pursuant to any claim, demand, proceeding, cause of action
or order), in each case, other than (i) any obligation of the Company or any of
its Subsidiaries arising under any Ancillary Agreement after the Closing or in
connection with employment of such Stockholder after the Closing, (ii) any claim
arising under this Agreement or (iii) any claim for indemnification arising
under the charter, bylaws or other organizational documents of the Company or
its Subsidiaries
39
or Applicable Law. Notwithstanding the foregoing, the Xxxxxx Stockholders make
no representations about any such contract, agreement, arrangement, obligation
or liability of the Company or any of its Subsidiaries with or to Xxxxxx
Brothers Inc. or any of the Affiliates of Xxxxxx Brothers Inc. other than the
Xxxxxx Stockholders.
SECTION 4.7. OWNERSHIP OF NOTES.
Each Significant Stockholder represents that the Notes held by
each such Significant Stockholder are set forth next to such Significant
Stockholder's name on Schedule 4.7 hereto.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to each
Stockholder as follows:
SECTION 5.1. ORGANIZATION, STANDING AND AUTHORITY.
The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation and
has all requisite power and authority to carry on its operations as they are now
being conducted.
SECTION 5.2. AUTHORIZATION.
The Purchaser has full right, power and authority and has
taken all corporate action necessary to execute and deliver this Agreement and
the Ancillary Agreements, to perform its obligations hereunder and thereunder
and to consummate the Subject Transactions. This Agreement has been, and by the
Closing Date each Ancillary Agreement to which the Purchaser is to be a party
will have been, duly executed and delivered by the Purchaser, and, subject to
due authorization, execution and delivery by the other parties, this Agreement
is, and each such Ancillary Agreement will be, the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally, and to general principles of equity
(whether considered in a proceeding at law or in equity).
SECTION 5.3. ACTIONS AND PROCEEDINGS.
As of the date hereof, there are no outstanding orders,
decrees or judgments by or with any Government Entity to which the Purchaser is
a party that would, individually or in the aggregate, have a Purchaser Material
Adverse Effect. As of the date hereof, there are no actions, suits, arbitrations
or legal, administrative or other proceedings pending or, to the Knowledge of
the Purchaser, threatened against the Purchaser, at law or in equity, by or
before any Government Entity, which would, if adversely determined, individually
or in the aggregate, have a Purchaser Material Adverse Effect.
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SECTION 5.4. NO CONFLICT OR VIOLATION.
Except as set forth in Section 5.5 or on Schedule 5.4, the
execution, delivery and performance by the Purchaser of this Agreement and the
Ancillary Agreements and the consummation of the Subject Transactions in
accordance with their terms will not (a) violate any provision of the charter,
bylaws or other organizational documents of the Purchaser, (b) violate, conflict
with or result in a breach of any of the terms of, or constitute a default (or
event which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
any agreement, license or contract to which the Purchaser is a party or by or to
which it or any of its assets or properties may be bound or subject, (c) violate
any order, judgment, injunction, award or decree of any court, arbitrator or
Government Entity against, or binding upon, the Purchaser, (d) violate any
statute, law or regulation of any jurisdiction applicable to the Purchaser, or
(e) result in a breach or violation of any of the terms or conditions of,
constitute a default under, or otherwise cause an impairment or revocation of,
any Permit related to the Purchaser's business or necessary to conduct such
business, except in the case of each of the foregoing clauses (b), (c), (d) and
(e) for such violations, conflicts, breaches, defaults, impairments or
revocations that would not, individually or in the aggregate, have a Purchaser
Material Adverse Effect.
SECTION 5.5. GOVERNMENTAL CONSENTS AND APPROVALS.
Except as required under the HSR Act or any competition law or
similar statute or regulation of any foreign jurisdiction, the execution,
delivery and performance by the Purchaser of this Agreement and the Ancillary
Agreements, and the consummation of the Subject Transactions in accordance with
their terms, do not require the Purchaser or any of its Affiliates to obtain any
consent or approval of, make any filing with, or give any notice to, any
Government Entity, except for such consents, approvals, filings or notices the
failure to obtain, make or give which, as the case may be, would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect.
SECTION 5.6. COMPLIANCE WITH LAWS.
Except for those violations, if any, which would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect, the
Purchaser is not in violation of any Applicable Law or any other requirement of
any Government Entity. The Purchaser has not received any written notice from
any Government Entity alleging any violation of any such Applicable Law or
directing the Purchaser to take any remedial action with respect to such law,
ordinance or regulation, in either case which would have a Purchaser Material
Adverse Effect.
SECTION 5.7. FINANCING.
The Purchaser has delivered to the Company complete and
correct executed copies of the documents listed in Part I of Exhibit D and all
other letters, agreements and other documents (collectively, the "Debt Financing
Documents") issued to the Purchaser or to which the Purchaser is a party in
connection with the debt financing of the Subject Transactions (the
"Financing"). The Purchaser has also delivered to the Company complete and
correct executed
41
copies of the documents listed in Part II of Exhibit D and all other letters,
agreements and other documents (collectively, the "Equity Financing Documents"
and collectively with the Debt Financing Documents, the "Financing Documents")
issued to the Purchaser or to which the Purchaser is a party in connection with
the equity financing for the Subject Transactions (the "Equity Investment"). The
Financing Documents are in full force and effect, are not subject to any
conditions other than those contained therein, and have not been amended or
modified in any respect, all commitment fees required to be paid thereunder have
been paid in full or will be duly paid in full when due, and no event has
occurred which (with or without notice, lapse of time or both) would constitute
a default thereunder on the part of the Purchaser or the Finance Parties, as the
case may be. There are no facts and circumstances known to the Purchaser or its
Affiliates that any of them believes or has reason to believe is reasonably
likely to (i) prevent the conditions described in the Financing Documents from
being satisfied, (ii) prevent the Purchaser from receiving financing pursuant to
the terms of the Financing Documents or (iii) make any of the conditions or
assumptions set forth in the Financing Documents unreasonable. The Finance
Parties have not advised the Purchaser or any of its Affiliates of any facts
which cause them to believe the financing contemplated by the Financing
Documents will not be consummated substantially in accordance with the terms
thereof. Assuming satisfaction of all applicable conditions set forth in the
Debt Financing Documents, at the Closing Date, the Purchaser will be capitalized
with the Equity Investment, which, together with the proceeds from the Financing
and available cash of the Purchaser, will provide sufficient funds to consummate
the Subject Transactions.
SECTION 5.8. SOPHISTICATED INVESTOR.
The Purchaser is a sophisticated investor, represented by
independent legal and investment counsel with experience in the acquisition and
valuation of ongoing businesses and acknowledges that it has received, or has
had access to, all information which it considers necessary or advisable to
enable it to make an informed investment decision concerning its purchase of the
Common Stock. The Purchaser is acquiring the Common Stock for investment
purposes only, and not with a view to, or for, any public resale or other
distribution thereof. The Purchaser is an "accredited investor" as such term is
defined in the regulations promulgated under the Securities Act.
SECTION 5.9. OTHER INVESTMENT REPRESENTATIONS.
The Purchaser acknowledges that (i) the Purchaser and its
employees, agents and accounting and legal representatives have been afforded
access to the books, records, key personnel, facilities and other information
related to the Common Stock and the business and affairs of the Company and its
Subsidiaries; (ii) the Purchaser and its employees, agents and accounting and
legal representatives have been given an opportunity to ask questions relating
to the Common Stock and the business and affairs of the Company and its
Subsidiaries and to receive answers thereto; (iii) the Purchaser has performed
such due diligence as the Purchaser deemed necessary in order to review and
assess the properties, business and affairs of the Company and its Subsidiaries
in connection with its acquisition of the Common Stock (including the matters
set forth in the Schedules attached hereto); and (iv) each of the Finance
Parties has similarly been afforded access to information and conducted such due
diligence as such Finance Parties required. In completing the Subject
Transactions, the Purchaser has not and is not relying
42
on any representation or warranty, whether by any Stockholder, the Company or
any other Person, which is not expressly set forth in this Agreement. The
Purchaser understands that no party hereto nor any Affiliates, representatives
or agents of any party is making any representation or warranty whatsoever, oral
or written, express or implied, other than as set forth in this Agreement, and
the Purchaser is not relying on any statement, representation or warranty, oral
or written, express or implied, made by another party hereto, such other party's
Affiliates, representatives or agents, or any other Person, except as set forth
in this Agreement.
SECTION 5.10. BROKERS.
No broker, investment bank, finder, financial adviser or other
person has acted as such for, or is entitled to any compensation from, the
Purchaser or its Affiliates in connection with this Agreement or the Subject
Transactions, except as set forth on Schedule 5.10.
SECTION 5.11. INFORMATION SUPPLIED.
None of the written information supplied or to be supplied by
the Purchaser specifically for inclusion or incorporation by reference in the
Tender Offer Documents will, at the time the Offer to Purchase first is mailed
to holders of the Notes, at any time it is amended or supplemented or at any
time prior to the expiration of the Tender Offers, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE VI.
COVENANTS
SECTION 6.1. CONDUCT OF THE BUSINESS PENDING THE CLOSING.
The Company will not, and the Company will not permit any of
its Subsidiaries to, take any action with the purpose of causing any of the
conditions to the Purchaser's obligations set forth in Article VII hereof to not
be satisfied. Except as contemplated by this Agreement, as set forth on Schedule
6.1 or with the prior written consent of the Purchaser, during the period from
the date of this Agreement to the Closing, the Company will, and will cause each
of its Subsidiaries to, conduct their respective businesses according to their
ordinary and usual course of business and to use all commercially reasonable
efforts consistent therewith (x) to preserve intact their respective material
properties, assets and business organizations and (y) to maintain satisfactory
relationships with material customers, suppliers, distributors, regulators,
creditors and others having business relationships with the Company and its
Subsidiaries, in each case in the ordinary course of business; provided,
however, that none of the Company or its Subsidiaries shall be required to incur
any costs or expenses or otherwise expend any monies out of the ordinary course
of business in connection with such efforts. Without limiting the generality of
the foregoing, and except as otherwise provided in this Agreement, the Company
will not, and will not permit any of its Subsidiaries to, without the prior
written consent of the Purchaser (such consent not to be unreasonably withheld
or delayed):
43
(i) except for the issuance of Common Stock upon the
exercise of currently outstanding Options, issue, sell or pledge, or
authorize or propose the issuance, sale or pledge, of additional shares
of capital stock of any class, or securities convertible into or
exchangeable for shares of capital stock, or any rights, warrants or
options to acquire any such shares, or other convertible securities of
the Company or its Subsidiaries;
(ii) split, combine or reclassify any shares of the
Capital Stock of the Company or its Subsidiaries or declare, set aside
for payment or pay any dividend or distribution, payable in cash,
stock, property or otherwise, with respect to any of the Capital Stock
of the Company or its Subsidiaries, other than, with respect to
dividends or distributions, cash dividends and distributions by a
direct or indirect wholly-owned Subsidiary to the Company or another
direct or indirect wholly-owned Subsidiary;
(iii) enter into an agreement with respect to any
merger, consolidation, liquidation or business combination involving
the Company or any of its Subsidiaries, or any acquisition or
disposition of all or substantially all of the assets or securities of
the Company or any of its Subsidiaries;
(iv) propose or adopt any amendment to the
certificate of incorporation or by-laws or other organizational
documents of the Company or any of its Subsidiaries;
(v) (A) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other
business organization or division or line of business thereof or (B)
make any investment, either by purchase of stock or securities,
contributions to capital (other than to a Subsidiary), property
transfer or purchase of any property or assets of any Person, except
pursuant to Contracts in effect on the date of this Agreement and
disclosed on Schedule 6.1(v) hereto;
(vi) except for borrowings under existing lines of
credit in the ordinary course of business, incur any long-term
Indebtedness or issue any debt securities or assume, guarantee or
endorse the obligations of any other Person in excess of Fifty Thousand
Dollars ($50,000) in the aggregate;
(vii) cancel any material third party Indebtedness
owed to the Company or any of its Subsidiaries (other than Indebtedness
owed to the Company or any of its wholly-owned Subsidiaries by another
wholly-owned Subsidiary);
(viii) (A) increase in any manner the rate or terms
of compensation or benefits of any of its directors, officers or other
employees, except as may be required under existing employment
agreements or such increases as are granted in the ordinary course of
business consistent with past practice, (B) hire any new employees
except in the ordinary course of business consistent with past
practice, (C) pay or agree to pay any pension, retirement allowance or
other employee benefit not required or permitted by any existing
Benefit Plan or other agreement or arrangement to any such director,
officer or employee, whether past or present, or (C) enter into or
amend any employment, bonus,
44
severance or retirement contract or adopt or amend any Benefit Plan,
except in the ordinary course of business consistent with past
practice;
(ix) (A) except for the sale of inventory in the
ordinary course of business consistent with past practice, sell, lease,
transfer or otherwise dispose of any of its material property or
assets, or (B) create Encumbrances on any of its material property or
assets, in each case described in this clause (B) in excess of Fifty
Thousand Dollars ($50,000) per transaction or One Hundred Thousand
Dollars ($100,000) in the aggregate;
(x) sell, assign, lease, license, transfer or
otherwise dispose of, mortgage, pledge or encumber, any Owned Real
Property, or amend, terminate, modify or renew any Real Property Lease
except as disclosed on Schedule 6.1;
(xi) make any loans, advances or capital
contributions (other than advances for travel and other normal business
expenses to officers and employees), except in the ordinary course of
business and in an aggregate amount outstanding at any one time not to
exceed One Hundred Thousand Dollars ($100,000);
(xii) commit to make any capital expenditure not set
forth on Schedule 6.1(xii) (unless consistent with subsection (xiii)
following) or fail to make capital expenditures consistent with past
practices (even in excess of amounts set forth on Schedule 6.1(xii)) or
fail to expend aggregate cash amounts in any month in respect of
commitments made between the date hereof and the Closing Date less than
the amount set forth on Schedule 6.1(xii) hereto with respect to such
month (unless such amounts may be avoided or deferred consistent with
past practices);
(xiii) fail to maintain all its assets in good repair
and condition, except to the extent of wear or use in the ordinary
course of business or damage by fire or other unavoidable casualty;
(xiv) make or change any Tax election, release,
assign, settle or compromise any material Tax liability, or waive or
consent to the extension of any statute of limitations for the
assessment and collection of any Tax, except in the ordinary course of
business consistent with past practice, or fail to make timely any
estimated payment for Taxes in accordance with Applicable Law;
(xv) except as may be required as a result of a
change in Applicable Law or GAAP, change any accounting principles or
practices used by the Company or any of its Subsidiaries;
(xvi) institute, settle or dismiss any action, claim,
demand, lawsuit, proceeding, arbitration or grievance by or before any
court, arbitrator or governmental or regulatory body threatened
against, relating to or involving the Company or any of its
Subsidiaries in connection with any business, asset or property of the
Company or any of its Subsidiaries, other than in the ordinary course
of business but not, in any individual case, in excess of One Hundred
Thousand Dollars ($100,000) ;
45
(xvii) enter into any Contract with a term of more
than thirty six (36) months or involving the payment, or provision of
goods or services, in excess of One Million Dollars ($1,000,000) or
enter into any Contract outside of the ordinary course of business
consistent with past practices;
(xviii) fail to pay the accounts payable or other
liabilities of the Company or any of its Subsidiaries in a manner
consistent with the practices of the Company and its Subsidiaries prior
to the date hereof or take any action not consistent with the past
practices of the Company and its Subsidiaries that is designed to
accelerate or has the effect of accelerating the receipt by the Company
or any of its Subsidiaries of any amounts of cash earlier than such
cash would have been realized consistent with the past practices of the
Company and its Subsidiaries; or
(xix) agree in writing to take any of the foregoing
actions.
SECTION 6.2. CERTAIN TRANSACTIONS.
The Stockholders and the Company agree that between the date
of this Agreement and the earlier of (a) the Closing and (b) the termination of
this Agreement, none of the Stockholders, the Company, any of its Subsidiaries
nor any of their respective Affiliates, officers, directors, representatives or
agents will (i) solicit, initiate, consider, encourage or accept any other
proposals or offers from any Person (A) relating to any acquisition or purchase
of all or any portion of the capital stock of the Company or any of its
Subsidiaries or assets of the Company or any of its Subsidiaries (other than any
sale of assets to be sold in the ordinary course of business consistent with
past practice and otherwise not in violation of the terms of this Agreement),
(B) to enter into any merger, consolidation or other business combination
relating to the Company or any of its Subsidiaries, (C) to enter into a
recapitalization, reorganization or any other extraordinary business transaction
involving or otherwise relating to the Company or any of its Subsidiaries or (D)
to enter into any other extraordinary business transaction involving or
otherwise relating to the Company or any of its Subsidiaries, or (ii)
participate in any discussions, conversations, negotiations and other
communications regarding, or furnish to any other Person any information with
respect to, or otherwise cooperate in any way, assist or participate in,
facilitate or encourage any effort or attempt by any other Person to seek to do
any of the foregoing. The Company immediately shall cease and cause to be
terminated all existing discussions, conversations, negotiations and other
communications with any Person conducted heretofore with respect to any of the
foregoing. The Company shall notify the Purchaser promptly if any such proposal
or offer, or any inquiry or other contact with any Person with respect thereto,
is made and shall, in any such notice to the Purchaser, indicate in reasonable
detail the identity of the Person making such proposal, offer, inquiry or
contact and the terms and conditions of such proposal, offer, inquiry or other
contact. The Stockholders and the Company agree not to, and to cause each of the
Subsidiaries not to, without the prior written consent of the Purchaser, release
any Person from, or waive any provision of, any confidentiality or standstill
agreement to which the Company or any Subsidiary is a party.
46
SECTION 6.3. INVESTIGATIONS; PRE-CLOSING ACCESS.
(a) Prior to the Closing Date, the Company shall, and shall
cause its Subsidiaries to, allow the Purchaser, through its employees and
representatives, to make such continuing investigation of the assets,
liabilities, business, operations, books and records of the Company and its
Subsidiaries as the Purchaser may reasonably request. Any investigation or
examination by the Purchaser of the Company and its Subsidiaries or access
pursuant to this Section 6.3 shall be conducted or occur at reasonable times
during regular business hours, as approved in advance by the Chief Executive
Officer of the Company; the Company shall, and shall cause its Subsidiaries and
their respective employees and representatives, including, without limitation,
counsel, investment bankers and independent public accountants, to, cooperate
with the Purchaser's employees and its representatives in connection with such
review and examination; and any such investigation, examination or interview
shall be subject to the terms and conditions of the Confidentiality Agreement
or, at the request of the Company, a separate confidentiality agreement between
the Company and each of such employees and representatives that is substantially
identical to the Confidentiality Agreement. Without limiting the foregoing, the
Company shall also deliver to Purchaser and its advisors such tax returns,
supporting materials and related documents as Purchaser reasonably deems
necessary to diligence the principal amount of the Defeasance Cost Tax Note.
(b) Between the date hereof and the Closing, the Company shall
furnish to the Purchaser as soon as available and in any event not later than
the end of each fiscal month, an unaudited consolidated balance sheet of the
Company as of the end of the preceding fiscal month and the related consolidated
statements of earnings and stockholders' equity (deficit) for such period, and,
as soon as available and in any event within twenty-five (25) Business Days
after the end of each fiscal quarter, a statement of cash flows for the quarter
then ended, each prepared in accordance with GAAP in conformity with the
practices consistently applied by the Company with respect to its monthly and
quarterly financial statements. All the foregoing shall be in accordance with
the books and records of the Company and shall fairly present its consolidated
financial position (taking into account the differences between the monthly and
quarterly statements prepared by the Company in conformity with its past
practices) as of the last day of the period then ended.
(c) The foregoing shall not require the Company or any of its
Subsidiaries to (i) permit any inspection, or to disclose any information, that
in their reasonable judgment could reasonably be expected to result in (A) the
disclosure of any trade secrets of third parties or the violation of any
obligations of the Company or any of its Subsidiaries with respect to
confidentiality provided that they shall have used commercially reasonable
efforts to obtain the consent of such third party to such inspection or
disclosure, (B) the waiver of any applicable attorney-client privilege, or (C)
the violation of any Applicable Law or (ii) provide access to any property for
purposes of testing or invasive sampling of soil groundwater, structural or
mechanical components, tanks or other conditions.
(d) Notwithstanding any other provisions of this Section 6.3,
the Purchaser and each other party to this Agreement shall cooperate in
implementing the provisions of this Section 6.3 so as not to prevent or
interfere with the compliance with Section 6.1 hereof.
47
SECTION 6.4. HSR ACT FILINGS; CONSENTS.
(a) The Company, the Significant Stockholders and the
Purchaser shall, to the extent required by the HSR Act, as promptly as
practicable and in any event within ten (10) Business Days after the date of
this Agreement, file, or cause to be filed, (i) Notification and Report Forms
under the HSR Act with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") in connection with the Subject Transactions and (ii) any similar
notices or filings required to be made under any competition law or similar
statute or regulation of any foreign jurisdiction in connection with the Subject
Transactions, and will use their respective reasonable best efforts to respond
as promptly as practicable to all inquiries received from the FTC, the Antitrust
Division or any applicable foreign Government Entity for additional information
or documentation and to cause the waiting periods under the HSR Act (and any
competition law or similar statute or regulation of any foreign jurisdiction) to
terminate or expire at the earliest possible date or to obtain any necessary
consents or approvals from any such Government Entity. Each of the Company and
the Purchaser shall inform the other promptly of any communication made by or on
behalf of such party to, or received from, the FTC, the Antitrust Division or
any applicable foreign Government Entity and shall furnish to the other such
information and assistance as the other may reasonably request in connection
with its preparation of any filing, submission or other act that is necessary or
advisable under the HSR Act or similar foreign statute or regulation. The
parties hereto agree not to take any action or omit to take any action that will
have the effect of unreasonably delaying, impairing or impeding the receipt of
any required authorizations, consents, orders or approvals.
(b) The Company, the Significant Stockholders and the
Purchaser shall cooperate and use reasonable best efforts to obtain all
consents, approvals and agreements of, and to give and make all notices and
filings with, any Government Entities necessary to authorize, approve or permit
the consummation of the Subject Transactions. The Company, the Significant
Stockholders and the Purchaser shall cooperate and use reasonable best efforts
to obtain all other consents and approvals to the Subject Transactions,
including (i) the matters set forth on Schedule 3.6, Schedule 4.4 and Schedule
6.4, (ii) of any Person from whom consents and approvals are required under any
Contract to which the Company or any of its Subsidiaries is a party, and (iii)
the consents of any other third parties.
(c) Each party shall provide all necessary information,
documentation and communications to any Government Entities and other Persons
required to consummate the Subject Transactions. Each party shall cooperate with
the other in obtaining, as promptly as practicable, all approvals,
authorizations and clearances of Government Entities and other Persons required
to consummate the Subject Transactions. Each party hereto shall have the right
to review in advance, and to the extent practicable each will consult the other
on, in each case subject to Applicable Laws relating to the exchange of
information or other applicable confidentiality requirements, all the
information relating to the Significant Stockholders, the Company or its
Subsidiaries, the Purchaser or any of their respective Affiliates, as the case
may be, that appears in any filings or other submissions with, or other written
materials submitted to, any third party or Government Entity in connection with
Subject Transactions. The Company, the Significant Stockholders and the
Purchaser agree, subject to Applicable Laws relating to the exchange of
information or applicable confidentiality agreements, that they will keep the
other
48
apprised of the status of matters relating to completion of the Subject
Transactions, including promptly furnishing the other with copies of any notice
or other communications received by any of the Significant Stockholders, the
Company or any of its Subsidiaries, or the Purchaser, as the case may be, from
any third party or Government Entity with respect to the Subject Transactions,
including, without limitation, all notices of claims, suits and actions for
which any such party receives service of process.
(d) Notwithstanding anything contained in this Section 6.4,
neither the Company, its Subsidiaries, the Securityholders nor the Purchaser and
its direct or indirect equity owners shall be obligated to: sell or otherwise
dispose of, or hold separate (through the establishment of a trust or
otherwise), particular assets or categories of assets, or operations, of the
Company, its Subsidiaries, the Securityholders or the Purchaser or any of its
direct or indirect equity owners (as the case may be). The Purchaser covenants
that it will not, and will not permit any of its Affiliates to, acquire at any
time prior to the Closing Date any interest in any Person (or any assets of any
Person) that competes in any material respect in any relevant market with any of
the businesses conducted by the Company or any of its Subsidiaries on the date
hereof.
SECTION 6.5. FURTHER ASSURANCES.
(a) Upon the terms and subject to the conditions herein
provided, on and prior to the Closing Date, each of the Company, the Significant
Stockholders and the Purchaser shall use reasonable best efforts to take, or
cause to be taken, all actions or do, or cause to be done, all things or execute
any documents necessary, proper or advisable under Applicable Laws to consummate
and make effective the Subject Transactions, including without limitation in the
case of the Significant Stockholders terminating without further liability on
the part of the Company the agreements set forth on Exhibit I hereto.
(b) The Purchaser shall use reasonable best efforts to obtain
the Financing and the Equity Investment described in the Financing Documents in
order to consummate the Subject Transactions (including, without limitation,
borrowing the Interim Loans (as defined in, and subject to the terms of, the
Debt Financing Documents (as defined in Section 5.7 hereof)). The Company agrees
to provide, and will cause its Subsidiaries and its and their respective
officers, directors, agents, employees, financial advisors, counsel, accountants
and other representatives and Affiliates to provide, such cooperation as may be
reasonably requested by the Purchaser and approved by counsel for the Company
and the Stockholders (which approval shall not be unreasonably withheld or
delayed) in connection with the arrangement of the Financing, including without
limitation, participation in meetings, due diligence sessions, road shows, the
preparation of offering memoranda, private placement memoranda, prospectuses and
similar documents, the execution and delivery of any further commitment letters,
underwriting or placement agreements, pledge and security documents, other
definitive financing documents, or other requested certificates or documents,
including comfort letters of accountants and such other certificates or
documents as the Purchaser may reasonably request from time to time.
(c) In the event that at any time funds are not or have not
been made available pursuant to the Financing Documents so as to enable the
Purchaser to proceed with the Subject Transactions in a timely manner, the
Purchaser shall (i) use its reasonable best efforts to obtain alternative
funding in an amount at least equal to the amount to be provided pursuant to the
49
Financing Documents on terms and conditions substantially comparable to those
provided in the Financing Documents, or otherwise on terms reasonably acceptable
to the Purchaser, and (ii) shall continue to use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under Applicable Laws and regulations to
consummate the Subject Transactions.
(d) Following the date hereof, the Purchaser shall promptly
disclose to the Company any amendment or modification, or any termination or
cancellation of, the Financing, or any information that becomes known to the
Purchaser or its Affiliates and that makes it unlikely that the condition set
forth in Section 7.6 will be satisfied at the Closing. None of the Purchaser or
any of its Affiliates will knowingly attempt, directly or indirectly, to induce
or encourage the Finance Parties or other Persons not to fund any of the
financing provided for in the Financing Documents.
(e) Between the date hereof and the Closing Date each party
hereto will promptly notify the others in writing of any breach of any
representation, warranty, covenant or agreement of such party or the occurrence
of any event or condition that is reasonably likely to result in the failure of
the conditions of any party to consummate the Closing; provided, however, that
the Xxxxxx Stockholders shall have no such obligation with respect to any
information it might learn from or about Xxxxxx Brothers Inc. or any of the
Affiliates of Xxxxxx Brothers Inc. other than the Xxxxxx Stockholders.
SECTION 6.6. TRANSACTION EXPENSES; DEFEASANCE COSTS.
(a) Except as otherwise specifically provided in this
Agreement, (i) the Company shall bear all Company Transaction Expenses, (ii) the
Purchaser shall bear all Purchaser Transaction Expenses and (iii) each
Stockholder shall bear its respective fees, costs and expenses incurred by such
Stockholder relating to the Subject Transactions (whether incurred prior to or
after the date hereof), including fees and disbursements of counsel, financial
advisors, consultants, accountants, actuaries and other advisors, but in the
case of each Significant Stockholder only to the extent that such do not
constitute Company Transaction Expenses.
(b) Each Significant Stockholder shall submit to the Company
and the Purchaser, not later than the close of business, New York, New York
time, three (3) Business Days prior to the Closing Date, a schedule setting
forth all fees, costs and expenses that such Significant Stockholder shall have
incurred in connection with the Subject Transactions, and only such fees, costs
and expenses as are on such schedule shall constitute Company Transaction
Expenses. Each Stockholder shall indemnify and hold harmless the Purchaser, the
Company and its Subsidiaries for any and all such fees, costs and expenses
incurred by such Stockholder relating to the Subject Transactions (whether
incurred prior to or after the date hereof) to the extent that such do not
constitute Company Transaction Expenses.
(c) From the date hereof until the Closing Date, the Company
shall provide written notice to the Purchaser of the payment prior to the
Closing Date of any Company Transaction Expenses or Defeasance Costs, including
the amount thereof, promptly after the payment thereof; provided, however, that
the Company shall not be required to provide such
50
notice until the aggregate amount of all Company Transaction Expenses and
Defeasance Costs previously paid by the Company or any of its Subsidiaries
without notice to the Purchaser pursuant to this Section 6.6(c) equals or
exceeds (or after giving effect to any such payment would exceed) Twenty Five
Thousand Dollars ($25,000). The Significant Stockholders and the Company hereby
covenant and agree that the Company shall cause all of the Company Transaction
Expenses and Defeasance Costs (other than any Tender Offer Consideration and any
Consent Payments that may become payable after the Closing) to be paid on or
prior to the Closing Date, and the Significant Stockholders shall, severally in
proportion to their respective Pro Rata Portions, indemnify the Purchaser and
the Company for any Company Transaction Expenses or Defeasance Costs (other than
any Tender Offer Consideration and any Consent Payments that may become payable
after the Closing) that remain unpaid after the Closing.
SECTION 6.7. EMPLOYEE MATTERS.
(a) The Purchaser acknowledges that the employees of the
Company and its Subsidiaries immediately prior to the Closing will continue to
be employed by the Company or one of its Subsidiaries immediately after the time
of the Closing and that the terms of employment for such employees will be the
same terms and conditions as are applicable prior to the Closing, except to the
extent any such employee becomes a party to an Employment Agreement on the
Closing Date. The Purchaser shall cause the Company and its Subsidiaries to
provide, for a period of twelve (12) months after the Closing Date, welfare,
retirement and fringe benefits to all Persons employed by the Company or any
Subsidiary (and any of their eligible dependents as of the Closing Date)
(collectively, the "Company Employees") substantially similar, in each case, to
the benefits provided to the Company Employees under the Benefit Plans
immediately before the Closing Date, except to the extent otherwise provided in
any Employment Agreement to which any Company Employee becomes a party on the
Closing Date. Without limiting the generality of the foregoing, in the event
that the employment of any Company Employee is terminated by the Company or any
Subsidiary prior to the first anniversary of the Closing Date, such Company
Employee shall have the same rights to receive such benefits, including a
severance benefit (if one is payable under the circumstances), that are not less
than the rights to receive benefits that the Company Employee would have had in
connection with such Company Employee's termination of employment under the
terms of the Benefit Plans in which such Company Employee participated
immediately prior to the Closing. This Section 6.7(a) is intended to be for the
benefit of and to grant third party rights to the Company Employees whether or
not parties to this Agreement, and each of the Company Employees shall be
entitled to enforce the covenants contained herein.
(b) Effective as of the Closing Date, the Purchaser shall
cause the Company and its Subsidiaries to offer employment agreements to the
employees whose names are set forth on Schedule 6.7(b) hereof (the "Key
Employees"). The forms of such employment agreements are attached as part of
Exhibit E.
(c) Effective as of the Closing Date, the Purchaser shall
cause the Company and its Subsidiaries to offer employment agreements to Xxxxxxx
X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx. The forms of such employment agreements are
attached hereto as part of Exhibit E.
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(d) Subject to Section 6.7(a) and the terms of any Employment
Agreement (with respect to any Company Employee who becomes a party thereto on
the Closing Date), the Company may amend or terminate any of the Benefit Plans
at any time following the Closing Date in accordance with their respective terms
and Applicable Law. In connection with any employee benefit plan (other than the
Benefit Plans) provided to the Company Employees after the Closing Date (i)
participants therein shall receive full credit for all service with the Company
and its Subsidiaries, including, but not limited to, recognition of service for
eligibility and vesting (but not for purposes of benefit accruals under any
pension or retirement plan), (ii) the Purchaser shall cause the Company to
waive, or cause its insurance carriers to waive, all limitations as to
pre-existing and at-work conditions, if any, with respect to participation and
coverage requirements applicable to the employees under the Company's welfare
plans (except for limitations or waiting periods that are already in effect and
that have not been satisfied with respect to such employees under the Benefit
Plans), and (iii) participants therein shall receive credit for any co-payments
and deductibles paid by such employees under the Benefit Plans for the year in
which such participation commences.
(e) The Company shall promptly notify the Purchaser of any
pre-Closing communications it or any of its Affiliates, directors, officers,
employees, attorneys or other representatives receive from the Department of
Labor or the PBGC relating to the matters that are the subject of this Agreement
or any Ancillary Agreement and permit the Purchaser to review in advance any
proposed filing or written communication by the Company to the Department of
Labor or the PBGC. The Purchaser will provide the Company and the PBGC with all
documents and information required to respond to any inquiry from the Department
of Labor or the PBGC.
SECTION 6.8. INDEMNIFICATION OF DIRECTORS AND OFFICERS;
RELEASES.
(a) It is understood and agreed that the Company shall, to the
fullest extent permitted under the Delaware General Corporation Law and
regardless of whether the Closing occurs, indemnify, defend and hold harmless
the present and former officers, directors, employees and agents of the Company
and of the Company's Subsidiaries (each a "Company Indemnified Party" and
collectively the "Company Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, including without limitation,
liabilities arising out of or pertaining to acts or omissions (other than
illegal acts or fraud), by them in their capacities as such, whether commenced,
asserted or claimed before or after the Closing Date; provided, however, that no
indemnification shall be made to (i) any Company Indemnified Person to the
extent it is finally determined by a court of competent jurisdiction (after all
rights to appeal shall have expired) that such Company Indemnified Party did
not, with the respect to the matter subject to indemnification hereunder, act in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Company (or any Subsidiary thereof) or (ii) any
Securityholder or any of the officers, directors, employees, agents or
Affiliates of any Securityholder that, in any such case, is finally determined
by a court of competent jurisdiction (after all rights to appeal shall have
expired) to be in respect of any liabilities resulting from, relating to or
arising out of any Purchaser Indemnifiable Matter. If any indemnity is paid to
or for the benefit of any Company Indemnified Party pursuant to this Section
6.8(a) or otherwise, and it is later determined that such Company Indemnified
Party was not entitled to any part of
52
such indemnification, such Company Indemnified Party shall pay to the Company on
demand such part of such indemnification together with interest thereon at a
rate per annum equal to the Prime Rate from the date such indemnification was
paid to or for the benefit of such Company Indemnified Party until such
indemnification is repaid to the Company.
(b) In the event of any such claim, action, suit, proceeding
or investigation, (i) the Company shall pay the reasonable fees and expenses of
counsel selected by the Company Indemnified Parties, which counsel shall be
reasonably satisfactory to the Company, promptly as statements therefor are
received, and (ii) the Company will cooperate in the defense of any such matter;
provided, however, that the Company shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld or delayed); and provided, further, that the Company shall
not be obligated pursuant to this Section 6.8(b) to pay the fees and
disbursements of more than one counsel for all Company Indemnified Parties in
any single action except to the extent that, in the opinion of counsel for the
Company Indemnified Parties, two or more of such Company Indemnified Parties
have conflicting interests in the outcome of such action. For six years after
the Closing Date, the Company shall (x) maintain or obtain officers' and
directors' liability insurance, or purchase extension(s) of the discovery period
under the Company's existing policies for a total of six (6) years, covering the
Company Indemnified Parties who are currently covered by the Company's officers
and directors liability insurance policy with respect to matters existing or
occurring at or prior to the Closing Date on terms not less favorable than those
in effect on the date of this Agreement in terms of scope of coverage and
amounts (provided that in either such case the Company and the Representatives
will work together to obtain such insurance at the lowest possible cost); and
(y) not amend the Certificate of Incorporation or By-Laws of the Company if the
effect of doing so would be to reduce or narrow the scope of the Company's
obligations to indemnify the Company Indemnified Parties or to reduce or narrow
the scope of any exculpatory provision in favor of the Company Indemnified
Parties. This Section 6.8 shall survive the Closing Date. The Purchaser shall
cause the Company to comply with this Section 6.8 and to reimburse all expenses,
including reasonable attorney's fees and expenses, incurred by any Person to
enforce the obligations of the Purchaser and the Company under this Section 6.8.
This Section 6.8 is intended to be for the benefit of and to grant third party
rights to Company Indemnified Parties whether or not parties to this Agreement,
and each of the Company Indemnified Parties shall be entitled to enforce the
covenants contained herein.
(c) If the Company or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provision shall be made so that the
successors and assigns of the Company assume the obligations set forth in this
Section 6.8. Notwithstanding the foregoing, no transfer or assignment shall
release any Person from that Person's obligations as set forth in this Section
6.8.
SECTION 6.9. STOCK OPTIONS.
Prior to the Closing Date, the Company shall comply with the
terms of each Option, subject to the terms of this Agreement. To the extent any
Options are exercised in whole or in part prior to the Closing, the Company
shall cause the exercising holder to execute a joinder
53
to this Agreement, in the form of Exhibit F, to become a Stockholder hereunder
with respect to all of the shares of Common Stock issuable with respect to such
Option. Prior to the Closing Date, the Company shall cause each Optionholder who
has not exercised such Optionholder's Options to enter into an Option
Termination Agreement. At the Closing, each Option then outstanding and
unexercised shall be cancelled and terminated in exchange for the cash payment
to the applicable holder as provided in Sections 2.1 and 2.2, and the Option
Plans shall be terminated.
SECTION 6.10. CUSTODY OF SHARE CERTIFICATES.
Concurrently with the execution of this Agreement, each of the
Stockholders and the Company shall enter into a custody agreement, in the form
attached hereto as Exhibit L (the "Custody Agreement"), with Xxxxxx X. Xxxxxx
(the "Custodian") and each of the Stockholders shall deliver to the Custodian
certificate(s) with appropriate transfer stamps, if any, affixed thereto,
representing the shares of Common Stock owned by such Stockholder with
appropriate stock powers duly endorsed in blank or accompanied by other duly
executed instruments of transfer. As soon as practicable after the date hereof,
but in any event no less than three (3) Business Days prior to the Closing Date,
the Company shall, or shall cause each Optionholder to, deliver to the Custodian
all Option Termination Agreements and any other agreements pertaining to the
Options held by the Optionholders accompanied by other duly executed instruments
of transfer as the Custodian may reasonably require. The Custodian will hold
such certificates evidencing the shares of Common Stock and Option Termination
Agreements in accordance with the terms of the Custody Agreement until the
Closing or the termination of this Agreement.
SECTION 6.11. NOTES TENDER OFFER.
(a) Promptly after the date of this Agreement and in any event
not later than five (5) Business Days after the date hereof, the Company will
commence (i) a cash tender offer (the "9 5/8% Notes Tender Offer") in respect of
all of the outstanding 9 5/8% Notes and (ii) a cash tender offer (the "9 1/4%
Notes Tender Offer" and, together with the 9 5/8 Notes Tender Offer, the "Tender
Offers") in respect of all of the outstanding 9 1/4% Notes. The aggregate
consideration payable to each holder of 9 5/8% Notes pursuant to the 9 5/8%
Notes Tender Offer and each holder of 9 1/4% Notes pursuant to the 9 1/4% Notes
Tender Offer, in respect of Notes validly tendered and not validly withdrawn
prior to the relevant expiration date of the relevant Tender Offer, shall be an
amount in cash (the "Tender Offer Consideration") to be mutually agreed upon by
the Purchaser and the Representatives within four (4) Business Days after the
date of this Agreement. Such Tender Offer Consideration may be increased from
time to time by the Company at any time from that set forth in the respective
drafts of the Offer to Purchase delivered to the Purchaser concurrent with the
execution of this Agreement. Each Tender Offer shall be made pursuant to the
relevant Offer to Purchase.
(b) As part of each of the Tender Offers, the Company shall
solicit the consent of the holders of the respective series of Notes to certain
amendments, including the elimination of the covenants set forth on Schedule
6.11 (the "Proposed Amendments"), to the respective indentures governing such
series of Notes as described in the respective Offers to Purchase (the "Notes
Consents"), and shall offer to pay an amount in cash (the "Consent Payment") to
be mutually agreed upon by the Purchaser and the Representatives within four (4)
Business Days
54
after the date of this Agreement (which amount shall not be less than the
amounts set forth in the respective drafts of the Offer to Purchase delivered to
the Purchaser concurrent with the execution of this Agreement), as such amount
may be increased by the Company from time to time, to each holder of a Note who
is entitled to vote on the Proposed Amendments and who validly consents to the
Proposed Amendments prior to the tenth (10th) day after the commencement of the
relevant Tender Offer (as such date may be extended, provided that the consent
of the Purchaser (which shall not be unreasonably delayed or withheld) is
required to extend more than five business days), the "Consent Date"). The
Company represents that the Proposed Amendments do not require the consent of
the holders of more than a majority of the outstanding principal amount of the 9
5/8% Notes or the 9 1/4% Notes, respectively, entitled to vote thereon and that,
to the Knowledge of the Company, the aggregate principal amount of the 9 5/8%
Notes and the 9 1/4% Notes not entitled to vote thereon does not exceed $800,000
and $3,184,000, respectively.
(c) The Company's obligation pursuant to each Tender Offer to
accept for payment and pay for any of the Notes tendered pursuant to such Tender
Offer shall be subject to the following conditions: (i) the consummation of the
Closing and (ii) such other conditions as are customary or appropriate for
transactions similar to the Tender Offers. Subject to the terms and conditions
of the Tender Offers, the Company agrees to accept for payment and to pay for
(at the times specified in the relevant Offer to Purchase) all Notes validly
tendered and not validly withdrawn. The Company will not waive any of the
conditions to either Tender Offer without the consent of the Purchaser, which
consent shall not be unreasonably delayed or withheld.
(d) The Company shall, as promptly as practicable after the
date of this Agreement, (i) complete the preparation of the Offers to Purchase,
together with related letters of transmittal and similar ancillary agreements
(such documents, together with all supplements and amendments thereto, being
referred to herein collectively as the "Tender Offer Documents"), relating to
each Tender Offer and (ii) disseminate to the record holders of the 9 5/8% Notes
and 9 1/4% Notes and, to the extent known by the Company, the beneficial owners
thereof (collectively, the "Noteholders"), the Tender Offer Documents relating
to the applicable Tender Offer; provided, however, that prior to the
dissemination thereof, the Company shall consult with the Purchaser with respect
to all of the Tender Offer Documents and shall afford the Purchaser reasonable
opportunity to comment thereon. The Tender Offer Documents will comply with all
Applicable Laws and the Company shall make all filings or obtain all consents
required under Applicable Law with respect thereto. The Purchaser shall provide
the Company with any information for inclusion in the Tender Offer Documents
which may be required under Applicable Laws and which is reasonably requested by
the Company. If at any time prior to the acceptance of the 9 5/8% Notes or 9
1/4% Notes pursuant to the Tender Offers, any event should occur that is
required by Applicable Law to be set forth in an amendment of, or a supplement
to, any of the Tender Offer Documents, the Company will prepare and disseminate
such amendment or supplement; provided, however, that prior to such
dissemination, the Company shall consult with the Purchaser with respect to such
amendment or supplement and shall afford the Purchaser reasonable opportunity to
comment thereon. The Company will notify the Purchaser at least three (3)
Business Days prior to the mailing of any amendment or supplement to the Tender
Offer Documents to the Noteholders.
55
(e) With respect to each of the 9 5/8% Notes and 9 1/4% Notes,
at such time as the Company receives Note Consents from Noteholders holding at
least a majority of the aggregate principal amount of each such series entitled
to vote thereon, the Company agrees to execute, and to cause all of the
guarantors that are a party to the indenture governing such notes (the
"Applicable Indenture") to execute, and will use reasonable best efforts to
cause the trustee under the Applicable Indenture to execute, a supplemental
indenture (a "Supplemental Indenture") in order to give effect to the applicable
Proposed Amendments; provided, however, that notwithstanding the fact that any
Supplemental Indenture will become effective upon such execution, the Proposed
Amendments set forth therein will not become operative unless and until all
conditions to such Tender Offer have been satisfied or waived by the Company and
the Company accepts on the Closing Date the 9 5/8% Notes or 9 1/4% Notes, as
applicable, (and related Notes Consents) validly tendered and not theretofore
validly withdrawn for purchase and payment pursuant to such Tender Offer. In
such event, the parties hereto agree, and the Tender Offer Documents will
provide, that the Proposed Amendments will be deemed operative as of immediately
prior to such acceptance for payment on the Closing Date, and the Company will
thereafter be obligated to pay all Tender Offer Consideration and Consent
Payments in accordance with the terms of the relevant Offer to Purchase.
(f) If at any time prior to the Closing Date any information
should be discovered by any party hereto, which should be set forth in an
amendment or supplement to any Tender Offer Documents mailed to any Noteholder
so that such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties hereto
and, to the extent required by Applicable Law, the Company shall promptly
prepare an appropriate amendment or supplement describing such information, and,
if required, file such amendment or supplement with the SEC or disseminate such
amendment or supplement to the applicable Noteholders.
(g) If the Notes Consent Condition shall not have been
satisfied by the Closing Date with respect to either or both of the 9 5/8% Notes
or the 9 1/4% Notes, then, at the Purchaser's election and provided the
Purchaser complies with subsection (h) of this Section 6.11, on the Closing Date
the Company (i) shall irrevocably deposit with the applicable trustee the amount
required to satisfy the applicable "covenant defeasance" condition of the 9 5/8%
Notes or the 9 1/4% Notes, as applicable, and (ii) shall comply with all other
conditions to a "covenant defeasance" that are capable of being satisfied by the
Closing Date (a "Note Defeasance").
(h) The Purchaser shall take any and all necessary action to
provide, or cause to be provided, to the Company at the Closing funds in an
amount equal to the Closing Date Indebtedness attributable to the 9 5/8% Notes
or 9 1/4% Notes, as applicable, validly tendered and not theretofore validly
withdrawn pursuant to the relevant Tender Offer, which funds shall be used by
the Company, together with other funds available to the Company, to consummate
the Tender Offers and/or any required Note Defeasance on the Closing Date,
provided that the conditions to the consummation of the Closing have been
satisfied or waived.
56
(i) Each of the Significant Stockholders hereby agree to
tender all of the Notes held by them in the Tender Offers and to cause each of
their respective Affiliates (provided that the Xxxxxx Stockholders will not be
so obligated with respect to Xxxxxx Brothers Inc. or any Affiliates of Xxxxxx
Brothers Inc. other than the Xxxxxx Stockholders) to tender all of the Notes
held by them in the Tender Offers.
SECTION 6.12. ESTOPPEL CERTIFICATES.
The Company shall exercise commercially reasonable efforts to
deliver to the Purchaser at the Closing an estoppel certificate, executed by
each landlord under the Real Property Leases and substantially in the form
attached hereto as Exhibit N or in the form required under the applicable Real
Property Lease. To the extent an estoppel certificate is delivered to the
Purchaser with respect to a Real Property Lease, any representations and
warranties of the Company or its Subsidiaries hereunder relating to such Real
Property Lease that are specifically set forth in the applicable estoppel
certificate shall no longer be required to be made by the Company or its
Subsidiaries hereunder with respect to the matters covered by such estoppel
certificate and such representations and warranties shall, to such extent (but
only to such extent), be deemed to be null and void and of no force or effect.
If obtained, such estoppel certificates shall not disclose any information
relating to the applicable Real Property Lease which would, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 6.13. CERTAIN TAX MATTERS.
(a) To the extent permitted by Applicable Law, the parties
hereto agree to cause state and local Tax periods of the Company and its
Subsidiaries to be closed at the close of business on the Closing Date. The
Purchaser agrees that, as of the day following the Closing Date, the Company
shall become a member of the "affiliated group" of corporations of which the
Purchaser is a member, as defined in Code Section 1504(a) (the "Purchaser Tax
Group"), and shall be included in a federal consolidated income Tax Return that
will be filed by such affiliated group for a taxable period that will include
the day following the Closing Date. The Purchaser shall timely file or cause to
be timely filed when due all Tax Returns of the Company and its Subsidiaries
that are required to be filed after the Closing Date (including, without
limitation, a federal income Tax Return for the Company and its Subsidiaries for
the taxable period ending on the Closing Date) and the Purchaser shall pay or
cause to be paid all Taxes shown as due on such Tax Returns (subject in all
cases to Section 9.3). All Straddle Period Tax Returns and all Tax Returns
relating to periods ending on or before the Closing Date that are prepared by
the Purchaser pursuant to this Section 6.13 shall be prepared in a manner
consistent with past practice. The Purchaser will not permit the Company and its
Subsidiaries to treat the Subject Transactions as being properly allocable to
the portion of the Closing Date occurring after the Closing or as occurring
after the Closing Date pursuant to the "Next Day Rule" under Treasury
Regulations Section 1.1502-76(b)(1)(ii)(B). The Tax Returns described in the
second preceding sentence shall be submitted to the Representatives no later
than fifteen (15) Business Days prior to the due date and filing thereof for
review and approval of the Representatives. The Representatives shall respond in
writing to the Purchaser with any comments within five (5) Business Days of
receiving the draft Tax Return(s). The Representatives and the Purchaser shall
consult with each other and attempt in good faith to resolve any issues arising
as a result of such Tax Returns and, if they are unable to do so, the disputed
items shall be resolved (within a
57
reasonable time, taking into account the deadline for filing such Tax Return) by
an internationally recognized independent accounting firm chosen by and mutually
agreeable to the Purchaser and the Representatives. Upon resolution of all such
items, the relevant Tax Return shall be timely filed on that basis. All Straddle
Period Tax Returns and all Tax Returns relating to periods ending on or before
the Closing Date that are prepared by the Purchaser pursuant to this Section
6.13 shall be prepared and filed as soon as practicable (but in no event after
the due date of such Tax Return, including any extension thereof). The Purchaser
shall, upon the Representatives' written request, prepare and prosecute a claim
or suit for a refund of or reduction in Taxes for any taxable period, provided
that the Significant Stockholders shall pay all reasonable expenses in
connection with the preparation and prosecution of such claim or suit. The
Purchaser shall not file any amended Tax Return for any period of the Company
and its Subsidiaries ending on or prior to the Closing Date or for the Straddle
Period without the prior written consent of the Representatives (which consent
shall not be unreasonably delayed or withheld).
(b) The Purchaser, the Stockholders, the Company and each of
their respective Subsidiaries shall reasonably cooperate, and shall cause their
respective Affiliates and such parties' respective directors, officers,
employees, agents, auditors and representatives reasonably to cooperate, in
preparing and filing all Tax Returns and in resolving all disputes and audits
with respect to all taxable periods relating to Taxes, including maintaining and
making available to each other all records necessary in connection with Taxes.
(c) For purposes of this Section 6.13, whenever it is
necessary to determine the liability for Taxes of the Company and its
Subsidiaries for a Straddle Period, the determination of the Taxes for the
portion of the Straddle Period ending on and including, and the portion of the
Straddle Period beginning after, the Closing Date shall be determined by
assuming that the Straddle Period consisted of two taxable years or periods, one
which ended at the close of the Closing Date and the other which began at the
beginning of the day following the Closing Date, and items of income, gain,
deduction, loss or credit, and state and local apportionment factors of the
Company and its Subsidiaries for the Straddle Period shall be allocated between
such two taxable years or periods on a "closing of the books basis" by assuming
that the books of the Company and its Subsidiaries were closed at the end of the
Closing Date. However, (A) exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation and (B)
periodic taxes such real and personal property taxes shall be apportioned
ratably between such periods on a daily basis.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO CLOSE
The obligations of the Purchaser under this Agreement to
consummate the Closing are subject to the satisfaction on or prior to the
Closing of the following conditions, any one or more of which may be waived by
it to the extent permitted by law:
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SECTION 7.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in Article III
and Article IV of this Agreement or any Ancillary Agreement or any schedule,
certificate or other document delivered on the Closing Date by the Company or
any of the Stockholders pursuant hereto shall be true and correct on the date
hereof and as of the Closing Date, except that any such representations and
warranties that expressly relate to a specified date shall be true and correct
only as of such date, in each case, except where the failure to be so true and
correct (without giving effect to any limitation or qualification as to
"materiality" (including the word "material") or "Material Adverse Effect" or
words of similar import set forth herein or therein) would not, individually or
in the aggregate, have a Material Adverse Effect. The Company and each of the
Stockholders shall have delivered to the Purchaser a certificate to the
foregoing effect (in respect of the Company's or such Stockholder's
representations and warranties), dated the Closing Date and signed by the
Company or such Stockholder.
SECTION 7.2. COMPLIANCE WITH COVENANTS.
The Company and the Stockholders shall have complied in all
material respects with, or performed in all material respects in accordance with
the terms of, their respective covenants contained in this Agreement or any
Ancillary Agreement or any schedule, certificate or other document delivered on
the Closing Date by the Company or any of the Stockholders pursuant hereto to be
complied with or performed prior to the Closing Date. The Company and each of
the Stockholders shall have delivered to the Purchaser a certificate to the
foregoing effect (in respect of the Company's or such Stockholder's covenants),
dated the Closing Date and signed by the Company or such Stockholder.
SECTION 7.3. GOVERNMENTAL AND REGULATORY CONSENTS AND
APPROVALS.
(a) All Permits required by the Purchaser, the Company or any
of its Subsidiaries, or any of the Stockholders, from the Government Entities
listed on Exhibit G hereto shall have been obtained and shall be in full force
and effect.
(b) The waiting period prescribed by the HSR Act or any
competition law or similar statute or regulation of any foreign jurisdiction
shall have terminated or expired, and any other governmental or regulatory
notices required in order to consummate the Subject Transactions shall have been
made (and any applicable waiting periods shall have expired or been terminated
in accordance with Applicable Law) and all governmental approvals required shall
have been received (and no such approvals shall contain any materially
burdensome requirement on the Company or the Purchaser or its Affiliates).
Notwithstanding the foregoing, the condition set forth in this Section 7.3(b)
shall be deemed satisfied with respect to Brazil upon the making by the Company
of any required filings with Brazilian Government Entities.
SECTION 7.4. INJUNCTION.
There shall not be in effect any judgment, order, injunction
or decree of any court of competent jurisdiction enjoining the consummation of
the Subject Transactions.
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SECTION 7.5. MATERIALITY OF CONDITIONS.
Notwithstanding anything contained herein, no condition
involving performance of agreements by the Company or any of the Stockholders
(other than those in Article II) as of the Closing shall be deemed not
fulfilled, and the Purchaser shall not be entitled to fail to consummate the
Subject Transactions or terminate this Agreement on such basis, if the respects
in which such agreements have not been performed, in the aggregate, would not
have a Material Adverse Effect.
SECTION 7.6. FINANCING.
All of the conditions to the Finance Parties' obligations to
provide the financing described in the Financing Documents shall be satisfied or
waived by the party entitled to waive the same, other than those conditions
described in the following paragraphs of Exhibit D to the Commitment Letter
included in the Debt Financing Documents, in each case to the extent such
paragraph is applicable to the Purchaser and the other entities that are, as of
immediately prior to the Closing, Affiliates of the Purchaser: paragraph (a);
paragraph (b); paragraph (c), but only in the event that the failure to satisfy
such paragraph (c) is the result of a breach by Purchaser or any of its
foregoing Affiliates of its obligations hereunder, under the Financing Documents
or under any Ancillary Agreement; paragraph (f); paragraph (g)(ii), but only in
the event that the failure to satisfy such paragraph (g)(ii) is the result of a
breach by Purchaser or any of its foregoing Affiliates of its obligations
hereunder, under the Financing Documents or under any Ancillary Agreement;
paragraph (i), but only in the event that the failure to satisfy such paragraph
(i) is the result of a breach by Purchaser or any of its foregoing Affiliates of
its obligations hereunder, under the Financing Documents or under any Ancillary
Agreement; paragraph (j); paragraph (k); paragraph (l); and paragraph (n).
SECTION 7.7. NOTES SATISFACTION CONDITION; INDEBTEDNESS AND
ENCUMBRANCES.
(a) The Note Satisfaction Condition shall have been satisfied.
(b) The Company shall have delivered to the Purchaser evidence
reasonably satisfactory to the Purchaser and the Finance Parties demonstrating
that except for (i) such of the 9 5/8% Notes and/or 9 1/4% Notes as shall remain
outstanding after completion of the Tender Offers, (ii) the Financing or (iii)
as otherwise set forth in Schedule 7.7, neither the Company nor any of its
Subsidiaries will have any Indebtedness outstanding upon consummation of the
Subject Transactions and all Encumbrances on the Assets of the Company or any of
its Subsidiaries securing payment for any Indebtedness will be terminated prior
to or upon the consummation of the Subject Transactions.
SECTION 7.8. DOCUMENTS.
(a) The Purchaser shall have received (i) certificates, with
appropriate transfer stamps, if any, affixed thereto, evidencing all of the
shares of Common Stock duly endorsed for transfer to the Purchaser with
appropriate stock powers duly endorsed in blank or accompanied by other duly
executed instruments of transfer, in each case transferring title to such shares
of Common Stock to the Purchaser free and clear of all Encumbrances, (ii) Option
Termination
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Agreements duly executed by each Optionholder outstanding on the Closing Date
and (iii) counterparts of each of the Ancillary Agreements (other than the
Employment Agreements) executed by each of the Stockholders and such other
Persons party thereto (other than the Purchaser).
(b) All documents and instruments of transfer delivered to the
Purchaser at the Closing shall be in form and substance reasonably satisfactory
to the Purchaser and its counsel, and shall be legally sufficient to consummate
the Subject Transactions.
(c) The Purchaser shall have received a copy of (i) the
certificates of incorporation, as amended (or similar organizational documents),
of the Company and each Subsidiary, certified by the secretary of state (or
other relevant authority) of the relevant jurisdiction, as of a date not
unreasonably prior to the Closing Date and accompanied by a certificate of the
Secretary or Assistant Secretary of each such entity, dated as of the Closing
Date, stating that no amendments have been made to such certificate of
incorporation (or similar document) since such date, and (ii) the by-laws (or
similar organizational documents) of the Company and of each Subsidiary,
certified by the Secretary or Assistant Secretary of each such entity.
(d) The Purchaser shall have received good standing
certificates for the Company and for each Subsidiary from the secretary of state
(or other relevant authority) of the jurisdiction in which each such entity is
incorporated or organized and from the secretary of state in each other
jurisdiction in which any of the Company or any Subsidiary is qualified to do
business as a foreign corporation, in each case dated as of a date not
unreasonably prior to the Closing Date.
SECTION 7.9. OPINIONS OF COUNSEL TO THE COMPANY.
The Purchaser shall have been furnished with an opinion of
Xxxxxxx Xxxx & Xxxxxxxxx LLP, external counsel to the Company, Xxxxxx X. Xxxxxx,
Esq., General Counsel of the Company, Xxxx Xxxxxx, Esq., Vice President and
Associate General Counsel of Xxxxxx Brothers Inc., and Xxxxxxx Xxxx & Xxxxxxxxx
LLP, counsel to The Xxxxxxx X. Xxxxxxxx 2004 Grantor Retained Annuity Trust,
each dated as of the Closing Date, covering the matters set forth on Exhibit
H-I, Exhibit H-II, Exhibit H-III, and Exhibit H-IV respectively, and which
provide that the Finance Parties (and their respective successors and assigns)
are entitled to rely upon such opinions.
SECTION 7.10. TERMINATION OF CERTAIN AFFILIATE AGREEMENTS.
Each of the agreements listed on Exhibit I hereto shall have
been terminated and all costs, fees and expenses of the Company and its
Subsidiaries incurred in connection therewith and not paid prior to the
determination of the Closing Date Cash Balance shall be included in the
determination of Company Transaction Expenses to be deducted from the Cash
Purchase Price on the Closing Date.
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SECTION 7.11. NO PLAN TERMINATION.
No Pension Plan that is sponsored by, or with respect to which
a contribution is required of, the Company, any Subsidiary or any ERISA
Affiliate shall, at the initiation of the PBGC or otherwise, have been
terminated pursuant to Title IV of ERISA, no actions or proceedings for the
termination of any such Pension Plan shall have been initiated or be pending and
neither the Company, any subsidiary nor any ERISA Affiliate shall have
authorized or agreed to any such termination.
SECTION 7.12. CONFIRMATION LETTERS.
The Company shall have delivered to the Purchaser evidence
reasonably satisfactory to the Purchaser demonstrating that all Company
Transaction Expenses and Defeasance Costs will be paid in full concurrent with
the Closing (or arrangements for the payment thereof reasonably satisfactory to
the Purchaser shall have been made) and that each of the Persons to whom Company
Transaction Expenses or Defeasance Costs are to be paid shall have delivered to
the Company written confirmation (in form and substance reasonably satisfactory
to the Purchaser) that all amounts owed to such Persons for Company Transaction
Expenses and Defeasance Costs have been paid in full or can be paid concurrent
with the Closing and confirming that none of the Company, any of its
Subsidiaries and the Purchaser will have any further liability to such Person
for any Company Transaction Expenses or Defeasance Costs (including any such
Company Transactions Expenses or Defeasance Costs that may be incurred after the
Closing) other than for services rendered after the Closing at the request of
the Purchaser, the Company or any of its Subsidiaries made at any time after the
Closing.
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE STOCKHOLDERS TO CLOSE
The obligations of each Stockholder under this Agreement to
consummate the Closing are subject to the satisfaction on or prior to the
Closing of the following conditions, any one or more of which may be waived by
the Significant Stockholders, acting on behalf of all of the Stockholders, to
the extent permitted by law:
SECTION 8.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in Article V of
this Agreement or any Ancillary Agreement or any schedule, certificate or other
document delivered on the Closing Date by the Purchaser pursuant hereto shall be
true and correct on the date hereof and as of the Closing Date, except that any
such representations and warranties that expressly relate to a specified date
shall be true and correct only as of such date, in each case, except where the
failure to be so true and correct (without giving effect to any limitation or
qualification as to "materiality" (including the word "material") or "Purchaser
Material Adverse Effect" or words of similar import set forth herein or therein)
would not, individually or in the aggregate, have a Purchaser Material Adverse
Effect.
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SECTION 8.2. COMPLIANCE WITH COVENANTS.
The Purchaser shall have complied in all material respects
with, or performed in all material respects in accordance with the terms of, its
covenants contained in this Agreement or any Ancillary Agreement or any
schedule, certificate or other document delivered on the Closing Date by the
Purchaser pursuant hereto to be complied with or performed prior to the Closing
Date. The Purchaser shall have delivered to the Representatives a certificate to
the foregoing effect, dated the Closing Date and signed by a senior executive
officer of the Purchaser.
SECTION 8.3. GOVERNMENTAL AND REGULATORY CONSENTS AND
APPROVALS.
(a) All Permits required by the Purchaser, the Company or any
of its Subsidiaries, or any of the Stockholders, from the Government Entities
listed on Exhibit G hereto shall have been obtained and shall be in full force
and effect.
(b) The waiting period prescribed by the HSR Act or any
competition law or similar statute or regulation of any foreign jurisdiction
shall have terminated or expired, and any other governmental or regulatory
notices required in order to consummate the Subject Transactions shall have been
made (and any applicable waiting periods shall have expired or been terminated
in accordance with Applicable Law) and all governmental approvals required shall
have been received (and no such approvals shall contain any materially
burdensome requirement on any Securityholder). Notwithstanding the foregoing,
the condition set forth in this Section 8.3(b) shall be deemed satisfied with
respect to Brazil upon the making by the Purchaser of any required filings with
Brazilian Government Entities.
SECTION 8.4. CASH PURCHASE PRICE.
Subject to the satisfaction of the conditions specified in
Sections 2.1 and 2.3 and in Article VIII, the Purchaser shall have paid to each
Stockholder and each Optionholder an amount in cash equal to such Person's
portion of the Cash Purchase Price as provided in Sections 2.1 and 2.2 of this
Agreement and shall have paid the Indemnity Escrow Fund to the Indemnity Escrow
Agent.
SECTION 8.5. INJUNCTION.
There shall not be in effect any judgment, order, injunction,
or decree of any court of competent jurisdiction, enjoining the consummation of
the Subject Transactions.
SECTION 8.6. MATERIALITY OF CONDITIONS.
Notwithstanding anything contained herein, no condition
involving performance of agreements by the Purchaser (other than those in
Article II) as of the Closing shall be deemed not fulfilled, and none of the
Stockholders shall be entitled to fail to consummate the Subject Transactions or
terminate this Agreement on such basis, if the respects in which such agreements
have not been performed, in the aggregate, would not have a Purchaser Material
Adverse Effect.
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SECTION 8.7. DOCUMENTS.
(a) The Representatives shall have received counterparts of
each of the Ancillary Agreements (other than the Employment Agreements) executed
by the Purchaser and the Purchaser shall have executed and delivered the
Defeasance Cost Tax Note.
(b) All documents and instruments of transfer delivered to the
Stockholders at the Closing shall be in form and substance reasonably
satisfactory to the Representatives and their counsel, and shall be legally
sufficient to consummate the Subject Transactions.
(c) The Representatives shall have received a copy of (i) the
certificate of incorporation, as amended (or similar organizational document),
of the Purchaser, certified by the secretary of state (or other relevant
authority) of the relevant jurisdiction, as of a date not unreasonably prior to
the Closing Date and accompanied by a certificate of the Secretary or Assistant
Secretary of such entity, dated as of the Closing Date, stating that no
amendments have been made to such certificate of incorporation (or similar
document) since such date, and (ii) the by-laws (or similar organizational
document) of such entity, certified by the Secretary or Assistant Secretary of
such entity.
(d) The Representatives shall have received good standing
certificates for the Purchaser from the secretary of state (or other relevant
authority) of the jurisdiction in which such entity is incorporated or organized
and from the secretary of state in each other jurisdiction in which such entity
is qualified to do business as a foreign corporation, in each case dated as of a
date not unreasonably prior to the Closing Date.
SECTION 8.8. OPINION OF COUNSEL TO THE PURCHASER.
The Representatives shall have been furnished with an opinion
of Xxxxxx, Xxxx & Xxxxxxxx LLP, dated as of the Closing Date, covering the
matters set forth on Exhibit K hereto.
ARTICLE IX.
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION
SECTION 9.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS.
All representations, warranties, covenants and agreements set
forth in this Agreement, the Ancillary Agreements or any schedule, certificate
or other document delivered pursuant hereto or thereto or in connection with the
Subject Transactions shall survive the Closing and the consummation of the
Subject Transactions. Notwithstanding the foregoing, no Person shall be entitled
to recover for any Losses pursuant to this Agreement unless written notice of a
claim therefor (describing in reasonable detail the facts and circumstances with
respect to the subject matter of such claim) is delivered to the applicable
party on or before the Applicable Limitation Date with respect to such claim,
irrespective of whether the subject matter of such claim shall have occurred
before or after the Closing Date. For purposes of this Agreement, the term
"Applicable Limitation Date" shall mean the date that is eighteen (18) months
after the Closing Date; provided, however, that (i) with respect to any Loss
arising from
64
(A) a breach of the representations and warranties of the Company, the
Stockholders or the Purchaser (as applicable) set forth in Sections 3.1(a),
3.1(c), 3.2, 3.3, 3.21, 4.1, 4.2, 4.3, 4.4. 4.5, 4.6, 5.1, 5.2, 5.3, 5.4, 5.5,
5.6, 5.8, 5.9 and 5.10 (collectively, the "Fundamental Representations and
Warranties") or (B) fraud or an intentional misrepresentation or an intentional
breach or (C) a breach after the Closing Date of any covenant or agreement that
by its terms requires compliance or performance at or after the Closing Date,
the Applicable Limitation Date shall be the date of expiration of the applicable
statute of limitations with respect thereto; (ii) with respect to any Loss
arising from a breach of the representations and warranties set forth in Section
3.14, the Applicable Limitation Date shall be thirty (30) days after the date of
expiration of the statute of limitations for the assessment and collection of
the applicable Tax; and (iii) with respect to the indemnification obligations of
the Significant Stockholders under Section 9.2(a)(iii), the Applicable
Limitation Date shall be the date that is six years and six months after the
Closing Date.
Neither the Stockholders nor the Purchaser shall have any
liability whatsoever with respect to any such representations and warranties
unless a claim is made hereunder prior to the Applicable Limitation Date, in
which case such representation and warranty shall survive as to such claim until
such claim has been finally resolved.
SECTION 9.2. INDEMNIFICATION BY THE SIGNIFICANT STOCKHOLDERS
AND THE STOCKHOLDERS.
(a) If the Closing occurs, then subject to Section 9.1 the
Significant Stockholders shall save, defend, indemnify and hold harmless the
Purchaser and its Affiliates (including the Company and its Subsidiaries) and
their respective officers, directors, employees, attorneys and agents and the
successors and assigns of each of the foregoing (collectively, the "Purchaser
Indemnified Parties") from and against any and all losses, damages, liabilities,
claims, interest, awards, judgments, penalties, costs and expenses (including
attorneys' fees, costs and other out-of-pocket expenses incurred in
investigating, prosecuting, preparing for the prosecution or defense of or
defending the foregoing) (hereinafter collectively, "Losses"), asserted against,
incurred, sustained or suffered by any of the foregoing as a result of or
arising out of:
(i) any pre-Closing breach of any representation or
warranty made by the Company contained in this Agreement or any
Ancillary Agreement or any schedule, certificate or other document
delivered by the Company on the Closing Date pursuant hereto or
thereto;
(ii) any pre-Closing breach of any covenant or
agreement by the Company contained in this Agreement or any Ancillary
Agreement or any schedule, certificate or other document delivered by
the Company on the Closing Date pursuant hereto or thereto (including
as a result of the action or failure to act of the Company or any of
its Subsidiaries); and
(iii) any matter set forth on Schedule 9.2(a)(iii) to
this Agreement.
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(b) If the Closing occurs, then subject to Section 9.1, each
of the Stockholders shall, severally and not jointly, save, defend, indemnify
and hold harmless the Purchaser Indemnified Parties from and against any and all
Losses asserted against, incurred, sustained or suffered by any of the foregoing
as a result of or arising out of:
(i) any representation or warranty made by such
Stockholder contained in this Agreement or any Ancillary Agreement or
any schedule, certificate or other document delivered by such
Stockholder on the Closing Date pursuant hereto or thereto; and
(ii) any breach of any covenant or agreement by such
Stockholder contained in this Agreement or any Ancillary Agreement or
any schedule, certificate or other document delivered by such
Stockholder on the Closing Date pursuant hereto or thereto.
(c) In the case of any claim for indemnity pursuant to Section
9.2(a), the obligations of the Significant Stockholders shall be several and not
joint, which shall mean that a Significant Stockholder shall be liable only to
the extent of such Significant Stockholder's Pro Rata Portion of such Loss. The
Purchaser Indemnified Parties' remedy for any indemnification of Losses under
Section 9.2(b) above may be satisfied by proceeding only against the Stockholder
committing such breach and, in the case of any Significant Stockholder, the
Sub-Account (as defined in the Indemnity Escrow Agreement) of such Significant
Stockholder in accordance with the terms of the Indemnity Escrow Agreement.
SECTION 9.3. LIMITATIONS ON INDEMNIFICATION BY THE SIGNIFICANT
STOCKHOLDERS AND THE STOCKHOLDERS.
The indemnification provided for in Section 9.2 above is
subject to the following covenants and limitations:
(a) The aggregate amount of all payments made by any
Significant Stockholder in satisfaction of claims for indemnification pursuant
to Section 9.2(a) shall not exceed such Significant Stockholder's Pro Rata
Portion of the Significant Stockholders' Cap; provided, however, that the
Significant Stockholders' Cap shall not apply with respect to any Losses
resulting from or arising out of breaches of any Fundamental Representations and
Warranties and such Losses shall not be limited by or count towards satisfaction
of the Significant Stockholders' Cap; and provided, further, that the aggregate
amount of all payments made by any Significant Stockholder or Stockholder in
satisfaction of claims for indemnification pursuant to Sections 9.2(a) and
9.2(b) (including with respect to any Losses resulting from breaches of any
Fundamental Representations and Warranties) shall not exceed such Significant
Stockholder's or Stockholder's Pro Rata Portion of the sum of the Cash Purchase
Price and the Defeasance Costs Tax Note paid to it pursuant to Section 2.2 or
2.3.
(b) The Significant Stockholders shall not be liable to
indemnify any Purchaser Indemnified Parties pursuant to Section 9.2(a) unless
and until the Purchaser Indemnified Parties have collectively suffered aggregate
Losses otherwise indemnifiable pursuant to such Section 9.2(a) in excess of a
Five Million Dollar ($5,000,000) aggregate
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deductible (the "Deductible") (at which point, subject to the other limitations
herein, the Significant Stockholders will be liable to the Purchaser Indemnified
Parties for their respective Pro Rata Portions of all Losses in excess of the
Deductible); provided, however, that the Deductible shall not apply with respect
to (i) any Losses resulting from or arising out of breaches of any Fundamental
Representations and Warranties; (ii) the representations and warranties set
forth in Section 3.14; and (iii) the indemnification obligation of the
Significant Stockholders under Section 9.2(a)(iii); and provided, further, that
where the aggregate amount of Losses (other than Losses related to Section
9.2(a)(iii)) arising out of a claim or series of related claims of a breach of a
representation, warranty, covenant or agreement does not exceed Ten Thousand
Dollars ($10,000), such claim or series of related claims shall not count as
Losses for purposes of Section 9.2(a) hereof.
(c) Any payment made by a Significant Stockholder or a
Stockholder to a Purchaser Indemnified Party pursuant to Section 9.2 in respect
of any indemnifiable event shall be net of any insurance or other proceeds
recovered by such Purchaser Indemnified Party in respect of such claim. In the
event that an insurance or other recovery is received by a Purchaser Indemnified
Party with respect to any Loss for which a Purchaser Indemnified Party has
previously been indemnified hereunder, then the Purchaser Indemnified Parties
shall promptly make a refund to the relevant Significant Stockholder (or the
Indemnity Escrow Agent) or the relevant Stockholder, as applicable, in an amount
equal to the lesser of (i) the total amount of such insurance recovery (net of
collection expenses), and (ii) the amount previously paid by the Significant
Stockholder or Stockholder as indemnification for such Loss.
(d) If the indemnification obligation under Section 9.2 arises
in respect of any indemnifiable event (i) for which a Purchaser Indemnified
Party receives indemnification from the Significant Stockholders or the
Stockholders, as applicable, and (ii) which results in any Tax benefit to such
Purchaser Indemnified Party for any taxable period (or portion thereof)
beginning and ending after the Closing Date which would not, but for such
indemnifiable event, be available, such Purchaser Indemnified Party shall pay,
or shall cause to be paid, to the relevant Significant Stockholders or
Stockholders (or the Indemnity Escrow Agent) an amount equal to the actual Tax
savings produced by such Tax benefit reduced by the amount of any Tax detriment
to such Purchaser Indemnified Party as a result of the receipt of such
indemnification. Tax benefits and detriments shall be taken into account as and
when actually realized. The amount of any such Tax saving for any taxable period
shall be the amount of the reduction in Taxes payable to a Tax authority by such
Purchaser Indemnified Party with respect to such Tax period (net of any Tax
detriment resulting from the receipt of the indemnity payment) as compared to
the Taxes that would have been payable to a Tax authority by such Purchaser
Indemnified Party with respect to such Tax period in the absence of such Tax
benefit.
(e) The Significant Stockholders shall not be obligated to
indemnify any Purchaser Indemnified Party with respect to any Loss to the extent
that a specific accrual or reserve for the amount of such Loss was reflected or
reserved against in the Financial Statements included in the Company Report most
recently filed by the Company with SEC before the date hereof.
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SECTION 9.4. INDEMNIFICATION BY THE PURCHASER INDEMNITORS.
If the Closing occurs, the Purchaser and the Company
(including its Subsidiaries) (collectively, the "Purchaser Indemnitors") shall
save, defend, indemnify and hold harmless the Securityholders and their
respective Affiliates and their respective, officers, directors, employees,
attorneys and agents and the successors and assigns of each of the foregoing
(collectively, the "Securityholder Parties") from and against any and all Losses
asserted against, incurred, sustained or suffered by any of the foregoing as a
result of or arising out of:
(a) any breach of any representation or warranty made by the
Purchaser contained in this Agreement or any Ancillary Agreement or any
schedule, certificate or other document delivered by the Purchaser on the
Closing Date pursuant hereto;
(b) any breach (including as a result of the action or failure
to act of the Purchaser) of any covenant or agreement by the Purchaser contained
in this Agreement or any Ancillary Agreement or any schedule, certificate or
other document delivered by the Purchaser on the Closing Date pursuant hereto;
and
(c) the conduct of business by the Purchaser, the Company and
its Subsidiaries after the Closing Date, including without limitation, any claim
for death, injury or property damage arising from the sale of products
manufactured by the Company or any of its Subsidiaries after the Closing Date or
attributable to any warranties, representations or commitments with respect to
products manufactured by the Company or any of its Subsidiaries after the
Closing Date and claims under Environmental Laws and for Taxes, in each case
arising out of the conduct of business by the Purchaser, the Company and its
Subsidiaries after the Closing Date.
SECTION 9.5. LIMITATIONS ON INDEMNIFICATION BY THE PURCHASER
INDEMNITORS.
The indemnification provided for in Section 9.4 above is
subject to the following limitations:
(a) The aggregate amount of all payments made by the Purchaser
Indemnitors in satisfaction of claims for indemnification pursuant to Section
9.4 shall not exceed Thirty Million Dollars ($30,000,000) (the "Purchaser's
Cap"); provided, however, that the Purchaser's Cap shall not apply with respect
to any Losses (i) related to any indemnification claim brought under Section
9.4(c), (ii) payments due under this Agreement including payments due under
Section 2.3 and Section 6.13 or (iii) resulting from or arising out of breaches
of any Fundamental Representations and Warranties and such Losses shall not be
limited by or count towards satisfaction of the Purchaser's Cap; and provided,
further, that the aggregate amount of all payments made by the Purchaser
Indemnitors in satisfaction of claims for indemnification pursuant to Sections
9.4 (including with respect to Section 9.4(c) and/or any Losses resulting from
breaches of any Fundamental Representations and Warranties) shall not exceed the
sum of the Cash Purchase Price and the amount of the Defeasance Costs Tax Note.
(b) Except for any indemnification claim brought under Section
9.4(c), the Purchaser Indemnitors shall not be liable to indemnify any
Securityholder Party pursuant to Section 9.4 where the aggregate amount of
Losses arising out of a claim or series of related
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claims of a breach of a representation or warranty does not exceed Ten Thousand
Dollars ($10,000), and no such claim or series of related claims shall not count
as Losses for purposes of Section 9.4 hereof.
(c) Any payment made by the Purchaser Indemnitors to a
Securityholder Party pursuant to Section 9.4 in respect of any indemnifiable
event shall be net of any insurance proceeds recovered by such Securityholder
Party in respect of such claim. In the event that an insurance recovery is
received by a Securityholder Party with respect to any Loss for which such
Securityholder Party has previously been indemnified hereunder, then such
Securityholder Party shall promptly make a refund to the Purchaser Indemnitors
in an amount equal to the lesser of (i) the total amount of such insurance
recovery (net of collection expenses), and (ii) the amount previously paid by
the Purchaser Indemnitors to such Securityholder Party as indemnification for
such Loss.
(d) If the Purchaser Indemnitors' indemnification obligation
under Section 9.4 arises in respect of any indemnifiable event (i) for which a
Securityholder Party receives indemnification from the Purchaser Indemnitors and
(ii) which results in any Tax benefit to such Securityholder Party for any
taxable period which would not, but for such indemnifiable event, be available,
such Securityholder Party shall pay, or shall cause to be paid, to the Purchaser
Indemnitors an amount equal to the actual Tax savings produced by such Tax
benefit reduced by the amount of any Tax detriment to such Securityholder Party
as a result of the receipt of such indemnification. Tax benefits and detriments
shall be taken into account as and when actually realized. The amount of any
such Tax saving for any taxable period shall be the amount of the reduction in
Taxes payable to a Tax authority by such Securityholder Party with respect to
such Tax period (net of any Tax detriment resulting from the receipt of the
indemnity payment) as compared to the Taxes that would have been payable to a
Tax authority by such Securityholder Party with respect to such Tax period in
the absence of such Tax benefit.
SECTION 9.6. PROCEDURES.
(a) In order for a Securityholder Party or Purchaser
Indemnified Party (an "Indemnified Party") to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
Loss or a claim or demand made by any Person against the Indemnified Party (a
"Third Party Claim"), such Indemnified Party shall deliver notice thereof to the
party against whom indemnity is sought (the "Indemnifying Party") with
reasonable promptness after receipt by such Indemnified Party of written notice
of the Third Party Claim and shall provide the Indemnifying party with such
information with respect thereto as the Indemnifying Party may reasonably
request. The failure to provide such notice, however, shall not release the
Indemnifying Party from any of its obligations under this Article IX except to
the extent that the Indemnifying Party is materially prejudiced by such failure
and shall not relieve the Indemnifying Party from any other obligation or
liability that it may have to the Indemnified Party pursuant to this Article IX.
(b) If the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party against the entirety of any Losses
(subject to any rights to recovery or offset pursuant to Sections 9.3, 9.5 or
9.10) that may result from a Third Party Claim pursuant to the terms of this
Agreement, the Indemnifying Party shall have the right, upon
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written notice to the Indemnified Party within fifteen (15) Business Days of
receipt of notice from the Indemnified Party of the commencement of such Third
Party Claim, to assume the defense thereof at the expense of the Indemnifying
Party (which expenses shall not be applied against any indemnity limitation
herein) with counsel selected by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party. If the Indemnifying Party does not
expressly elect to assume the defense of such Third Party Claim within the time
period and otherwise in accordance with the first sentence of this Section
9.6(b), the Indemnified Party shall have the sole right to assume the defense of
and to settle such Third Party Claim; provided, however, that the Indemnified
Party (i) shall keep the Indemnifying Party reasonably apprised of material
developments in any matter for which indemnification may be sought, (ii) shall
give notice to the Indemnifying Party of pending settlement discussions and
afford the Indemnifying Party a commercially reasonable opportunity to comment
on any such pending settlement (provided that the Indemnified Party will not be
required to obtain the consent of the Indemnifying Party to any such settlement)
and (iii) shall allow the Indemnifying Party to monitor such action at its
discretion and at its sole expense. The Indemnifying Party shall cooperate with
the Indemnified Party in such defense and make available to the Indemnified
Party all witnesses, pertinent records, materials and information in the
Indemnifying Party's possession or under the Indemnifying Party's control
relating thereto as is reasonably required by the Indemnified Party. If the
Indemnifying Party assumes the defense of such Third Party Claim, the
Indemnified Party shall have the right to employ separate counsel and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Party unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
Indemnifying Party or (ii) the named parties to the Third Party Claim (including
any impleaded parties) include both the Indemnified Party and the Indemnifying
Party, and the Indemnified Party reasonably determines that representation by
counsel to the Indemnifying Party of both the Indemnifying Party and such
Indemnified Party may present such counsel with a conflict of interest. If the
Indemnifying Party assumes the defense of any Third Party Claim, the Indemnified
Party shall, at the Indemnifying Party's expense, cooperate with the
Indemnifying Party in such defense and make available to the Indemnifying Party
all witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Indemnifying Party. If the Indemnifying Party
assumes the defense of any Third Party Claim, the Indemnifying Party shall not
admit any liability with respect to, or settle, compromise or discharge, or
offer to settle, compromise or discharge, such Third Party Claim without the
Indemnified Party's prior written consent (which shall not be unreasonably
delayed or withheld); provided, however, that the Indemnified Party's consent
shall not be required for any settlement, compromise or discharge of a Third
Party Claim that the Indemnifying Party may recommend and that by its terms
requires that the Indemnifying Party pay the full amount of the liability in
connection therewith, that otherwise releases the Indemnified Party completely
and with prejudice in connection with such Third Party Claim and that would not
subject the Indemnified Party to any injunctive or other equitable relief (it
being understood that the Indemnified Party shall have the sole discretion to
determine whether to consent to any settlement, compromise or discharge that
would subject the Indemnified Party to any injunctive or other equitable
relief).
(c) The Indemnifying Party shall not be entitled to require
that any action be asserted or brought against any other Person before action is
brought or claim is made against it hereunder by the Indemnified Party, and the
Significant Stockholders shall have no right to, and
70
shall not, object to or protest the handling by a Purchaser Indemnified Party of
any such claim or deny or dispute any claim for indemnification brought by the
Purchaser Indemnified Parties under this Article IX on the basis of the
assertion, prosecution or handling by a Purchaser Indemnified Party of any claim
by Purchaser Indemnified Party against any such other Person. The Purchaser
will, and will use its commercially reasonable efforts to cause the Purchaser
Indemnified Parties to, and the Significant Stockholders will, reasonably
cooperate, communicate and consult with each other with respect to any actions
or claims brought against any other such third Person.
(d) In any action where the Purchaser Indemnified Parties or
the Securityholder Parties reasonably determine that there are claims or
defenses available to such parties that are different from or in addition to
those available to the party defending such action, such parties shall have the
right to select separate legal counsel, at their sole cost and expense, to
assert such claims or defenses or to otherwise participate in such action.
(e) Notwithstanding the provisions of Section 11.4, each
Indemnifying Party hereby consents to the nonexclusive jurisdiction of any court
in which an action in respect of a Third Party Claim is brought against any
Indemnified Party for purposes of any claim that an Indemnified Party may have
under this Agreement with respect to such action or the matters alleged therein
and agrees that process may be served on each Indemnifying Party with respect to
such claim in accordance with the notice provisions set forth in Section 11.3
hereof.
SECTION 9.7. REMEDIES NOT AFFECTED BY INVESTIGATION,
DISCLOSURE OR KNOWLEDGE.
No investigation conducted by or on behalf of any party at any
time and no disclosure provided to or knowledge of any party with respect to any
event, condition or circumstance that renders inaccurate any representation or
warranty or reveals the occurrence of a breach of any covenant or agreement of
any other party contained in this Agreement or any Ancillary Agreement or any
schedule, certificate or other document delivered pursuant hereto or thereto or
in connection with the Subject Transactions shall be deemed to be a waiver of
any rights to indemnification or other remedy arising in connection therewith.
SECTION 9.8. INDEMNITY ESCROW FUND.
(a) Any indemnification to be provided by the Significant
Stockholders to a Purchaser Indemnified Party under Section 9.2(a) shall be by
recourse first to, and payable from the Indemnity Escrow Fund pursuant to the
terms of the Indemnity Escrow Agreement, and then, subject to the limitations on
aggregate liability for such claim, by cash payment from the Significant
Stockholders; provided, however, that if the Purchaser Indemnified Parties are
seeking indemnification based upon a breach of the Fundamental Representations
and Warranties set forth in Sections 3.1(a), 3.1(c), 3.2, 3.3 or 3.21, the
Purchaser Indemnified Parties shall have the right to elect to proceed
simultaneously against the Indemnity Escrow Fund and any one or more Significant
Stockholders directly, subject to the limitations set forth in this Agreement.
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(b) Any indemnification to be provided by a Stockholder to a
Purchaser Indemnified Party under Section 9.2(b) shall be by recourse directly
against such Stockholder; provided, however, that (i) in the case of any claim
against a Significant Stockholder under Section 9.2(b), the Purchaser
Indemnified Party shall be entitled to assert a claim against such Significant
Stockholder's Pro Rata Portion of the Indemnity Escrow Fund pursuant to the
terms of the Indemnity Escrow Agreement, but no monies shall be paid in respect
of such claim by the Indemnity Escrow Agent other than out of funds that would
otherwise be released to such Significant Stockholder in accordance with the
terms of the Indemnity Escrow Agreement.
SECTION 9.9. EXCLUSIVE REMEDY; ADDITIONAL LIMITATIONS.
(a) Except as otherwise expressly provided in this Agreement
or any Ancillary Agreement, no party hereto nor any of its Affiliates nor any of
their respective directors, officers, stockholders, partners (limited or
general), employees, attorneys or agents, shall have any liability whatsoever,
whether in tort or otherwise, in respect of this Agreement, any Ancillary
Agreement or any schedule, certificate or other document delivered by any of
them pursuant hereto or the Subject Transactions.
(b) No party hereto shall have any liability under any
provision of this Agreement, any Ancillary Agreement or otherwise for any
punitive, incidental, consequential, special or indirect damages, including
business interruption, loss of future revenue, profits or income, or loss of
business reputation or opportunity, including, without limitation, any such
damages relating to the breach or alleged breach of this Agreement, any
Ancillary Agreement or any schedule, certificate or other document delivered
pursuant hereto or in connection with the Subject Transactions.
SECTION 9.10. SUBROGATION.
(a) If a Purchaser Indemnified Party collects an
indemnification payment from the Indemnity Escrow Fund with respect to a Loss
for which a commercially reasonable claim against a Person other than the
parties hereto is available, then the Significant Stockholders shall be
subrogated to the claims and rights of action of such Purchaser Indemnified
Party against such other Person to the extent of such indemnification payments
hereunder.
(b) In connection with the rights of the Significant
Stockholders pursuant to this Section 9.10, the Purchaser shall, and shall cause
the Company and its Subsidiaries to, reasonably cooperate with the Significant
Stockholders in securing the subrogation rights of the Significant Stockholders
set forth in this Section 9.10 and in pursuing claims for recovery.
(c) None of the Purchaser nor any Purchaser Indemnified Party
makes any representation or warranty hereunder to the Significant Stockholders
regarding the availability or enforceability of the subrogation rights set forth
in this Section 9.10. The Significant Stockholders acknowledge that third
parties may have valid defenses to any such attempted subrogation.
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SECTION 9.11. APPOINTMENT OF THE REPRESENTATIVES.
(a) In order to efficiently administer the terms of Section
2.3 and the defense and/or settlement of any claims for indemnity by a Purchaser
Indemnified Party pursuant to Section 9.2(a) ("Common Indemnification Claims"),
Xxxxxxx X. Xxxxxxxx and Xxxx X. Xxxxxxxxxx (the "Representatives"), are hereby
appointed to serve as the representatives of the Securityholders. The
Representatives shall have full power and authority to make, on behalf of all of
the Securityholders, any and all decisions relating to the terms of Section 2.3
hereof and the defense and/or settlement of any Common Indemnification Claims
for which any Purchaser Indemnified Party may claim to be entitled to indemnity
pursuant to Section 9.2(a) hereof. All such decisions and actions by the
Representatives shall be binding upon all of the Securityholders, and no
Securityholder shall have the right to object to, dissent from, protest or
otherwise contest the same. All fees, costs and expenses of the Representatives
incurred by them in connection with its responsibilities as herein defined shall
be reimbursed by the Securityholders in accordance with their respective
portions of the Cash Purchase Price payable to them in accordance with Sections
2.2 and 2.3.
(b) Each Securityholder agrees that (i) the provision of this
Section 9.11 are independent and severable, are irrevocable and coupled with an
interest and shall be enforceable notwithstanding any rights or remedies any
Securityholder or the Purchaser may have in connection with the Subject
Transactions, (ii) the remedy at law for any breach of the provisions of this
Section 9.11 would be inadequate, (iii) any Securityholder or the Purchaser
shall be entitled to temporary and permanent injunctive relief without the
necessity of proving damages if such Securityholder or the Purchaser brings an
action to enforce the provisions of this Section 9.11, and (iv) the provisions
of this Section 9.11 shall be binding upon the successors, assigns, heirs and
estates of each Securityholder.
(c) Each Securityholder hereby (i) waives any claims such
Securityholder may have or assert, including those that may arise in the future,
against the Representatives, and any of their respective Affiliates, for any
action or inaction taken or not taken by the Representatives in connection
therewith, provided that such action or inaction is not taken in a manner that
results in any Significant Stockholder paying a greater proportion of any claim
for indemnity pursuant to Section 9.2(a) hereof than such Significant
Stockholder's Pro Rata Portion thereof, and (ii) acknowledges and agrees that
neither it nor any of its successors, assigns, heirs or estates nor any of their
respective officers, directors, employees or Affiliates will have any claims or
rights to contribution or indemnity from the Purchaser, the Company or any of
its Subsidiaries with respect to any amounts paid by any of them pursuant to
this Article IX.
(d) Any notice or communication delivered by the Purchaser or
the Company to the Representatives with respect to the administration of the
terms of Section 2.3 or the defense and/or settlement of any claims for
indemnity by a Purchaser Indemnified Party pursuant to Section 9.2(a) shall, as
between the Purchaser and the Company, on the one hand, and the Securityholders,
on the other, be deemed to have been delivered to all Securityholders. The
Purchaser and the Company shall be entitled to rely exclusively upon any
communication or writings given or executed by the Representatives in connection
with any claims for indemnity (other than those claims arising under Section
9.2(b)) and shall not be liable in any manner whatsoever for any action taken or
not taken in reliance upon the actions taken or not taken or
73
communications or writings given or executed by the Representatives. The
Purchaser and the Company shall be entitled to disregard any notices or
communications given or made by any Securityholder Party in connection with any
claims for indemnity arising under Section 9.2(a) unless given or made through
the Representatives.
ARTICLE X.
TERMINATION PRIOR TO CLOSING
SECTION 10.1. TERMINATION OF AGREEMENT.
This Agreement may be terminated:
(a) at any time prior to the Closing, by the Purchaser or any
of the Significant Stockholders in writing, if there shall be any order, writ,
injunction or decree of any court or Government Entity binding on the Purchaser,
the Company or any Stockholder, which prohibits or restrains the Purchaser, the
Company or any of the Stockholders from consummating the Subject Transactions;
provided, however, that the Purchaser, the Company and the Significant
Stockholders, as the case may be, shall have used their reasonable best efforts
to have any such order, writ, injunction or decree lifted;
(b) at any time prior to the Closing, by the Purchaser or any
of the Significant Stockholders in writing, if the Closing has not occurred on
or prior to December 27, 2004; provided, however, that no such party hereto may
terminate this Agreement pursuant to this Section 10.1(b) if such party (or, in
the case of the Significant Stockholders, the Company) is in material violation
or breach of its agreements, representations or warranties contained in this
Agreement;
(c) at any time prior to the Closing, by any of the
Significant Stockholders in writing, if there has been a material violation or
breach by the Purchaser of its agreements, covenants, representations or
warranties contained in this Agreement, which violation or breach would result
in the failure to satisfy one or more of the conditions set forth in Section 8.1
or Section 8.2 (subject to Section 8.6) and such violation or breach shall be
incapable of being cured or, if capable of being cured, shall not have been
cured within 30 days after written notice thereof shall have been given to the
Purchaser in accordance with Section 11.3, and if the Company and the
Stockholders are not then in material violation or breach of their agreements,
covenants, representations or warranties contained in this Agreement;
(d) at any time prior to the Closing, by the Purchaser in
writing, if there has been a material violation or breach by the Company or any
of the Stockholders of their respective agreements, covenants, representations
or warranties contained in this Agreement, which violation or breach would
result in the failure to satisfy one or more of the conditions set forth in
Section 7.1 or Section 7.2 (subject to Section 7.5) and such violation or breach
shall be incapable of being cured or, if capable of being cured, shall not have
been cured within 30 days after written notice thereof shall have been given to
the Company and the Significant Stockholders in accordance with Section 11.3,
and if the Purchaser is not then in material
74
violation or breach of its agreements, covenants, representations or warranties
contained in this Agreement;
(e) at any time on or prior to the Closing Date, by mutual
written consent of the Significant Stockholders and the Purchaser; or
(f) on the Closing Date, (i) by the Purchaser in writing, if
any of the conditions set forth in Article VII shall not have been satisfied on
or before such date or (ii) by any of the Significant Stockholders in writing,
if any of the conditions set forth in Article VIII shall not have been satisfied
on or before such date; provided, however, that no such party hereto may
terminate this Agreement pursuant to this Section 10.1(f) if such party (or, in
the case of the Significant Stockholders, the Company) is in material violation
or breach of its agreements, representations or warranties contained in this
Agreement.
SECTION 10.2. SURVIVAL.
If this Agreement is terminated and the Subject Transactions
are not consummated as described above, this Agreement shall become null and
void and of no further force and effect, and there shall be no liability or
obligation hereunder on the part of the Stockholders, the Company or the
Purchaser, or any of their respective directors, officers, employees,
Affiliates, agents, representatives, successors or assigns except (i) for the
provisions of this Agreement and the Confidentiality Agreement relating to the
obligations of the parties hereto to keep confidential and not to use certain
information and data obtained from the other parties hereto, (ii) for the
provisions of Sections 6.6, 9.9, 11.1, 11.2, 11.3, 11.4, 11.8 and 11.9 and this
Section 10.2, which shall survive any such termination, (iii) for liability of
the Stockholders and the Company, on the one hand, for all Losses, in an
aggregate amount not to exceed Thirty Million Dollars ($30,000,000), resulting
from or arising out of a breach by such parties of any representation, warranty
or covenant contained in this Agreement, and (iv) for liability of the
Purchaser, on the other hand, for all Losses, in an aggregate amount not to
exceed Thirty Million Dollars ($30,000,000), resulting from or arising out of a
breach by such party of any representation, warranty or covenant contained in
this Agreement.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. PUBLICITY.
The press release announcing the execution of this Agreement
shall be issued only in such form as shall be mutually agreed upon by the
Company, the Significant Stockholders and the Purchaser. Thereafter, the
Purchaser, the Company and the Significant Stockholders shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to the Subject Transactions, and shall not issue any such press
release or make any such public statement before such consultation, except as
may be required by law.
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SECTION 11.2. CONFIDENTIALITY.
The parties agree that, other than as agreed or as required to
implement the Subject Transactions, the parties will keep confidential the terms
and conditions of this Agreement, including, without limitation, the Ancillary
Agreements, the Exhibits and Schedules hereto, except as otherwise required by
law (including, without limitation, pursuant to any federal or state securities
laws or the rules of any stock exchange or self-regulatory organization or
pursuant to any legal, regulatory or legislative proceedings).
SECTION 11.3. NOTICES.
Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally (by courier or
otherwise), telegraphed, telexed, sent by facsimile transmission or sent by
certified or registered mail, postage prepaid and return receipt requested, or
by express mail. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed or sent by facsimile transmission or, if
mailed, three days after the date of deposit in the United States mails, as
follows:
(i) if to the Company prior to the Closing Date (and with
a copy to the Purchaser after the Closing Date):
K&F Industries, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000,
with a copy, which shall not constitute notice, to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) if to any Stockholder, to the address set forth below
such Stockholder's name on Exhibit A hereto; and
(iii) if to Purchaser:
c/o Aurora Capital Group
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy, which shall not constitute notice, to:
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Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Any party may, by notice given in accordance with this Section
11.3 to the other parties, designate another address or Person for receipt of
notices hereunder provided that notice of such a change shall be effective upon
receipt.
SECTION 11.4. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF. Each of the parties hereto, including,
without limitation, each of the Stockholders, agrees that any legal action or
proceeding with respect to this Agreement may be brought in the Courts of the
State of New York, County of New York or the United States District Court for
the Southern District of New York and, by execution and delivery of this
Agreement, each party hereto irrevocably submits itself in respect of its
property, generally and unconditionally, to the non-exclusive jurisdiction of
the aforesaid courts in any legal action or proceeding arising out of this
Agreement. Each of the parties hereto hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to in the preceding sentence. Each
party hereby consents to process being served in any such action or proceeding
by the mailing of a copy thereof to the address set forth in Section 11.3 hereof
and agrees that such service upon receipt shall constitute good and sufficient
service of process or notice thereof. Nothing in this Section 11.4 shall affect
or eliminate any right to serve process in any other matter permitted by law.
SECTION 11.5. ENTIRE AGREEMENT.
(a) This Agreement (including the Ancillary Agreements and any
other additional agreements contemplated hereby or thereby and the Exhibits and
the Schedules hereto) contains the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto other than the Confidentiality Agreement,
which shall survive and remain in full force and effect according to its terms.
(b) Any information provided in any Schedule hereto is
considered set forth on each and every other Schedule hereto as to which such
information is applicable. Any disclosure in any Schedule of any contract,
document, liability, default, breach, violation, limitation, impediment or other
matter, although the provision for such disclosure may require such disclosure
only if such contract, document, liability, default, breach, violation,
limitation, impediment or other matter be "material," shall not be construed
against any Stockholder as an assertion by such Stockholder that any such
contract, document, liability, default, breach, violation, limitation,
impediment or other matter is, in fact, material.
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SECTION 11.6. WAIVERS AND AMENDMENTS; NON-CONTRACTUAL
REMEDIES; PRESERVATION OF REMEDIES.
This Agreement may be amended, superseded, canceled, renewed
or extended, and the terms hereof may be waived, only by a written instrument
signed by the Purchaser and the Representative or, in the case of a waiver, by
the party waiving compliance. Except as provided in Article IX hereof, no delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, or shall any waiver on the part of any party
of any right, power or privilege, or any single or partial exercise of any such
right, power or privilege, preclude any further exercise thereof or the exercise
of any other such right, power or privilege. Except as otherwise provided
herein, the rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
SECTION 11.7. BINDING EFFECT; ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors, permitted assigns and
legal representatives. Neither this Agreement, nor any right hereunder, may be
assigned by any party (in whole or in part) without the prior written consent of
the other parties hereto; provided, however, that the rights and obligations of
the Purchaser hereunder shall be assignable without any other party's consent to
(i) any lender of the Purchaser or the Company or any of its Subsidiaries, (ii)
any wholly-owned subsidiary of the Purchaser, or (iii) any third party that
acquires substantially all of the capital stock or assets of the Purchaser or
the Company, whether through a merger, consolidation, purchase of stock, asset
purchase or otherwise.
SECTION 11.8. INTERPRETATION.
(a) The parties acknowledge and agree that, except as
specifically provided herein, they may pursue judicial remedies at law or equity
in the event of a dispute with respect to the interpretation or construction of
this Agreement.
(b) For purposes of this Agreement, the words "hereof,"
"herein," "hereby" and other words of similar import refer to this Agreement as
a whole unless otherwise indicated. Whenever the singular is used herein, the
same shall include the plural, and whenever the plural is used herein, the same
shall include the singular, where appropriate. All terms defined herein in the
singular shall have the same meaning when used in the plural; all terms defined
herein in the plural shall have the same meaning when used in the singular.
SECTION 11.9. NO THIRD PARTY BENEFICIARIES.
Except as set forth in Section 6.7, Section 6.8 and except for
those parties included in the definitions of "Purchaser Indemnified Parties" and
"Securityholder Parties" in Article IX hereof, nothing in this Agreement is
intended or shall be construed to give any Person, other than the parties
hereto, their successors and permitted assigns, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision contained
herein.
78
SECTION 11.10. COUNTERPARTS.
This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
SECTION 11.11. OTHER AGREEMENTS, EXHIBITS AND SCHEDULES.
The Exhibits and the Schedules are a part of this Agreement as
if fully set forth herein. All references herein to Articles, Sections,
subsections, paragraphs, subparagraphs, clauses, Exhibits and Schedules shall be
deemed references to such parts of this Agreement, unless the context shall
otherwise require.
SECTION 11.12. HEADINGS.
The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
SECTION 11.13. INVESTIGATION BY PURCHASER.
In entering into this Agreement, Purchaser has relied solely
upon its own investigation and analysis, and the Purchaser (a) acknowledges that
none of the Stockholders or the Company or any of their respective directors,
officers, members, managers, stockholders, employees, Affiliates, controlling
persons, agents or representatives makes or has made any representation or
warranty, either express or implied, as to the accuracy or completeness of any
of the information provided or made available to the Purchaser or its directors,
officers, employees, Affiliates, controlling persons, agents or representatives,
except as and only to the extent expressly set forth herein or in any Ancillary
Agreement or any Exhibit, Schedule, certificate or other document delivered
pursuant hereto or thereto or in connection with the Subject Transactions with
respect to such representations and warranties and subject to the limitations
and restrictions contained in this Agreement or any Ancillary Agreement or any
Exhibit, Schedule or certificate delivered pursuant hereto or thereto or in
connection with the Subject Transactions, and (b) agrees, to the fullest extent
permitted by law, that, except to the extent expressly set forth herein, none of
the Stockholders or the Company or any of their respective directors, officers,
members, managers, stockholders, employees, Affiliates, controlling persons,
agents or representatives shall have any liability or responsibility whatsoever
to the Purchaser or its directors, officers, employees, affiliates, controlling
persons, agents or representatives on any basis (including, without limitation,
in contract or tort, under federal or state securities laws or otherwise) based
upon any information provided or made available, or statements made, to the
Purchaser or its directors, officers, employees, Affiliates, controlling
persons, agents or representatives (or any omissions therefrom), including,
without limitation, in respect of the specific representations and warranties of
the Stockholders or the Company set forth in this Agreement or in any Ancillary
Agreement or any Exhibit, Schedule, certificate or other document delivered
pursuant hereto or thereto or in connection with the Subject Transactions and
subject to the limitations and restrictions contained in this Agreement. In
particular, without limiting the foregoing disclaimer, none of the following
shall be deemed to
79
constitute a representation or warranty of the Stockholders or the Company or
any of their respective directors, officers, members, managers, stockholders,
employees, Affiliates, controlling persons, agents or representatives: (i) any
financial projection or forecast relating to the business of the Company and its
Subsidiaries, (ii) any information set forth in actuarial reports relating to
Company and its Subsidiaries, (iii) any oral or written information presented to
the Purchaser during any management presentation, including any question and
answer session pursuant thereto or (iv) any information provided to assist the
Purchaser with the arrangements for the Financing as contemplated by Section
6.5. With respect to any projection or forecast delivered by or on behalf of the
Stockholders or the Company to the Purchaser, the Purchaser acknowledges that
(A) there are uncertainties inherent in attempting to make such projections and
forecasts, (B) it is familiar with such uncertainties, (C) it is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
such projections and forecasts so furnished to it, and (D) it shall have no
claim against any Person with respect thereto.
[Remainder of page intentionally left blank.]
80
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AAKF ACQUISITION, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
K&F INDUSTRIES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President & Chief Operating Officer
XXXXXX BROTHERS MERCHANT BANKING PORTFOLIO PARTNERSHIP
L.P.
By: LB I Group, its General Partner
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Senior Vice President
XXXXXX BROTHERS OFFSHORE INVESTMENT PARTNERSHIP L.P.
By: Xxxxxx Brothers Offshore Partners, Ltd.,
its General Partner
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Director
S-1
XXXXXX BROTHERS OFFSHORE INVESTMENT
PARTNERSHIP -- JAPAN L.P.
By: Xxxxxx Brothers Offshore Partners Ltd.,
its General Counsel
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Director
XXXXXX BROTHERS CAPITAL PARTNERS II, L.P.
By: Xxxxxx Brothers Holdings Inc.,
its General Partner
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Vice President
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxx
THE XXXXXXX X. XXXXXXXX 2004 GRANTOR RETAINED ANNUITY
TRUST NO. 2
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxx, as Trustee of
The Xxxxxxx X. Xxxxxxxx 2004 Grantor Retained Annuity
Trust No. 2
/s/ Xxxxxxxxx Xxxxxxxx
-----------------------------------------
Xxxxxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx Paddock
-----------------------------------------
Xxxxx Xxxxxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx
S-2
