EXHIBIT 3
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement is made and entered into on September 18,
2001 (this "AGREEMENT"), among Seneca Investments LLC, a Delaware limited
liability company ("PARENT"), E-Services Investments Organic Sub LLC, a Delaware
limited liability company and a wholly owned subsidiary of Parent ("PURCHASER"),
Organic Holdings LLC, a Delaware limited liability company ("SELLER"), and
Xxxxxxxx Xxxxxx, the holder of a majority of the membership interests in Seller
(the "MAJORITY MEMBER").
RECITALS
A. As of June 14, 2001, (1) Organic Holdings, Inc., a California
corporation ("HOLDINGS"), transferred certain assets to Cinagro, Inc., a newly
formed Delaware corporation and wholly owned subsidiary of Holdings ("CINAGRO"),
specifically (a) all of the shares of common stock (the "COMPANY SHARES") of
Organic, Inc., a Delaware corporation (the "COMPANY"), beneficially owned by
Holdings and (b) the promissory notes, dated January 31, 2000, issued by the
Majority Member and payable to Holdings in the original aggregate principal
amount of $10,756,374.75, plus accrued but unpaid interest (the "PROMISSORY
NOTES"), in return for all of the shares of capital stock in Cinagro, and (2)
Holdings further entered into an Operating Agreement for Seller, pursuant to
which Holdings was issued membership units (the "UNITS") representing all of the
economic interest of Seller;
B. Thereafter but prior to the date hereof, (1) Holdings contributed all
of its assets, including the shares of capital stock of Cinagro, and its
liabilities to Seller and (2) Holdings distributed the Units to the shareholders
of Holdings and Holdings was dissolved;
C. As a result of the Reorganization, as of the date hereof, Seller owns
all the outstanding shares of capital stock of Cinagro and Cinagro owns the
Company Shares and the Promissory Notes;
D. Prior to the Closing, Cinagro shall have (1) dividended to Seller the
Promissory Notes or redeemed a portion of the shares of capital stock of Cinagro
from Seller in exchange for the distribution to Seller of the Promissory Notes,
(2) furnished to Parent such evidence as it shall have requested pertaining to
the foregoing, and (3) dividended to Seller any cash paid upon the exercise of
the Cinagro Warrant (such transactions described in Recitals A, B and D,
collectively, the "REORGANIZATION");
E. Seller desires to sell to Purchaser, and Purchaser desires to purchase
and accept from Seller, all of the shares of capital stock of Cinagro other than
the shares, if any, redeemed by Cinagro in the Reorganization (the shares to be
so purchased and sold, the "CINAGRO SHARES") on the terms and subject to the
conditions of this Agreement;
F. Substantially simultaneously herewith, Parent will submit to the
Company a non-binding proposal to acquire all of the shares of common stock of
the Company not owned
directly or indirectly by Parent, Seller or Cinagro (the "OTHER ORGANIC SHARES")
on the terms and subject to the conditions set forth in such proposal (the
"PUBLIC LETTER"); and
G. Each of Parent, Purchaser, Seller and the Majority Member desire that
the foregoing transactions be completed on such terms and subject to such
conditions and wish to make certain representations, warranties and covenants in
connection therewith.
NOW, THEREFORE, the parties hereto agree as follows:
I. PURCHASE AND SALE OF THE CINAGRO SHARES
1.1. PURCHASE AND SALE. On the terms and subject to the conditions of this
Agreement, at the Closing, Seller will sell, assign, transfer and deliver to
Purchaser, and Purchaser will purchase and accept from Seller, the Cinagro
Shares. All certificates representing the Cinagro Shares being sold by Seller
will be duly endorsed, with all necessary transfer tax stamps affixed.
1.2. PURCHASE PRICE. Parent will cause Purchaser to pay to Seller in
accordance with the payment provisions (the "PAYMENT PROVISIONS") set forth on
SCHEDULE 1.2 the purchase price (the "PURCHASE PRICE") for the Cinagro Shares to
be purchased and sold at the Closing, calculated and paid as follows:
(a) CLOSING PAYMENT. On the Closing Date, an amount equal to $6.0 million,
less the Reduction Amount ("IP-1").
(b) SECOND PAYMENT. Subject to SECTION 1.3(i), within ten calendar days
after the earlier to occur of (i) the first anniversary of the Closing Date or
(ii) the later of the date of consummation of a Transaction (the "TRANSACTION
CLOSING") or the Closing Date, a second payment equal to $10.0 million ("IP-2").
(c) THIRD PAYMENT. Within ten calendar days after the Annual Determination
for calendar year 2002 and any adjustments thereto have become binding on the
parties as herein provided, if the 2002 PBT is greater than $10.0 million, a
third payment of $2.5 million ("IP-3").
(d) FOURTH PAYMENT. Within ten calendar days after the Annual
Determination for calendar year 2003 and any adjustments thereto have become
binding on the parties as herein provided, if the 2003 PBT is greater than $15.0
million and the 2003 PBT Margin is greater than 10%, a fourth payment of $5.0
million ("IP-4").
(e) FIFTH PAYMENT. Within ten calendar days after the Annual Determination
for the calendar year 2004 and any adjustments thereto have become binding on
the parties as herein provided, a fifth payment ("IP-5") (but only if the amount
is a positive number), calculated as follows:
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IP-5 = IP-5 MULTIPLE X 2002 PBT + 2003 PBT + 2004 PBT X 0.60 X O MULTIPLE
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MINUS ($3.1 MILLION + IP-3 + IP-4)
(f) SIXTH PAYMENT. Within ten calendar days after the Annual Determination
for the calendar year 2005 and any adjustments thereto have become binding on
the parties as herein provided, a sixth payment ("IP-6") (but only if the amount
is a positive number), calculated as follows:
IP-6 = IP-6 MULTIPLE X 2003 PBT + 2004 PBT + 2005 PBT X 0.60 X O MULTIPLE
------------------------------
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MINUS ($3.1 MILLION + IP-3 + IP-4 + IP-5)
(g) FINAL PAYMENT. Within ten calendar days after the Annual Determination
for the calendar year 2006 and any adjustments thereto have become binding on
the parties as herein provided, a final payment ("FP") (but only if the amount
is a positive number), calculated as follows:
FP = FP MULTIPLE X CAPBT X O MULTIPLE MINUS ($3.1 MILLION + IP-3 + IP-4 + IP-5 + IP-6)
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(h) NON-REFUNDABILITY OF PAYMENTS. Any payments made to Seller pursuant to
SECTIONS 1.2(a), (b), (c), (d), (e), (f) or (g) will be nonrefundable and, to
the extent IP-5, IP-6 or FP are negative numbers, no amounts are required to be
paid by any party under this Agreement with respect thereto.
1.3. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms will have the meanings indicated below:
(a) The term "NET INCOME" means the Company's consolidated net income
(loss) for the relevant period determined in accordance with United States
generally accepted accounting principles consistently applied ("GAAP").
(b) The term "PBT" means Net Income of the Company before provision for
federal, state and local income taxes for such period, determined in
accordance with GAAP, provided that the following specific rules and
adjustments will apply whether or not those rules are consistent with GAAP
(except as specifically stated below) for purposes of calculating PBT,
Revenue, PBT Margin or any other amount contemplated hereby to be determined
by reference to a financial statement:
(i) neither the proceeds from nor any dividends or refunds with
respect to, nor any increases or decreases in the cash surrender value of,
any life insurance policy under which Purchaser or any subsidiary thereof
is the named beneficiary or otherwise entitled to recovery or any return
of any deposit or prepayment will be included as income or revenue, or
expense or loss, as the case may be;
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(ii) extraordinary or unusual gains or losses and net gains from the
sale of any capital assets will be excluded, but net losses from the sale
of any capital assets will be included (after giving effect to the
exclusion of restructuring charges recorded or reserves or accruals
established by the Company prior to the Closing or the Transaction Closing
to the extent set forth in SECTION 1.3(b)(iii));
(iii) notwithstanding SECTION 1.3(b)(ii), any write-downs or
reserves against assets or liabilities of the Company or any of its
subsidiaries in accordance with GAAP, including without limitation
accounts receivable reserves or write-offs, will be treated as an
expense except to the extent of Purchase Accounting Accruals
specifically related thereto and except that restructuring charges
recorded and agreed to by Parent prior to the Closing or the
Transaction Closing will be excluded to the extent of Purchase
Accounting Accruals specifically related thereto;
(iv) the utilization of reserves or accruals established by the
Company prior to the Closing or the Transaction Closing and to which
Parent has consented (such consent not to be unreasonably withheld as to
reserves required by GAAP as determined by the Accountants) and Purchase
Accounting Accruals, in each case to the extent consistent with GAAP and
specifically relating to an event or circumstance for which they were
established, will be permitted and, notwithstanding SECTION 1.3(b)(xiii),
the reversal of any reserve specifically described in SCHEDULE 1.3(b)(iv)
by reason of an event occurring after the date hereof and requiring such
reversal under GAAP will be taken into account in determining PBT and Net
Income for the Measuring Period in which such event occurs;
(v) interest income and expense will be included, provided, however,
that following the Closing, whether or not the Company declares or pays
dividends or other distributions to its stockholders (and regardless of
the amount of any such distribution), in all events any interest income or
expense will be calculated as if the Company distributed to its
stockholders on January 1st of each year 90% of its Net Income for the
immediately preceding year and, except as aforesaid, all other investment
income will be excluded (other than investment income from any cash
management program in which the Company participates);
(vi) costs or expenses incurred in preparing or contesting any
Annual Determination will not be treated as an expense; provided,
however, that such costs and expenses will only be excluded to the
extent they are not part of the Company's normal audit expense;
(vii) the revenue, income, expenses, assets and liabilities of any
subsidiary of the Company whose results of operations are required to be
consolidated with those of the Company under GAAP will be included only in
proportion to the Company's direct or indirect ownership in such
subsidiary;
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(viii) intercompany management fees, if any, charged by and
dividends paid to Parent, Purchaser or any one of their respective
successors, owners or Affiliates (each, a "PARENT COMPANY") or to the
Company and its subsidiaries will not be treated as expenses;
(ix) charges for services rendered or provided to the Company or
any subsidiary thereof by any Parent Company and agreed to by Parent
and Seller (other than services covered by SECTION 1.3(b)(viii)), or
for expenses incurred for insurance and other items purchased on a
group basis, in any such case on substantially the same basis as all
other Parent Companies that are covered thereby (as to which Parent
will disclose to the Company as promptly as reasonably practicable in
connection with the preparation of Parent's budget and in connection
with any material modifications thereto), will be treated as expenses;
(x) goodwill recorded by Parent or Purchaser, including the related
amortization or impairment thereof, including any amounts that are pushed
down to the Company or any of its subsidiaries arising out of the
transactions contemplated hereby or the Transaction, will be excluded;
(xi) except for tax benefits arising from net operating losses
incurred after the Closing Date and to the extent such losses are actually
used to reduce taxes of the Company in accordance with GAAP during the
relevant Measuring Period, tax benefits from net operating losses will be
excluded;
(xii) Indemnifiable Losses of a Purchaser Indemnified Party which
give rise to an indemnity payment pursuant to SECTION 5.3 (and ignoring
for purposes of this clause (xii) the limits set forth in SECTION 5.2(b))
and which are assumed by Seller or the Majority Member or as to which the
Purchaser Indemnified Parties have been reimbursed (by offset or
otherwise) will not be treated as an expense, and any amount received by
any Purchaser Indemnified Party pursuant thereto will be excluded from the
calculation of PBT;
(xiii) the following expenditures will be excluded for the
purposes of calculating PBT for the Measuring Period in which the
expenditures are made or, if earlier, accrued under GAAP: (A)
restructuring reserves recorded by the Company through the six-month
period ended June 30, 2001 and reflected in the Company's financial
statements as of and for the six months ended June 30, 2001 that were
delivered to Parent prior to the date hereof and that have been
acknowledged and agreed to in writing by Parent and (B) other items, if
any, identified by Parent and within the specific reserves set forth in
SCHEDULE 1.3(b)(xiii); provided, however, that in any such case (A) the
reversal or failure to utilize any portion thereof or of any Purchase
Accounting Accruals will be disregarded for all purposes of this
Agreement and (B) only expenditures of the specific type for which a
particular restructuring reserve or Purchase Accounting Accrual was
established may be excluded for such purposes; and
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(xiv) dividends, if any, the payment of which is contingent on or
determined by reference to achievement of a specific level of PBT will be
treated as an expense for the year in which Net Income was measured, but
only to the extent such dividends are paid on the Class A Common Stock of
the Company.
(c) "MEASURING PERIOD" means the applicable periods specified in SECTION
1.2 for the calculation of PBT, Revenues and PBT Margin, as the case may be.
(d) "REVENUES" during each relevant period means revenues reflected on the
consolidated income statement of the Company for that Measuring Period prepared
in accordance with GAAP, as adjusted in accordance with the applicable rules of
SECTION 1.3(b) and finally determined pursuant to SECTION 1.4.
(e) "PBT MARGIN" for a Measuring Period will equal the percentage
equivalent of the quotient determined by dividing the total PBT for such
Measuring Period by the total Revenues for such Measuring Period. For this
purpose, the PBT Margin for 2003 is determined by dividing the sum of PBT for
2003 by the total Revenues for 2003 and the PBT Margin for 2006 is determined by
dividing the sum of PBT for 2004, 2005 and 2006 by the total Revenues for 2004,
2005 and 2006. For purposes of this Agreement, the PBT Margin will be rounded up
or down, as the case may be, to the nearest one-tenth of one percent.
(f) "IP-5 MULTIPLE" means 5.5.
(g) "IP-6 MULTIPLE" means 5.5.
(h) "FP MULTIPLE" means 5.5, (i) increased by 0.5 if the average of the
2004, 2005 and 2006 Revenue Growth Rates is at least 20% and by 0.5 if PBT
Margin for 2006 is greater than 12% and (ii) decreased by 0.5 if the average of
the 2004, 2005 and 2006 Revenue Growth Rates is less than 12% and by 0.5 if PBT
Margin for 2006 is less than 8%.
(i) "O MULTIPLE" means 16.0%, except if the Transaction Closing has not
occurred within 364 calendar days of the Closing Date, Purchaser may elect not
to make the IP-2 payment set forth in SECTION 1.2(B), in which event without
further action the O Multiple will be 42.0%; provided that following the
Closing, if the Company issues additional voting capital stock ("VOTING STOCK"),
the O Multiple will be adjusted by multiplying the O Multiple in effect
immediately prior to such issuance by a fraction, the numerator of which is the
aggregate number of shares of Voting Stock outstanding immediately prior to such
issuance and the denominator of which is the aggregate number of shares of
Voting Stock outstanding immediately following such issuance (in each case,
calculating the number of outstanding shares on an as-converted basis and
treating all the authorized Class A Common Stock (as defined in the Incentive
Plan) as issued and outstanding for such purpose).
(j) "CAPBT" is the sum of (A) aggregate PBT for the calendar years 2004,
2005 and 2006 (whether PBT for such years is positive or negative) minus (B) (i)
negative PBT, if any, for the period beginning on the first day of the calendar
month in which the
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Closing Date occurs and ending on and including December 31, 2002 plus (ii) two
times the amount of negative PBT, if any, for calendar year 2003.
Notwithstanding any other provision hereof,
(i) If PBT is negative in 2002, 2003 PBT will be reduced by the
amount of such negative PBT for purposes of calculating IP-6; and
(ii) If PBT is negative in 2003, such negative 2003 PBT will be
multiplied by 2 for purposes of calculating IP-5 and IP-6.
(k) "TRANSACTION" means (i) any merger, consolidation or other form of
business acquisition or combination transaction pursuant to which the Company
becomes a direct or indirect wholly owned subsidiary of Parent or any of its
direct or indirect stockholders (any such transaction, a "MERGER") or (ii) a
tender offer in which Parent, any of Parent's direct or indirect stockholders or
Purchaser purchases more than 90% of the outstanding voting stock of the
Company, so long as in either case, (A) Parent determines that each Company
Stock Right has been or will be extinguished in a Merger at a per share price no
greater than the positive difference, if any, between the per share price paid
to all stockholders of the Company (other than Parent and its Affiliates) in
such transaction and the exercise price thereof, and (B) Parent and Purchaser
are not prohibited from completing a Merger by any then-applicable law or court
order.
(l) "PURCHASE ACCOUNTING ACCRUALS" means accruals established by Parent or
Purchaser in accordance with GAAP in connection with the Transaction or the
transactions contemplated hereby.
(m) "REVENUE GROWTH RATE" for a given year will equal the percentage
equivalent of the quotient determined by dividing (A) total Revenues for such
year minus total Revenues for the immediately prior year by (B) total Revenues
for such immediately prior year. For this purpose, the Revenue Growth Rate for
2004 is determined by subtracting 2003 Revenues from 2004 Revenues and dividing
such amount by 2003 Revenues; the Revenue Growth Rate for 2005 is determined by
subtracting 2004 Revenues from 2005 Revenues and dividing such amount by 2004
Revenues; and the Revenue Growth Rate for 2006 is determined by subtracting 2005
Revenues from 2006 Revenues and dividing such amount by 2005 Revenues. For
purposes of this Agreement, the Average Revenue Growth Rate will be rounded up
or down, as the case may be, to the nearest one-tenth of one percent.
(n) "REDUCTION AMOUNT" means the product of $745.03 TIMES the number of
calendar days from and including June 14, 2001 that Cinagro owns, directly or
indirectly, all or any portion of the Promissory Notes.
1.4. ACCOUNTING PROCEDURES. (a) The parties will use their respective
reasonable best efforts to cause Xxxxxx Xxxxxxxx & Co., another nationally
recognized independent accounting firm then retained by Parent as its
independent accountants (the "ACCOUNTANTS"), as soon as practicable after the
end of each of 2002 through
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2006, but in any event not later than April 30th of the following year, to
prepare in accordance with this Agreement a report containing an audited
consolidated balance sheet of the Company as of the close of business on
December 31st of each such fiscal year, and a related audited consolidated
statement of income of the Company for the 12 months then ended, in each case
together with a statement of the Accountants that states that such report was
prepared in accordance with this Agreement and sets forth the PBT, PBT Margin
and Revenues for the period under examination and all adjustments required to be
made to such audited financial statements in order to make the calculations
required under SECTIONS 1.2 and 1.3 (the "ANNUAL DETERMINATION"). All such
determinations will be in accordance with the applicable provisions of this
Agreement. No adjustment or accrual required by GAAP to any of the items to be
calculated pursuant to this SECTION 1.4 will be disregarded based on materiality
considerations.
(b) If Purchaser or Seller does not agree that an Annual Determination
correctly states the applicable PBT, PBT Margin or Revenues, the disputing party
will promptly (but not later than 45 calendar days after the delivery of such
Annual Determination) give written notice to the other of its exceptions thereto
(in reasonable detail describing the nature of the disagreement asserted). If
Purchaser and Seller reconcile their differences in writing, the Annual
Determination will be adjusted accordingly and will thereupon become binding,
final and conclusive on all of the parties hereto. If Purchaser and Seller are
unable to reconcile their differences, the items in dispute will be submitted to
a mutually acceptable nationally recognized accounting firm (the "INDEPENDENT
AUDITORS") in the United States other than the Accountants for final
determination and the Annual Determination will be deemed adjusted in accordance
with the determination of the Independent Auditors and will become binding,
final and conclusive on all of the parties hereto. The Independent Auditors may
consider only the items in dispute, may reach a determination on such items only
within the range specified by Purchaser and Seller for resolving each item in
dispute and will be instructed by Purchaser and Seller to act within 90 calendar
days (or such longer period as Purchaser and Seller may agree) to resolve all
items in dispute. If Purchaser and Seller do not give notice of any exception
within 45 calendar days after the delivery of an Annual Determination or if
Purchaser and Seller give written notification of their acceptance of an Annual
Determination, such Annual Determination will thereupon become binding, final
and conclusive on all the parties hereto.
(c) In the event the Independent Auditors are for any reason unable or
unwilling to perform the services required of them under this SECTION 1.4, then
Purchaser and Seller will select another nationally recognized accounting firm
in the United States other than such firm or the Accountants to perform the
services to be performed under this SECTION 1.4 by the Independent Auditors. If
Purchaser and Seller fail to select the Independent Auditors as so required or
fail to select another accounting firm after it is determined that the
Independent Auditors will not perform the services required, or if the
Accountants are unable or unwilling to perform the Annual Determination, either
of Purchaser or Seller may request the American Arbitration Association in
New
York,
New York (the "AAA") to appoint an independent firm of certified public
accountants to perform the services required under this SECTION 1.4 by the
Independent Auditors or, if
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applicable, the Accountants. Any arbitration herein contemplated will be
conducted in
New York City. For purposes of this SECTION 1.4, the term
"INDEPENDENT AUDITORS" includes such other accounting firm chosen in accordance
with the foregoing provisions.
(d) One-half of the fees and expenses of the Independent Auditors and the
AAA will be paid by Purchaser and one-half of such fees and expenses will be
paid by Seller.
1.5. EXAMINATION OF BOOKS AND RECORDS. The parties will use their
respective reasonable best efforts to make available to all parties during
normal business hours upon reasonable advance notice all books and records,
including accountants' work papers, relevant to the calculations required under
SECTION 1.3.
1.6. PAYMENT OF THE PURCHASE PRICE. Payment of each component of the
Purchase Price will be made by Purchaser by wire transfer of immediately
available funds in accordance with SECTION 1.2. Each of the Purchase Price
payments set forth in SECTIONS 1.2(b), (c), (d), (e), (f) and (g) will be deemed
to include imputed interest, to the extent required by the Internal Revenue Code
of 1986, as amended (the "CODE").
II. REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents
and warrants to Parent and Purchaser as follows:
2.1.1 ORGANIZATION, EXECUTION AND EFFECT OF AGREEMENT. (a) Seller is a
limited liability company that (A) is duly organized, validly existing and in
good standing under the Laws of its jurisdiction of formation, (B) is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
the nature of its business makes such qualification necessary, except for such
of the foregoing in which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to prevent
or materially delay the consummation of the transactions contemplated by this
Agreement or Seller's performance of its obligations under this Agreement or any
Transaction Document to which it is or will be a party (a "SELLER MATERIAL
ADVERSE EFFECT"), (C) has the requisite power and authority to execute and
deliver this Agreement and the other documents to be delivered at the Closing
hereunder (the "TRANSACTION DOCUMENTS") to which Seller is a party and to
perform the transactions contemplated hereby and thereby to be performed by it,
and (D) has duly taken all necessary action required to be taken under
applicable Law for the due authorization of the execution and delivery by Seller
of this Agreement and the Transaction Documents to which it is a party and the
performance by it of the transactions contemplated hereby or thereby. Cinagro
has engaged in no business activities other than to facilitate the transactions
contemplated hereby, has no liabilities or obligations other than as set forth
in, and pursuant to, this Agreement or as set forth in SCHEDULE 2.1.6, and has
no assets other than the Company Shares, the Promissory Notes and any proceeds
from the exercise of the Cinagro Warrant.
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(b) This Agreement has been, and the Transaction Documents to which Seller
is a party will be, duly and validly executed and delivered by Seller and,
assuming the due execution and delivery of this Agreement by the Majority
Member, Purchaser and Parent, and assuming the due execution and delivery of the
Transaction Documents by the other parties thereto, constitute legal, valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms.
(c) Without limiting the generality or effect of any other provision
hereof, the Reorganization described in Recital A has been approved by the
Boards of Directors of Holdings and Cinagro and the Reorganization described in
Recital B has been approved by holders of the requisite number of equity
securities of Holdings. As of the date hereof, the Reorganization has been
effected in accordance with the description thereof set forth in Recitals A and
B and, as of the Closing Date, the Reorganization will have been effected in
accordance with the description thereof set forth in Recital D of this
Agreement, in each case in accordance with the constituent documents of the
parties thereto and all applicable legal requirements.
2.1.2 OWNERSHIP. (a) Cinagro has no outstanding shares of capital stock
other than 1,738,674 shares of common stock issued to Seller, which constitute
as of the date hereof and as of the Closing will constitute, all of the
outstanding shares of capital stock of Cinagro, other than the shares, if any,
redeemed by Cinagro in the Reorganization. Any Shares so redeemed will be
retired and no longer be outstanding. Seller is the true and lawful owner of
record, and has the sole voting power and sole dispositive power over, the
Cinagro Shares. The delivery of the certificates representing the Cinagro Shares
being sold by Seller will transfer to Purchaser good and valid title to the
Cinagro Shares, free of any liens, security interests or other encumbrances,
claims or voting or other restrictions (collectively, "LIENS") of any kind
adverse to Parent or Purchaser. Cinagro is the true and lawful owner of record
of, free of any Liens, and has the sole voting power and sole dispositive power
over, the Company Shares.
(b) As of the close of business on September 6, 2001, the Company Shares
comprise 51,954,975 shares of Company common stock and constitute (i) 58.7% of
the issued and outstanding shares of capital stock of the Company as of the date
hereof and (ii) 52.2% of the shares of capital stock of the Company assuming the
exercise of all Company Stock Rights. To the knowledge of Seller after due
inquiry of the officers of the Company, since September 6, 2001, there have been
no issuances of Company common stock (other than in connection with the exercise
of Company Stock Rights set forth on SCHEDULE 2.1.7).
2.1.3 NO CINAGRO OPTIONS. Except for the Warrant, dated June 14, 2001, in
favor of Xxxx Hromdako to purchase shares of common stock of Cinagro (the
"CINAGRO WARRANT"), there are no outstanding subscriptions, options, rights
(including phantom stock rights), warrants, calls, commitments, understandings,
arrangements, plans or other rights to acquire shares of capital stock of
Cinagro.
2.1.4 NO RESTRICTIONS. (a) There is no suit, action, claim, investigation
or inquiry by any court, tribunal, arbitrator, authority, agency, commission,
official or other
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instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision ("GOVERNMENTAL
AUTHORITY"), and no legal, administrative or arbitration proceeding pending or,
to the Knowledge of Seller, threatened against Seller, Cinagro, Holdings, the
Company or any of the Cinagro Shares or the Company Shares, with respect to the
execution, delivery and performance of this Agreement or any Transaction
Document, the Reorganization or the transactions contemplated hereby or thereby
or any other agreement entered into by Seller in connection with the
transactions contemplated hereby or thereby.
(b) Except as set forth on SCHEDULE 2.1.4(b), the execution and delivery
by Seller of this Agreement and the Transaction Documents to which it is a party
and the Reorganization do not and will not, and the performance by Seller of the
transactions contemplated hereby and thereby to be performed by it will not,
conflict with, or result in any material violation of, or constitute a material
default (with or without notice or lapse of time, or both) under, or require the
Company to obtain any consent, approval or action of, make any filing with or
give any notice to, or result in or give to any Person any right of payment,
reimbursement or other material benefit, or give rise to a right of termination,
cancellation, modification or acceleration of any material obligation or the
loss of a material benefit or the incurrence of a material liability, or result
in the creation or imposition of any Lien upon the Company Shares or the Cinagro
Shares, under, (i) any provision of the certificate of incorporation or bylaws
or comparable governing documents of Seller, Cinagro or the Company or (ii) to
the Knowledge of Seller, any permit or approval ("PERMIT"), if any, issued to
Seller, Cinagro, Holdings or the Company under any statute, law, rule,
regulation or ordinance (collectively, "LAWS") or any judgment, decree, order,
writ, permit or license (collectively, "ORDERS") relating to Seller, Cinagro,
Holdings or the Company, except in the case of any of the foregoing in clause
(ii) that relate to the Company that could not reasonably be expected to have a
Company Material Adverse Effect; provided that, no representation or warranty is
made by Seller in this Section 2.1.4 with respect to the Transaction.
(c) Except as set forth in SCHEDULE 2.1.4(c), the execution, delivery and
performance by Seller of its obligations under this Agreement and the
Transaction Documents to which it is a party and the Reorganization do not and
will not, and the consummation of the transactions contemplated hereby and
thereby will not, (i) result in the violation by Seller, Cinagro or the Company
of any Law or Order applicable only to it or any of the Cinagro Shares or the
Company Shares or (ii) conflict with, result in any violation or breach of,
constitute (with or without notice or lapse of time or both) a default under, or
require Seller, Cinagro or the Company to obtain any consent, approval or action
of, make any filing with or give any notice to, or result in or give to any
Person any right of payment, reimbursement or other material benefit or result
in the termination, cancellation, loss, modification or acceleration of any
material benefit or obligation or the incurrence of a material liability, or
result in the creation or imposition of any Lien upon the Cinagro Shares or the
Company Shares, under any of the terms, conditions or provisions of any
agreement, commitment, lease, license, evidence of indebtedness, mortgage,
indenture, security agreement, instrument, note, bond, franchise, permit,
concession or other instrument, obligation or agreement of any kind
(collectively, "CONTRACTS") to which Seller, Cinagro, Holdings or the Company is
a party
11
or by which Seller, Cinagro or the Company or any of their respective assets or
properties are bound, except in the case of any of the foregoing in clause (i)
or (ii) that relate to the Company that could not reasonably be expected to have
a Company Material Adverse Effect. Except as disclosed in the Company's proxy
statement filed with the SEC on June 20, 2000, the consummation of the Merger
(alone or together with the occurrence of any additional acts or events) will
not result in any severance or "parachute" payment or the acceleration of any
material benefit payable to any current or former director or officer of the
Company, or to the Knowledge of Seller after due inquiry of the officers of the
Company, any current or former employee of the Company. For purposes of this
Agreement, "COMPANY MATERIAL ADVERSE EFFECT" means any change, effect, event,
condition or exception that, individually or when taken together with all such
changes, effects, events, conditions or exceptions, has had or could reasonably
be expected to have or result in a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
2.1.5 APPROVALS AND CONSENTS. Except for the possible filing of a
pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR ACT") or as set forth on SCHEDULE 2.1.5, no material consent, approval
or action of, filing with or notice to any Person, including without limitation
any Governmental Authority, is necessary or required under any of the terms,
conditions or provisions of any Law or Order or any Contract to which Seller,
Cinagro, Holdings or the Company is a party or the Cinagro Shares or the Company
Shares are bound that has not already been obtained in connection with the
Reorganization, the execution and delivery of this Agreement and any Transaction
Documents by Seller, the performance by Seller of its obligations hereunder or
thereunder or the consummation by Seller of the transactions contemplated hereby
or thereby. Giving effect to the Reorganization, the approval of a majority of
the management board of Seller is the only action required to be taken by Seller
or its equity owners to approve the execution and delivery of this Agreement and
any Transaction Documents by Seller, the performance by Seller of its
obligations hereunder or thereunder or the consummation by Seller of the
transactions contemplated hereby or thereby.
2.1.6 NO CONTRACTS OR OTHER LIABILITIES. Except as set forth in SCHEDULE
2.1.6, none of Seller, Holdings or any director, officer, employee or
"affiliate" or any "associates" or members of the "immediate family" (as such
terms are defined in the Exchange Act) of any of the foregoing is a party to any
Contract with, or has any claim or right against, Cinagro or the Company or any
of their respective subsidiaries, other than rights to payment of salary and
welfare benefits in the ordinary course of business; provided that no
representation or warranty is made in this SECTION 2.1.6 with respect to the
Majority Member. Neither Seller, Holdings nor Cinagro nor any of their
respective subsidiaries is a party to any Contract with the Company or any of
its subsidiaries in respect of this Agreement or the transactions contemplated
hereby.
2.1.7 OPTIONS; ETC. SCHEDULE 2.1.7 sets forth a complete and accurate list
as of September 7, 2001 of each issued and outstanding warrant, option,
conversion right or
12
other right to acquire shares of capital stock of the Company (the "COMPANY
STOCK RIGHTS"), including the holder of such Company Stock Right, the date of
grant, the number of Company Shares issuable upon the exercise of such Company
Stock Right, the exercise price thereof and the number of Company Stock Rights
vested. Except as set forth in SCHEDULE 2.1.7, as of the date hereof, there are
no outstanding subscriptions, options, rights (including phantom stock rights),
warrants, calls, commitments, understandings, arrangements, plans or other
Company Stock Rights of any kind to acquire the Company Shares.
2.1.8 FINANCIAL STATEMENTS AND NO MATERIAL ADVERSE CHANGES. The following
financial statements (the "HISTORICAL FINANCIAL STATEMENTS") are contained in
the Company Filed SEC Documents or have been provided to Parent prior to the
date hereof: (i) the audited consolidated balance sheet of the Company and its
subsidiaries as of December 31, 2000 and the related audited consolidated
statement of income, stockholders' equity and cash flows for the fiscal year
then ended, as reported on by PricewaterhouseCoopers LLP, (ii) the unaudited
consolidated balance sheet and the related unaudited consolidated statement of
income, stockholders' equity and cash flows for the six months ended June 30,
2001, and (iii) the unaudited consolidated balance sheet and the related
unaudited consolidated statement of income, stockholders' equity and cash flows
for the quarter ended June 30, 2001. The Historical Financial Statements have
been prepared in accordance with GAAP, applied on a consistent basis throughout
the periods indicated. Each of the consolidated balance sheets and statements of
stockholders' equity included in the Historical Financial Statements fairly
presents, in all material respects, the financial condition of the Company and
its subsidiaries at the respective date thereof, and reflects all claims against
and all debts and liabilities of the Company and its subsidiaries, fixed or
contingent, as at the respective date thereof, required to be shown thereon
under GAAP, and the related statements of income and cash flows fairly present,
in all material respects, the results of operations and cash flows for the
respective periods indicated (subject, in the case of unaudited financial
statements, to normal recurring year-end audit adjustments and the absence of
footnotes). Except as described in the Company Filed SEC Documents, as publicly
disclosed by the Company prior to the date hereof or as set forth on SCHEDULE
2.1.8, since June 30, 2001 there has been no change that could reasonably be
expected to have or result in a Company Material Adverse Effect.
2.1.9 REPORTS. The Company has filed all reports or other filings with the
SEC that are required to be filed prior to the date hereof (all such reports and
filings filed prior to the date hereof, the "COMPANY FILED SEC DOCUMENTS"). As
of their respective dates, the Company Filed SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended, (the "SECURITIES ACT"), or the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to such Company Filed
SEC Documents, and none of the Company Filed SEC Documents when filed contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; the financial statements of the Company included in the Company
Filed
13
SEC Documents comply as to form, as of their respective dates of filing
with the SEC, in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position
and stockholders' equity of the Company and its consolidated subsidiaries as of
the dates thereof and the consolidated statement of earnings and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
recurring year-end audit adjustments).
2.1.10 CERTAIN LITIGATION MATTERS. To the Knowledge of Seller, after due
inquiry of the existing or former officers of the Company listed on SCHEDULE
2.1.10, neither the Majority Member nor any of such officers engaged in the
conduct described in Paragraphs 27, 28, 29, 31, 67, 68, 70, 71 and 72 of the
Complaint in XXXXX V. ORGANIC INC., ET AL., Civ. No. 01-4778 (S.D.N.Y.).
2.2. REPRESENTATIONS AND WARRANTIES OF THE MAJORITY MEMBER. The Majority
Member hereby represents and warrants to Parent and Purchaser as follows:
2.2.1 EXECUTION AND EFFECT OF DOCUMENT. (a) The Majority Member is an
individual who has the full legal right and capacity to execute and deliver this
Agreement and the Transaction Documents to which he is a party and to perform
the transactions contemplated hereby and thereby by him.
(b) This Agreement has been, and the Transaction Documents to which the
Majority Member is a party will be, duly and validly executed and delivered by
the Majority Member and, assuming the due execution and delivery of this
Agreement by Seller, Purchaser and Parent, and assuming the due execution and
delivery of the Transaction Documents by the other parties thereto, constitute
legal, valid and binding obligations of the Majority Member, enforceable against
the Majority Member in accordance with their respective terms.
2.2.2 OWNERSHIP OF SELLER. The Majority Member owns a majority of the
voting power and dispositive power over Seller.
2.2.3 NO RESTRICTIONS. (a) Except as set forth in SCHEDULE 2.2.3(a), there
is no suit, action, claim, investigation or inquiry by any Governmental
Authority, and no legal, administrative or arbitration proceeding pending or, to
the Knowledge of the Majority Member, threatened against the Majority Member
with respect to the execution, delivery and performance of this Agreement or any
Transaction Document, the Reorganization or the transactions contemplated hereby
or thereby or any other agreement entered into by the Majority Member in
connection with the transactions contemplated hereby or thereby.
(b) The execution, delivery and performance by the Majority Member of his
obligations under this Agreement and the Transaction Documents to which he is a
party
14
and the consummation of the transactions contemplated hereby and thereby will
not (i) result in the violation of any Law or Order applicable to the Majority
Member or (ii) conflict with, result in any violation or breach of, constitute
(with or without notice or lapse of time or both) a default under, or require
the Majority Member to obtain any consent, approval or action of, make any
filing with or give any notice to, or result in or give to any Person any right
of payment, reimbursement or other material benefit, or result in the
termination, cancellation, loss, modification or acceleration of any material
benefit or obligation or the incurrence of a material liability, or result in
the creation or imposition of any Lien upon the Company Shares, Seller or the
Cinagro Shares, under any of the terms, conditions or provisions of any Contract
to which the Majority Member is a party or by which the Majority Member or any
of its assets or properties are bound.
2.2.4 CONTRACTS. Except as described on SCHEDULE 2.2.4 or in any report or
other filing made by the Company with the Securities and Exchange Commission
(the "SEC") prior to the date hereof, the Majority Member is not party to any
Contract with, or has any claim or right against Cinagro or the Company or any
of their respective subsidiaries, other than rights to payment of salary and
welfare benefits from the Company in the ordinary course of business.
2.3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT. Each of
Purchaser and Parent hereby represents and warrants to Seller and the Majority
Member as follows:
2.3.1 ORGANIZATION, AUTHORIZATION AND EFFECT OF AGREEMENT. (a) Each of
Parent and Purchaser is a limited liability company duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
formation and is duly qualified or licensed to do business and is in good
standing as a foreign limited liability company in each jurisdiction in which
the character of the properties owned or leased by it or the nature of its
business makes such qualification necessary, except for such of the foregoing in
which the failure to be so qualified or in good standing would not, individually
or in the aggregate, reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement or Parent's or
Purchaser's performance of their respective obligations under this Agreement or
any Transaction Document to which it is or will be a party (a "PARENT MATERIAL
ADVERSE EFFECT").
(b) Each of Parent and Purchaser has the requisite power and authority to
execute and deliver this Agreement and the Transaction Documents to which it is
a party and to perform the transactions contemplated hereby and thereby to be
performed by it. All necessary action required to be taken under applicable Laws
has been duly taken for the due authorization of the execution and delivery by
Parent and Purchaser of this Agreement and the Transaction Documents to which
each of them is a party and the performance by Parent and Purchaser of the
transactions contemplated hereby or thereby. This Agreement has been, and each
of the Transaction Documents to which the Parent or Purchaser is a party will
be, duly and validly executed and delivered by each of Parent and Purchaser and,
assuming the due execution and delivery of this Agreement by each of Seller and
the Majority Member, and the due execution and
15
delivery of the Transaction Documents by the other parties thereto, constitutes
a valid and binding obligation of each of Parent and Purchaser, enforceable
against each of them in accordance with its terms.
2.3.2 NO RESTRICTIONS. The execution and delivery of this Agreement and
the Transaction Documents by each of Parent and Purchaser does not, and the
performance by Parent and Purchaser of the transactions contemplated hereby or
thereby to be performed by each of them will not, conflict with or result in any
material violation of, or constitute a material default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or the loss of a
material benefit or incurrence of a material liability under, any provision of
any operating agreement, certificate of incorporation or bylaws or comparable
governing documents of Parent and Purchaser, or any Contract or Permit
applicable to Parent or Purchaser.
2.3.3 APPROVALS AND CONSENTS. Except for the possible filing of a
pre-merger notification report by Purchaser under the HSR Act and filings that
may be required under the Exchange Act, no consent, approval or action of,
filing with or notice to any Person, including without limitation any
Governmental Authority, is necessary or required under any of the terms,
conditions or provisions of any Law or Order or any Contract to which Parent or
Purchaser is a party for the execution and delivery of this Agreement and any
Transaction Documents by Parent or Purchaser, the performance by Parent or
Purchaser of its obligations hereunder or thereunder or the consummation by
Parent or Purchaser of the transactions contemplated hereby and thereby, except,
in the case of Contracts to which Purchaser or Parent is a party, for such
consents or approvals that, if not obtained, could not reasonably be expected to
have a Parent Material Adverse Effect.
2.3.4 OWNERSHIP OF COMPANY SHARES; PARENT SEC FILINGS. As of the date of
this Agreement, Parent is the beneficial owner of 19,648,101 shares of common
stock of the Company. The Schedule 13D filed by Parent with the SEC on May 14,
2001, as amended on August 6, 2001, was true and correct in all material
respects when filed, provided, however, that neither Parent nor Purchaser makes
any representation or warranty as to the number of outstanding shares of common
stock of the Company or the number of shares of common stock of the Company
issuable upon exercise of Company Stock Rights or any percentage derived
therefrom.
2.3.5 STATUS OF PARENT. (a) Purchaser is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D of the Securities Act.
(a) Without limiting the scope or effect of any of the representations and
warranties set forth in SECTIONS 2.1 OR 2.2, Purchaser, by reason of its
business and financial experience, has such knowledge, sophistication and
experience in financial and business matters and in making investment decisions
of this type that it is capable of (i) evaluating the merits and risks of an
investment in the Cinagro Shares and making an informed investment decision,
(ii) protecting its own interest, and (iii) bearing the economic risk of such
investment for an indefinite period of time.
16
2.3.6 INVESTMENT INTENT; CERTAIN RESTRICTIONS. (a) Purchaser is acquiring
the Cinagro Shares for investment and not with the view to, or any intention of,
a resale or distribution of the Cinagro Shares, in whole or in part, or the
grant of any participation therein in violation of federal or state securities
laws. Purchaser understands that neither the Cinagro Shares nor the Company
Shares have been registered under the Securities Act or state securities laws by
reason of specific exemptions from the registration provisions of the Securities
Act and applicable state securities laws that depend upon, among other things,
the bona fide nature of Purchaser 's investment intent and the accuracy of
Purchaser 's representations as set forth in SECTION 2.3.5. Purchaser further
understands that Seller will have no obligation to register the Cinagro Shares
or the Company Shares under the Securities Act or any state securities laws or
to take any action that would make available any exemption from the registration
requirements of such laws. Purchaser hereby acknowledges that, because of the
restrictions on transfer and assignment of the Cinagro Shares and the Company
Shares, Purchaser may have to bear the economic risk of the investment in the
Cinagro Shares and the Company Shares for an indefinite period of time.
(b) Purchaser understands that there is no established trading market for
the Cinagro Shares, and that no public market for the Cinagro Shares may develop
in the future. Purchaser understands that the Cinagro Shares must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration requirement is available.
(c) Purchaser will observe and comply with the Securities Act and the
rules and regulations promulgated thereunder, as now in effect and as from time
to time amended, in connection with any offer, sale, pledge, transfer or other
disposition of the Cinagro Shares and the Company Shares. In furtherance of the
foregoing, and in addition to the other restrictions contained in this SECTION
2.3, Purchaser will not offer to sell, exchange, transfer, pledge or otherwise
dispose of any of the Cinagro Shares or the Company Shares, except pursuant to a
valid registration statement under the Securities Act or a valid exemption
therefrom.
2.3.7 RESTRICTIVE LEGEND. All certificates representing the Cinagro Shares
deliverable to Purchaser pursuant to this Agreement, and any certificates
subsequently issued with respect thereto or in substitution therefor, will bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 OR ITS SUCCESSOR RULE UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION APPLIES."
2.3.8 RESTRICTED SECURITIES. Purchaser understands that the Cinagro Shares
and the Company Shares are characterized as "restricted securities" under the
federal
17
securities laws inasmuch as they are being acquired from Seller, directly or
indirectly, in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, Purchaser represents that it is familiar with Rule 144, as
presently in effect, and understands the resale limitations imposed hereby and
by the Securities Act.
III. COVENANTS
3.1. PRESS RELEASES. The parties will endeavor to consult with each other
in good faith, to the extent reasonably practicable, with respect to any press
release or similar public announcement with respect to this Agreement or any
Transaction Document or the transactions contemplated hereby or thereby;
provided, however, that nothing herein will prohibit any party from issuing or
causing publication of any such press release or public announcement to the
extent that such party determines such action to be required by Law or the rules
of the Nasdaq or any national stock exchange applicable to it or its Affiliates.
3.2. REGULATORY FILINGS. (a) The parties will cooperate to determine if a
filing under the HSR Act is required in connection with the transactions
contemplated by this Agreement and, if required, will file or cause to be filed
as promptly as practicable with the United States Federal Trade Commission and
the United States Department of Justice all filings and any supplemental
information that may be requested pursuant to the HSR Act; provided that, at the
election of Parent and subject to the consent of Seller (which consent will not
be unreasonably withheld or delayed), Parent, Purchaser and Seller may defer the
filing of any pre-merger notification report under the HSR Act until promptly
after the execution by Parent and the Company of a definitive agreement in
respect of the Transaction contemplated by the Public Letter. If applicable to
the consummation of the transactions contemplated by this Agreement, Purchaser
and Parent will each make such filings and use their respective reasonable best
efforts to obtain all Permits required by Law. Each of Seller and the Majority
Member will, and will cause the Company to, make such filings and use its
reasonable best efforts to obtain the governmental approvals referred to in
SECTION 2.1.5. Purchaser and Parent will each make such filings and use their
respective reasonable best efforts to obtain the governmental approvals referred
to in SECTION 2.3.3. All filings referred to in this SECTION 3.2(a) will comply
in all material respects with the requirements of the respective Laws pursuant
to which they are made.
(b) Without limiting the generality or effect of SECTION 3.2(a), each of
the parties will (i) use their respective reasonable best efforts to comply as
expeditiously as possible with all lawful requests of Governmental Authorities
for additional information and documents pursuant to the HSR Act, if applicable,
(ii) not (A) extend any waiting period under the HSR Act, if applicable, or (B)
enter into any agreement with any Governmental Authority not to consummate the
transactions contemplated by this Agreement or any Transaction Document, except
with the prior consent of Seller, in the case of Parent and Purchaser, or
Parent, in the case of Seller or the Majority Member, and (iii) cooperate with
each other and use their respective reasonable best efforts to
18
cause the lifting or removal of any temporary restraining order, preliminary
injunction or other judicial or administrative order which may be entered into
in connection with the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, in no
event will Parent or Purchaser or any of their Affiliates be required to divest,
hold separate or otherwise limit, or enter into any agreement to divest, hold
separate or otherwise limit, any of their respective assets or businesses or any
portion of the business of the Company.
3.3. INJUNCTIONS. Without limiting the generality or effect of any
provision of SECTION 3.2 or ARTICLE IV, if any Governmental Authority having
jurisdiction over any party issues or otherwise promulgates any injunction,
decree or similar order prior to the Closing that prohibits the consummation of
the transactions contemplated hereby, the parties will use their respective
reasonable best efforts to have such injunction dissolved or otherwise
eliminated as promptly as possible and, prior to or after the Closing, to pursue
the underlying litigation diligently and in good faith.
3.4. SATISFACTION OF CONDITIONS. Without limiting the generality or effect
of any provision of ARTICLE IV, but subject to SECTION 3.2(b), prior to the
Closing, each of the parties hereto will use his or its reasonable best efforts
with due diligence and in good faith to satisfy promptly all conditions required
hereby to be satisfied by such party in order to expedite the consummation of
the transactions contemplated hereby.
3.5. CERTAIN COVENANTS. Until the second anniversary of the Closing,
without further action, the Majority Member and Seller will comply with the
non-solicitation, confidentiality and other covenants or obligations contained
in SECTION 10 of the Incentive Plan as if they were Grantees thereunder.
3.6. APPOINTMENT OF SELLER'S REPRESENTATIVE. (a) Seller hereby designates,
appoints and authorizes any two members of Seller's management board ("SELLER'S
REPRESENTATIVE") to serve as Seller's exclusive representative and
attorney-in-fact to make any and all decisions, grant or withhold any and all
consents and waivers, give or accept any and all instructions and notices, and
take any and all other actions as are contemplated to be taken by or on behalf
of Seller by the terms of this Agreement or any Transaction Document.
(b) Any decision or act of Seller's Representative will constitute a
decision or act of Seller, and will be final, binding and conclusive upon
Seller. Parent and Purchaser may conclusively rely upon any decision or act of
Seller's Representative as being the decision or act of Seller and Seller will
not have the right to object, dissent, protest or otherwise contest the same.
3.7. RESTRICTED ACTIVITIES. (a) If the Closing occurs, until the earlier
of the expiration of the Measuring Period and payment to Seller of the entire
amounts payable under SECTION 1.2 (the "COVENANT PERIOD"), except (1) as
expressly contemplated by this Agreement, (2) for transactions in which the
Company or its successors become a wholly owned subsidiary (disregarding the
Class A Common Stock (as defined in the Incentive Plan) for this purpose) of
another Person in a transaction pursuant to which
19
the Person assumes the covenants in this SECTION 3.7, (3) as approved by Seller
in writing, (4) for such of the following as do not reduce Revenues, Margin or
PBT in or for any Measuring Period (the parties acknowledging that Parent will
have the burden of proof as to any such matter by clear and convincing
evidence), and (5) as provided in SECTION 3.7(b), none of Parent, Purchaser or
any of their respective Affiliates (collectively, "PURCHASER ENTITIES") will,
and each of them will cause any entity that becomes an assignee of the Cinagro
Shares or the Company Shares as permitted hereby not to, cause the Company to
take any of the following actions:
(i) except (A) for transactions covered by Purchase Accounting
Accruals or restructuring reserves contemplated by SECTION 1.3(b)(xiii),
(B) in connection with the closure, consolidation or relocation of one or
more offices of the Company, (C) for sales or other dispositions involving
a gross sales price valued in accordance with GAAP at under $5.0 million,
or (D) as a result of or following the consummation of reorganization or
bankruptcy proceedings, voluntarily sell or otherwise dispose of any
material portion of the assets of the Company through a transaction or
series of related transactions outside the normal course of business;
(ii) enter into any line of business that is not in the good faith
business judgment of a majority of the Company's Board of Directors
reasonably related to the business then being conducted by the Company and
its subsidiaries;
(iii) acquire the stock, assets or business of another Person in
which any Purchaser Entity has a Substantial Equity Interest (other
than Cinagro);
(iv) change its name;
(v) change any accounting policy, other than to the extent required
by law, rule, regulation or GAAP, if the effect thereof reduces Revenues,
Margin or PBT in or for any Measuring Period;
(vi) amend its certificate of incorporation, bylaws or other
comparable organizational documents if the effect thereof reduces
Revenues, Margin or PBT in or for any Measuring Period;
(vii) except for any transaction on arm's length terms (as
determined by a majority of the Company's Board of Directors in good
faith) or which Purchaser and Seller believe in good faith at the time
thereof is not reasonably likely to have an adverse effect on PBT,
engage in any material transaction with a Purchaser Entity; or
(viii) effect any transaction (or series of transactions) that
would result in a Change in Control other than a Transaction.
For purposes of this Agreement, a (1) "CHANGE OF CONTROL" means (A) any
consolidation or merger of the Company with or into any other corporation or
corporations in which the holders of the Company's outstanding shares
immediately
20
before such consolidation or merger do not, immediately after such consolidation
or merger, retain stock representing a majority of the voting power of the
surviving corporation of such consolidation or merger or stock representing a
majority of the voting power of a corporation that wholly owns, directly or
indirectly, the surviving corporation of such consolidation or merger or (B) the
sale, transfer or assignment of securities of the Company representing a
majority of the voting power of all the Company's outstanding voting securities
by the holders thereof to an acquiring party other than any transaction in (A)
or (B) in which one or more of the beneficial owners of stock of Parent (or a
subsidiary of such owner) are the acquiring or purchasing party in a single
transaction or series of related transactions and (2) "SUBSTANTIAL EQUITY
INTEREST" means beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of more than 20% of the equity, measured by either voting stock or
aggregate equity interest, of a corporation or other legal entity.
(b) Notwithstanding the foregoing, the Company may complete any
transaction or take any action of a type otherwise prohibited by SECTION 3.7(a)
if Parent provides Seller written notice thereof not less than ten business days
prior to completing the transaction or taking the action and, in such written
notice, offers to pay Seller Fair Value within five business days after the
determination thereof as hereafter provided (a "FAIR VALUE OFFER" and such
transaction, a "FAIR VALUE TRANSACTION"). Seller may, within five business days
after receiving a Fair Value Offer from Parent, either (i) accept the Fair Value
Offer, in which case Fair Value will be determined in accordance with this
SECTION 3.7(b), or (ii) reject the Fair Value Offer, in which case SECTION 1.2
will remain in effect; provided, however, that if the Seller rejects the Fair
Value Offer and a transaction or action otherwise prohibited by SECTION 3.7(a)
is closed or completed by the Company, (A) if the transaction involves a merger,
consolidation or other business acquisition or combination transaction in which
Company Shares or Cinagro common stock is converted into common stock or voting
preferred stock of another person and the Company merges or consolidates with or
becomes a subsidiary of another entity, then (1) the O Multiple will, without
any further action, automatically be adjusted to the product of the O Multiple
immediately prior to such transaction and a fraction, the numerator of which is
the number of common shares (on an as-converted basis) of the acquiring,
surviving or resulting entity (such entity, the "ACQUIRING PERSON" and such
shares, the "ACQUIRING PERSON SHARES") received in the transaction by all
holders of Company Shares or Cinagro common shares (as applicable) and the
denominator of which is the total number of Acquiring Person Shares (on an
as-converted basis) outstanding immediately after the transaction and (2) "PBT,"
"Revenues" and "Net Income" from and after the closing of such transaction will
be calculated for all purposes of this Agreement on the basis of the
consolidated PBT, Revenues and Net Income of the surviving, resulting or
combined entity in such transaction and (B) as to any other transaction, the
definitions of "O Multiple," "PBT," "Revenues" and "Net Income" will be amended
in such manner as agreed to by Parent and Seller or, absent such agreement, as
Parent shall determine in good faith based on the effect such transaction would
have thereon so as not to result in any material change in the amount payable
pursuant to SECTION 1.2 giving effect to such transaction. Parent will inform
Seller in writing (a "CHANGE NOTICE") of any changes referred to in clause (B)
of the immediate preceding
21
sentence within 30 calendar days after the closing of such transaction. Seller
will promptly (and in any event within 30 calendar days following delivery of a
Change Notice) give written notice to Parent of any objection to the Change
Notice. If Parent and Seller reconcile their differences in writing or Seller
fails to give Parent written notice of its objections to the Change Notice
within such 30-day period, this Agreement will be amended accordingly without
any further action and will thereupon become binding, final and conclusive on
all of the parties hereto. If Parent and Seller are unable to reconcile their
differences in writing within 30 calendar days after delivery to Parent of
Seller's objection to the Change Notice (the "FIRST NEGOTIATION PERIOD"), the
Fair Value Transaction may nonetheless be completed, in which event Parent and
Seller will determine Fair Value as provided in the definition thereof as
promptly as practicable after expiration of the First Negotiation Period (the
"SECOND NEGOTIATION PERIOD") and, if Parent and Seller are unable to reach
agreement on the determination of Fair Value during the Second Negotiation
Period, the dispute between Seller and Parent relating to Fair Value will be
determined in accordance with the dispute resolution procedures set forth below
in this SECTION 3.7(b). For purposes of this Agreement, "FAIR VALUE" means the
difference, if positive, between (x) the "fair value" (using such valuation
techniques that are appropriate for valuing the Company as a "going concern" and
assuming that Section 262(h) of the General Corporation Law of the State of
Delaware applies and Seller is entitled to exercise appraisal rights in respect
of the Relevant Shares in connection with the transaction or action at issue)
that would be payable in respect of a number of common shares of the Company
equal to the product of the O Multiple immediately prior to the completion of
the transaction TIMES the number of all such outstanding shares at such time
(the "RELEVANT SHARES"), as jointly determined by agreement of Parent and Seller
and determined at the time of a Fair Value Offer LESS (y) the sum of (1) all
amounts previously paid to Seller under Article I hereof and (2) all dividends
or distributions of cash or other property paid in respect of the Relevant
Shares, or, absent such agreement, such amount calculated by either Parent or
Seller in good faith and submitted in writing to the other prior to the
expiration of the Second Negotiation Period. For all purposes of this Agreement,
"FAIR VALUE" will be calculated exclusive of any element of value arising from
the transaction or action at issue. If Parent and Seller are unable to reach
agreement as to Fair Value during the Second Negotiation Period, Fair Value will
be determined by an investment banking firm or group of national reputation
jointly selected by Parent and Seller (or, if they cannot agree upon such
financial advisor within ten calendar days after expiration of the Second
Negotiation Period, as selected by lot by the Chairman of the Board of the
Company from a group including three such firms or groups submitted by each of
Parent and Seller together with a certification that the submitting Person has
not paid over $100,000 in fees or other compensation to any such firm within the
preceding 24 months) (the "FINANCIAL ADVISOR"). In making the determination
herein contemplated, the Financial Advisor may consider only the items in
dispute, may only select the estimate submitted to either Parent or Seller by
the other and will be instructed by Parent and Seller to act within 90 calendar
days (or such longer period as Parent and Seller may agree) to resolve all items
in dispute. Any determination herein contemplated to be made by the Financial
Advisor will be conclusive and binding on the parties hereto. One-half of the
fees and expenses of the Financial Advisor will be paid
22
by Parent and one-half of such fees and expenses will be paid by Seller. The
parties will use their respective reasonable best efforts to make available to
all parties during normal business hours upon reasonable advance notice all
books and records, including accountants' work papers, relevant to the
calculations contemplated by this SECTION 3.7(b). Payment of Fair Value as
determined herein will be made, without interest, by wire transfer of
immediately available funds in accordance with SECTION 1.2 within five business
days of the determination thereof as provided herein, whereupon Purchaser and
Parent will have no further rights or obligations under SECTION 1.2 or this
SECTION 3.7.
(c) During the Covenant Period, Purchaser and Parent will, and each of
them will cause Cinagro and any other entity that becomes an assignee of the
Company Shares as permitted hereby to, vote their shares of common stock (and
cause their Affiliates to vote their shares of common stock) of the Company in
favor of the election to the Board of Directors of the Company of a designee of
Seller; provided, however, that unless such designee is the Majority Member,
this covenant will not apply to any designee as to whom Parent objects in good
faith (whereupon Seller may submit an alternative designee until Parent does not
so object) or to any designee who has a direct or indirect economic interest in
any Person whose primary business is competitive with any business of the
Company.
3.8. OPERATION OF THE BUSINESS. Subject to applicable fiduciary duties of
the parties, if any, except (a) for matters publicly disclosed by the Company on
or prior to the date hereof, (b) as expressly contemplated by this Agreement, or
(c) as otherwise consented to by Parent (on behalf of itself and Purchaser) in
writing, prior to the Closing, neither Seller nor the Majority Member will vote
in favor of or take any affirmative action that would result in the Company or
its subsidiaries:
(i) not keeping their respective businesses intact;
(ii) taking or permitting to be taken or doing or suffering to be
done anything other than in the ordinary course of their respective
businesses as presently conducted;
(iii) not carrying on their respective businesses in compliance with
all applicable Laws;
(iv) not keeping intact their respective business organizations;
(v) not preserving and maintaining the goodwill associated with
their respective businesses or their relationships with their respective
officers, employees, clients, suppliers, licensors and others with whom
they have a material relationship;
(vi) issuing any of its equity securities or options or other rights
in respect of or measured by its equity securities to officers, directors
or employees
23
of the Company, other than pursuant to Company Stock Rights outstanding
on the date hereof; or
(vii) making any payment or being obligated to make any payment or
have any future liability in respect of Company Stock Rights after the
consummation of a Merger, other than the obligation to pay the positive
difference, if any, between the per share price paid to all stockholders
of the Company (other than Parent and its Affiliates) in the Merger and
the exercise price thereof.
Nothing in this SECTION 3.8 will restrict the Company from taking any action
specified in clauses (i) through (vii) of this SECTION 3.8.
3.9. EQUITY INCENTIVE PLAN. (a) Prior to the Transaction Closing, each of
Parent and Purchaser will, and each of them will cause Cinagro and any other
entity that becomes an assignee of the Company Shares as permitted hereby, to
vote shares of common stock (and cause their Affiliates to vote their shares of
common stock) of the Company owned by any of them in favor of adopting the
equity incentive plan attached hereto as EXHIBIT A (together with the stock
award agreements thereunder, the "INCENTIVE PLAN") if approved by the Board of
Directors of the Company and submitted to a vote of the stockholders of the
Company. After the Transaction Closing, if not previously adopted, each of
Parent and Purchaser will, and each of them will cause Cinagro and any other
entity that becomes an assignee of the Company Shares as permitted hereby to,
cause the Company to duly adopt the Incentive Plan.
(b) Attached as ANNEX B to the Incentive Plan is a list of initial stock
awards (expressed as a percentage ownership interest in the Company) presently
expected to be granted under the Incentive Plan. The grant of stock awards under
the Incentive Plan will, in each case, be subject to the terms and conditions
set forth in the Incentive Plan and any required stockholder approvals.
3.10. NO OTHER REPRESENTATIONS OR WARRANTIES. (a) Each of Parent and
Purchaser acknowledges and agrees that, except for the representations and
warranties (including the Schedules with respect thereto) made by Seller and
expressly set forth in SECTION 2.1 of this Agreement, neither Seller nor any
representative of Seller has made and will not be construed as having made to
Parent or Purchaser or to any of their respective representatives, and none of
Parent, Purchaser or any of their respective representatives have relied upon,
any representation or warranty of any kind. Without limiting the generality of
the foregoing, and notwithstanding any express representation and warranty made
by Seller in SECTION 2.1 hereof, each of Parent and Purchaser agrees that
neither Seller nor any representative of Seller makes or has made any
representation or warranty to the Parent or Purchaser or to any of their
respective representatives with respect to any estimates, projections and other
forecasts relating to the Cinagro Shares or the Company Shares, and plan and
budget information with respect thereto or, except to the extent and as
expressly covered by a representation and warranty of Seller contained in
SECTION 2.1 hereof, with respect to any other statements, documents or other
information heretofore or hereafter delivered
24
to or made available to Parent or Purchaser or to any of their respective
representatives and that neither Parent nor Purchaser will assert any claim
against Seller or any of its directors, officers, employees, agents,
stockholders, or representatives, or hold Seller or any such persons liable with
respect thereto.
(b) Each of Parent and Purchaser acknowledges and agrees that, except for
the representations and warranties (including the Schedules with respect
thereto) made by the Majority Member and expressly set forth in SECTION 2.2 of
this Agreement, neither the Majority Member nor any of his representatives has
made and will not be construed as having made to Parent or Purchaser or to any
of their respective representatives, and none of Parent, Purchaser or any of
their respective representatives have relied upon, any representation or
warranty of any kind. Without limiting the generality of the foregoing, and
notwithstanding any express representation and warranty made by the Majority
Member in SECTION 2.2 hereof, each of Parent and Purchaser agrees that neither
the Majority Member nor any of his representatives makes or has made any
representation or warranty to the Parent or Purchaser or to any of their
respective representatives with respect to any estimates, projections and other
forecasts relating to the Company Shares, and plan and budget information with
respect thereto or, except to the extent and as expressly covered by a
representation and warranty of the Majority Member contained in SECTION 2.2
hereof, with respect to any other statements, documents or other information
heretofore or hereafter delivered to or made available to Parent or Purchaser or
to any of their respective representatives and that neither Parent nor Purchaser
will assert any claim against the Majority Member or any of his agents or
representatives, or hold the Majority Member or any such persons liable with
respect thereto.
3.11. POSSIBLE TRANSACTION WITH THE COMPANY. Substantially simultaneously
with the execution of this Agreement, Parent will submit the Public Letter to
the Company. Parent presently intends to pursue the transactions contemplated by
the Public Letter in good faith; provided, however, the failure of Parent to
pursue or consummate such transactions will not be deemed a breach of this
Agreement. If Parent or Purchaser acquires at least 90% of the outstanding
voting stock of the Company in a Transaction, Parent will endeavor in good faith
to effect or to cause Purchaser to effect a Merger within 45 days after the
closing of such acquisition.
3.12. MAINTENANCE OF EXISTENCE AND CASH. (a) Until all of the payments to
be made to Seller pursuant to Section 1.2 have been finally determined and paid,
Seller will maintain its existence as a Delaware limited liability company and,
except as set forth in Section 3.12(b), will not liquidate, dissolve or
distribute all or substantially all of its assets.
(b) Notwithstanding any other provision hereof, until the later of (i)
April 1, 2003 and (ii) the payment of all liabilities and obligations of Seller
under SECTION 5.3(a) for claims asserted hereunder on or prior to April 1, 2003,
Seller will not (A) distribute any cash or other assets to any of its equity
holders, (B) lend any cash or other assets to any Person, or (C) purchase or
redeem any of its capital stock unless in any such case it obtains a written
undertaking in form and substance reasonably satisfactory to Parent
25
and duly executed by such equity holder or Person wherein such equity holder or
Person agrees, for the direct benefit of Parent and Purchase, to severally
guarantee Seller's performance of its obligations under SECTION 5.3 in
substantially the form of SCHEDULE 3.12(b); provided, however, that this SECTION
3.12 will not apply with respect to the distribution by Seller of IP-1 (x) to
its equity holders directly or as part of a purchase or redemption of equity or
similar transaction or (y) in respect of fees and expenses payable by Seller.
3.13. RESERVED
3.14. ACTIONS IN RESPECT OF PLEDGED SECURITIES. Seller will take such
action in respect of the shares of Holdings (and any Units issued in respect
thereof) that are held beneficially or of record by Xxxxxxx Xxxxx and pledged to
Omnicom Finance Inc. ("OFI", and such securities, the "PLEDGED Securities") as
OFI may request in exercising all rights of ownership in respect of the Pledged
Securities, including without limitation (i) delivering all dividends,
distributions or other payments in respect of any purchase, exchange, redemption
or other acquisition or retirement of any of the Pledged Securities and (ii)
registering the Pledged Securities in the name of OFI; provided that OFI
indemnifies Seller for any Indemnifiable Loss in respect of any action requested
to be taken by Seller pursuant to this SECTION 3.14 (it being understood and
agreed that the parties will follow the procedures set forth in SECTION 5.5 of
this Agreement in respect of any claim by Seller for indemnity pursuant to this
SECTION 3.14).
3.15. DISCLOSURE SCHEDULES. From time to time prior to the Closing Date,
Seller will promptly supplement or amend the Schedules referred to in SECTION
2.1 with respect to any matter arising after the date of this Agreement for
which Seller has Knowledge which, if existing or occurring at or prior to the
date of this Agreement, would have been required to be set forth or described in
such Schedules. For purposes of determining the accuracy of the representations
and warranties of the Seller contained in SECTION 2.1 in order to determine the
fulfillment of the condition set forth in SECTION 4.2.1 or to determine Parent's
rights to be indemnified as set forth in ARTICLE V below, the Schedules
delivered by Seller shall be deemed to include only that information contained
therein on the date of this Agreement and shall be deemed to exclude any
information contained in any subsequent supplement or amendment thereto unless
accepted in writing by Parent in its sole discretion.
IV. THE CLOSING
4.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER, PARENT, SELLER AND
THE MAJORITY MEMBER. The obligations of each of Purchaser, Parent, Seller and
the Majority Member under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to the
Closing, of the following conditions:
4.1.1 RESTRAINING ACTION. There shall not have been entered a preliminary
or permanent injunction, temporary restraining order or other judicial or
administrative order or decree in any jurisdiction, the effect of which
prohibits the Closing; and
26
4.1.2 HSR. The waiting period under the HSR Act, if applicable, shall have
expired or been terminated.
4.2. ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND
PARENT. The obligations of Purchaser and Parent under this Agreement to
consummate the transactions contemplated hereby will be subject to the
satisfaction, at or prior to the Closing, of all of the following conditions,
any one or more of which may be waived at the option of Parent:
4.2.1 NO MATERIAL MISREPRESENTATION OR BREACH. (a) There shall have been
no material breach by Seller or the Majority Member in the performance of any of
the covenants herein to be performed by it or him in whole or in part prior to
the Closing, (b) the representations and warranties of Seller or the Majority
Member contained in this Agreement (i) that are not qualified as to materiality
or material adverse effect shall be true and correct in all material respects
and (ii) that are so qualified by materiality or material adverse effect shall
be true and correct, in each case on the date hereof and as of the Closing Date
as if made anew on the Closing Date, except in each case for representations or
warranties made as of a specified date, which shall be so true and correct as of
the specified date, and (c) Seller and the Majority Member shall have delivered
to Purchaser and Parent a certificate certifying each of the foregoing, dated as
of the Closing Date and signed by each of Seller and the Majority Member, as the
case may be;
4.2.2 SURRENDER AND ISSUANCE OF CERTIFICATES. Seller shall have delivered
to Purchaser certificates representing the Cinagro Shares, together with such
other documents and instruments, if any, as may be necessary to permit Purchaser
to acquire the Cinagro Shares, free and clear of any and all Liens;
4.2.3 LITIGATION. No action, suit or proceeding shall be pending against
Parent, Purchaser, Seller, Cinagro, Holdings, the Majority Member or the Company
or any of their respective Affiliates by or before any Governmental Authority
which Parent determines after consultation with counsel presents a substantive
risk of personal liability or expense to Parent, Purchaser, Cinagro or the
Company based upon this Agreement or the transactions contemplated hereby;
4.2.4 PROMISSORY NOTES. The Promissory Notes shall have been dividended by
Cinagro to Seller or sold to Seller in redemption of a portion of the Cinagro
Shares, in each case pursuant to documentation reasonably satisfactory to
Purchaser;
4.2.5 CINAGRO WARRANT. Seller shall have satisfied all of its obligations,
if any, in respect of the Cinagro Warrant pursuant to the letter agreement
attached hereto as SCHEDULE 4.2.5 and the Cinagro Warrant shall have expired in
accordance with its terms, without further action, as of the Closing;
4.2.6 LEGAL OPINION. Xxxxxxxx & Xxxxxxxx LLP, counsel to Seller, shall
have delivered to Parent and Purchaser a legal opinion in substantially the form
of SCHEDULE 4.2.6;
27
4.2.7 STOCK RIGHTS, ETC. After June 30, 2001, the Company shall not have
(x) issued any equity securities (other than upon exercise or settlement of
Company Stock Rights listed on SCHEDULE 2.1.7) or (y) granted, sold or otherwise
issued any Company Stock Rights (other than as listed on SCHEDULE 2.1.7);
4.2.8 LEASE AMENDMENT. The transactions contemplated by the letter
agreement, attached as SCHEDULE 4.2.8, shall have been consummated in accordance
with documentation reflecting the express terms of such letter agreement and
such other terms that are not materially inconsistent with the express terms of
such letter agreement;
4.2.9 NO DEFAULTS. No event shall have occurred which, with or without
notice or lapse of time or both, constitutes a default or event of default under
any Material Contract. For purposes of this Agreement, the term "MATERIAL
CONTRACT" means any (i) Contract to which the Company or any of its Subsidiaries
is a party that has been, or is required to be, filed by the Company with the
SEC, (ii) material real estate or material equipment lease to which the Company
or any of its Subsidiaries is a party, (iii) Contract evidencing debt for
borrowed money of the Company or any of its Subsidiaries, or any such obligation
of any other Person for which the Company or any of its Subsidiaries has
guaranteed or may otherwise be held liable (other than, in any such case, any
such Contract, as in effect on the date hereof, with Omnicom Group Inc. or any
of its Affiliates), or (iv) Contract the consequences of a breach of which has
had or is reasonably likely to have a Company Material Adverse Effect;
4.2.10 NO MAE. No event shall have occurred or be threatened to have
occurred, including without limitation any development relating to a material
client, which Parent determines in good faith has had or is reasonably likely to
have a Company Material Adverse Effect; and
4.2.11 CONSENTS. All consents, approvals and waivers required to be
obtained, and all notices required to be given, in each case under any of the
Contracts specified in items 2 through 12 of SCHEDULE 2.1.4(c) shall have been
received or given, respectively.
4.3. ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND THE
MAJORITY MEMBER. The obligations of Seller and the Majority Member under this
Agreement to consummate the transactions contemplated hereby will be subject to
the satisfaction, at or prior to the Closing, of all the following conditions,
any one or more of which may be waived by Seller at its option:
4.3.1 NO MATERIAL MISREPRESENTATION OR BREACH. (a) There shall have been
no material breach by either Purchaser or Parent in the performance of any of
the covenants herein to be performed by either of them in whole or in part prior
to the Closing, (b) the representations and warranties of Parent and Purchaser
contained in this Agreement (i) that are not qualified as to materiality or
material adverse effect shall be true and correct in all material respects and
(ii) that are so qualified by materiality or material adverse effect (if any)
shall be true and correct, in each case on the date
28
hereof and as of the Closing Date as if made anew on the Closing Date, except in
each case for representations or warranties made as of a specified date, which
shall be so true and correct as of the specified date, and (c) an officer of
each of Purchaser and Parent shall have delivered to Seller and the Majority
Member a certificate certifying each of the foregoing, dated as of the Closing
Date and signed by one of its officers;
4.3.2 CLOSING PAYMENT. Purchaser shall have delivered to Seller IP-1 in
the manner specified in SECTION 1.6; and
4.3.3 LITIGATION. No action, suit or proceeding shall be pending against
the Majority Member, Seller, Cinagro or Holdings by or before any Governmental
Authority on behalf of any third party (other than any current or former equity
owner of Seller or Holdings) which Seller determines after consultation with
counsel presents a substantive risk of personal liability or expense to Seller,
the Majority Member of Holdings based upon this Agreement or the transactions
contemplated hereby and as to which Parent has not, after initiation of such
action, suit or proceeding, expressly undertaken in writing fully to indemnify
Seller and the Majority Member and their respective Affiliates for all
Indemnifiable Losses resulting therefrom (excluding, however, Indemnifiable
Losses to the extent resulting from the Reorganization or from any Knowing
violation of Law or gross negligence of any such Person).
4.4. THE CLOSING. Subject to the fulfillment or waiver of the conditions
precedent specified in SECTIONS 4.1, 4.2 and 4.3, the consummation of the
purchase of the Cinagro Shares (the "CLOSING") will take place on the first
Business Day after the conditions set forth in SECTIONS 4.1, 4.2 and 4.3 have
been satisfied or waived or such other date as the parties agree in writing to
be the date of the closing (the "CLOSING DATE"). The Closing will take place at
10:00 a.m., Eastern time, at the offices of Xxxxx, Day, Xxxxxx & Xxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, or by the exchange of documents and
instruments by mail, courier, telecopy and wire transfer to the extent mutually
acceptable to the parties hereto. Notwithstanding any other provision hereof,
(a) Purchaser may delay the Closing Date to the business day after completion of
a Transaction ("T+1") and (b) at the request of Seller, the Closing Date will be
extended until T+1 or, if earlier, the seventh business day after the Public
Letter shall have been withdrawn ("T+7") and Parent shall have notified Seller
within five business days after the Public Letter shall have been withdrawn that
it desires to complete the Closing on T+7.
4.5. TERMINATION. Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated at any time prior to the Closing:
(i) By the mutual written consent of Parent and Seller;
(ii) By either Parent or Seller, if the Closing shall not have
occurred on or before February 28, 2002 (the "TERMINATION DATE"),
provided, however, that the right to terminate this Agreement pursuant to
this SECTION 4.5(a)(ii) will not be available to any party whose breach of
any provision of this Agreement results in the failure of the Closing to
occur by such time;
29
(iii) By either Parent or Seller if at any time after December 31,
2001 the Public Letter shall have been withdrawn by Parent and Parent
shall not have made another proposal in good faith to acquire all of the
Company's common stock in a Transaction;
(iv) By either Parent or Seller if there shall have been entered a
final, nonappealable order or injunction of any Governmental Authority
restraining or prohibiting the consummation of the transactions
contemplated hereby or any material part thereof;
(v) By Parent if Seller or the Majority Member shall have (i) failed
to perform any obligation or to comply with any agreement or covenant of
Seller or the Majority Member under this Agreement or (ii) breached any of
its representations or warranties, in each case such that the condition in
SECTION 4.2.1 would not be satisfied, which failure has not been cured
within ten calendar days of written notice from Parent; or
(vi) By Seller if Parent or Purchaser shall have (i) failed to
perform any obligation or comply with any agreement or covenant of Parent
or Purchaser under this Agreement or (ii) breached any of its
representations or warranties, in each case such that the condition in
SECTION 4.3.1 would not be satisfied, which failure has not been cured
within ten calendar days of written notice from Seller.
(b) In the event of the termination of this Agreement under this SECTION
4.5, each party hereto will pay all of its own fees and expenses. There will be
no further liability hereunder on the part of any party hereto if this Agreement
is so terminated, except by reason of a prior breach of any representation,
warranty or covenant contained in this Agreement.
V. SURVIVAL AND INDEMNIFICATION
5.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) Each of
the representations and warranties contained in ARTICLE II will survive the
Closing and remain in full force and effect until the first anniversary of the
Closing Date; provided, however, that the representations and warranties
contained in SECTIONS 2.1.1, 2.1.2, 2.1.3, 2.1.6, 2.1.7, 2.1.10, 2.2.1, 2.2.2,
2.2.3, 2.2.4, 2.3.1, 2.3.2, 2.3.3, 2.3.5, 2.3.6 and 2.3.8 will survive the
Closing and remain in full force and effect for the period of the applicable
statute of limitations. Any claim for indemnification with respect to any of
such matters that is not asserted by a written notice given as herein provided
specifically identifying the particular breach underlying such claim and the
facts and Indemnifiable Loss relating thereto within such specified period of
survival may not be pursued and is hereby irrevocably waived.
(b) All covenants contained in this Agreement will survive the Closing and
remain in effect indefinitely unless a specified period is otherwise set forth
in this Agreement (in which event such specified period will control).
30
5.2. DEFINITIONS; LIMITATIONS ON LIABILITY. (a) For purposes of this
Agreement, (i) "INDEMNITY PAYMENT" means any amount of Indemnifiable Losses
required to be paid pursuant to this Agreement, (ii) "INDEMNITEE" means any
Seller Indemnified Party or Purchaser Indemnified Party, (iii) "INDEMNIFYING
PARTY" means any Person required to provide indemnification under this
Agreement, (iv) "INDEMNIFIABLE LOSSES" means any and all claims, demands,
actions, suits or proceedings (by any Person, including without limitation any
Governmental Authority), settlements and compromises relating thereto and
reasonable attorneys' fees and expenses in connection therewith, losses,
liabilities, damages, costs and expenses (other than indirect and punitive
damages and other than consequential damages to the extent relating to decreases
in value of the business of the Company and lost profits), and (v) "THIRD PARTY
CLAIM" means any claim, demand, action, suit or proceeding made or brought by
any Person that is not a party to this Agreement or an Affiliate of a party to
this Agreement.
(b) Notwithstanding any other provision hereof, (i) no claim or claims for
indemnification pursuant to SECTION 5.3(a)(i) or SECTION 5.3(b)(i) may be
asserted against Seller or the Majority Member, as the case may be, unless the
amount of the Indemnifiable Losses for which Seller or the Majority Member
(determined on a combined basis) would otherwise be required to indemnify a
Purchaser Indemnified Party exceeds $250,000 in the aggregate, provided,
however, that this SECTION 5.2(b)(i) will not apply to Indemnifiable Losses
relating to, resulting from or arising out of a breach of representation or
warranty of Seller under SECTIONS 2.1.1, 2.1.2, 2.1.3, or 2.1.6, or the Majority
Member under SECTIONS 2.2.1, 2.2.2, 2.2.3 or 2.2.4 and (ii) no claim or claims
for indemnification pursuant to SECTION 5.3(c)(i) may be asserted against Parent
or Purchaser unless the amount of the Indemnifiable Losses for which Parent or
Purchaser would otherwise be required to indemnify a Seller Indemnified Party
exceeds $250,000 in the aggregate, provided, however, that this SECTION
5.2(b)(ii) will not apply to Indemnifiable Losses relating to, resulting from or
arising out of a breach of representation or warranty of Parent or Purchaser
under SECTIONS 2.3.1, 2.3.2, 2.3.3, 2.3.5, 2.3.6 or 2.3.8.
(c) Notwithstanding any other provision of this Agreement, if the Closing
occurs, (i) the aggregate indemnification obligations of Seller under SECTION
5.3(a)(i) and SECTION 5.3(a)(vi) and the Majority Member under SECTION 5.3(b)(i)
will not exceed 100% of the aggregate Purchase Price paid or payable at any time
(the "MAXIMUM INDEMNITY AMOUNT"), and (ii) the aggregate indemnification
obligations of any equity holder of Seller will not exceed the lesser of (x) the
aggregate amount paid or payable at any time to, or for the benefit of, such
equity holder by or on behalf of Seller in respect of the Purchase Price and (y)
the product of the aggregate Indemnifiable Losses for which Seller is required
to indemnify a Purchaser Indemnified Party under SECTION 5.3(a) of this
Agreement that remain unpaid by Seller and the percentage of outstanding equity
interests of Seller owned by such equity holder on the date of this Agreement.
For the avoidance of doubt, the Maximum Indemnity Amount or the aggregate
Purchase Price paid or payable to or for the benefit of any equity holder of
Seller will not be limited by the amounts paid as of any particular time, but
will include all amounts that have been paid or are actually paid in the future
in respect of the Purchase Price.
31
(d) None of the limitations set forth in this SECTION 5.2 will apply to
any Indemnifiable Losses incurred by (i) a Purchaser Indemnified Party that
relate, directly or indirectly, to (A) any fraudulent acts committed by any
Seller Indemnified Party and (B) the obligations of Seller and the Majority
Member to pay certain expenses pursuant to SECTION 1.4 or 6.2 or (ii) a Seller
Indemnified Party that relate, directly or indirectly, to any fraudulent acts
committed by any Purchaser Indemnified Party and (B) the obligations of Parent
and Purchaser to pay certain expenses pursuant to SECTION 1.4 or 6.2.
5.3. INDEMNIFICATION. (a) Subject to SECTIONS 5.1, 5.2, 5.4 and 5.5,
Seller will indemnify, defend and hold harmless Parent, Purchaser and their
respective Affiliates (including, after the Closing, Cinagro) and their
respective directors, officers, partners, members, managers, employees, agents
and representatives (including without limitation any predecessor or successor
to any of the foregoing) (collectively, the "PURCHASER INDEMNIFIED PARTIES")
from and against any and all Indemnifiable Losses relating to, resulting from or
arising out of:
(i) Any breach by Seller of any of its representations or warranties
contained in this Agreement;
(ii) Any breach by Seller of any covenant of Seller in this
Agreement;
(iii) Any taxes imposed on or asserted against Seller, Cinagro,
Holdings or any of their respective Affiliates (other than the Company)
for which Seller, Cinagro, Holdings or any such Affiliate may be liable in
respect of the properties, income or operations of Seller, Cinagro,
Holdings or any such Affiliate for, with respect to Cinagro, any tax
period (or portion thereof) ending on or before the Closing Date or, with
respect to Seller or Holdings, for any tax period (or portion thereof)
whatsoever;
(iv) Any liability or obligation of Seller, Holdings or any of their
respective predecessors (including, without limitation, any liability
under any Contract listed or required to be listed on SCHEDULE 2.1.6 or
the Cinagro Warrant);
(v) Any claim by any current or former equity owner of Seller,
Holdings or Cinagro relating to, resulting from or arising out of the
Reorganization or the transactions contemplated by this Agreement or any
of the Transaction Documents; provided, however, that Seller will have no
obligation under this SECTION 5.3(a)(v) to indemnify any Purchaser
Indemnified Party for any Indemnifiable Loss for which a Seller
Indemnified Party is entitled to indemnity under SECTION 5.3(c);
(vi) Any claim (x) of any current or former holder of any Company
Stock Right in respect of any Company Stock Rights granted under the
Company's 1999 Long-Term Stock Incentive Plan, as amended, other than (A)
a claim for salary for services actually rendered or under an employee
welfare benefit plan
32
(as that term is defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended), (B) a claim for the positive
difference, if any, between the amount payable to all other stockholders
of the Company (other than Parent and its Affiliates) in a Transaction and
the exercise price thereof multiplied by the number of Company Shares
subject to such option, warrant or Company Stock Right that have then
vested, or (C) a claim in respect of any other right to which such holder
is entitled to under any agreement in respect of a Transaction, (y) of the
obligor of any loan made by the Company to any stockholder or employee for
amounts withheld by Parent, Purchaser or the Company from the proceeds
payable with respect to any shares of common stock of the Company in a
Merger which shares are, by the terms of such loan, required to secure
such loan, and (z) of any Person asserting ownership of or any interest in
any Cinagro Share; or
(7) any liability of Cinagro arising or accruing prior to the
Closing Date.
(b) Subject to SECTIONS 5.1, 5.2, 5.4 and 5.5, the Majority Member will
indemnify, defend and hold harmless the Purchaser Indemnified Parties from and
against any and all Indemnifiable Losses relating to, resulting from or arising
out of:
(i) Any breach by the Majority Member of any of his representations
or warranties contained in this Agreement;
(ii) Any breach by the Majority Member of any covenant of the
Majority Member in this Agreement; and
(iii) Any liability or obligation of Seller under SECTION 5.3(a)
that has not been satisfied by Seller more than 30 calendar days after
such liability is determined; provided, however, that the aggregate
indemnification liabilities of the Majority Member pursuant to this
SECTION 5.3(b)(iii) will not exceed the lesser of (x) the aggregate
amount paid or payable at any time to, or for the benefit of, the
Majority Member by or on behalf of Seller in respect of the Purchase
Price and (y) the product of the aggregate Indemnifiable Losses for
which Seller is required to indemnify a Purchaser Indemnified Party
under SECTION 5.3(a) of this Agreement that remain unpaid by Seller and
the percentage of outstanding equity interests of Seller owned by the
Majority Member on the date of this Agreement.
(c) Subject to SECTIONS 5.1, 5.2, 5.4 and 5.5, each of Purchaser and
Parent will jointly and severally indemnify, defend and hold harmless Seller and
the Majority Member and their respective Affiliates and their respective
directors, officers, partners, members, managers, employees, agents and
representatives (including without limitation any predecessor or successor to
any of the foregoing) (collectively, the "SELLER INDEMNIFIED PARTIES") from and
against any and all Indemnifiable Losses relating to, resulting from or arising
out of:
33
(i) Any breach by Purchaser or Parent of any of the representations
or warranties of Purchaser or Parent contained in this Agreement; and
(ii) Any breach by Purchaser or Parent of any covenant of Purchaser
or Parent in this Agreement.
5.4. OFFSET. Parent and Purchaser may at their option offset against any
amount they or either of them is otherwise required to pay hereunder to Seller
or Seller's beneficial owners (i) the amount of any Indemnifiable Loss for which
any Purchaser Indemnified Party is entitled to indemnity hereunder or (ii)
pending the final resolution of such amount, the actual amount demanded in any
Third Party Claim plus Parent's good faith estimate of the costs related
thereto; provided however, that Parent and Purchaser may not offset any
Indemnifiable Loss described in clause (i) or (ii) against the payment of IP-1
or IP-2. Upon such offset such Indemnifying Party's obligation under SECTION
5.3(a) or 5.3(b), as the case may be, will be deemed satisfied to the extent of
the offset. In the event the amount offset by Parent or Purchaser under clause
(ii) of the first sentence of this SECTION 5.4 exceeds the aggregate amount of
Indemnifiable Losses that are actually suffered or incurred by such Purchaser
Indemnified Parties in respect of such Third Party Claims (such excess amount,
the "EXCESS OFFSET AMOUNT"), then Parent will promptly pay to the appropriate
Indemnifying Party the Excess Offset Amount, together with interest thereon from
the date such offset amount would have otherwise been payable to the
Indemnifying Party to the date the Excess Offset Amount is paid at an annual
rate equal to the prime rate announced from time to time by Citibank, N.A. The
offset right provided hereunder will not be affected by limitations on indemnity
under any Reimbursement Agreement or this Agreement, other than the limitations
set forth in SECTIONS 5.1(a), 5.2(b) and 5.2(c), in each case to the extent
applicable.
5.5. DEFENSE OF CLAIMS. (a) If any Indemnitee receives notice of the
assertion or commencement of any Third Party Claim against such Indemnitee with
respect to which an Indemnifying Party is obligated to provide indemnification
under this Agreement, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than 30
calendar days after receipt of such notice of such Third Party Claim. Such
notice by the Indemnitee will describe the Third Party Claim in reasonable
detail thereof and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. In addition, the Indemnitee will furnish copies of, or provide
access to, all material written evidence pertaining to such Third-Party Claims
as promptly as reasonably practicable. The Indemnifying Party will have the
right to participate in or, by giving written notice to the Indemnitee, to
assume, the defense of any Third Party Claim at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (reasonably satisfactory to
the Indemnitee), and the Indemnitee will cooperate in good faith in such
defense.
(b) If, within 20 calendar days after giving notice of a Third Party Claim
to an Indemnifying Party pursuant to SECTION 5.5(a), an Indemnitee receives
written notice from the Indemnifying Party that the Indemnifying Party has
elected to assume the
34
defense of such Third Party Claim as provided in the last sentence of SECTION
5.5(a), the Indemnifying Party will not be liable for any legal expenses
subsequently incurred by the Indemnitee in connection with the defense thereof;
provided, however, that if the Indemnifying Party fails to take reasonable steps
necessary to defend diligently such Third Party Claim within ten calendar days
after receiving written notice from the Indemnitee that the Indemnitee believes
the Indemnifying Party has failed to take such steps, the Indemnitee may assume
its own defense, and the Indemnifying Party will be liable for all reasonable
costs or expenses paid or incurred in connection therewith. Without the prior
written consent of the Indemnitee, the Indemnifying Party will not enter into
any settlement of any Third Party Claim that would lead to liability or create
any financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is made
to settle a Third Party Claim without leading to liability or the creation of a
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party will
give written notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within ten calendar days after its receipt of such
notice, the Indemnitee may continue to contest or defend such Third Party Claim
and, in such event, the maximum liability of the Indemnifying Party as to such
Third Party Claim will not exceed the amount of such settlement offer.
(c) Any claim by an Indemnitee on account of an Indemnifiable Loss which
does not result from a Third Party Claim (a "DIRECT CLAIM") will be asserted by
giving the Indemnifying Party reasonably prompt written notice thereof, but in
any event not later than 30 calendar days after the Indemnitee becomes aware of
such Direct Claim. Such notice by the Indemnitee will describe the Direct Claim
in reasonable detail and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have a period of 30 calendar days within
which to respond in writing to such Direct Claim. If the Indemnifying Party does
not so respond within such 30 calendar day period, the Indemnifying Party will
be deemed to have rejected such claim, in which event the Indemnitee will be
free to pursue such remedies as may be available to the Indemnitee on the terms
and subject to the provisions of this Agreement.
(d) A failure to give timely notice or to include any specified
information in any notice as provided in SECTIONS 5.5(a), 5.5(b) or 5.5(c) will
not affect the rights or obligations of any party hereunder except and only to
the extent that, as a result of such failure, any party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise materially prejudiced as a result
of such failure.
(e) If the amount of any Indemnifiable Loss, at any time subsequent to the
making of an Indemnity Payment, is reduced by recovery, settlement or otherwise
under or pursuant to any insurance coverage, or pursuant to any claim, recovery,
settlement, rebate or other payment by or against any other Person, the amount
of such reduction, less any costs, expenses, premiums or taxes incurred in
connection therewith, will promptly be repaid by the Indemnitee to the
Indemnifying Party. Upon making any
35
Indemnity Payment the Indemnifying Party will, to the extent of such Indemnity
Payment, be subrogated to all rights of the Indemnitee against any third Person
in respect of the Indemnifiable Loss to which the Indemnity Payment relates;
provided, however, that (i) the Indemnifying Party shall then be in compliance
with its obligations under this Agreement in respect of such Indemnifiable Loss
and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss,
any and all claims of the Indemnifying Party against any such third Person on
account of said Indemnity Payment will be subrogated and subordinated in right
of payment to the Indemnitee's rights against such third Person. Without
limiting the generality or effect of any other provision hereof, each such
Indemnitee and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described subrogation and
subordination rights.
VI. MISCELLANEOUS PROVISIONS
6.1. NOTICES. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) (if so delivered or dispatched prior to 5:00 p.m.,
local time, on a Business Day in the place of receipt; otherwise such notice
will be deemed delivered or dispatched on the next Business Day) or one Business
Day after having been dispatched by a nationally recognized overnight courier
service to the appropriate party at the address specified below or to such other
address or addresses as any such party may from time to time designate as to
itself by like notice:
If to Parent or Purchaser, to:
Seneca Investments LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxx X. Bark
If to Seller, to:
Organic Holdings LLC
000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
36
Facsimile No.: 000-000-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: Xxxxx X. Mac Cormac
If to Majority Member, to:
Xxxxxxxx Xxxxxx
00 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxxxx Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx
6.2. EXPENSES. Except as otherwise expressly provided herein, each of the
parties hereto will pay his or its own expenses relating to the transactions
contemplated by this Agreement and the Transaction Documents, including without
limitation the fees and expenses of his or its respective counsel, financial
advisors and accountants.
6.3. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors (and their
respective executors, heirs and legal representatives) and permitted assigns,
but will not be assignable or delegable by any party without the prior written
consent of Parent and Seller; provided that Parent and Purchaser may assign
their rights and obligations under this Agreement to any other subsidiary of
Parent provided that no such assignment will relieve Parent or Purchaser of any
of its respective obligations under this Agreement.
6.4. WAIVER. Either Parent (on behalf of itself and Purchaser) or Seller
(on behalf of itself and the Majority Member), by written notice to the other,
may (a) extend the time for performance of any of the obligations or other
actions of the other under this Agreement, (b) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement, (c)
waive compliance with any of the conditions or covenants of the other contained
in this Agreement, or (d) waive or modify performance of any of the obligations
of the other under this Agreement. Except as provided in the immediately
preceding sentence, no action taken pursuant to this Agreement will be deemed to
constitute a waiver of compliance with any representations, warranties or
37
covenants contained in this Agreement. Any waiver of any term or condition will
not be construed as a subsequent waiver of the same term or condition, or a
waiver of any other term or condition of this Agreement. No failure or delay of
any party in asserting any of its rights hereunder will constitute a waiver of
any such rights.
6.5. ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) and the Transaction Documents supersede any other agreement,
whether written or oral, that may have been made or entered into by any party or
any of their respective Affiliates (or by any director, officer or
representative thereof) prior to the date hereof relating to the matters
contemplated hereby. This Agreement (together with the Schedules and Exhibits
hereto) and the Transaction Documents constitute the entire agreement by and
among the parties hereto and there are no agreements or commitments by or among
such parties or their Affiliates except as expressly set forth herein and
therein.
6.6. AMENDMENTS, SUPPLEMENTS, ETC. This Agreement (including any Exhibit
or Schedule hereto) may be amended or supplemented at any time by additional
written agreements as may mutually be determined by Parent (without the joinder
of Purchaser) and Seller (on behalf of itself and the Majority Member) to be
necessary, desirable or expedient to further the purposes of this Agreement or
to clarify the intention of the parties hereto.
6.7. RIGHTS OF THE PARTIES. Except as provided in ARTICLE V or in SECTION
6.3, nothing expressed or implied in this Agreement is intended or will be
construed to confer upon or give any Person other than the parties hereto and
their respective Affiliates any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby. Nothing express or implied in
this Agreement is intended or will be construed to result in any liability to
the Company.
6.8. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) This
Agreement and the legal relations among the parties hereto will be governed by
and construed in accordance with the substantive Laws of the State of
New York,
without giving effect to the principles of conflict of laws thereof.
(b) Each party hereby irrevocably and unconditionally submits, for itself
and its property, to the exclusive jurisdiction of the
New York state court
located in the Borough of Manhattan, City of
New York or the United States
District for the Southern District of
New York (each, a "
NEW YORK Court"), and
any appellate court from any such court, in any suit, action or proceeding
arising out of or relating to this Agreement or any Transaction Document, or for
recognition or enforcement of any judgment resulting from any such suit, action
or proceeding, and each party hereby irrevocably and unconditionally agrees that
all claims in respect of any such suit, action or proceeding may be heard and
determined in the
New York Court.
(c) It will be a condition precedent to each party's right to bring any
such suit, action or proceeding that such suit, action or proceeding, in the
first instance, be brought in the
New York Court (unless such suit, action or
proceeding is brought solely
38
to obtain discovery or to enforce a judgment), and if each such court refuses to
accept jurisdiction with respect thereto, such suit, action or proceeding may be
brought in any other court with jurisdiction.
(d) No party may move to (i) transfer any such suit, action or proceeding
from the New York Court to another jurisdiction, (ii) consolidate any such suit,
action or proceeding brought in the New York Court with a suit, action or
proceeding in another jurisdiction unless such motion seeks solely and
exclusively to consolidate such suit, action or proceeding in the New York
Court, or (iii) dismiss any such suit, action or proceeding brought in the New
York Court for the purpose of bringing or defending the same in another
jurisdiction.
(e) Each party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, (i) any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in the New York Court,
(ii) the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in the New York Court, and (iii) the right to object, with
respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party. Each party irrevocably consents to service of
process in any manner permitted by law. Notwithstanding the foregoing, this
SECTION 6.8 will not apply to any suit, action or proceeding by a party seeking
indemnification or contribution pursuant to this Agreement or otherwise in
respect of a suit, action or proceeding against such party by a third party if
such suit, action or proceeding by such party seeking indemnification or
contribution is brought in the same court as the suit, action or proceeding
against such party.
6.9. TITLES AND HEADINGS. Titles and headings to Articles and Sections
herein are inserted for convenience of reference only, and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
6.10. CERTAIN INTERPRETIVE MATTERS AND DEFINITIONS. (a) Unless the context
otherwise requires, (i) all references to Articles, Sections, Schedules or
Exhibits are to Articles, Sections, Schedules or Exhibits of or to this
Agreement, (ii) each term defined in this Agreement has the meaning assigned to
it, (iii) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with GAAP, (iv) "OR" is disjunctive but not
necessarily exclusive, (v) words in the singular include the plural and VICE
VERSA, (vi) the term "AFFILIATE" has the meaning given to that term in Rule
12b-2 of Regulation 12B under the Exchange Act, (vii) all references to "$" or
dollar amounts will be to lawful currency of the United States of America,
(viii) "TO THE KNOWLEDGE" of any Person means, when referring to an individual,
the actual knowledge of such individual, and when referring to any other Person,
means the actual knowledge of such Person's directors and officers, in each case
without undertaking any specific investigation for purposes of making any
representation or warranty in this Agreement except as otherwise herein
provided, (ix) "PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity, and (x) the use in this Agreement of the
39
masculine pronoun in reference to a party hereto shall be deemed to include the
feminine or neuter, and vice versa, as the context may require.
(b) No provision of this Agreement will be interpreted in favor of, or
against, any of the parties hereto by reason of the extent to which any such
party or its counsel participated in the drafting thereof or by reason of the
extent to which any such provision is inconsistent with any prior draft hereof.
(c) The disclaimer set forth on the bottom of certain pages of the
Schedules to this Agreement relating to the Company will have no effect for
purposes of this Agreement, including without limitation, the provisions of
SECTION 4.2.1, SECTION 4.3.1, SECTION 4.5 or ARTICLE V.
6.11. NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by Seller, Majority Member, Parent and
Purchaser to express their mutual intent, and no rule of strict construction
will be applied against any party hereto.
6.12. COUNTERPARTS. This document may be executed in one or more separate
counterparts, each of which, when so executed, will be deemed to be an original.
Such counterparts will together constitute one and the same instrument. This
Agreement may be executed by facsimile signatures.
6.13. REMEDIES; SEVERABILITY. It is specifically understood and agreed
that any breach of the provisions of this Agreement by any Person subject hereto
will result in irreparable injury to the other parties hereto, that the remedy
at law alone will be an inadequate remedy for such breach and that, in addition
to any other remedies which they may have, such other parties may enforce their
respective rights by actions for specific performance (to the extent permitted
by law). Whenever possible, each provision of this Agreement will be interpreted
in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is deemed prohibited or invalid under such
applicable law, such provision will be ineffective to the extent of such
prohibition or invalidity, and such prohibition or invalidity will not
invalidate the remainder of such provision or the other provisions of this
Agreement.
6.14. EXTINGUISHMENT OF CINAGRO OBLIGATIONS. Effective as of the Closing
Date, without any further action of Cinagro, Seller or any other Person, all
financial obligations of Cinagro to Seller or its Affiliates, whether arising
before, on or after the Closing Date, payable under any Contract or other
obligation of Cinagro entered into or in effect on or prior to the Closing Date
shall be extinguished and be deemed satisfied in full, and Cinagro shall have no
further obligation in respect thereof.
40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
SENECA INVESTMENTS LLC
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
E-SERVICES INVESTMENTS ORGANIC SUB LLC
By: Communicade LLC,
its member
By:
SENECA INVESTMENTS LLC,
its member
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
ORGANIC HOLDINGS LLC
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxxx
Director
By: /s/ Xxxxxxx Xxxxx
-----------------------------------------
Xxxxxxx Xxxxx
Director
/s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Xxxxxxxx Xxxxxx
41
INDEX OF DEFINED TERMS
TERM PAGE
---- ----
$ ..........................................................................40
AAA..........................................................................8
ACCOUNTANTS..................................................................7
ACQUIRING PERSON............................................................21
ACQUIRING PERSON SHARES.....................................................21
AFFILIATE...................................................................40
AGREEMENT....................................................................1
ANNUAL DETERMINATION.........................................................8
CAPBT........................................................................7
CHANGE NOTICE...............................................................22
CHANGE OF CONTROL...........................................................21
CINAGRO......................................................................1
CINAGRO SHARES...............................................................2
CINAGRO WARRANT.............................................................10
CLOSING.....................................................................30
CLOSING DATE................................................................30
CODE.........................................................................9
COMPANY......................................................................1
COMPANY FILED SEC DOCUMENTS.................................................13
COMPANY MATERIAL ADVERSE EFFECT.............................................12
COMPANY SHARES...............................................................1
COMPANY STOCK RIGHTS........................................................13
CONTRACTS...................................................................12
COVENANT PERIOD.............................................................20
DIRECT CLAIM................................................................36
EXCESS OFFSET AMOUNT........................................................35
FAIR VALUE..............................................................22, 23
FAIR VALUE OFFER............................................................21
FAIR VALUE TRANSACTION......................................................21
FINANCIAL ADVISOR...........................................................23
FP...........................................................................3
FP MULTIPLE..................................................................6
GAAP.........................................................................3
GOVERNMENTAL AUTHORITY......................................................11
HISTORICAL FINANCIAL STATEMENTS.............................................13
HOLDINGS.....................................................................1
HSR ACT.....................................................................12
INCENTIVE PLAN..............................................................24
INDEMNIFIABLE LOSSES........................................................31
INDEMNIFYING PARTY..........................................................31
INDEMNITEE..................................................................31
INDEX OF DEFINED TERMS
(continued)
PAGE
INDEMNITY PAYMENT...........................................................31
INDEPENDENT AUDITORS......................................................8, 9
IP-1.........................................................................2
IP-2.........................................................................2
IP-3.........................................................................2
IP-4.........................................................................2
IP-5.........................................................................3
IP-5 MULTIPLE................................................................6
IP-6.........................................................................3
IP-6 MULTIPLE................................................................6
LAWS........................................................................11
LIENS.......................................................................10
MAJORITY MEMBER..............................................................1
MATERIAL CONTRACT...........................................................28
MAXIMUM INDEMNITY AMOUNT....................................................32
MEASURING PERIOD.............................................................6
MERGER.......................................................................7
NET INCOME...................................................................3
NEW YORK COURT..............................................................39
O MULTIPLE...................................................................6
OFI.........................................................................26
ORDERS......................................................................11
OTHER ORGANIC SHARES.........................................................2
PARENT.......................................................................1
PARENT COMPANY...............................................................5
PARENT MATERIAL ADVERSE EFFECT..............................................15
PAYMENT PROVISIONS...........................................................2
PBT..........................................................................3
PBT MARGIN...................................................................6
PERMIT......................................................................11
PERSON......................................................................40
PLEDGED SECURITIES..........................................................26
PROMISSORY NOTES.............................................................1
PUBLIC LETTER................................................................2
PURCHASE ACCOUNTING ACCRUALS.................................................7
PURCHASE PRICE...............................................................2
PURCHASER....................................................................1
PURCHASER ENTITIES..........................................................20
PURCHASER INDEMNIFIED PARTIES...............................................33
REDUCTION AMOUNT.............................................................7
RELEVANT SHARES.............................................................22
REORGANIZATION...............................................................1
REVENUE GROWTH RATE..........................................................7
REVENUES.....................................................................6
SEC.........................................................................15
-2-
INDEX OF DEFINED TERMS
(continued)
PAGE
SECURITIES ACT..............................................................13
SELLER.......................................................................1
SELLER INDEMNIFIED PARTIES..................................................34
SELLER MATERIAL ADVERSE EFFECT...............................................9
SELLER'S REPRESENTATIVE.....................................................19
SUBSTANTIAL EQUITY INTEREST.................................................21
T+1.........................................................................30
T+7.........................................................................30
TERMINATION DATE............................................................30
THIRD PARTY CLAIM...........................................................31
TO THE KNOWLEDGE............................................................40
TRANSACTION..................................................................7
TRANSACTION CLOSING..........................................................2
TRANSACTION DOCUMENTS........................................................9
UNITS........................................................................1
VOTING STOCK.................................................................6
-3-
