FINAL EXECUTION VERSION
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
XXXXX CORPORATION,
EMED CO, INC.,
SUMMIT/EMED HOLDINGS, LLC
AND
THE SELLING HOLDERS
NAMED HEREIN
Dated as of April 2, 2004
TABLE OF CONTENTS
PAGE
Article I DEFINITIONS.......................................................................... 2
1.1 Certain Definitions.................................................................. 2
Article II SALE AND PURCHASE OF SECURITIES...................................................... 10
2.1 Sale and Purchase of Securities...................................................... 10
Article III CONSIDERATION........................................................................ 10
3.1 Consideration........................................................................ 10
3.2 Payment of Purchase Price............................................................ 11
3.3 Purchase Price Adjustment............................................................ 12
Article IV CLOSING AND TERMINATION.............................................................. 16
4.1 Closing Date......................................................................... 16
4.2 Termination of Agreement............................................................. 16
4.3 Procedure Upon Termination........................................................... 16
4.4 Effect of Termination................................................................ 16
Article V REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................ 17
5.1 Organization and Good Standing of the Company........................................ 17
5.2 Authorization of Agreement........................................................... 17
5.3 Conflicts; Consents of Third Parties................................................. 17
5.4 Capitalization....................................................................... 18
5.5 Corporate Matters.................................................................... 18
5.6 Subsidiaries......................................................................... 19
5.7 Financial Statements................................................................. 19
5.8 No Undisclosed Liabilities........................................................... 19
5.9 Absence of Certain Developments...................................................... 20
5.10 Taxes................................................................................ 21
5.11 Real Property........................................................................ 23
5.12 Assets............................................................................... 24
5.13 Intellectual Property................................................................ 24
5.14 Material Contracts................................................................... 25
5.15 Employee Benefits Plans.............................................................. 27
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.16 Labor................................................................................ 29
5.17 Litigation........................................................................... 30
5.18 Compliance with Laws; Permits........................................................ 30
5.19 Environmental Matters................................................................ 30
5.20 Financial Advisors................................................................... 32
5.21 Accounts............................................................................. 32
5.22 Insurance............................................................................ 32
5.23 Bank Accounts........................................................................ 33
5.24 Transactions with Related Parties.................................................... 33
5.25 Product Matters...................................................................... 33
5.26 Disclosure........................................................................... 34
5.27 Due Diligence........................................................................ 34
5.28 No Other Representations or Warranties; Schedules.................................... 34
Article VI REPRESENTATIONS AND WARRANTIES OF THE LLC UNITHOLDERS................................ 34
6.1 Organization and Good Standing....................................................... 34
6.2 Authorization of Agreement........................................................... 34
6.3 Conflicts; Consents of Third Parties................................................. 35
6.4 Ownership and Transfer of LLC Units.................................................. 35
6.5 Litigation........................................................................... 35
6.6 Financial Advisors................................................................... 35
6.7 LLC Matters.......................................................................... 36
6.8 Taxes................................................................................ 37
Article VII REPRESENTATIONS AND WARRANTIES OF THE FOUNDING STOCKHOLDERS.......................... 39
7.1 Organization and Good Standing....................................................... 39
7.2 Authorization of Agreement........................................................... 40
7.3 Conflicts; Consents of Third Parties................................................. 40
7.4 Ownership and Transfer of Company Stock.............................................. 41
7.5 Litigation........................................................................... 41
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.6 Financial Advisors................................................................... 41
Article VIII REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................................... 41
8.1 Organization and Good Standing....................................................... 41
8.2 Authorization of Agreement........................................................... 41
8.3 Conflicts; Consents of Third Parties................................................. 42
8.4 Litigation........................................................................... 42
8.5 Investment Intention................................................................. 42
8.6 Financial Advisors................................................................... 42
8.7 Financing............................................................................ 42
8.8 Solvency............................................................................. 42
8.9 Condition of the Business............................................................ 43
Article IX COVENANTS............................................................................ 43
9.1 Access to Information................................................................ 43
9.2 Conduct of the Business Pending the Closing.......................................... 44
9.3 Consents............................................................................. 46
9.4 Regulatory Approvals................................................................. 46
9.5 Further Assurances................................................................... 47
9.6 Confidentiality...................................................................... 48
9.7 Indemnification...................................................................... 48
9.8 Preservation of Records.............................................................. 50
9.9 Publicity............................................................................ 50
9.10 Employment and Employee Benefits..................................................... 50
9.11 Supplementation and Amendment of Schedules........................................... 51
9.12 Exclusivity.......................................................................... 51
9.13 Real Property........................................................................ 52
9.14 Noncompetition Agreements............................................................ 53
9.15 Certain Agreements................................................................... 53
9.16 Continuation of Benefits............................................................. 53
Article X CONDITIONS TO CLOSING................................................................ 53
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TABLE OF CONTENTS
(CONTINUED)
PAGE
10.1 Conditions Precedent to Obligations of Purchaser..................................... 53
10.2 Conditions Precedent to Obligations of the Selling Holders........................... 55
10.3 Frustration of Closing Conditions.................................................... 57
Article XI INDEMNIFICATION...................................................................... 57
11.1 Survival of Representations and Warranties........................................... 57
11.2 Indemnification by Selling Holders................................................... 57
11.3 Indemnification by Purchaser......................................................... 59
11.4 Indemnification Procedures........................................................... 59
11.5 Limitations on Indemnification for Breaches of Representations and Warranties........ 60
11.6 Tax Treatment of Indemnity Payments.................................................. 62
11.7 No Consequential Damages............................................................. 62
11.8 Exclusive Remedy..................................................................... 62
Article XII MISCELLANEOUS........................................................................ 63
12.1 Payment of Sales, Use or Similar Taxes............................................... 63
12.2 Expenses............................................................................. 63
12.3 Holder Representative................................................................ 63
12.4 Submission to Jurisdiction; Consent to Service of Process............................ 65
12.5 Entire Agreement; Amendments and Waivers............................................. 65
12.6 Governing Law........................................................................ 65
12.7 Notices.............................................................................. 65
12.8 Severability......................................................................... 67
12.9 Binding Effect; Assignment........................................................... 67
12.10 Counterparts......................................................................... 67
12.11 Specific Performance................................................................. 67
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TABLE OF CONTENTS
(CONTINUED)
SCHEDULES PAGE
--------- ----
Schedule 1.1(a) Existing Liens and Permitted Liens
Schedule 1.1(b) Knowledge of the Company
Schedule 3.1(a) Closing Debt
Schedule 3.3(c) Agreed Principles
Schedule 3.3(c)(i) Working Capital as of January 31, 2004
Schedule 5.1 Foreign Qualifications
Schedule 5.3(a) No Conflicts
Schedule 5.3(b) Consents
Schedule 5.4(a) Stock Ownership
Schedule 5.4(b) Capitalization
Schedule 5.5 Officers and Directors
Schedule 5.7 Financial Statements
Schedule 5.9 Absence of Certain Changes
Schedule 5.10 Tax Returns
Schedule 5.11 Real Property
Schedule 5.12 Assets
Schedule 5.13 Intellectual Property
Schedule 5.14 Material Contracts
Schedule 5.15(a) Employee Benefit Plans
Schedule 5.16(a) Employees
Schedule 5.16(c) Labor Matters
Schedule 5.17 Litigation
Schedule 5.18(b) Permits
Schedule 5.19(a) Environmental Compliance
Schedule 5.19(b) Environmental Permits
Schedule 5.19(h) Tanks
Schedule 5.19(k) Asbestos and PCBs
Schedule 5.19(m) Environmental Assessments
Schedule 5.20 Financial Advisors
Schedule 5.22(a) Insurance Policies
Schedule 5.21(b) Claims Under Insurance Policies
Schedule 5.23 Bank Accounts
Schedule 5.24 Transactions with Related Parties
Schedule 5.25(a) Product Warranty Claims
Schedule 5.25(b) Product Liability Matters
Schedule 6.7(a) LLC Ownership
Schedule 6.7(d) LLC Bank Accounts
Schedule 6.7(g) LLC Officers and Managers
Schedule 6.8 LCC Tax Returns
Schedule 8.3(a) No Conflicts
Schedule 9.2 Conduct of Business
Schedule 9.10 Purchaser Plans
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EXHIBITS
Exhibit A - Selling Holder Information
Exhibit B - Escrow Agreements
Exhibit C - Noncompetition Agreement
Exhibit D - Opinion of Weil, Gotshal & Xxxxxx LLP
Exhibit E - Opinion of Xxxxxxx & Xxxxx, LLP
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of April 2, 2004 (the
"Agreement"), by and among Xxxxx Corporation, a corporation existing under the
laws of Wisconsin ("Purchaser"), EMED Co., Inc., a New York corporation (the
"Company"), Summit/EMED Holdings, LLC, a Delaware limited liability company (the
"LLC"), certain stockholders of the Company listed on the signature pages hereof
(collectively, the "Founding Stockholders"), and the unitholders of the LLC
listed on the signature pages hereof (collectively the "LLC Unitholders" and,
together with the Founding Stockholders, the "Selling Holders").
W I T N E S S E T H:
WHEREAS, the Founding Stockholders own an aggregate of 22,394.8641
shares of the Company's common stock, $.01 par value per share (the "Common
Stock"), which constitute 18.22792% (the "Company Percentage") of the issued and
outstanding shares of Common Stock of the Company, and 66,243.88 shares of the
Company's Series A Redeemable Preferred Stock, $.01 par value per share (the
"Preferred Stock" and, together with the Common Stock, the "Company Stock")
which constitutes 15.81% of the issued and outstanding shares of Preferred Stock
of the Company;
WHEREAS, the LLC Unitholders own an aggregate of 352,756.1200 units
of the LLC's issued and outstanding Class A Units (the "Class A Units"), and
116,095.0091 units of the LLC's Class B Units (the "Class B Units" and, together
with the Class A Units, the "LLC Units" and, together with the Company Stock,
the "Securities") which together constitute all of the issued and outstanding
units of the LLC;
WHEREAS, the LLC owns an aggregate of 100,465.3648 shares of the
Company's Common Stock, which constitute 81.77208% (the "LLC Percentage") of the
Common Stock of the Company, and 352,756.1200 shares of the Company's Preferred
Stock which constitutes 84.19% of the issued and outstanding shares of Preferred
Stock of the Company;
WHEREAS, the Selling Holders desire to sell to Purchaser, and
Purchaser desires to purchase from the Selling Holders, the Securities for the
purchase price and upon the terms and conditions hereinafter set forth; and
WHEREAS, certain terms used in this Agreement are defined in Section
1.1;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions.
(a) For purposes of this Agreement, the following terms shall have
the meanings specified in this Section 1.1:
"Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
"Antitrust Laws" means the HSR Act, the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended, and any
other United States federal or state or foreign statutes, rules, regulations,
orders, decrees, administrative or judicial doctrines or other laws that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
"Xxxx Group" means Sunapee Securities, Inc. and Squam Lake Investors
III, L.P.
"Business Day" means any day of the year on which national banking
institutions in New York are open to the public for conducting business and are
not required or authorized to close.
"Cash" shall mean all cash (including cash on hand and cash in bank
accounts) and cash equivalents of the Company and the LLC on the Closing Date.
"Class A Amount" shall mean an amount equal to the full amount
payable to holders of Class A Units upon a liquidation of the LLC as provided in
that certain Operating Agreement of the LLC, dated as of April 26, 1999.
"Class B Unit Price" shall be equal to (i) (A) the Closing Amount
minus (B) the Class A Amount and minus (C) the Series A Amount; multiplied by
(ii) the LLC Percentage; divided by (iii) the number of Class B Units
outstanding immediately prior to the Closing Date.
"Closing Amount" means an amount equal to the Purchase Price, as the
Purchase Price has been adjusted pursuant to Section 3.3(b) hereof, less the
Adjustment Escrow Amount and the Indemnity Escrow Amount.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Common Share Price" shall be equal to (i)(A) the Closing Amount
minus (B) the Class A Amount and minus (C) the Series A Amount; multiplied by
(ii) the Company Percentage; divided by (iii) the number of shares of Common
Stock owned by the Founding Stockholders immediately prior to the Closing Date.
"Contract" means any contract, indenture, note, bond, lease,
commitment or other agreement.
"Environmental Claim" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims, Liens,
investigations, proceedings or notices of noncompliance or violation (written or
oral) by any Person alleging potential liability (including, without limitation,
potential liability for enforcement, investigatory costs, cleanup costs,
governmental response costs, removal costs, remedial costs, natural resource
damages, property damages, personal injuries or penalties) arising out of, based
on or resulting from: (a) the presence or Release or threatened Release of any
Hazardous Materials at any location, whether or not owned by the Company; or (b)
circumstances forming the basis of any violation or alleged violation, of any
Environmental Law; or (c) any and all claims by any Person seeking damages,
contribution, indemnification, costs, recovery, compensation or injunctive
relief resulting from the presence or Release of any Hazardous Material or (d)
the transportation, storage, treatment or disposal of Hazardous Materials.
"Environmental Law" means any foreign, federal, state or local
statute, regulation, ordinance, rule of common law or other legal requirement
currently in effect relating to the protection of human health and safety, the
environment or natural resources, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
App. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.) the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), as each has
been or may be amended and the regulations promulgated pursuant thereto.
"Existing Liens" means all Liens affecting any of the assets or
properties of the Company on the date of this Agreement, all of which are listed
on Schedule 1.1(a) attached hereto.
"GAAP" means generally accepted accounting principles in the United
States as of the date hereof.
"Governmental Body" means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority thereof, or
any court or arbitrator (public or private).
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"Hazardous Material" means any substance, material or waste that is
regulated, classified, or otherwise characterized under or pursuant to any
Environmental Law as "hazardous," "toxic," "pollutant," "contaminant,"
"radioactive," or words of similar meaning or effect, including, without
limitation, petroleum and its by-products, asbestos, polychlorinated biphenyls,
radon, mold and urea formaldehyde insulation.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" of any Person means, without duplication, (i) the
principal of, accrued interest of, premium (if any) in respect of and prepayment
and other penalties, charges, expenses and fees associated with (A) indebtedness
of such Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable; (ii) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and other accrued
current liabilities arising in the Ordinary Course of Business); (iii) all
obligations of such Person under leases required to be capitalized in accordance
with GAAP; (iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction; (v) all obligations of the type referred to in clauses (i) through
(iv) of other Persons for the payment of which such Person is responsible or
liable, directly or indirectly, as obligor, guarantor, surety or otherwise,
including guarantees of such obligations; and (vi) all obligations of the type
referred to in clauses (i) through (v) of other Persons secured by any Lien on
any property or asset of such Person (whether or not such obligation is assumed
by such Person).
"Intellectual Property" means all intellectual property rights used
by the Company arising from or in respect of the following: (i) all patents and
applications therefor (including U.S. and foreign patents and design patents),
including continuations, divisionals, continuations-in-part, or reissues of
patent applications and patents issuing thereon (collectively, "Patents"), (ii)
all trademarks, service marks, trade names, service names, brand names, trade
dress rights, logos, Internet domain names and corporate names, together with
the goodwill associated with any of the foregoing, and all applications,
registrations and renewals thereof, (collectively, "Marks"), (iii) copyrights
and registrations and applications therefor, works of authorship (under 17
U.S.C. Section 102) and mask work rights (collectively, "Copyrights"), (iv) all
Software and Technology of the Company and (v) all trade secrets (as defined in
the Uniform Trade Secrets Act).
"Inventory" means all of the Company's inventories of raw materials,
supplies, work in process and finished goods.
"IRS" means the Internal Revenue Service.
"Knowledge of the Company" means the actual knowledge of those
Persons identified on Schedule 1.1(b) after due inquiry of those employees with
direct reporting responsibilities to such Persons and review by such Persons of
the books and
4
records of the Company under their control by virtue of such Person's position
with the Company.
"Law" means any foreign, federal, state, local or other law,
statute, code, ordinance, rule, regulation or governmental requirement or
restriction and the rules, regulations and orders promulgated thereunder.
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits or proceedings (public or private) by or before a Governmental
Body or other Person.
"Liability" means any debt, liability or obligation (whether direct
or indirect, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due) and including all costs and expenses
relating thereto.
"Lien" means any lien, encumbrance, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude or transfer restriction.
"Management Group" shall mean each employee of the Company who is a
party to this Agreement.
"Material Adverse Effect" means (i) a material adverse effect on the
business, assets, properties, results of operations or financial condition of
the Company and the LLC taken as a whole, other than an effect resulting from an
Excluded Matter (as defined below), or (ii) a material adverse effect on the
ability of the Company, the LLC or a Selling Holder to consummate the
transactions contemplated by this Agreement. "Excluded Matter" means any one or
more of the following: (i) the effect of any change in the United States or
foreign economies or securities or financial markets in general; (ii) the effect
of any change that generally affects any industry in which the Company or the
LLC operates; (iii) the effect of any change arising in connection with
earthquakes, hostilities, acts of war, sabotage or terrorism or military actions
or any escalation or worsening of any such hostilities, acts of war, sabotage or
terrorism or military actions existing or underway as of the date hereof;
provided that none of the Company's real or physical properties or operating
assets is directly affected by such action or occurrence; (iv) the effect of any
action taken by Purchaser or its Affiliates with respect to the transactions
contemplated hereby or with respect to the Company or the LLC which is in
contravention of the terms or provisions of this Agreement; (v) the failure of
the Company and the LLC taken as a whole to meet any of its internal
projections, unless such failure is attributable to a breach by the Company or
the LLC of a representation, warranty or covenant contained herein; or (vi) any
effect resulting from the public announcement of this Agreement, compliance with
terms of this Agreement or the consummation of the transactions contemplated by
this Agreement.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award of a Governmental Body or other Person.
5
"Ordinary Course of Business" means the ordinary and usual course of
business of the Company or the LLC, as applicable.
"Permits" means any approvals, authorizations, consents, licenses,
permits or certificates of a Governmental Body.
"Permitted Exceptions" means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances disclosed in policies of
title insurance which have been made available to Purchaser by the Company; (ii)
statutory liens for current Taxes, assessments or other governmental charges not
yet delinquent or the amount or validity of which is being contested in good
faith by appropriate proceedings, provided an appropriate reserve is established
therefor; (iii) mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the Ordinary Course of Business and which do not
materially impair the value or use of the property to which they attach; (iv)
zoning, entitlement and other land use and environmental regulations by any
Governmental Body; (v) liens securing Indebtedness other than Closing Debt; (vi)
title of a lessor under a capital or operating lease; and (vii) such other
imperfections in title, charges, easements, restrictions and encumbrances which
do not materially affect the use or value of the property to which they attach.
"Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, or leaching into the indoor
or outdoor environment, or into or out of any property.
"Remedial Action" means all actions to (i) clean up, remove, treat
or in any other way address any Hazardous Material, (ii) prevent the Release of
any Hazardous Material so it does not endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment, (iii) perform
pre-remedial studies and investigations or post-remedial monitoring and care and
(iv) to correct a condition of noncompliance with Environmental Laws.
"Series A Amount" shall mean the amount per share equal to the
Series A Liquidation Amount (as such term is defined in the Certificate of
Incorporation of the Company).
"Software" means any and all (i) computer programs, including any
and all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations,
including any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, screens, user
interfaces, report formats, firmware, development tools, templates, menus,
buttons and icons, and (iv) all documentation including user manuals and other
training documentation related to any of the foregoing.
6
"Subsidiary" means any Person of which a majority of the outstanding
voting securities or other voting equity interests are owned, directly or
indirectly, by the Company.
"Summit Group" means collectively Summit Ventures V, L.P., Summit V
Companion Fund, L.P., Summit Subordinated Debt Fund II, L.P., Summit V Advisors
Fund (Q.P.), L.P., Summit V Advisors Fund, L.P. and Summit Investors III, L.P.
"Xxxxxxxxxx Group" means each individual member, and each trust for
the benefit of any member, of the Xxxxxxxxxx family as set forth on the
signature pages hereto.
"Taxes" means (i) all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clause (i) and (iii) any
transferee liability in respect of any items described in clauses (i) and/or
(ii).
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"Technology" means, collectively, all designs, formulae, algorithms,
procedures, methods, techniques, ideas, know-how, research and development,
technical data, programs, subroutines, tools, materials, specifications,
processes, inventions (whether patentable or unpatentable and whether or not
reduced to practice), apparatus, creations, improvements, works of authorship
and other similar materials, and all recordings, graphs, drawings, reports,
analyses, and other writings, and other tangible embodiments of the foregoing,
in any form whether or not specifically listed herein, and all related
technology, that are incorporated in, embodied in, displayed by or relate to, or
are used by the Company.
"Transaction Expenses" means all fees and expenses of the Company,
the LLC and the Selling Holders payable in connection with the transactions
contemplated by this Agreement, including without limitation, any investment
banking fees and expenses, finder's fees or similar fees and the fees and
expenses of counsel, accountants and other experts, in each case to the extent
incurred by the Company, LLC or the Selling Holders.
(b) Terms Defined Elsewhere in this Agreement. For purposes of
this Agreement, the following terms have meanings set forth in the sections
indicated:
Term Section
---- -------
Accounting Referee 3.3(e)
Adjustment Escrow Account 3.1(b)
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Term Section
---- -------
Adjustment Escrow Agreement 3.1(b)
Adjustment Escrow Amount 3.1(b)
Agreed Principles 3.3(c)
Agreement Recitals
Balance Sheet 5.7
Balance Sheet Date 5.7
Class A Amount 3.2(a)
Class A Units Recitals
Class B Units Recitals
Closing 4.1
Closing Date 4.1
Closing Debt 3.1(a)
Closing Statement 3.3(c)
Closing Working Capital 3.3(c)
Common Stock Recitals
Company Recitals
Company Documents 5.2
Company Percentage Recitals
Company Benefit Plan 5.15(a)
Company Pension Plan 5.15(b)
Company Property 5.11(a)
Company Properties 5.11(a)
Company Stock Recitals
Confidentiality Agreement 9.6
Continuing Employees 9.10(a)
Copyrights 1.1 (in Intellectual Property
definition)
EMED Loss 11.4
EMED Losses 11.4
Escrow Agent 3.1(b)
Estimated Balance Sheet 3.3(a)
Estimated Working Capital 3.3(a)
Excluded Matter 1.1 (in definition of Material
Adverse Effect)
Final Working Capital 3.3(g)
Financial Statements 5.7
Founding Stockholder Documents 7.2
Founding Stockholders Recitals
Holder Representative 12.3(a)
Indemnification Claim 11.4
Indemnity Escrow Account 3.1(b)
Indemnity Escrow Agreement 3.1(b)
Indemnity Escrow Amount 3.1(b)
Indemnitees 9.7(a)
LLC Recitals
LLC Percentage Recitals
8
Term Section
---- -------
LLC Unitholder Documents 6.2
LLC Units Recitals
LLC Unitholders Recitals
Marks 1.1 (in Intellectual Property
definition)
Material Contracts 5.14(a)
Net Working Capital 3.3(a)
Noncompetition Agreement 9.14
Owned Property 5.11(a)
Owned Properties 5.11(a)
Patents 1.1 (in Intellectual Property
definition)
Preferred Stock Recitals
Product Liability Matters 5.25(b)
Product Warranty Claims 5.25(a)
Purchase Price 3.1(a)
Purchaser Recitals
Purchaser Documents 8.2
Purchaser Expenses 11.3(a)(ii)
Purchaser Indemnified Parties 11.3(a)
Purchaser Loss 11.3(a)(i)
Purchaser Losses 11.3(a)(i)
Purchaser Plans 9.10(b)
Real Property Lease 5.11(a)
Securities Recitals
Securities Act 8.5
Selling Holder Loss 11.2(a)(i)
Selling Holder Losses 11.2(a)(i)
Selling Holders Recitals
Selling Holder Expenses 11.2(a)(ii)
Selling Holder Indemnified Parties 11.2(a)
Series A Amount 3.2(b)
Target Working Capital 3.3(a)
Title Commitments 9.13(a)
Title Company 9.13(a)
Working Capital 3.3(c)
(c) Other Definitional and Interpretive Matters. Unless otherwise
expressly provided, for purposes of this Agreement, the following rules of
interpretation shall apply:
Calculation of Time Period. When calculating the period of time
before which, within which or following which any act is to be done or step
taken pursuant to this Agreement, the date that is the reference date in
calculating such period shall be excluded. If the last day of such period is a
non-Business Day, the period in question shall end on the next succeeding
Business Day.
9
Dollars. Any reference in this Agreement to $ shall mean U.S.
dollars.
Exhibits/Schedules. The Exhibits and Schedules to this Agreement are
hereby incorporated and made a part hereof and are an integral part of this
Agreement. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this Agreement.
Gender and Number. Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall include
the plural and vice versa.
Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Section" are to the corresponding Section of this Agreement
unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
Including. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
(d) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
ARTICLE II
SALE AND PURCHASE OF SECURITIES
2.1 Sale and Purchase of Securities. Upon the terms and subject to
the conditions contained herein, on the Closing Date, each Selling Holder agrees
to sell to Purchaser, and Purchaser agrees to purchase from each Selling Holder,
the Securities owned by such Selling Holder set forth opposite such Selling
Holder's name on Exhibit A hereto.
U ARTICLE III
CONSIDERATION
3.1 Consideration.
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(a) The aggregate consideration for the Securities shall be an
amount in cash equal to one hundred and ninety million dollars ($190,000,000)
minus (i) the outstanding amount of the Company's and the LLC's debt for money
borrowed as set forth on Schedule 3.1(a) as of the Closing as reflected in pay
off letters delivered pursuant to Section 10.1(h)(x) hereof (the "Closing
Debt"), minus (ii) the amount of all Transaction Expenses (not paid prior to the
Closing Date by the LLC, Company or Selling Holders) plus (iii) the amount of
Cash (the "Purchase Price"), subject to adjustment as provided in Section 3.3.
Simultaneously with the Closing, Purchaser shall repay, or cause to be repaid,
on behalf of the Company and the LLC, the Closing Debt of the Company and the
LLC by wire transfer of immediately available funds as directed by the Holder
Representative and, to the extent permitted by the holders of the Closing Debt,
cause all liens, security interests, mortgages, and other encumbrances securing
or supporting the Closing Debt to be released and terminated. Simultaneously
with the Closing, Purchaser shall pay, or cause to be paid, on behalf of
Company, LLC and Selling Holders the Transaction Expenses to the extent not
either (x) paid prior to the Closing Date or (y) taken into account under clause
3.1(a)(ii) and deducted from the Purchase Price to the Persons and in the
amounts as directed by the Holder Representative.
(b) At the Closing the Purchaser shall deposit (i) a portion of
the Purchase Price payable pursuant to Section 3.1(a) equal to one million five
hundred thousand dollars ($1,500,000.00) (the "Adjustment Escrow Amount") with a
bank or trust company mutually acceptable to the Purchaser and the Holder
Representative (the "Escrow Agent") to be held in escrow (the "Adjustment Escrow
Account") pursuant to the terms and provisions of the escrow agreement attached
hereto as Exhibit B-1 (the "Adjustment Escrow Agreement") and (ii) a portion of
the Purchase Price payable pursuant to Section 3.1(a) equal to ten million
dollars ($10,000,000.00) (the "Indemnity Escrow Amount") with the Escrow Agent
to be held in escrow (the "Indemnity Escrow Account") pursuant to the terms and
provisions of the escrow agreement attached hereto as Exhibit B-2 (the
"Indemnity Escrow Agreement"). Except as otherwise provided herein, the
Indemnity Escrow Amount shall be the sole source of recovery for Purchaser
Indemnification Claims pursuant to Article XI. The Adjustment Escrow Agreement
shall provide that all amounts in the Adjustment Escrow Account shall be
released in connection with the payment described in Section 3.3(h) hereof. The
Indemnity Escrow Agreement shall provide that the remaining balance of the
Indemnity Escrow Account, less the amount of any Indemnification Claims then
outstanding, shall be released on September 30, 2005.
3.2 Payment of Purchase Price. On the Closing Date, Purchaser shall pay
an amount equal to the Closing Amount to the Selling Holders, which shall be
paid by wire transfer of immediately available United States funds into (i) the
account of Summit Ventures V, L.P. with respect to the aggregate amount payable
to all members of the Summit Group, (ii) Sunapee Securities, Inc. with respect
to the aggregate amount payable to the Xxxx Group, (iii) Xxxxxxx Xxxxxxxxxx with
respect to the aggregate amount payable to all members of the Xxxxxxxxxx Group
and (iv) the Company with respect to the aggregate amount payable to all members
of the Management Group. The Holder Representative shall deliver to Purchaser,
at least three (3) Business Days prior to
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Closing, a letter of direction indicating the amount payable to each of the
Summit Group, the Xxxx Group, the Xxxxxxxxxx Group and each member of the
Management Group as contemplated above and wire transfer instructions for each
such payment, as applicable.
(a) Each holder of issued and outstanding Class A Units of the LLC
shall receive with respect to each such Class A Unit held by it an amount equal
to the Class A Amount.
(b) Each Founding Stockholder who holds shares of Series A
Preferred Stock of the Company shall receive with respect to each such Series A
Preferred Share held by it an amount equal to the Series A Amount.
(c) Each holder of issued and outstanding Class B Units of the LLC
shall receive with respect to each such Class B Unit an amount equal to the
Class B Unit Price.
(d) Each Founding Stockholder who holds shares of Common Stock of
the Company shall receive, with respect to each such share of Common Stock, an
amount equal to the Common Share Price.
(e) Any additional payments to be made by the Purchaser to the
Selling Holders hereunder, whether pursuant to Section 3.3, the release of funds
held in the Adjustment Escrow Account or the Indemnity Escrow Account or
otherwise, shall be paid pro rata among the holders of Class B Units and Common
Stock based upon the percentage of the Purchase Price received by such holders
by wire transfer of immediately available United States funds to the Summit
Group, Xxxx Group and Management Group as described in the first paragraph of
this Section 3.2.
3.3 Purchase Price Adjustment.
(a) No less than five (5) business days prior to the Closing Date,
the Company shall prepare and deliver to Purchaser for Purchaser's review (i)
the Estimated Balance Sheet (as defined below) and (ii) a certificate of the
Chief Financial Officer of the Company to the effect that the Estimated Balance
Sheet represents such person's good faith estimate of the Estimated Balance
Sheet and the Estimated Working Capital (each as defined below) based on the
books and records of the Company. The estimated balance sheet ("Estimated
Balance Sheet") shall present an estimate of the Working Capital as of the end
of business on the day immediately preceding the Closing Date, but after giving
effect to the benefit of any tax deductions arising from the payment by the
Company of the transaction bonuses set forth on Schedule 5.15(g) ("Estimated
Working Capital") and shall be prepared in accordance with Section 3.3(c) below.
The preparation of the Estimated Balance Sheet shall be for the sole purpose of
determining the amount by which the Estimated Working Capital differs from
fourteen million, two hundred thousand dollars ($14,200,000.00) (the "Target
Working Capital").
(b) For purposes of Closing, the Purchase Price will be adjusted
if the Estimated Working Capital differs from Target Working Capital. If the
Estimated Working Capital is less than the Target Working Capital, then the
Purchase Price will be
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decreased on a dollar-for-dollar basis by the amount of such deficiency. If the
Estimated Working Capital is greater than the Target Working Capital, then the
Purchase Price will be increased on a dollar-for dollar basis by the amount of
such excess.
(c) As promptly as practicable, but no later than sixty (60) days
after the Closing Date, the Purchaser shall cause to be prepared and delivered
to Holder Representative the Closing Statement (as defined below) and a
certificate based on such Closing Statement setting forth the Purchaser's
calculation of Closing Working Capital. The closing statement (the "Closing
Statement") shall present the Working Capital as of the end of business on the
day immediately preceding the Closing Date, but after giving effect to the
benefit of any tax deductions arising from the payment by the Company of the
transaction bonuses set forth on Schedule 5.15(g) ("Closing Working Capital").
"Working Capital" means the current assets (excluding Cash) of the Company, plus
the net property, plant and equipment of the Company as shown on the January 31,
2004 Balance Sheet of the Company (less any depreciation and any property, plant
and equipment conveyed or otherwise disposed of since such date and plus any
capital expenditures since such date) reduced by the current liabilities
(excluding Closing Debt and accrued but unpaid interest and Transaction
Expenses) of the Company, in each case as determined in accordance with GAAP and
the accounting principles set forth on Schedule 3.3(c) (the "Agreed
Principles"). The preparation of the Closing Statement shall be for the sole
purpose of determining the amount by which Closing Working Capital differs from
Estimated Working Capital. Attached hereto as Schedule 3.3(c)(i) is a schedule
showing Working Capital as of January 31, 2004. For purposes of the preparation
of the Closing Statement, the Purchaser shall conduct a physical count of the
Inventory consisting of one hundred percent (100%) of the raw material Inventory
and at least fifty percent (50%) by value of the other Inventory (starting with
the highest value items and working down), which count shall take place after
the Closing Date. The results of such count shall be adjusted (i.e., rolled
forward and rolled back) so as to be accurate as of the end of business on the
day immediately preceding the Closing Date. Purchaser and Selling Holders shall
be permitted to have representatives participate in and/or observe such count.
Purchaser and Holder Representative shall use their reasonable efforts to
resolve any disputes regarding the count while it is being conducted.
(d) If Holder Representative disagrees with the Purchaser's
calculation of the Closing Working Capital delivered pursuant to Section 3.3(c),
the Holder Representative may, within thirty (30) days after delivery of the
Closing Statement, deliver a notice to the Purchaser disagreeing with such
calculation and setting forth Holder Representative's calculation of such
amount. Any such notice of disagreement shall specify those items or amounts as
to which the Holder Representative disagrees, and the Holder Representative
shall be deemed to have agreed with all other items and amounts contained in the
Closing Statement and the calculation of Closing Working Capital delivered
pursuant to Section 3.3(c).
(e) If a notice of disagreement shall be duly delivered pursuant
to Section 3.3(d), the Holder Representative and Purchaser shall, during the
thirty (30) days following such delivery, use their commercially reasonable
efforts to reach agreement on the disputed items or amounts in order to
determine, as may be required, the amount of
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Closing Working Capital, which amount shall not be less than the amount thereof
shown in the Purchaser's calculation delivered pursuant to Section 3.3(c) nor
more than the amount thereof shown in Holder Representative's calculation
delivered pursuant to Section 3.3(d). If during such period, the Holder
Representative and Purchaser are unable to reach such agreement, they shall
promptly thereafter cause the New York city office of KPMG, LLP (the "Accounting
Referee") to review this Agreement and the disputed items or amounts for the
purpose of calculating Closing Working Capital (it being understood that in
making such calculation, the Accounting Referee shall be functioning as an
expert to determine, based on the provisions of this Section 3.3, only those
items in dispute and shall not act as an arbitrator). The parties hereto
acknowledge and certify that the Accounting Referee is not the principal
independent auditor for the Purchaser, the Company, the LLC or Summit Partners,
L.P. In making such calculation, the Accounting Referee shall consider only
those items or amounts in the Closing Statement and the Purchaser's calculation
of Closing Working Capital as to which the Holder Representative has disagreed.
The Holder Representative and Purchaser shall execute a reasonable engagement
letter if requested by the Accounting Referee. Within ten (10) Business Days
after the Accounting Referee has been retained, each of the Holder
Representative and the Purchaser shall deliver to the Accounting Referee such
party's position with respect to each matter in dispute. Within five (5)
Business Days after the expiration of such ten (10) Business Day period, each
party may deliver to the Accounting Referee such party's response to the other
party's position on each matter in dispute. With each submission, each party may
also furnish to the Accounting Referee such other information and documents as
it deems relevant or such information and documents as may be requested by the
Accounting Referee with appropriate copies or notification being given to the
other party. The Accounting Referee shall deliver to the Holder Representative
and Purchaser, as promptly as practicable (but in any case no later than thirty
(30) days from the date of engagement of the Accounting Referee), a report
setting forth the Accounting Referee's decision on each matter in dispute. Such
report shall be final and binding upon the Selling Holders and Purchaser. The
Closing Working Capital shall be finally calculated based on the report of the
Accounting Referee. The cost of such review and report shall be borne equally by
the Selling Holders, on the one hand, and Purchaser, on the other hand.
(f) The Selling Holders, Purchaser, the Company and the LLC shall,
and shall cause their respective representatives to, cooperate and assist in the
preparation of the Closing Balance Sheet and the calculation of Closing Working
Capital and in the conduct of the review referred to in this Section 3.3,
including, without limitation, the making available to the extent necessary of
books, records, work papers and personnel.
(g) If Final Working Capital exceeds Estimated Working Capital,
Purchaser shall pay to the Selling Holders, in the manner and with interest as
provided in Section 3.3(h), the amount of such excess and, if Estimated Working
Capital exceeds Final Working Capital, the Selling Holders shall pay to
Purchaser in the manner and with interest as provided in Section 3.3(h). Any
payment made by either party pursuant to this Section 3.3(g) shall be deemed an
adjustment to the Class B Unit Price and the Common Share Price and shall be
allocated pro rata among the holders of Class B Units and Common Stock based
upon percentage of the Purchase Price received by such holders.
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"Final Working Capital" means Closing Working Capital (i) as shown in the
Purchaser's calculation delivered pursuant to Section 3.3(c) if no notice of
disagreement with respect thereto is duly delivered pursuant to Section 3.3(d);
or (ii) if such a notice of disagreement is delivered, (A) as agreed by the
Holder Representative and Purchaser pursuant to Section 3.3(e) or (B) in the
absence of such agreement, as shown in the Accounting Referee's calculation
delivered pursuant to Section 3.3(e); provided, however, that in no event shall
Final Working Capital be more than the Holder Representative's calculation of
Closing Working Capital delivered pursuant to Section 3.3(d) or less than
Purchaser's calculation of Closing Working Capital delivered pursuant to Section
3.3(c).
(h) Any payment pursuant to Section 3.3(g) shall be made at a
mutually convenient time and place within five (5) Business Days after Final
Working Capital has been determined, by wire transfer by Purchaser or the
Selling Holders, as the case may be, of immediately available funds to the
account of such other party as may be designated in writing by such other party.
Any payment to be made hereunder by the Selling Holders shall be made first by
disbursement from the Adjustment Escrow Account pursuant to the provisions of
the Adjustment Escrow Agreement and thereafter, to the extent the Adjustment
Escrow Account is insufficient to make any payment required hereby, shall be
made by the holders of Class A Units and holders of Common Stock on a pro rata
basis based upon the proceeds received pursuant to this Agreement. With respect
to any such amount due and payable in excess of the Adjustment Escrow Amount the
members of each of the Summit Group, the Xxxxxxxxxx Group and the Xxxx Group
shall be jointly and severally liable for the portion of such payments due by
the respective members of such group, but only severally liable with respect to
any other group. Each of the Summit Group, Xxxxxxxxxx Group and Xxxx Group shall
be jointly and severally liable for any amounts due and owing with respect to
the Management Group. The Summit Group, Xxxx Group and Xxxxxxxxxx Group shall be
liable for a portion of such payment due and owing from a Management Group
member equal to the product of (i) the aggregate proceeds received by all
members of such group divided by (ii) the aggregate proceeds received by all
members of each of the Summit Group, Xxxx Group and Xxxxxxxxxx Group. The
Purchaser shall be required to seek, and shall take reasonable steps against any
member of the Management Group to collect the full amount of such excess payable
pursuant hereto, prior to seeking payment from any member of the Summit Group,
Xxxxxxxxxx Group or Xxxx Group, it being agreed that Purchaser shall not be
required to commence litigation to collect any such amount from the Management
Group. The amount of any payment to be made pursuant to this Section 3.3(h)
shall bear interest from and including the Closing Date to but excluding the
date of payment at a rate per annum equal to the rate of interest published by
the Wall Street Journal as the "prime rate" at large U.S. money center banks on
the Closing Date. Such interest shall be payable at the same time as the payment
to which it relates and shall be calculated daily on the basis of a year of
three hundred sixty five (365) days and the actual number of days elapsed.
15
ARTICLE IV
CLOSING AND TERMINATION
4.1 Closing Date. Subject to the satisfaction of the conditions
set forth in Sections 10.1 and 10.2 hereof (or the waiver thereof by the party
entitled to waive such condition), the closing of the sale and purchase of the
Securities provided for in Section 2.1 hereof (the "Closing") shall take place
at the offices of Xxxxxxx & Xxxxx, LLP, 000 X. Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX
(or at such other place as the parties may designate in writing) at 10:00 a.m.
(central time) on a date to be specified by the parties, which date shall be no
later than the fifth Business Day after the satisfaction or waiver of each
condition to the Closing set forth in Article X (other than conditions that by
their nature are to be satisfied at the Closing, but subject to the satisfaction
or waiver of such conditions), unless another time or date or both are agreed to
in writing by the parties hereto. The date on which the Closing shall be held is
referred to in this Agreement as the "Closing Date".
4.2 Termination of Agreement. This Agreement may be terminated
prior to the Closing as follows:
(a) At the election of the Holder Representative or Purchaser on
or after May 15, 2004, if the Closing shall not have occurred by the close of
business on such date, provided that the terminating party is not in material
default of any of its obligations hereunder, and provided further that such date
shall be automatically extended for 75 days if only the conditions to Closing
set forth in Sections 10.1(d) and 10.2(d) remain unsatisfied or unwaived at May
15, 2004, it being acknowledged and understood that all conditions to Closing
set forth herein must still be satisfied or waived on or prior to the date to
which such date is extended;
(b) by mutual written consent of the Holder Representative and
Purchaser; or
(c) by the Holder Representative or Purchaser if there shall be in
effect a final nonappealable Order of a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby.
4.3 Procedure Upon Termination. In the event of termination and
abandonment by Purchaser or the Holder Representative , or both, pursuant to
Section 4.2 hereof, written notice thereof shall forthwith be given to the other
party or parties, and this Agreement shall terminate, and the purchase of the
Securities hereunder shall be abandoned, without further action by Purchaser or
the Selling Holders.
4.4 Effect of Termination. In the event that this Agreement is
validly terminated in accordance with Section 4.2, then each of the parties
shall be relieved of its duties and obligations arising under this Agreement
after the date of such termination and such termination shall be without
liability to Purchaser, the Company, the LLC or any
16
Selling Holder; provided, each party shall have such rights and remedies in law
or equity as may be available under applicable Law in the event of a breach by
the other party of the representations, warranties and covenants contained
herein and, provided, further, that the obligations of the parties set forth in
Article XII hereof shall survive any such termination and shall be enforceable
hereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser that:
5.1 Organization and Good Standing of the Company. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of New York and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now conducted. The Company is duly qualified or authorized to do business as
a foreign corporation and is in good standing under the laws of each
jurisdiction listed on Schedule 5.1, which are the only jurisdictions where it
is required to be so qualified or authorized.
5.2 Authorization of Agreement. The Company has full corporate
power and authority to execute and deliver this Agreement and each other
agreement, document, or instrument or certificate contemplated by this Agreement
or to be executed by the Company in connection with the consummation of the
transactions contemplated by this Agreement (the "Company Documents"), and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Company Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of the Company. This Agreement has been,
and each of the Company Documents will be at or prior to the Closing, duly and
validly executed and delivered by the Company and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
5.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 5.3(a), none of the execution
and delivery by the Company of this Agreement or the Company Documents, the
consummation of the transactions contemplated hereby or thereby, or compliance
by the Company with any of the provisions hereof or thereof will conflict with,
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination or cancellation
under, or result in the imposition of a Lien on any
17
shares of the Company Stock or any assets of the Company under, any provision of
(i) the certificate of incorporation and by-laws or comparable organizational
documents of the Company; (ii) any Material Contract or Permit to which the
Company is a party or by which any of the properties or assets of the Company
are bound; (iii) any Order applicable to the Company or by which any of the
properties or assets of the Company are bound; or (iv) any applicable Law.
(b) Except as set forth on Schedule 5.3(b), no material consent,
waiver, approval, Order, Permit or authorization of, or declaration or filing
with, or notification to, any Person or Governmental Body is required on the
part of the Company in connection with the execution and delivery of this
Agreement or the Company Documents or the compliance by the Company with any of
the provisions hereof or thereof, or the consummation of the transactions
contemplated hereby or thereby, except for compliance with the applicable
requirements of the HSR Act.
5.4 Capitalization.
(a) The authorized capital stock of the Company consists of
424,000 shares of common stock, $.01 par value per share (the "Common Stock"),
and 1,424,000 shares of Series A Redeemable Preferred Stock, $.01 par value per
share (the "Preferred Stock"). There are 122,860.2289 shares of Common Stock
issued and outstanding, no shares of Common Stock are held by the Company as
treasury stock, 419,000 shares of Preferred Stock outstanding and no shares of
Preferred Stock are held by the Company as treasury stock. All of the issued and
outstanding shares of Common Stock and Preferred Stock were duly authorized for
issuance and are validly issued, fully paid and non-assessable and were issued
in compliance with all Laws. The outstanding shares of Common Stock and
Preferred Stock are owned of record as set forth on Schedule 5.4(a) attached
hereto.
(b) Except as set forth on Schedule 5.4(b), there is no existing
option, warrant, call, right, or Contract of any character to which the Company
is a party requiring, and there are no securities of the Company outstanding
which upon conversion or exchange would require, the issuance, of any shares of
capital stock of the Company or other securities convertible into, exchangeable
for or evidencing the right to subscribe for or purchase shares or units of
capital stock of the Company other than the Shareholders Agreement. The Company
is not a party to any voting trust or other Contract with respect to the voting,
redemption, sale, transfer or other disposition of the Company Stock. All prior
redemptions of the capital stock of the Company have been in accordance in all
material respects with all applicable Laws.
5.5 Corporate Matters.
(a) The Company has no Subsidiaries.
(b) True, correct and complete copies of the Company's Articles of
Incorporation and Bylaws have been made available to Purchaser.
18
(c) The Company's corporate minute books, complete and correct
copies of which have been made available to Purchaser, contain complete and
accurate records of the material actions taken by the shareholders and Board of
Directors of the Company. The share transfer books of the Company are correct,
complete and current.
(d) The accounting books and records of the Company are complete
and correct in all material respects and are maintained in a manner consistent
with past practice.
(e) The present officers and directors of the Company are set
forth on Schedule 5.5 attached hereto.
5.6 Subsidiaries. The Company has no Subsidiaries.
5.7 Financial Statements. The Company has delivered to Purchaser
true, correct and complete copies of (i) the audited balance sheets of the
Company as at December 31, 2001, 2002 and 2003 and the related audited
statements of income and of cash flows of the Company for the years then ended
and (ii) the unaudited balance sheet of the Company as at January 31, 2004 and
the related statements of income and cash flows of the Company for the one (1)
month period then ended (such audited and unaudited statements, including the
related notes and schedules thereto, are referred to herein as the "Financial
Statements"). The Financial Statements are complete and correct in all material
respects and were prepared in accordance with the books and records of the
Company. Except as set forth in the notes thereto and as disclosed in Schedule
5.7, and, with respect to the unaudited statements, the lack of footnotes and
normal year end adjustments, each of the Financial Statements has been prepared
in accordance with GAAP consistently applied and presents fairly in all material
respects the financial position, results of operations and cash flows of the
Company as at the dates and for the periods indicated therein.
For the purposes hereof, the audited balance sheet of the Company as
at December 31, 2003 is referred to as the "Balance Sheet" and December 31, 2003
is referred to as the "Balance Sheet Date".
5.8 No Undisclosed Liabilities. To the Knowledge of the Company,
the Company has no Liabilities of any kind that would have been required to be
reflected in, reserved against or otherwise described on the Balance Sheet or in
the notes thereto in accordance with GAAP and were not so reflected, reserved
against or described, other than (i) Liabilities incurred in the Ordinary Course
of Business after the Balance Sheet Date; and (ii) Liabilities incurred in
connection with the transactions contemplated hereby.
19
5.9 Absence of Certain Developments. Except as contemplated by
this Agreement or as set forth on Schedule 5.9, since the Balance Sheet Date the
Company has conducted its business only in the Ordinary Course of Business and
there has not been:
(a) an event, change, occurrence or circumstance that has had or
could reasonably be expected to have a Material Adverse Effect;
(b) any material damage, destruction, or loss (whether or not
covered by insurance) affecting the Company's properties, assets, business, or
prospects, or any known threat to take by condemnation or eminent domain any
Owned Properties or real property leased by the Company;
(c) any executory purchase commitment which is in any material
respect in excess of normal business requirements or other than for normal
operating inventories;
(d) the declaration or payment of any dividend or distribution on
any of the Company's capital stock other than in cash;
(e) any grant of an increase or any commitment to increase the
salary or wages paid to or benefits provided to and any bonus paid or payable to
any director or employee of the Company, except for increases of salary or wages
granted at such times and in such amounts as are consistent with the past
practice of the Company;
(f) any Indebtedness incurred, aside from trade payables incurred
in the Ordinary Course of Business;
(g) any Liability incurred or assumed, or any Contract entered
into or assumed involving more than ten thousand dollars ($10,000) in each
instance, except in the Ordinary Course of Business;
(h) any loan or advance to a third party or advances to employees
other than in the Ordinary Course of Business;
(i) any payment of, or commitment to pay, any severance or
termination pay to any officer, director, consultant, agent, employee or
shareholder;
(j) any change in accounting methods or practices or any change in
depreciation or amortization policies or rates;
(k) any purchase, sale, abandonment or other disposition of assets
or properties in anticipation of this Agreement, or any purchase, lease, sale,
abandonment or other disposition of assets, except in the Ordinary Course of
Business;
(l) any acquisition of all or any substantial part of the stock or
the business or operating assets of any other Person;
20
(m) any waiver or release of any material rights;
(n) any cancellation or compromise of any debts owed to the
Company or known claims against others exceeding $10,000.00 or any payment of
any debts owed by the Company by others on behalf of the Company;
(o) any sale, transfer, grant or expiration of any material rights
under any Contract with respect to any Intellectual Property or Technology;
(p) any redemption, purchase or acquisition of any shares of the
Company's capital stock or any issuance of any shares of the Company's capital
stock or securities convertible into its capital stock; and/or
(q) any other material transaction outside the Ordinary Course of
Business.
5.10 Taxes. Except as set forth on Schedule 5.10 hereof:
(a) The Company has duly and timely filed all federal income and
all other material state, local and foreign Tax Returns of any kind which were
required to be filed by it (taking into account all applicable extensions). All
such Tax Returns and reports are true, correct and complete in all material
respects. The Company has paid or adequately reflected in accordance with GAAP
as a reserve for Taxes in the most recent Financial Statements all Taxes owed by
it. No Tax deficiency has been proposed or assessed against the Company that is
still pending, and to the Knowledge of the Company, no Tax deficiency has been
threatened against the Company. As of the date hereof, the Company does not have
in effect any waivers of any statutes of limitations relating to the payment of
Taxes for any taxable period. Schedule 5.10 lists all federal, state and local
and foreign income Tax Returns filed by the Company for taxable periods ending
on or after December 31, 1998. No Tax Returns of the Company for any open year
have been audited.
(b) The Company is not bound by and does not have any obligation
under or potential liability with respect to any Tax allocation, Tax sharing or
Tax indemnification agreement or similar Contract.
(c) No written notice has been received from a jurisdiction in
which the Company does not file Tax Returns that the Company is or may be
subject to Taxes assessed by such jurisdiction.
(d) The Company has duly withheld and paid all Taxes which it is
required to withhold and pay relating to amounts heretofore paid or owing to any
employee, independent contractor, creditor, or any other Person.
(e) Since January 1, 1999, the Company has not received from the
IRS or any other Tax authority written notice of underpayment of Taxes,
assessment of additional Taxes or other deficiency which has not been paid or
any objection to any Tax Return filed by the Company.
21
(f) The Company has not been a member of an affiliated group
(within the meaning of Section 1504(a) of the Code) filing a consolidated
federal income Tax Return except for the group, the common parent of which is
the LLC.
(g) There are no liens for Taxes (other than current Taxes not yet
due and payable) upon the assets of the Company.
(h) The Company is not a party to or bound by any Contract or
arrangement covering any employee or former employee nor is there any agreement
(including this Agreement) that the Company is a party to that under any
circumstance could obligate the Company to make payments to an employee or
former employee that, individually or in the aggregate, could give rise to any
payment (nor have any payments been made) that would not be deductible pursuant
to Section 280G or 162 of the Code.
(i) Since January 1, 1999, the Company has not: except for the
election made pursuant to Code Section 338(h)(10) in connection with the 1999
transaction in which members of the Summit Group, directly or indirectly,
acquired shares of the Company's capital stock, filed an election under Code
Section 338(g) or Code Section 338(h)(10) (nor has a deemed election under Code
Section 338(e) occurred); entered into any closing agreement with a Tax
authority; filed any consent under Code Section 341(f) or agreed to have Code
Section 341(f)(2) apply to any disposition of a subsection (f) asset (as defined
in Code Section 341(f)(4)) owned by the Company.
(j) The Company has delivered to the Purchaser true, correct and
complete copies of all requested federal and state income, franchise and other
Tax Returns with respect to Company together with true and correct copies of all
requested accountants' work papers relating to the preparation thereof.
(k) The joint election made by the Company pursuant to Section
338(h)(10) of the Code in connection with the 1999 transaction in which members
of the Summit Group, directly or indirectly, acquired shares of the Company's
capital stock was validly made and timely filed with appropriate Governmental
Bodies and was and continues to be effective.
(l) The assets of the Company are not treated as "tax-exempt use
property" within the meaning of Code Section 168(h) nor secure any debt the
interest of which is exempt from Tax under Section 103 of the Code. The Company
is not a party to any safe harbor lease within the meaning of Section 168(f)(1)
of the Internal Revenue Code of 1954, as in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982. The Company has not been the
"distributing corporation" (within the meaning of Section 355(c)(2) of the Code)
with respect to a transaction described in Section 355 of the Code within the
three (3) year period ending as of the date of this Agreement. The Company has
not participated in an international boycott as defined in Section 999 of the
Code. The Company has not agreed, and is not required to make, any adjustment
under Code Section 263A, 481(a) or 482 (or similar provision of any Tax Law) by
reason of a change in accounting method or otherwise. The Company
22
has no permanent establishment in any foreign country, as defined in any
applicable Tax treaty or convention between the United States of America and
such foreign country. The Company is in compliance with the terms and conditions
of any applicable Tax exemptions, Tax agreements or Tax orders of any government
to which it may be subject or which it may have claimed, and the transactions
contemplated by this Agreement will not have any adverse effect on such
compliance. Since January 1, 1999, the Company has not received a written Tax
opinion with respect to any transaction. The Company is not the direct or
indirect beneficiary of a guarantee of Tax benefits or any other arrangement
that has the same economic effect with respect to any transaction or Tax opinion
relating to the Company. The Company is not a party to an understanding or
arrangement described in Section 6111(d) or Section 6662(d)(2)(C)(iii) of the
Code. The Company is not a party to a lease agreement involving a defeasance of
rent, interest or principal. The Company is not subject to any private letter
ruling of the IRS or any comparable ruling of any state, local, foreign or other
Tax authority.
5.11 Real Property.
(a) Schedule 5.11 sets forth a complete list of (i) all real
property and interests in real property owned in fee by the Company
(individually, an "Owned Property" and collectively, the "Owned Properties"),
and (ii) all leases of real property by the Company (individually, a "Real
Property Lease" and collectively, the "Real Property Leases" and, together with
the Owned Properties, being referred to herein individually as a "Company
Property" and collectively as the "Company Properties"). The Company has good
and valid fee simple title to all Owned Property free and clear of all Liens of
any nature whatsoever except (A) Liens set forth on Schedule 5.11 and (B)
Permitted Exceptions. The Company Property subject to a Real Property Lease and
located at 0000 Xxxxxx Xxxxx, Xxxxxxxxxxxxx, XX is not subject to any Lien
except for Permitted Exceptions and other Liens shown on the Title Commitment
for such property. The Company has not received any written notice of any
default or event that with notice or lapse of time, or both, would constitute a
default by the Company under any of the Real Property Leases. The Company
Property constitutes all of the real property used by the Company in its
business. Except as set forth in Schedule 5.11, the Company does not have an
option or right to acquire any real property.
(b) The Company is in peaceful possession of the Company Property.
The Company Property (i) is not subject to any leases or tenancies of any kind
(except for any lease to which is Material Contract); (ii) is not located in a
flood plain, wetland or similar restricted area; (iii) is served by all water,
sewer, electrical, telephone, drainage and gas utilities required for the
current normal operations; (iv) has full and free direct vehicular access to and
from a public road or street; (v) is used in a manner which is permitted under
applicable zoning ordinances and other Laws without any special use approval or
permits; (vi) to the Knowledge of the Company requires no work or improvements
to bring it into compliance with any applicable Law; (vii) is not subject to any
interest of any Person under an easement, contract, option, mineral rights or
other Contract; (viii) is not subject to any unpaid assessments for public
improvements; and (ix) is not the subject of any construction or improvements
for which payment in full has not been made.
23
(c) To the Knowledge of the Company, there are no planned or
contemplated public improvements which may result in special assessments against
the Company Property or which may otherwise materially affect the availability
of utility service or access to the Company Property.
(d) To the Knowledge of the Company, there is no increase or
contemplated increase in the assessed value of the Company Property which would
materially increase the estimated real estate Taxes for such Company Property.
(e) To the Knowledge of the Company, no road change or roadwork is
planned or contemplated that would materially adversely affect the present use
of the Company Property.
(f) To the Knowledge of the Company, the roofs, walls, foundations
and other major structural components of the Company Property are in good
repair, normal wear and tear excepted, and are free from material defects.
(g) To the Knowledge of the Company, the water, sewer, plumbing,
heating, air conditioning and electrical systems serving the Company Property
are in good operating condition, normal wear and tear excepted, and are in
condition to pass safety, health and other examinations under applicable Law.
5.12 Assets.
(a) Except as set forth on Schedule 5.12, the Company owns good
and marketable title to all of its assets and properties, free and clear of any
and all Liens of any nature whatsoever except Permitted Exceptions as of the
Closing Date. The Company is in sole possession of, and has sole control of, its
assets and properties. Except as disclosed in Schedule 5.12, no material asset
or property used by the Company is leased, rented, licensed, or otherwise not
owned by the Company.
(b) The assets and properties of the Company include all of the
assets and properties which are necessary for the operation of the Company's
business as now conducted.
(c) The Inventory of the Company is properly reflected in the
Financial Statements of the Company.
(d) Except for goods in transit, all of the tangible assets and
properties of the Company are physically located at the Company Property.
(e) To the Knowledge of the Company, all of the tangible assets
owned or used by the Company are in good operating condition and repair, normal
wear and tear excepted, and such assets and their use conform in all material
respects to all applicable laws. The Company has not received written notice of
any violation of any building, zoning, or other Law relating to such assets or
their use.
5.13 Intellectual Property.
24
(a) Schedule 5.13 attached hereto sets forth a list of all of the
patents, patent applications, trade names, trademarks, trade designations,
service marks, trademark and service xxxx applications, registered copyrights,
copyright applications and domain names included in the Intellectual Property.
(b) Except as set forth on Schedule 5.13, the Company owns the
exclusive and entire right, title and interest in and to the Intellectual
Property owned by it and owns or possesses adequate licenses or other rights to
use the Intellectual Property not owned by it. The Company does not infringe on
the intellectual property rights of others. There are no claims, demands or
proceedings pending or, to the Knowledge of the Company, threatened, by any
third party pertaining to or challenging the Company's rights to any of the
Intellectual Property. None of the Intellectual Property is invalid or
unenforceable. To the Knowledge of the Company, no Person has infringed on the
Intellectual Property. To the Knowledge of the Company, the sole and exclusive
right, title, and interest in and to all patents, trademarks, trade names,
copyrights and applications for the foregoing, and rights to discoveries or
inventions (whether or not patentable) owned or held by any officer, director,
employee, former employee, or independent contractor engaged by the Company has
been duly and effectively transferred to the Company.
(c) There is no royalty, commission or other similar payment of
any kind due or which could become due for the use of the any of the
intellectual property in making, using or selling any of the Company's products.
5.14 Material Contracts.
(a) Schedule 5.14 sets forth all of the following Contracts to
which the Company is a party or by which it is bound (collectively, the
"Material Contracts"):
(i) Contracts with any Selling Holder or any current officer,
director or management-level employee of the Company, with an Affiliate of
the Company or with any family member of an officer, director or
management-level employee of the Company;
(ii) Collective bargaining agreements or other Contracts with any
labor union or association representing any employee of the Company;
(iii) Contracts for the sale of any of the assets of the Company
other than in the Ordinary Course of Business, for consideration in excess
of ten thousand dollars ($10,000);
(iv) Contracts relating to the acquisition by the Company of all or
substantially all of the assets, any operating business or the capital
stock of any other Person;
(v) Contracts relating to the incurrence of: (A) any Indebtedness
or the making of any loans which are covered by (i) the definition of
"Indebtedness" and (B) any Indebtedness or the making of any loan which are
covered by any other
25
provision of the definition of "Indebtedness" and which involve amounts in
excess of fifty thousand dollars ($50,000);
(vi) All leases of Company Property;
(vii) All leases of personal property any one of which involves the
expenditure of more than ten thousand dollars ($10,000) in the aggregate or
requires performance by any party more than one (1) year from the date
hereof that, in either case, is not terminable by the Company without
penalty on notice of ninety (90) days or less;
(viii) All licenses (including software licenses other than
commercially available "canned" software), royalty agreements, and similar
authorizations, obligations or agreements;
(ix) All Contracts (other than those for the sale of its products)
involving a consideration of or expenditure in excess of ten thousand
dollars ($10,000), or involving performance over a period of more than
ninety (90) days.
(x) All purchase commitments: (i) for Inventory in excess of six
(6) months' normal usage; (ii) in excess of the normal, ordinary, usual and
current requirements; or (iii) at any price materially in excess of the
current market price in effect at the time of making the commitment.
(xi) All powers of attorney given to any Person.
(xii) All management, consulting, or employment agreements or other
Contract providing for employment or the rendering of services that provide
for: (A) any commission, bonus, profit sharing, incentive, retirement,
consulting or additional compensation or (B) contain severance or
termination pay liabilities or obligations.
(xiii) All Contracts for the storage, transportation, treatment or
disposal of any hazardous waste or hazardous byproduct.
(xiv) All Contracts restricting the right of the Company to compete
in any business or in any geographical area or any agreement by any other
Person not to compete with the Company in any business or in any
geographical area.
(xv) All Contracts restricting the right of the Company to use or
disclose any information in its possession, other than confidentiality
agreements entered into in the Ordinary Course of Business.
(xvi) All partnership, joint venture, limited liability company or
similar Contracts.
(xvii) Any other Contract which involves the expenditure of more
than twenty five thousand dollars ($25,000) in the aggregate or requires
performance
26
by any party more than ninety (90) days from the date hereof that, in
either case, is not terminable by the Company without penalty on notice of
ninety (90) days or less; and
(b) The Company has made available to Purchaser a true, accurate
and complete copy of each Material Contract.
(c) Except as set forth in Schedule 5.14, the Company and, to the
Knowledge of Company, each other party to each Material Contract has performed
each material term, covenant, and condition of each Material Contract which is
to be performed by them at or before the date hereof. Each of the Material
Contracts is in full force and effect and constitutes the legal, binding and
enforceable obligation of the Company, and to the Knowledge of the Company, the
other parties thereto.
(d) During the twelve (12) month period preceding the date hereof,
no material Contracts of the Company were terminated, expired, or not renewed.
5.15 Employee Benefits Plans.
(a) Schedule 5.15(a) lists each "employee benefit plan" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and any other pension, profit sharing, bonus, incentive
compensation, stock ownership, stock purchase, stock appreciation, severance,
retirement, disability, health care, sick leave, dental, life insurance,
accident insurance, vacation, death benefit, severance, employee welfare, group
insurance or any other employee plan, program, arrangement, policy or Contract
which is provided to, for the benefit of, or relate to current or former
employees or directors of the Company or any dependents thereof (each, a
"Company Benefit Plan"). The Company has made available to Purchaser true,
correct and complete copies of (i) each Company Benefit Plan (or, in the case of
any such Company Benefit Plan that is unwritten, descriptions thereof), (ii) the
three most recent annual reports on Form 5500 required to be filed with the IRS
with respect to each Company Benefit Plan (if any such report was required),
(iii) the most recent summary plan description for each Company Benefit Plan for
which such summary plan description is required and (iv) each trust agreement
and insurance or group annuity contract relating to any Company Benefit Plan.
Each Company Benefit Plan maintained, contributed to or required to be
contributed to by the Company has been administered in all material respects in
accordance with its terms and, if applicable, the terms of its summary plan
description. The Company and all the Company Benefit Plans are all in compliance
in all material respects with the applicable provisions of ERISA, the Code and
all other applicable Laws. The Company is the sole sponsor of the Company
Benefit Plans to which it contributes, sponsors, or owes liability. Except as
set forth in Schedule 5.15(a), the Company can terminate each Company Benefit
Plan without payment of any additional compensation or other amount or any
additional vesting or acceleration of any benefits provided under any such
Company Benefit Plan.
(b) All Company Benefit Plans that are "employee pension plans"
(as defined in Section 3(3) of ERISA) that are intended to be tax qualified
under
27
Section 401(a) of the Code (each, a "Company Pension Plan") that is maintained,
contributed to or required to be contributed to by the Company is so qualified.
No event has occurred since the date of the most recent determination letter or
application therefor relating to any such Company Pension Plan that would
adversely affect the qualification of such Company Pension Plan. The Company has
made available to Purchaser a correct and complete copy of the most recent
determination letter received with respect to each Company Pension Plan
maintained, contributed to or required to be contributed to by the Company, as
well as a correct and complete copy of each pending application for a
determination letter, if any.
(c) All contributions, premiums and benefit payments under or in
connection with the Company Benefit Plans that are required to have been made
hereof in accordance with the terms of the Company Benefit Plans have been
timely made or have been reflected on the books and records of the Company. No
Company Pension Plan has an "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code), whether or not
waived. To the Knowledge of the Company, no reportable event has occurred in
connection with any Company Benefit Plan. To the Knowledge of the Company, no
Company Benefit Plan and no trustee or administrator of any Company Benefit Plan
has engaged in any "prohibited transaction" as defined in ERISA and the Code.
(d) No Company Benefit Plan is a "multi-employer plan" (as defined
in Section 3(37) of ERISA) and neither the Company nor any ERISA Affiliate has
ever maintained, contributed to or been obligated to contribute to any such
plan. For purposes hereof, "ERISA Affiliate" means each entity that is, or has
ever been, required by Sections 414(b), 414(c), 414(m) or 414(o) of the Code to
be aggregated with the Company.
(e) Any past Company Benefit Plan that has been terminated was
done so in compliance with all applicable Laws, and the Company has no further
liability or obligation pursuant to any past Company Benefit Plan.
(f) There are no actions, suits or claims pending (other than
routine claims for benefits) and no audits pending with respect to any Company
Benefit Plan or against the assets of any Company Benefit Plan, and to the
Knowledge of the Company no such action, suit, claim or audit is threatened and
no act or omission has occurred which could result in any such actions, suits or
claims (other than routine claims for benefits).
(g) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee of the Company to
severance pay, unemployment compensation or any other payment, (ii) except as
set forth on Schedule 5.15(g), accelerate the time of payment or vesting, or
increase the amount of compensation due to any such employee or former employee
or (iii) result in any prohibited transaction described in Section 406 of ERISA
or Section 4975 of the Code for which an exemption is not available.
28
(h) No Employee Benefit Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured) beyond retirement
or other termination of service other than (i) coverage mandated by applicable
Law, (ii) death or retirement benefits under any Employee Benefit Plan that is
an employee benefit pension plan, (iii) deferred compensation benefits that are
accrued as liabilities on the books of the Company, or (iv) disability benefits
under any employee welfare benefit plan.
(i) The Company has no announced plan or legally binding
commitment to create any new or additional Company Benefit Plan or to amend or
modify any existing Company Benefit Plan, except to the extent required by Law.
(j) Neither the Company nor an ERISA Affiliate has any liability
as a successor of any other organization to any employee benefit plan (or
beneficiary, sponsor, trustee or fiduciary of such plan) pursuant to successor
liability rules of Title IV of ERISA or other Law.
5.16 Labor.
(a) Schedule 5.16(a) attached hereto sets forth a complete and
correct copy of the Company's payroll report as of March 27, 2004.
(b) The Company is not a party to any labor or collective
bargaining agreement.
(c) Except as set forth on Schedule 5.15(c), since January 1, 1999
the Company has not experienced, there is not currently pending and to the
Knowledge of the Company, there is not threatened, any strike, work stoppage,
work slowdown, lockout, union organizing activity or general labor dispute.
(d) The Company is in compliance in all material respects with all
applicable Laws regarding employment and employment practices, terms and
conditions of employment, wages and hours.
(e) The Company has not received any written notice or any claim
by any present or former employee against the Company (whether under applicable
Law, under any employee agreement or otherwise) on account of or for: (i)
overtime pay, other than overtime pay for the current payroll period, (ii) wages
or salaries, other than wages or salaries for the current payroll period, or
(iii) vacations, time off or pay in lieu of vacation or time off, other than
vacation or time off (or pay in lieu thereof) earned in the twelve (12) month
period immediately preceding the date hereof and accrued as a liability on the
most recent balance sheet included in the Financial Statements.
(f) The Company has made all required payments to its unemployment
compensation reserve account with the appropriate Governmental Body, and there
are not currently any employees receiving unemployment compensation benefits
which are being charged against such account.
29
(g) There is not now pending or, to the Knowledge of the Company,
threatened, any charge or complaint before the National Labor Relations Board or
any representative thereof, or any comparable foreign or state agency or
authority. The Company has not committed any unfair labor practice which has not
been fully remedied.
(h) There is no pending or, to the Knowledge of the Company,
threatened, claims by any Person against the Company arising out of any Law
relating to discrimination to employees or employee practices or occupational or
safety and health standards.
(i) Since January 1, 1999, the Company has not been the subject
of, and to the Knowledge of the Company there is not threatened, any inspection,
audit, investigation, complaint or other proceeding relating to employment Laws,
including without limitation occupational or safety and health standards and
immigration Laws.
(j) To the Knowledge of the Company, no management-level employee
of the Company intends to terminate his or her employment with the Company
whether or not in connection with the transactions contemplated by this
Agreement.
5.17 Litigation. Except as set forth on Schedule 5.17, there are no
Legal Proceedings pending or, to the Knowledge of the Company, threatened
against the Company. Schedule 5.17 sets forth all Legal Proceedings to which the
Company has been a party since January 1, 2001. Neither the Company nor its
assets is subject to an Order. There is no Legal Proceeding pending or, to the
Knowledge of the Company, threatened against the Company by any Person which
questions the legality, validity or propriety of the transactions contemplated
by this Agreement.
5.18 Compliance with Laws; Permits.
(a) The Company, its properties and assets and the operation of
its business are in compliance in all material respects with all applicable
Laws. The Company has not received any written notice of or been charged with
the violation of any Laws. Since January 1, 1999, the Company has not been the
subject of an inspection or inquiry regarding violations or alleged violations
of any Law by any Person.
(b) The Company currently has all material Permits which are
required for the operation of its business as presently conducted. All of such
Permits are listed on Schedule 5.18(b). The Company is not in default or
violation (and no event has occurred which, with notice or the lapse of time or
both, would constitute a default or violation) of any term, condition or
provision of any Permit to which it is a party.
5.19 Environmental Matters.
(a) Except as set forth on Schedule 5.19(a), the Company, its
assets, and properties including the Company Properties are and have been in
compliance with all applicable Environmental Laws and all Permits issued
pursuant to Environmental Laws or otherwise;
30
(b) The Company has all Permits required by Environmental Laws for
the operation of its business as currently conducted, such Permits are in full
force and effect and the Company has timely applied for required renewals of
such Permits. All such Permits, approvals, registration and authorization are in
good standing and are set forth on Schedule 5.19(b).
(c) There is no Environmental Claim pending, or, to the Knowledge
of the Company, threatened, against the Company or any Person whose liability
for any Environmental Claim the Company has or may have retained or assumed
either contractually or by operation of Law, or against any Company Property or
personal property or operation which the Company owns, leases, manages or uses
and there is no reasonable basis for any such Environmental Claim.
(d) There has been no Release by the Company, or to the Knowledge
of the Company, any other Person, of any Hazardous Materials on any Company
Property in an amount or manner which would require notice to any Governmental
Body or Remedial Action under Environmental Law, nor, to the Knowledge of the
Company, has any such Release occurred on any property previously owned, used,
leased or operated by the Company.
(e) No real property owned, operated, used or controlled by the
Company is currently listed on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or on any comparable state list,
and the Company has not received any written notice from any Person under or
relating to CERCLA or any comparable state or local Law.
(f) To the Company's knowledge, no off-site location at which
Hazardous Materials from the Company or any of its businesses were disposed,
treated or otherwise handled are listed on the National Priorities List or on
any comparable state list, the Company has not received any written notice from
any Person with respect to any off-site location alleging that the Company is or
may be liable for the costs of any Remedial Action or damage to natural
resources and the Company has not received any written request for information
from any Person relating to the off-site disposal, treatment or other handling
of Hazardous Materials.
(g) There is not and has not been any Hazardous Material used,
generated, treated, stored, transported, disposed of, handled or otherwise
existing on, under or about any Company Property, except for quantities of any
such Hazardous Materials stored or otherwise held on, under or about any Company
Property in compliance with all Environmental Laws and intended to be used in
the operation of the Company's business.
(h) Except as set forth on Schedule 5.19(h), there is not now and
has not been at any time in the past any underground or above-ground storage
tank or pipeline at any Company Property and there has been no Release from or
rupture of any
31
such tank or pipeline, including, without limitation, any Release from or in
connection with the filling or emptying of such tank.
(i) The Company is not the subject of any outstanding Order,
Contract or Legal Proceeding respecting (i) Environmental Laws, (ii) Remedial
Action or (iii) any Release or threatened Release of a Hazardous Material.
(j) To the Knowledge of the Company, there are no investigations
of the businesses of the Company, or currently or previously owned, operated or
leased property of the Company pending or threatened which would reasonably be
expected to result in the imposition of any material liability pursuant to any
Environmental Law.
(k) Except as set forth on Schedule 5.19(k), there is not now,
nor, to the Knowledge of the Company, has there ever been, located at Company
Property or, to the Knowledge of the Company, any previously owned, operated,
leased or used property, any (i) asbestos-containing material, (ii) equipment
containing polychlorinated biphenyls or (iii) lead paint and the Company has not
manufactured, produced or distributed any products containing any asbestos
material.
(l) No Company asset is subject to any Lien under or as a result
of any Environmental Law and, to the Knowledge of the Company, no such Lien is
threatened.
(m) Schedule 5.19(m) contains a true, complete and correct list of
all environmental assessments (Phase I or Phase II), site investigate reports,
remedial reports and other environmental reports and studies conducted by the
Company or that are otherwise in the Company's possession related to any Company
Property or any previously owned, operated, leased or used property.
5.20 Financial Advisors. Except as set forth on Schedule 5.20, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Company in connection with the transactions contemplated by this
Agreement and no Person is entitled to any fee or commission or like payment
from Purchaser in respect thereof.
5.21 Accounts. All of the Company's accounts receivable have arisen
from arm's-length transactions in the ordinary course of business and are
accurately reflected in the Company's Financial Statements.
5.22 Insurance.
(a) Schedule 5.22(a) hereto lists and describes all of the
insurance policies of the Company now in effect. Said policies are in full force
and effect.
(b) Schedule 5.22(b) hereto lists and summarizes all claims in
excess of five thousand dollars ($5,000) under said insurance policies or any
other policies made or pending since January 1, 1999.
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(c) No lapse of the insurance coverage of the Company has ever
occurred since January 1, 1999, and since such date the Company has not had any
application for such insurance coverage denied or any insurance policy or
coverage thereunder canceled, withdrawn, or not renewed.
(d) There is no claim pending under any insurance policy as to
which coverage has been questioned, denied or disputed in writing and, to the
Knowledge of the Company, there is no basis for the denial of any such claim.
5.23 Bank Accounts. Schedule 5.23 hereto describes all checking
accounts, savings accounts, custodial accounts, certificates of deposit, safe
deposit boxes, money market accounts, or other similar accounts maintained by
the Company. The signatories identified on Schedule 5.23 constitute the only
signatories with respect to said accounts.
5.24 Transactions with Related Parties. Except as set forth on
Schedule 5.24 hereto, the Company is not a party to any transaction or proposed
transaction, including, without limitation, the leasing of property, the
purchase or sale of raw materials or finished goods, the furnishing of services
or the borrowing or lending of money, with any Selling Holder or any director,
officer, employee, agent, or consultant of the Company or any Person owned or
controlled by any of the preceding, or any Person who is an Affiliate of any
Selling Holder.
5.25 Product Matters.
(a) All instances of product warranty claims for any products
produced, distributed, sold or shipped by the Company prior to the Closing Date
("Product Warranty Claims") involving amounts in excess of five thousand dollars
($5,000) per occurrence that have occurred or for which notice has been received
by the Company since January 1, 2002 are listed on Schedule 5.25(a).
(b) All product recalls and liabilities, obligations or damages of
any kind for death, disease or injury to Person, business or property relating
to products produced, distributed, sold or shipped by the Company prior to the
Closing Date ("Product Liability Matters") involving amounts in excess of five
thousand dollars ($5,000) that have occurred or for which notice has been
received by the Company since January 1, 2001 are listed on Schedule 5.25(b).
(c) The Company has not received any written notice with respect
to defects or deficiencies in the design of products sold by the Company prior
to the date hereof.
(d) The products of the Company which are produced by the Company
have received all approvals from Governmental Bodies or third Persons which they
are required to obtain or which the Company purports to have obtained and such
products comply with the requirements, standards and specifications of all such
approvals.
33
5.26 Disclosure. To the Knowledge of the Company, no disclosure or
statement of fact by the Company contained in this Agreement (including the
schedules attached hereto) contains or will contain any untrue statement of
material fact or omits or will omit to state any item or a material fact
necessary in order to make statements herein or therein not misleading.
5.27 Due Diligence. Neither the Company nor the LLC nor any Selling
Holder has withheld any information from Purchaser pursuant to Purchaser's due
diligence investigation of the Company and the LLC on the grounds that such
information is subject to attorney-client privilege or any obligation of
confidentiality.
5.28 No Other Representations or Warranties; Schedules. Except for
the representations and warranties contained in this Agreement (as modified by
the Schedules hereto), the Company, the LLC and the Selling Holders are not
making any other express or implied representation or warranty with respect the
Company, or the transactions contemplated by this Agreement, and disclaim any
other representations or warranties, and are not responsible for and disclaim
any liability with respect to, any projection, forecast or other information
provided by any other Person. The disclosure of any matter or item in any
schedule hereto shall not be deemed to constitute an acknowledgment that any
such matter is required to be disclosed or is material.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE LLC UNITHOLDERS
Each LLC Unitholder hereby represents as to himself or itself to
Purchaser that:
6.1 Organization and Good Standing. Such LLC Unitholder is either
(a) a limited partnership or a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it was formed and
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now conducted or (b) an individual.
6.2 Authorization of Agreement. Such LLC Unitholder has all
requisite power, authority and legal capacity to execute and deliver this
Agreement and each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by such LLC Unitholder in
connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement, the "LLC Unitholder Documents"), and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and each of the LLC Unitholder Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all required action on the part of such LLC Unitholder. This
Agreement has been, and each of the LLC Unitholder Documents will be at or prior
to the Closing, duly and validly executed and delivered by such LLC Unitholder,
and (assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each LLC Unitholder
34
Document, when so executed and delivered will constitute, the legal, valid and
binding obligation of such LLC Unitholder, enforceable against such LLC
Unitholder in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
6.3 Conflicts; Consents of Third Parties.
(a) None of the execution and delivery by such LLC Unitholder of
this Agreement or the LLC Unitholder Documents, the consummation of the
transactions contemplated hereby or thereby, or compliance by such LLC
Unitholder with any of the provisions hereof or thereof will conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination or cancellation under, or
result in the imposition of a Lien on any LLC Units or Company Stock under, any
provision of (i) the certificate of incorporation and by-laws or comparable
organizational documents of such LLC Unitholder, as applicable; (ii) the
Articles of Organization or Operating Agreement of the LLC, (iii) any Contract
or Permit to which the LLC or such LLC Unitholder is a party or by which any of
the properties or assets of the LLC or such LLC Unitholder are bound; (iv) any
Order applicable to the LLC or such LLC Unitholder or by which any of the
properties or assets of the LLC or such LLC Unitholder are bound; or (v) any
applicable Law.
(b) No consent, waiver, approval, Order, Permit or authorization
of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of such LLC Unitholder in connection
with the execution and delivery of this Agreement or the LLC Unitholder
Documents, or the compliance by such LLC Unitholder with any of the provisions
hereof or thereof or the consummation of the transactions contemplated hereby,
except for compliance with the applicable requirements of the HSR Act.
6.4 Ownership and Transfer of LLC Units. Such LLC Unitholder is
the record and beneficial owner of the LLC Units indicated as being owned by
such LLC Unitholder on Exhibit A, free and clear of any and all Liens. Such LLC
Unitholder has the power and authority to sell, transfer, assign and deliver
such LLC Units as provided in this Agreement, and such delivery will convey to
Purchaser good and marketable title to such LLC Units, free and clear of any and
all Liens.
6.5 Litigation. There are no Legal Proceedings pending or, to the
knowledge of such LLC Unitholder, threatened that are reasonably likely to
prohibit or restrain the ability of such LLC Unitholder to enter into this
Agreement or consummate the transactions contemplated hereby.
6.6 Financial Advisors. No Person has acted, directly or
indirectly, as a broker, finder or financial advisor for such LLC Unitholder in
connection with the
35
transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or like payment in respect thereof.
6.7 LLC Matters.
(a) Except as set forth on Exhibit A, there is no unit, security
or other ownership interest in the LLC issued and outstanding. There is no
existing option, warrant, call, right, or Contract of any character to which the
LLC or any LLC Unitholder is a party requiring, and there are no securities of
the LLC outstanding which upon conversion or exchange would require, the
issuance of any unit, security or other ownership interest in the LLC or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase units, securities or other ownership interests in the
LLC other than the LLC Operating Agreement. Except as set forth on Schedule
6.7(a) neither the LLC nor any LLC Unitholder is a party to any voting trust or
other Contract with respect to the voting, redemption, sale, transfer or other
disposition of the LLC Units or other ownership interests in the LLC. All prior
redemptions of units or other ownership interests in the LLC have been in
accordance with all applicable Laws.
(b) The sole assets of the LLC consist of 100,465.3648 shares of
the Company's Common Stock, 352,756.1200 shares of the Company's Preferred Stock
and $11,560.68 in cash as of March 29, 2004. The LLC has no Liabilities. The LLC
has no employees.
(c) Except for its purchase and ownership of the Company's Common
Stock and the Company's Preferred Stock, the granting of options, and for the
filing of federal income Tax Returns, the LLC has not conducted any business
activities.
(d) Schedule 6.7(d) hereto describes all checking accounts,
savings accounts, custodial accounts, certificates of deposit, safe deposit
boxes, money market accounts, or other similar accounts maintained by the LLC.
The signatories identified on Schedule 6.7(d) constitute the only signatories
with respect to said accounts.
(e) True, correct and complete copies of the LLC's Article of
Organization and Operating Agreement have been delivered to Purchaser.
(f) The LLC's minute books, complete and correct copies of which
have been made available to Purchaser, contain complete and accurate records of
the material actions taken by the members and managers of the LLC. The
membership interest transfer books of the LLC are correct, complete and current.
(g) The present officers and managers of the LLC are set forth on
Schedule 6.7(g) attached hereto.
(h) The LLC is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite limited liability company power and authority to own, lease and
operate its properties and to carry on its business as now conducted.
36
(i) The LLC has full limited liability company power and authority
to execute and deliver this Agreement and each other agreement, document, or
instrument or certificate contemplated by this Agreement or to be executed by
the LLC in connection with the consummation of the transactions contemplated by
this Agreement (the "LLC Documents"), and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the LLC Documents and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all requisite limited liability
company action on the part of the LLC. This Agreement has been, and each of the
LLC Documents will be at or prior to the Closing, duly and validly executed and
delivered by the LLC and (assuming the due authorization, execution and delivery
by the other parties hereto and thereto) this Agreement constitutes the legal,
valid and binding obligations of the LLC, enforceable against the LLC in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(j) None of the execution and delivery by the LLC of this
Agreement or the LLC Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the LLC with any of the
provisions hereof or thereof will conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination or cancellation under, or result in the
imposition of a Lien on any LLC Units or any assets of the LLC under, any
provision of (i) the certificate of organization and operating agreement or
comparable organizational documents of the LLC; (ii) any Material Contract or
any material contract to which the LLC is a party or by which any of the
properties or assets of the LLC are bound; or (iii) any Order applicable to the
LLC or by which any of the properties or assets of the LLC are bound.
(k) No material consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of the LLC in connection with the
execution and delivery of this Agreement or the LLC Documents or the compliance
by the LLC with any of the provisions hereof or thereof, or the consummation of
the transactions contemplated hereby or thereby, except for compliance with the
applicable requirements of the HSR Act.
6.8 Taxes.
(a) The LLC has duly and timely filed all federal income and all
other material state, local and foreign Tax Returns of any kind which were
required to be filed by it (taking into account all applicable extensions). All
such Tax Returns and reports are true, correct and complete in all material
respects. The LLC has paid or adequately reflected in accordance with GAAP as a
reserve for Taxes in the most recent Financial Statements all Taxes owed by it.
No Tax deficiency has been proposed or assessed against the LLC that is still
pending, and to the Knowledge of the LLC Unit Holders, no
37
Tax deficiency has been threatened against the LLC. As of the date hereof, the
LLC does not have in effect any waivers of any statutes of limitations relating
to the payment of Taxes for any taxable period. Schedule 6.8 lists all federal,
state and local and foreign income Tax Returns filed by the LLC for taxable
periods ending on or after December 31, 1998. No Tax Returns of the LLC for any
open year have been audited.
(b) The LLC is not bound by and does not have any obligation under
or potential liability with respect to any Tax allocation, Tax sharing or Tax
indemnification agreement or similar Contract.
(c) No written notice has been received from a jurisdiction in
which the LLC does not file Tax Returns that the LLC is or may be subject to
Taxes assessed by such jurisdiction.
(d) The LLC has duly withheld and paid all Taxes which it is
required to withhold and pay relating to amounts heretofore paid or owing to any
employee, independent contractor, creditor, or any other Person.
(e) Since January 1, 1999, the LLC has not received form the IRS
or any other Tax authority written notice of underpayment of Taxes, assessment
of additional Taxes or other deficiency which has not been paid or any objection
to any Tax Return filed by the LLC.
(f) The LLC has not been a member of an affiliated group (within
the meaning of Section 1504(a) of the Code) filing a consolidated federal income
Tax Return except for the group, the common parent of which is the LLC.
(g) There are no liens for Taxes (other than current Taxes not yet
due and payable) upon the assets of the LLC.
(h) The LLC is not a party to or bound by any Contract or
arrangement covering any employee or former employee nor is there any agreement
(including this Agreement) that the LLC is a party to that under any
circumstance could obligate the LLC to make payments to an employee or former
employee that, individually or in the aggregate, could give rise to any payment
(nor have any payments been made) that would not be deductible pursuant to
Section 280G or 162 of the Code.
(i) Since January 1, 1999, the LLC has not: except for the
election made pursuant to Code Section 338(h)(10) in connection with the 1999
transaction in which members of the Summit Group, directly or indirectly,
acquired shares of the Company's capital stock, filed an election under Code
Section 338(g) or Code Section 338(h)(10) (nor has a deemed election under Code
Section 338(e) occurred); entered into any closing agreement with a Tax
authority; filed any consent under Code Section 341(f) or agreed to have Code
Section 341(f)(2) apply to any disposition of a subsection (f) asset (as defined
in Code Section 341(f)(4)) owned by the LLC.
(j) The LLC has delivered to the Purchaser true, correct and
complete copies of all requested federal and state income, franchise and other
Tax Returns with
38
respect to LLC together with true and correct copies of all requested
accountants' work papers relating to the preparation thereof.
(k) The joint election made by the LLC pursuant to Section
338(h)(10) of the Code in connection with the 1999 transaction in which members
of the Summit Group, directly or indirectly, acquired shares of the Company's
capital stock was validly made and timely filed with appropriate Governmental
Bodies and was and continues to be effective.
(l) The assets of the LLC are not treated as "tax-exempt use
property" within the meaning of Code Section 168(h) nor secure any debt the
interest of which is exempt from Tax under Section 103 of the Code. The LLC is
not a party to any safe harbor lease within the meaning of Section 168(f)(1) of
the Internal Revenue Code of 1954, as in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982. The LLC has not been the
"distributing corporation" (within the meaning of Section 355(c)(2) of the Code)
with respect to a transaction described in Section 355 of the Code within the
three (3) year period ending as of the date of this Agreement. The LLC has not
participated in an international boycott as defined in Section 999 of the Code.
The LLC has not agreed, and is not required to make, any adjustment under Code
Section 263A, 481(a) or 482 (or similar provision of any Tax Law) by reason of a
change in accounting method or otherwise. The LLC has no permanent establishment
in any foreign country, as defined in any applicable Tax treaty or convention
between the United States of America and such foreign country. The LLC is in
compliance with the terms and conditions of any applicable Tax exemptions, Tax
agreements or Tax orders of any government to which it may be subject or which
it may have claimed, and the transactions contemplated by this Agreement will
not have any adverse effect on such compliance. Since January 1, 1999, the LLC
has not received a written Tax opinion with respect to any transaction. The LLC
is not the direct or indirect beneficiary of a guarantee of Tax benefits or any
other arrangement that has the same economic effect with respect to any
transaction or Tax opinion relating to the LLC. The LLC is not a party to an
understanding or arrangement described in Section 6111(d) or Section
6662(d)(2)(C)(iii) of the Code. The LLC is not a party to a lease agreement
involving a defeasance of rent, interest or principal. The LLC is not subject to
any private letter ruling of the IRS or any comparable ruling of any state,
local, foreign or other Tax authority.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE FOUNDING STOCKHOLDERS
Each Founding Stockholder hereby represents as to himself or itself
to Purchaser that:
7.1 Organization and Good Standing. Such Founding Stockholder is
either (a) a trust or limited liability company duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it was formed
and has all requisite
39
power and authority to own, lease and operate its properties and to carry on its
business as now conducted or (b) an individual.
7.2 Authorization of Agreement. Such Founding Stockholder has all
requisite power, authority and legal capacity to execute and deliver this
Agreement and each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by such Founding Stockholder in
connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement, the "Founding Stockholder Documents"),
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and each of the Founding Stockholder
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all required action on the part of such
Founding Stockholder. This Agreement has been, and each of the Founding
Stockholder Documents will be at or prior to the Closing, duly and validly
executed and delivered by such Founding Stockholder, and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each Founding Stockholder Document, when so
executed and delivered will constitute, the legal, valid and binding obligation
of such Founding Stockholder, enforceable against such Founding Stockholder in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
7.3 Conflicts; Consents of Third Parties.
(a) None of the execution and delivery by such Founding
Stockholder of this Agreement or the Founding Stockholder Documents, the
consummation of the transactions contemplated hereby or thereby, or compliance
by such Founding Stockholder with any of the provisions hereof or thereof will
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination or
cancellation under, any provision of (i) the certificate of incorporation and
by-laws or comparable organizational documents of such Founding Stockholder, as
applicable; (ii) any Contract or Permit to which such Founding Stockholder is a
party or by which any of the properties or assets of such Founding Stockholder
are bound; (iii) any Order applicable to such Founding Stockholder or by which
any of the properties or assets of such Founding Stockholder are bound; or (iv)
any applicable Law.
(b) No consent, waiver, approval, Order, Permit or authorization
of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of such Founding Stockholder in
connection with the execution and delivery of this Agreement or the Founding
Stockholder Documents, or the compliance by such Founding Stockholder with any
of the provisions hereof or thereof or the consummation of the transactions
contemplated hereby, except for compliance with the applicable requirements of
the HSR Act.
40
7.4 Ownership and Transfer of Company Stock. Such Founding
Stockholder is the record and beneficial owner of the Company Stock indicated as
being owned by such Founding Stockholder on Exhibit A, free and clear of any and
all Liens. Such Founding Stockholder has the power and authority to sell,
transfer, assign and deliver such Company Stock as provided in this Agreement,
and such delivery will convey to Purchaser good and marketable title to such
Company Stock, free and clear of any and all Liens.
7.5 Litigation. There are no Legal Proceedings pending or, to the
knowledge of such Founding Stockholder, threatened that are reasonably likely to
prohibit or restrain the ability of such Founding Stockholder to enter into this
Agreement or consummate the transactions contemplated hereby.
7.6 Financial Advisors. No Person has acted, directly or
indirectly, as a broker, finder or financial advisor for such Founding
Stockholder in connection with the transactions contemplated by this Agreement
and no Person is entitled to any fee or commission or like payment in respect
thereof.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Selling Holders
that:
8.1 Organization and Good Standing. Purchaser is a corporation
duly organized, validly existing and in active status under the laws of the
State of Wisconsin and has all requisite corporate power and authority to own,
lease and operate properties and carry on its business.
8.2 Authorization of Agreement. Purchaser has full corporate power
and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by Purchaser in connection with the consummation of the transactions
contemplated hereby and thereby (the "Purchaser Documents"), and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Purchaser Document have been
duly authorized by all necessary corporate action on behalf of Purchaser. This
Agreement has been, and each Purchaser Document will be at or prior to the
Closing, duly executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each Purchaser Document when so executed and
delivered will constitute, the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
41
8.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 8.3(a) hereto, none of the
execution and delivery by Purchaser of this Agreement or the Purchaser
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by Purchaser with any of the provisions hereof or thereof will
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination or
cancellation under, any provision of (i) the articles of incorporation and
by-laws of Purchaser; (ii) any material Contract or Permit to which Purchaser is
a party or by which any of the properties or assets of Purchaser are bound;
(iii) any Order applicable to Purchaser or by which any of the properties or
assets of Purchaser are bound; or (iv) any applicable Law.
(b) No consent, waiver, approval, Order, Permit or authorization
of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of Purchaser in connection with the
execution and delivery of this Agreement or the Purchaser Documents or the
compliance by Purchaser with any of the provisions hereof or thereof, except for
compliance with the applicable requirements of the HSR Act.
8.4 Litigation. There are no Legal Proceedings pending or, to the
knowledge of Purchaser, threatened that are reasonably likely to prohibit or
restrain the ability of Purchaser to enter into this Agreement or consummate the
transactions contemplated hereby.
8.5 Investment Intention. Purchaser is acquiring the Securities
for its own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act of
1933, as amended (the "Securities Act") thereof. Purchaser understands that the
Securities have not been registered under the Securities Act and cannot be sold
unless subsequently registered under the Securities Act or an exemption from
such registration is available.
8.6 Financial Advisors. Except for fees paid by the Purchaser to
Xxxxxx X. Xxxxx & Co., Incorporated ("Baird"), no Person is entitled to any fee
or commission or like payment in connection with the transactions contemplated
by this Agreement, and except for Baird, no Person has acted, directly or
indirectly, as a broker, finder or financial advisor for Purchaser in connection
with the transactions contemplated by this Agreement.
8.7 Financing. At the Closing, Purchaser will have sufficient
funds available to pay the Purchase Price and any expenses incurred by Purchaser
in connection with the transactions contemplated by this Agreement and will have
the resources and capabilities (financial or otherwise) to perform its
obligations hereunder.
8.8 Solvency. In completing the transactions contemplated by this
Agreement, Purchaser does not intend to hinder, delay or defraud any present or
future creditors of Purchaser or the Company or the LLC.
42
8.9 Condition of the Business. Notwithstanding anything contained
in this Agreement to the contrary, Purchaser acknowledges and agrees that none
of the Company nor any Selling Holder is making any representations or
warranties whatsoever, express or implied, beyond those expressly given by the
Company in Article V, the LLC Unitholders in Article VI and the Founding
Stockholders in Article VII, (as modified by the Schedules hereto as
supplemented or amended in accordance with the terms of this Agreement), and
Purchaser acknowledges and agrees that, except for the representations and
warranties contained therein, the assets and the business of the Company are
being transferred on a "where is" and, as to condition, "as is" basis. Any
claims Purchaser may have against the Selling Holders for breach of
representation or warranty shall be based solely on the representations and
warranties given by the Selling Holders in Article V, the LLC Unitholders in
Article VI and the Founding Stockholders in Article VII (as modified by the
Schedules hereto as supplemented or amended in accordance with the terms
hereof).
ARTICLE IX
COVENANTS
9.1 Access to Information. Prior to the Closing Date, Purchaser
shall be entitled, through its officers, employees and representatives
(including, without limitation, its legal advisors and accountants), to make
such investigation of the properties, businesses and operations of the Company
and the LLC and such examination of the books and records of the Company and the
LLC as it reasonably requests and to make extracts and copies of such books and
records. Any such investigation and examination shall be conducted during
regular business hours and under reasonable circumstances and shall be subject
to restrictions under applicable Law. The Company and the LLC shall each cause
the officers, employees, consultants, agents, accountants, attorneys and other
representatives of the Company and the LLC to cooperate with Purchaser and
Purchaser's representatives in connection with such investigation and
examination, and Purchaser and its representatives shall cooperate with the
Company, the LLC and each of their representatives and shall use their
reasonable efforts to minimize any disruption to the business. Notwithstanding
anything herein to the contrary, no such investigation or examination shall be
permitted to the extent that it would require the Company or the LLC to disclose
information subject to attorney-client privilege or conflict with any
confidentiality obligations by which the Company or the LLC is bound. To the
extent that the Company and the LLC do not provide information because of
attorney-client privilege or confidentiality obligations, the Holder
Representative shall make appropriate disclosures to Purchaser regarding the
fact that such information is not being disclosed, the reason such information
is not being disclosed and the general subject matter of such information to the
extent such disclosure can be made without violating such privilege or
confidentiality obligation. Notwithstanding anything to the contrary contained
herein, prior to the Closing, (i) Purchaser shall not contact any customers of
the Company or the LLC without the Holder Representative's consent which consent
may be withheld for any reason, (ii) Purchaser shall not contact any supplier to
the Company or the LLC without the Holder Representative's consent, which
consent shall not be unreasonably withheld, delayed or conditioned (it being
agreed by
43
the parties hereto that reasonable conditions shall include, but not be limited
to, the requirements that an employee of the Company be present during any such
contact, that such contact take place during normal business hours and that such
contact not unreasonably interfere with normal operations of the Company), and
(iii) Purchaser shall have no right to perform invasive or subsurface
investigations of the properties or facilities of the Company or the LLC (except
for those already performed). The Holder Representative shall deliver to
Purchaser a copy of the monthly financial statements of the Company as soon as
such financial statements are prepared in the Ordinary Course of Business.
9.2 Conduct of the Business Pending the Closing.
(a) Prior to the Closing, except (i) as set forth on Schedule 9.2,
(ii) as required by applicable Law, (iii) as otherwise contemplated by this
Agreement or (iv) with the prior written consent of Purchaser (which consent
shall not be unreasonably withheld, delayed or conditioned), the Company and the
LLC shall each:
(i) conduct the respective businesses of the Company and the LLC
only in the Ordinary Course of Business and not make or institute any
material changes in its method of purchase, sale, management, accounting
or operation;
(ii) use its commercially reasonable efforts to (A) maintain and
preserve the present business operations, organization and goodwill of the
Company and the LLC respectively, (B) preserve the present relationships
with customers, suppliers and others having business relations with the
Company and the LLC respectively and (C) to keep available to the Company
the employees of the Company; and
(iii) pay all Taxes before such Taxes become delinquent unless
contested in good faith by appropriate proceedings and notice is provided
to Purchaser.
(b) Except (i) as set forth on Schedule 9.2, (ii) as required by
applicable Law, (iii) as otherwise contemplated by this Agreement or (iv) with
the prior written consent of Purchaser (which consent shall not be unreasonably
withheld, delayed or conditioned), each of the Company and the LLC shall not,
and the Selling Holders shall cause the Company and the LLC not to:
(i) declare, set aside, make or pay any dividend or other
distribution in respect of the capital stock of the Company or the LLC, as
applicable, or repurchase, redeem or otherwise acquire any outstanding
shares of the capital stock or other securities of, or other ownership
interests in, the Company or the LLC;
(ii) transfer, issue, sell or dispose of any shares of capital
stock or other securities of the Company or the LLC or grant options,
warrants, calls or other rights to purchase or otherwise acquire shares of
the capital stock or other securities of the Company or the LLC;
44
(iii) effect any recapitalization, reclassification or like change
in the capitalization of the Company or the LLC;
(iv) amend the organizational documents of the Company or the LLC;
(v) (A) increase the compensation of any director or employee of
the Company or the LLC, except for increases at such times and in such
amounts as are consistent with the past practices of the Company or the
LLC, as the case may be; (B) grant any bonus, benefit or other direct or
indirect compensation to any director or employee of the Company or the
LLC except in the Ordinary Course of Business consistent with past
practice, (C) increase the coverage or benefits available under any (or
create any new) severance pay, termination pay, vacation pay, company
awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or
other employee benefit plan or arrangement made to, for, or with any
current or former director or employee of the Company or the LLC or
otherwise modify or amend or terminate any such plan or arrangement or (D)
enter into any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to
which the Company or the LLC is a party or involving a director or
employee of the Company or the LLC, except, in each case, as required by
applicable Law from time to time in effect or by the terms of any Company
Benefit Plans;
(vi) subject to any Lien, any Company Property or any of the other
properties or assets (whether tangible or intangible) of the Company or
the LLC, except for Permitted Exceptions;
(vii) acquire any properties or assets outside of the Ordinary
Course of Business or sell, assign, license, transfer, convey, lease or
otherwise dispose of any of the properties or assets of the Company or the
LLC (except pursuant to an existing Contract for fair consideration in the
Ordinary Course of Business or for the purpose of disposing of obsolete or
worthless assets);
(viii) other than in the Ordinary Course of Business, cancel or
compromise any material debt or claim or waive or release any material
right of the Company or the LLC;
(ix) commence or enter into any commitment for capital
expenditures of the Company or the LLC in excess of fifty thousand dollars
($50,000) for any individual commitment and four hundred thousand dollars
($400,000) for all commitments in the aggregate;
(x) enter into, modify or terminate any labor or collective
bargaining agreement of the Company or the LLC or, through negotiations or
otherwise, make any commitment or incur any liability to any labor
organizations;
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(xi) permit the Company or the LLC to enter into or agree to enter
into any merger or consolidation with any corporation or other entity, or
acquire the securities of any other Person;
(xii) other than in the Ordinary Course of Business, permit the
Company or the LLC to enter into or modify any Contract with any Selling
Holder or any Affiliate of any Selling Holder;
(xiii) enter into any other Contract outside of the Ordinary Course
of Business or which requires a payment or other obligation in excess of
twenty five thousand dollars ($25,000) or amend, supplement or modify any
lease for real property;
(xiv) make any Tax election or settle or compromise any material Tax
liability; or
(xv) agree to do anything prohibited by this Section 9.2.
9.3 Consents. The Company and the LLC shall use their commercially
reasonable efforts, and the Purchaser and Selling Holders shall cooperate with
the Company and the LLC, to obtain at the earliest practicable date all consents
and approvals required to consummate the transactions contemplated by this
Agreement, including, without limitation, the consents and approvals referred to
in Sections 5.3(b), 6.3(b), and 7.3(b) hereof. Purchaser shall use its
commercially reasonable efforts to obtain at the earliest practicable date all
consents and approvals referred to in Section 8.3(b) hereof. No party shall be
obligated to pay any consideration to any third party from whom consent or
approval is requested.
9.4 Regulatory Approvals.
(a) Each of Purchaser, the Company, the LLC and the Selling
Holders (if necessary) shall (i) make or cause to be made all filings required
of each of them or any of their respective Subsidiaries or Affiliates under the
HSR Act or other Antitrust Laws with respect to the transactions contemplated
hereby as promptly as practicable and, in any event, within ten (10) Business
Days after the date of this Agreement in the case of all filings required under
the HSR Act and within four (4) weeks in the case of all other filings required
by other Antitrust Laws, (ii) comply at the earliest practicable date with any
request under the HSR Act or other Antitrust Laws for additional information,
documents, or other materials received by each of them or any of their
respective Subsidiaries from the FTC, the Antitrust Division or any other
Governmental Body in respect of such filings or such transactions, and (iii)
reasonably cooperate with each other in connection with any such filing and in
connection with resolving any investigation or other inquiry of any of the FTC,
the Antitrust Division or other Governmental Body under any Antitrust Laws with
respect to any such filing or any such transaction. Each such party shall use
its commercially reasonable efforts to furnish to each other all information in
such party's possession required by such other party for any application or
other filing to be made by such other party pursuant to any applicable Law in
connection
46
with the transactions contemplated by this Agreement. Each such party shall
promptly inform the other parties hereto of any oral communication with, and
provide copies of written communications with, any Governmental Body regarding
any such filings. No party hereto shall independently participate in any formal
meeting with any Governmental Body in respect of any such filings,
investigation, or other inquiry without giving the other parties hereto prior
notice of the meeting and, to the extent permitted by such Governmental Body,
the opportunity to attend and/or participate. Subject to applicable Law, the
parties hereto will consult and cooperate with one another in connection with
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted by or on behalf of any party hereto relating to
proceedings under the HSR Act or other Antitrust Laws. Any party may, as it
deems advisable and necessary, reasonably designate any competitively sensitive
material provided to the other parties under this Section 9.4 as "outside
counsel only." Such materials and the information contained therein shall be
given only to the outside legal counsel of the recipient and will not be
disclosed by such outside counsel to employees, officers, or directors of the
recipient, unless express written permission is obtained in advance from the
source of the materials.
(b) Each of Purchaser and the Company shall use its commercially
reasonable efforts to resolve such objections, if any, as may be asserted by any
Governmental Body with respect to the transactions contemplated by this
Agreement under the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the Federal Trade Commission Act, as amended, and any other United
States federal or state or foreign statutes, rules, regulations, orders,
decrees, administrative or judicial doctrines or other laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, the "Antitrust Laws"). Each
of Purchaser and the Company shall use its commercially reasonable efforts to
take such action as may be required to cause the expiration of the notice
periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement. In
connection with and without limiting the foregoing, each of Purchaser and the
Company agrees to take promptly any and all commercially reasonable steps
necessary to avoid or eliminate each and every impediment under any Antitrust
Laws that may be asserted by any Federal, state and local and non United States
antitrust or competition authority, so as to enable the parties to close the
transactions contemplated by this Agreement as expeditiously as possible;
provided that nothing contained herein shall be deemed to require either party
to commence or defend any litigation or adversarial proceeding or enter into or
agree to enter into any consent decree, hold separate order or trust or
otherwise agree to sell or dispose of any assets.
9.5 Further Assurances.
(a) Each of Purchaser, the Company, the LLC and the Selling
Holders shall use its commercially reasonable efforts to (i) take all actions
necessary or appropriate to consummate the transactions contemplated by this
Agreement and (ii) cause the fulfillment at the earliest practicable date of all
of the conditions to their respective obligations to consummate the transactions
contemplated by this Agreement.
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(b) From time to time following the Closing, at the request of a
party hereto, and without further consideration, the other parties will execute
and deliver to the requesting party, such documents and take such actions as the
requesting party may reasonably request in order to consummate more effectively
the transactions contemplated hereby.
9.6 Confidentiality.
(a) Purchaser acknowledges that the information provided to it in
connection with this Agreement and the transactions contemplated hereby is
subject to the terms of the confidentiality agreement between Purchaser, the
Company and the LLC dated October 21, 2003 as amended November 13, 2003,
February 5, 2004 and March 1, 2004 (the "Confidentiality Agreement"), the terms
of which are incorporated herein by reference. Effective upon, and only upon,
the Closing Date, the Confidentiality Agreement shall terminate.
(b) No Selling Holder shall, directly or indirectly, use or
disclose, or cause or allow to be used or disclosed, any secret, confidential,
or proprietary information of the Company or the LLC. The foregoing covenant
shall not apply to any secret, confidential or proprietary information which (i)
has been independently developed by others, or (ii) becomes generally known to
the public through no act or omission of a Selling Holder in violation of the
foregoing covenant. Selling Holders acknowledge and agree that the foregoing
covenant is reasonable in scope and protects the legitimate business interests
of the Company, the LLC and the Purchaser.
9.7 Indemnification.
(a) From and after the Closing Date, the Company and the LLC shall
indemnify, defend and hold harmless, to the fullest extent permitted under
applicable Law, the individuals who on or prior to the Closing Date were
directors, managers, officers or employees of the Company or the LLC
(collectively, the "Indemnitees") with respect to all acts or omissions by them
in their capacities as such. Purchaser agrees that all rights of the Indemnitees
to indemnification and exculpation from liabilities for acts or omissions
occurring at or prior to the Closing Date as provided in the respective
certificate of incorporation or by-laws or comparable organizational documents
of the Company or the LLC as now in effect, and any indemnification agreements
or arrangements of the Company or the LLC shall survive the Closing Date and
shall continue in full force and effect in accordance with their terms. For a
period of five (5) years from the Closing Date, such rights shall not be
amended, or otherwise modified in any manner that would adversely affect the
rights of the Indemnitees, unless such modification is required by Law. In
addition, the Company and the LLC shall pay any reasonable expenses of any
Indemnitee under this Section 9.7, as incurred to the fullest extent permitted
under applicable Law, provided that the person to whom expenses are advanced
provides an undertaking to repay such advances to the extent required by
applicable Law. Notwithstanding the foregoing, any breach of a representation or
warranty made by the Company, the LLC or a Selling Holder herein or any
indemnification obligation owing by any Selling Holder hereunder shall not be
deemed
48
for any reason to be a claim covered by indemnification or advancement of
expenses owing to such Indemnitee under this Agreement, any Law, certificate of
organization, bylaw or comparable document or other agreement whatsoever. In the
event the LLC is liquidated, dissolved or otherwise ceases to exist, the Company
shall assume all of the LLC's obligations hereunder.
(b) Each of Purchaser and the Indemnitee shall cooperate, and
cause their respective Affiliates to cooperate, in the defense of any Claim and
shall provide access to properties and individuals as reasonably requested and
furnish or cause to be furnished records, information and testimony, and attend
such conferences, discovery proceedings, hearings, trials or appeals, as may be
reasonably requested in connection therewith.
(c) For the six-year period commencing immediately after the
Closing Date, Purchaser shall maintain in effect, or cause the Company or LLC to
maintain in effect, each of the Company and the LLC's current directors' and
officers' liability insurance covering acts or omissions occurring prior to the
Closing Date with respect to those persons who are currently covered by each of
the Company and the LLC's directors' and officers' liability insurance policy on
terms with respect to such coverage and amount no less favorable to the Company
and the LLC's directors and officers currently covered by such insurance than
those of such policy in effect on the date hereof; provided that Purchaser may
substitute therefor policies of a reputable insurance company the terms of
which, including coverage and amount, are no less favorable to such directors
and officers than the insurance coverage otherwise required under this Section
9.7(c); provided further that Purchaser shall only be required to pay an annual
premium up to 200% of the Company's annual premium in effect as of the Closing
Date; provided that the Selling Holders or their designees may pay any premium
in excess of such amount.
(d) The provisions of this Section 9.7: (i) are intended to be for
the benefit of, and shall be enforceable by, each Indemnitee, his or her heirs
and his or her representatives; and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by Contract or otherwise.
(e) In the event that within the six year period commencing
immediately after the Closing Date, Purchaser or any of its successors or
assigns (i) consolidates with or merges into any other person and is not the
continuing or surviving corporation or entity of such consolidation or merger;
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision shall be
made so that the directors' and officers' liability insurance policy required to
be maintained pursuant to Section 9.7(c) above is not terminated.
(f) The obligations of Purchaser under this Section 9.7 shall not
be terminated or modified in such a manner as to adversely affect any Indemnitee
to whom this Section 9.7 applies without the consent of the affected Indemnitee
(it being expressly
49
agreed that the Indemnitees to whom this Section 9.7 applies shall be
third-party beneficiaries of this Section 9.7).
9.8 Preservation of Records. Following the Closing, the Company
shall, and the Purchaser shall cause the Company to, preserve and keep the
records held by them relating to the respective businesses of the Company and
the LLC in accordance with the document retention policy of the Purchaser but in
no event for a period less than six (6) years from the Closing Date for records
relating to Taxes and ownership of the Company and the LLC and three (3) years
from the Closing Date for records relating to environmental matters and shall
make such records and personnel available to the other as may be reasonably
required by such party in connection with, among other things, any insurance
claims by, Legal Proceedings or tax audits against or governmental
investigations of the Selling Holders or Purchaser or any of their Affiliates or
in order to enable the Selling Holders to comply with their respective
obligations under this Agreement and each other agreement, document or
instrument contemplated hereby or thereby. The Selling Holder requesting such
access shall pay the reasonable direct out-of-pocket expenses of the Company
incurred in connection with this Section 9.8. Prior to Closing each Selling
Holder shall deliver to the Company all records or other property of or relating
to the Company or the LLC in such Selling Holder's control or possession and
shall promptly deliver to the Company all such records which come into its
control or possession after the Closing.
9.9 Publicity.
(a) None of the Selling Holders, the Company, the LLC or Purchaser
shall issue any press release or public announcement concerning this Agreement
or the transactions contemplated hereby without obtaining the prior written
approval of the other party hereto, which approval will not be unreasonably
withheld or delayed, unless, in the judgment of the Selling Holders, the
Company, the LLC or Purchaser, disclosure is otherwise required by applicable
Law or by the applicable rules of any stock exchange on which the Selling
Holders, the Company, the LLC or Purchaser (or its Affiliate) lists securities,
provided that, to the extent required by applicable law, the party intending to
make such release shall use its commercially reasonable efforts consistent with
applicable Law to consult with the other party with respect to the text thereof.
(b) Each of Purchaser, the Company, the LLC and the Selling
Holders agrees that the terms of this Agreement shall not be disclosed or
otherwise made available to the public and that copies of this Agreement shall
not be publicly filed or otherwise made available to the public, except where
such disclosure, availability or filing is required by applicable Law and only
to the extent required by such Law. In the event that such disclosure,
availability or filing is required by applicable Law, each of Purchaser, the
Company, the LLC and the Selling Holders (as applicable) agrees to use its
commercially reasonable efforts to obtain "confidential treatment" of this
Agreement with the U.S. Securities and Exchange Commission (or the equivalent
treatment by any other Governmental Body) and to redact such terms of this
Agreement as the other party shall request and as is permitted by the U.S.
Securities and Exchange Commission or other Governmental Body.
50
9.10 Employment and Employee Benefits.
(a) Employees. Except with respect to employees employed at its
Palmetto, Florida facility, the Company shall continue to employ its employees
on substantially similar terms as those currently in place; provided, however
that nothing in this Agreement shall prevent the Company after the Closing from
terminating the employment of any such employee or otherwise making personnel
decisions as the Company deems appropriate in its sole discretion. Such
individuals who continue their employment with the Company following the Closing
Date are hereinafter referred to as the "Continuing Employees." Purchaser and
Company acknowledge and agree that the Company shall be liable for any and all
severance costs, unemployment insurance costs, filing fees, amounts payable in
connection with any violation of the WARN Act and other similar costs and
expenses associated with the layoff or termination of all or substantially all
of the Company employees employed at its Palmetto, Florida facility; provided,
that the Selling Holders agree that the foregoing agreement and acknowledgement
in no way affects or alters the right of a Selling Holder Indemnified Party to
seek indemnification hereunder.
(b) Benefits.
(i) For a period of one (1) year following the Closing Date, the
Company shall provide such Continuing Employees who remain employed by the
Company with compensation (including salary, wages and opportunities for
commissions, bonuses, incentive pay, overtime and premium pay), employee
benefits, location of employment and a position of employment that are, in
each case, substantially equivalent to those provided by the Company to
such Continuing Employee immediately prior to the Closing.
(ii) Continuing Employees shall not be entitled to any credit for
his or her years of service with the Company, its Subsidiaries and any
predecessor entities, with respect to any Purchaser Employee Plans except
as provided in Schedule 9.10.
9.11 Supplementation and Amendment of Schedules. From time to time
prior to the Closing, the Company and the LLC shall each have the right to
supplement or amend the Schedules with respect to any matter hereafter arising
by written notice to Purchaser. No such supplement or amendment shall have any
effect on the satisfaction of the condition to closing set forth in Section
10.1(a). For purposes of determining the accuracy of the representations and
warranties contained in this Article V, Article VI or Article VII hereof and the
liability of some or all of the Selling Holders under Article XI, the Schedules
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 supplement or amendment thereto.
9.12 Exclusivity. From the date of this Agreement until the Closing
or the date this Agreement is terminated under Section 4.2, neither the Company,
nor the LLC nor any Selling Holder shall, and the Selling Holders shall not
permit any officer,
51
director, employee or representative or agent of the Company or the LLC to: (a)
initiate or encourage the initiation by others of discussions or negotiations
with third parties or respond to (other than to decline interest in)
solicitations by third parties relating to any merger, sale or other disposition
of any equity securities or the assets of the Company or the LLC (an
"acquisition proposal"), (b) enter into or participate in any discussion,
negotiation or agreement with respect to any such acquisition proposal, or (c)
furnish any non-public information regarding the Company or the LLC to any third
party (other than vendors, banks or any Governmental Body in the Ordinary Course
of Business). The Holder Representative shall promptly advise Purchaser of any
acquisition proposal or inquiry regarding the making of an acquisition proposal,
including any requests for information.
9.13 Real Property.
(a) With respect to the Company Properties, Purchaser has
obtained, at its expense, title insurance commitments (the "Title Commitments")
issued by First American Title Insurance Company (the "Title Company"), pursuant
to which the Title Company has agreed to issue to Purchaser a standard ALTA Form
B-1992 owner's policy or leasehold policy, as the case may be, of title
insurance, in an amount reasonably prescribed by Purchaser, insuring good and
marketable title to the owned Company Properties and valid leasehold interest in
the leased Company Properties. Purchaser has delivered complete and accurate
copies of the Title Commitments to counsel for the Selling Holders. The Company
shall cooperate with Purchaser (including without limitation providing such
affidavits and other information as may be customarily required) to cause the
Title Company to issue its final title policy or title xxxx-up at Closing in the
form shown on the Title Commitments, with all requirements satisfied, with no
new exceptions added, with all standard exceptions deleted, and including such
endorsements as Purchaser may reasonably request, including without limitation
(if generally available in the state in which the property is located), (i)
nonimputation endorsement, (ii) zoning 3.1 endorsement, (iii) owners
comprehensive endorsement insuring over violations of title covenants,
conditions and restrictions, (iv) access endorsement, (v) "same as" survey
endorsement, (vi) location endorsement, and (vii) contiguity endorsement. The
Purchaser shall pay for the cost of the title insurance policies and
endorsements.
(b) Survey. Within ten (10) days after execution and delivery of
this Agreement, the Holder Representative, at the expense of the Purchaser,
shall provide to Purchaser original current surveys of the Company Properties,
certified to Purchaser and to the Title Company, prepared by registered
surveyors reasonably satisfactory to Purchaser, which surveys shall be prepared
in accordance with the 1997 Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys (including all Table A Items except contours), and pursuant
to the accuracy standards of an Urban Class A Survey and shall be sufficient to
delete the standard title insurance policy exception for surveys, without adding
any new exceptions to the Title Commitments.
(c) Estoppel Certificates. For the Company Property located at
0000 Xxxxxx Xxxxx, Xxxxxxxxxxxxx, Xxx Xxxx, the Company shall obtain Estoppel
52
Certificates from the landlords of each facility in a form reasonably
satisfactory to Purchaser.
9.14 Noncompetition Agreements. At the Closing, each member of the
Xxxxxxxxxx Group shall cause to be delivered to Company and Purchaser a
Noncompetition Agreement, substantially in the form of Exhibit C hereto (a
"Noncompetition Agreement" and collectively, the "Noncompetition Agreements"),
duly executed by each such Person, providing that, among other things, no Member
of the Xxxxxxxxxx Group shall compete with the Company for a period of five (5)
years in the United States and further providing that each Person shall not
solicit or hire any Company employee during each such five (5) year period.
9.15 Certain Agreements. Each Selling Holder, the Company and the
LLC hereby agree that: (a) each shareholders agreement, redemption agreement,
registration rights agreement or any other similar agreement relating to the
ownership or operation of the Company or the LLC shall be terminated effective
as of the Closing without any further action required by any party to any such
agreement and (b) any transfer restrictions, right to purchase or other similar
rights or restrictions applicable in the event of the sale of the Securities to
Purchaser hereunder are hereby waived.
9.16 Continuation of Benefits. The Company shall permit the members
of the Xxxxxxxxxx Group that participate in the Company health insurance plan as
a retiree as described in Schedule 5.15(h) attached hereto to continue to
participate in such plan until the earlier of (a) the date on which the Company
ceases to offer such plan and (b) five (5) years from the Closing Date; provided
that the Purchaser and the Company shall give such persons 12 month's prior
written notice of such termination of the health insurance plan.
ARTICLE X
CONDITIONS TO CLOSING
10.1 Conditions Precedent to Obligations of Purchaser. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions (any or all of which may be waived by Purchaser
in whole or in part to the extent permitted by applicable Law):
(a) The representations and warranties of the Company, the LLC and
the Selling Holders set forth in Sections 5.4, 6.4 and 7.4 of this Agreement
shall be true and correct in all respects on the date hereof and at and as of
the Closing.
(b) All representations and warranties of the Company, the LLC and
the Selling Holders set forth in this Agreement other than in Sections 5.4, 6.4
and 7.4 shall be true and correct on the date hereof and at and as of the
Closing, except to the extent such representations and warranties relate to an
earlier date (in which case such representations and warranties shall be true
and correct on and as of such earlier date); provided, that in the event of a
breach of a representation or warranty, the condition set
53
forth in this Section 10.1(b) shall be deemed satisfied unless the effect of all
such breaches of representations and warranties taken together result in a
Material Adverse Effect; provided further that for purpose of this Section
10.1(b) the use of the term "material" as a qualifier in any such representation
or warranty, except in the context of a "Material Contract" or "Material Adverse
Effect", shall be disregarded.
(c) The Selling Holders shall have complied in all respects with
their obligations under Section 2.1 hereof and the Company, the LLC and the
Selling Holders shall have performed and complied in all material respects with
all of the other obligations and agreements required by this Agreement to be
performed or complied with by them on or prior to the Closing Date.
(d) The waiting period applicable to the transactions contemplated
by this Agreement under the HSR Act shall have expired or early termination
shall have been granted.
(e) There shall not be in effect any Order by a Governmental Body
of competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby. No Legal Proceeding that
is reasonably likely to be successful on its merits shall be pending before any
court in which relief requested is to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated hereby.
(f) During the period from the date of this Agreement to the
Closing Date there shall not have occurred any event, occurrence or circumstance
having, or which reasonably could be expected to have, a Material Adverse
Effect.
(g) The Company shall have obtained the written consent of the
Town of Amherst Industrial Development Agency to the transactions contemplated
by this Agreement as required under the Amended and Restated Lease Agreement
dated as of December 1, 1996 by and between the Town of Amherst Industrial
Development Agency and the Company and shall have delivered such consent to the
Purchaser.
(h) Prior to or at Closing, as applicable, the Selling Holders
shall have delivered or caused to be delivered to Purchaser the following
documents, in each case duly executed or otherwise in proper form:
(i) certificates representing the Securities to be sold hereunder,
duly endorsed in blank or accompanied by stock or membership interest
transfer powers;
(ii) certificates representing the shares of the Company's Common
Stock and the Company's Preferred Stock owned by the LLC;
(iii) a certificate of a duly authorized officer or representative
of the Company and the LLC and of each Selling Holder to the effect that:
(A) the representations and warranties made by them in this Agreement are
true and correct as of the Closing Date as if originally made on the
Closing Date except to
54
the extent such representations and warranties relate to an earlier date
(in which case such representations and warranties shall be true and
correct on and as of such earlier date) and (B) they have complied in all
respects with their obligations under Section 2.1 hereof and have
performed and complied in all material respects with all of their other
obligations and agreements required by this Agreement to be performed or
complied with by them on or prior to the Closing Date;
(iv) the written opinion of Weil, Gotshal & Xxxxxx LLP in
substantially the form of Exhibit D attached hereto;
(v) the Noncompetition Agreements duly executed by the parties
thereto (other than the Purchaser);
(vi) certified copies of the resolutions of the Board or Directors
(or comparable body) and the shareholders and members of the Company and
the LLC, respectively, authorizing and approving this Agreement and the
consummation of the transactions contemplated hereby;
(vii) each of the Indemnity Escrow Agreement and the Adjustment
Escrow Agreement, duly executed by the Holder Representative and the
Escrow Agent;
(viii) a copy of the Articles of Incorporation of Company and the
Articles of Organization of the LLC each certified by the appropriate
jurisdiction of incorporation and a copy of the Bylaws of Company and the
Operating Agreement of the LLC each certified by the secretary (or
equivalent position) of Company and the LLC, respectively;
(ix) Incumbency certificates relating to each person executing any
document executed and delivered to Purchaser by the Company or the LLC
pursuant to the terms hereof;
(x) pay off letters representing all of the Closing Debt;
(xi) resignations of the directors and officers (or equivalent
positions) of the Company and the LLC;
(xii) a properly executed affidavit of non-foreign status, in form
and substance reasonably satisfactory to Purchaser.
(xiii) all other documents, instruments or writings reasonably
required to be delivered to Purchaser at or prior to Closing pursuant to
this Agreement and such other certificates of authority and documents as
Purchaser may reasonably request to be delivered.
10.2 Conditions Precedent to Obligations of the Selling Holders.
The obligations of the Selling Holders to consummate the transactions
contemplated by this
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Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions (any or all of which may be waived by the
Holder Representative in whole or in part to the extent permitted by applicable
Law):
(a) The representations and warranties of Purchaser set forth in
this Agreement qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, on the date
hereof and at and as of the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties relate to an earlier
date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date), and the
Selling Holders shall have received a certificate signed by an authorized
officer of Purchaser, dated the Closing Date, to the foregoing effect.
(b) Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date, and the
Selling Holders shall have received a certificate signed by an authorized
officer of Purchaser, dated the Closing Date, to the foregoing effect.
(c) There shall not be in effect any Order by a Governmental Body
of competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby. No Legal Proceeding that
is reasonably likely to be successful on its merits shall be pending before any
court in which relief requested is to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated hereby.
(d) The waiting period applicable to the transactions contemplated
by this Agreement under the HSR Act shall have expired or early termination
shall have been granted.
(e) Purchaser shall have delivered, or caused to be delivered, to
the Selling Holders evidence of the wire transfers referred to in Section 3.2
hereof.
(f) At Closing, the Purchaser shall have delivered or caused to be
delivered to Selling Holder the following documents, in each case duly executed
or otherwise in proper form:
(i) the certificates described in Section 10.2(a) and 10.2(b)
above;
(ii) the written opinion of Xxxxxxx & Xxxxx LLP in substantially
the form of Exhibit E attached hereto;
(iii) the Noncompetition Agreements duly executed by the Purchaser
and the Company;
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(iv) certified copies of the resolutions of the Board or Directors
of the Purchaser, authorizing and approving this Agreement and the
consummation of the transactions contemplated hereby;
(v) each of the Indemnity Escrow Agreement and the Adjustment
Escrow Agreement, duly executed by the Purchaser and the Escrow Agent;
(vi) incumbency certificates relating to each person executing any
document executed and delivered to the Holder Representative by Purchaser
pursuant to the terms hereof;
(vii) A certificate of an officer of Purchaser certifying
substantially as follows: immediately after giving effect to the
acquisition of the Securities and the consummation of the other
transactions contemplated by this Agreement (including, without
limitation, the debt and equity financings being entered into in
connection therewith): (A) the fair saleable value (determined on a going
concern basis) of the assets of Purchaser, the Company and the LLC shall
be greater than the total amount of their liabilities (including all
liabilities, whether or not reflected in a balance sheet prepared in
accordance with GAAP, and whether direct or indirect, fixed or contingent,
secured or unsecured, disputed or undisputed), (B) Purchaser, the Company
and the LLC shall be able to pay their debts and obligations in the
Ordinary Course of Business as they become due and (C) Purchaser, the
Company and the LLC shall have adequate capital to carry on their
businesses and all businesses in which they are about to engage; and
(viii) All other documents, instruments or writings reasonably
required to be delivered to the Holder Representative at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as the Holder Representative may request to be
delivered may reasonably request.
10.3 Frustration of Closing Conditions. None of the Company, the
LLC, Purchaser or the Selling Holders may rely on the failure of any condition
set forth in Sections 10.1 or 10.2, as the case may be, if such failure was
caused by such party's failure to comply with any provision of this Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 Survival of Representations and Warranties. The
representations and warranties of the parties contained in this Agreement shall
survive Closing and claims may be asserted with respect thereto to the extent
permitted by this Article XI.
11.2 Indemnification by Selling Holders.
(a) Subject to Section 11.5 hereof, to induce Purchaser to enter
into this Agreement and to purchase the Securities, the Selling Holders hereby
agree, acting on a several and not joint basis (except as provided herein), to
indemnify and hold
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Purchaser, the Company, the LLC, and their respective directors, officers,
employees, Affiliates, stockholders, agents, attorneys, representatives,
successors and permitted assigns (collectively, the "Selling Holder Indemnified
Parties") harmless from and against:
(i) any and all losses, liabilities, obligations and damages
(individually, a "Selling Holder Loss" and, collectively, "Selling Holder
Losses") based upon or arising directly from (A) any breach of the
representations, warranties, covenants or agreements made by the Selling
Holders or the Company in this Agreement or (B) any Selling Holder Losses
arising directly from the transportation, treatment, storage, disposal or
other handling of any Hazardous Materials at, or to, a site facility other
than the Company's Palmetto, Florida facility;
(ii) any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and expenses, including
reasonable attorneys' and other professionals' fees and disbursements
(collectively, "Selling Holder Expenses") incident to any and all Losses
with respect to which indemnification is provided hereunder.
(b) Notwithstanding the foregoing, the members of the Xxxx Group,
Summit Group and Xxxxxxxxxx Group shall be jointly and severally liable for the
indemnification obligations of members of their respective group.
(c) Each of the Summit Group, Xxxx Group and Xxxxxxxxxx Group,
shall assume any indemnification obligation of a member of the Management Group
not paid by such member of the Management Group as provided herein. The Summit
Group, the Xxxx Group and the Xxxxxxxxxx Group shall each be responsible for a
portion of such indemnification obligation equal to the product of (i) the
aggregate proceeds received by all members of such group divided by (ii) the
aggregate proceeds received by all the members of each of the Summit Group, Xxxx
Group and Xxxxxxxxxx Group multiplied by the amount of such indemnification
claim. The Purchaser shall be required to seek, and shall take all reasonable
steps against any member of the Management Group to collect the full amount of
such indemnification obligation prior to seeking any payment from any member of
the Summit Group, Xxxx Group or the Xxxxxxxxxx Group; provided, however, that
the Purchaser shall not be obligated to initiate litigation against any member
of the Management Group.
(d) Except as provided in Section 11.2(b) above, each Selling
Holder shall be liable only for its pro rata portion of any Selling Holder Loss
based upon a portion of the aggregate combined proceeds related to the Class B
Units and the Common Stock and in no event shall a Selling Holder be required to
make any indemnification payment in excess of the portion of the Purchase Price
received by such Selling Holder pursuant hereto.
(e) Notwithstanding anything contained herein to the contrary,
except as provided in Section 11.2(b), no Selling Holder shall be held liable
for the breach by
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any other Selling Holder of any representation, or warranty made by such Selling
Holder as to only itself.
(f) Purchaser shall take and shall cause its Affiliates to use
reasonable efforts to mitigate any Selling Holder Loss upon becoming aware of
any event which would give rise thereto.
11.3 Indemnification by Purchaser.
(a) Subject to Section 11.5 hereof, Purchaser hereby agrees to
indemnify and hold the Selling Holders and their respective directors, officers,
employees, Affiliates, stockholders, agents, attorneys, representatives,
successors and assigns (collectively, the "Purchaser Indemnified Parties")
harmless from and against:
(i) any and all losses, liabilities, obligations and damages
(individually, a "Purchaser Loss" and, collectively, "Purchaser Losses")
based upon or arising directly from: (A) any breach of a representation or
warranty made by Purchaser in this Agreement and (B) any breach of a
covenant or agreement of Purchaser set forth in this Agreement; and
(ii) any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and expenses, including
attorneys' and other professionals' fees and disbursements (collectively,
"Purchaser Expenses") incident to any and all Purchaser Losses with
respect to which indemnification is provided hereunder.
(b) The Selling Holders shall take and cause their Affiliates to
use reasonable efforts to mitigate any Purchaser Loss upon becoming aware of any
event which gives rise thereto.
11.4 Indemnification Procedures. In the event that any Legal
Proceedings shall be instituted, or that any claim shall be asserted, by any
Person in respect of which payment may be sought under Sections 11.2, 11.3 or
11.4 hereof (an "Indemnification Claim"), the indemnified party shall promptly
cause written notice of the assertion of any Indemnification Claim of which it
has knowledge which is covered by this indemnity to be forwarded to the
indemnifying party; provided, that the failure by the indemnified party to so
notify the indemnifying party shall not relieve the indemnifying party from
liability to the indemnified party for any liability hereunder except to the
extent such failure shall have prejudiced the defense of the Indemnification
Claim. The indemnifying party shall have the right, at its sole option and
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Indemnification Claim which relates to any Selling
Holder Losses or Purchaser Losses (individually an "EMED Loss" and together the
"EMED Losses") indemnified against hereunder. If the indemnifying party elects
to defend against, negotiate, settle or otherwise deal with any Indemnification
Claim which relates to any EMED Losses indemnified against hereunder, it shall
within fifteen (15) days (or sooner, if the nature of
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the Indemnification Claim so requires) notify the indemnified party of its
intent to do so. The assumption of the defense of an Indemnification Claim by
the indemnifying party shall constitute an admission that such Indemnification
Claim is indemnifiable by the indemnifying party hereunder. If the indemnifying
party elects not to defend against, negotiate, settle or otherwise deal with any
Indemnification Claim which relates to any EMED Losses indemnified against
hereunder or if the indemnifying party does not defend against the
Indemnification Claim with reasonable diligence and in good faith, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Indemnification Claim. If the indemnifying party shall assume the defense
of any Indemnification Claim, the indemnified party may participate, at his or
its own expense, in the defense of such Indemnification Claim; provided,
however, that such indemnified party shall be entitled to participate in any
such defense with separate counsel at the expense of the indemnifying party if
(i) so requested by the indemnifying party to participate, (ii) in the
reasonable opinion of counsel to the indemnified party, a conflict or potential
conflict exists between the indemnified party and the indemnifying party that
would make such separate representation advisable or (iii) the Indemnification
Claim seeks injunctive or other relief which, if granted, could materially and
adversely affect the indemnified party or its Affiliates; and provided, further,
that the indemnifying party shall not be required to pay for more than one such
separate counsel and one local counsel for all indemnified parties in connection
with any Indemnification Claim. The parties hereto agree to cooperate fully with
each other in connection with the defense, negotiation or settlement of any such
Indemnification Claim and to keep the other party reasonably informed of all
material developments on any Indemnification Claim which such party is
defending. Notwithstanding anything in this Section 11.4 to the contrary,
neither the indemnifying party nor the indemnified party shall, without the
written consent of the other party, settle or compromise any Indemnification
Claim or permit a default or consent to entry of any judgment unless the
claimant and such party provide to such other party an unqualified release from
all liability in respect of the Indemnification Claim; provided, that in the
event the indemnifying party elects not to defend against, negotiate, settle or
otherwise deal with any Indemnification Claim which relates to EMED Losses or if
the indemnifying party does not defend against the Indemnification Claim with
reasonable diligence and in good faith as described above, the indemnified party
shall be free to settle or compromise the Indemnification Claim on such terms
and conditions as are acceptable to the indemnified party and the indemnified
party shall be indemnified for the EMED Losses relating thereto, subject to the
limitations set forth in Section 11.5. Notwithstanding the foregoing, if a
settlement offer solely for money damages is made by the applicable third party
claimant, and the indemnifying party notifies the indemnified party in writing
of the indemnifying party's willingness to accept the settlement offer and,
subject to the applicable limitations of Section 11.5, pay the amount called for
by such offer, and the indemnified party declines to accept such offer, the
indemnified party may continue to contest such Indemnification Claim, free of
any participation by the indemnifying party, and the amount of any ultimate
liability with respect to such Indemnification Claim that the indemnifying party
has an obligation to pay hereunder shall be limited to the lesser of (A) the
amount of the settlement offer that the indemnified party declined to accept
plus the Losses of the indemnified party relating to such Indemnification Claim
through the date of its rejection of the settlement offer or
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(B) the aggregate EMED Losses of the indemnified party, with respect to such
Indemnification Claim. If the indemnifying party makes any payment on any
Indemnification Claim, the indemnifying party shall be subrogated, to the extent
of such payment, to all rights and remedies of the indemnified party to any
insurance benefits or other claims of the indemnified party with respect to such
Indemnification Claim.
11.5 Limitations on Indemnification for Breaches of Representations
and Warranties.
(a) Notwithstanding anything herein to the contrary, Purchaser
must give notice to the Holder Representative, and Holder Representative must
give notice to Purchaser, of any Indemnification Claim relating to a breach of a
representation or warranty in writing in reasonable detail prior to September
30, 2005; provided, however, that Indemnification Claims relating to Section
5.19 and Section 11.2(a)(i)(B) hereof may be made prior to the third anniversary
of the Closing and, provided, further, however, that Indemnification Claims
relating to Sections 5.2, 5.4, 5.10, 5.20, 6.2, 6.4, 6.6, 6.7(a), 6.7(i), 6.8,
7.2, 7.4, 7.6, 8.2, 8.6 or 8.8 hereof may be made prior to the expiration of the
applicable statute of limitations with respect to such matter. Any
Indemnification Claim relating to a breach of a representation or warranty made
prior to or on the applicable dates set forth above in this Section 11.5 shall
survive until resolved in accordance with the terms hereof. Any Indemnification
Claim relating to a breach of a representation and warranty not made by on or
prior to the applicable dates set forth above in this Section 11.5 will be
irrevocably and unconditionally released and waived.
(b) Notwithstanding the provisions of this Article XI, the Selling
Holders shall not have any indemnification obligations for EMED Losses under
Section 11.2(a)(i)(A) for breaches of representations and warranties or under
Section 11.2(a)(i)(B), unless the aggregate amount of all such EMED Losses
exceeds one million dollars ($1,000,000), and then only to the extent of such
excess; provided however that such limitation shall not apply to any breach of a
representation contained in Sections 5.2, 5.4, 5.10, 5.20, 6.2, 6.4, 6.6,
6.7(a), 6.7(b), 6.7(c), 6.7(i), 6.8, 7.2, 7.4 and 7.6. The maximum aggregate
indemnification to be paid by the Selling Holders under Section 11.2(a)(i)(A)
for breaches of representations and warranties and under Section 11.2(a)(i)(B)
shall not exceed the Indemnity Escrow Amount; provided, however, that such
limitation shall not apply to any breach of a representation contained in
Sections 5.2, 5.4, 5.10, 5.20, 6.2, 6.4, 6.6, 6.7(a), 6.7(b), 6.7(c), 6.7(i),
6.8, 7.2, 7.4 and 7.6, for which the maximum amount payable with respect to any
breach of the representation and warranty contained in Section 5.10 and Section
6.8 shall, in the aggregate, be thirty million dollars ($30,000,000), less any
amounts paid to the Purchaser from the Indemnity Escrow Amount in respect of
claims as provided above, and with respect to each other excluded representation
the maximum amount payable shall be the proceeds received by the Selling Holders
hereunder less any amount previously paid to the Purchaser from the Indemnity
Escrow Account.
(c) No representation or warranty of the Company or the Selling
Holders contained herein shall be deemed untrue or incorrect, and the Company or
the Selling Holders shall not be deemed to have breached a representation or
warranty, as a
61
consequence of the existence of any fact, circumstance or event which is
disclosed in one Schedule to this Agreement as long as such fact, circumstance
or event is disclosed on another Schedule and the disclosure on one Schedule
applies to another Schedule in the Purchaser's reasonable determination.
(d) Purchaser shall not make any claim for indemnification under
this Article XI in respect of any matter that is taken into account in the
calculation of any adjustment to the Purchase Price pursuant to Section 3.3(g).
(e) Any indemnification amounts payable under this Article XI
shall be calculated after giving effect to the actual realized tax benefits or
tax losses and insurance recovery to the parties resulting from the damage,
loss, liability or expense that is the subject of the indemnity; provided, that
such indemnified party is not subject to retroactive adjustments or other
reimbursements of its insurance in respect of such proceeds; provided, further,
that the pendency of such payments shall not delay or reduce the obligation of
the indemnifying party to make indemnification payments hereunder and if
insurance proceeds are subsequently received by the indemnified party such
proceeds shall be promptly paid over to the indemnifying party to the extent of
any indemnification payments made.
(f) Any indemnification obligation of the Selling Holders
hereunder which: (i) exceeds the Indemnity Escrow Amount or (ii) is asserted
after the Indemnity Escrow Amount has been released, and in either case is still
a valid claim for indemnification hereunder, shall be the responsibility of by
the Selling Holders themselves, subject to each of the other subparagraphs of
this Article XI.
11.6 Tax Treatment of Indemnity Payments. The Selling Holders and
Purchaser agree to treat any indemnity payment made pursuant to this Article XI
as an adjustment to the Purchase Price for federal, state, local and foreign
income tax purposes.
11.7 No Consequential Damages. Notwithstanding anything to the
contrary elsewhere in this Agreement, no party shall, in any event, be liable to
any other Person for any consequential, incidental, indirect, special or
punitive damages of such other Person, including diminution of value or loss of
business reputation or opportunity relating to the breach or alleged breach
hereof (provided that such limitation shall not limit the Purchaser's right to
recover for loss of revenue, loss of profit and other Selling Holder Losses
relating to the business operated by the Company arising from or related to any
such breach or alleged breach or to Selling Holders' right to recover contract
damages in connection with Purchaser's failure to close in violation of this
Agreement).
11.8 Exclusive Remedy. Following the Closing, the sole and
exclusive remedy for any breach or inaccuracy, or alleged breach or inaccuracy,
of any representation or warranty in this Agreement or any covenant or agreement
to be performed on or prior to the Closing Date, other than the covenant set
forth in Section 2.1 hereof, shall be indemnification in accordance with this
Article XI. Except as provided in Section 11.5(b) and 11.5(f), any
indemnification payable by the Selling Holders shall be satisfied by
distribution from the Indemnity Escrow Account. In furtherance of the
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foregoing, the parties hereby waive, to the fullest extent permitted by
applicable Law, any and all other rights, claims and causes of action (including
rights of contributions, if any) known or unknown, foreseen or unforeseen, which
exist or may arise in the future, relating to breaches or inaccuracies of
representations or warranties, that they may have against the Selling Holders or
Purchaser, as the case may be, arising under or based upon any federal, state or
local Law (including any such Law relating to environmental matters or arising
under or based upon any securities Law, common Law or otherwise).
ARTICLE XII
MISCELLANEOUS
12.1 Payment of Sales, Use or Similar Taxes. All sales, use,
transfer, intangible, recordation, documentary stamp or similar Taxes or
charges, of any nature whatsoever, applicable to, or resulting from, the
transactions contemplated by this Agreement shall be borne by Purchaser.
12.2 Expenses. Except as otherwise provided in this Agreement, each
of the Selling Holders and Purchaser shall bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby. The Selling
Holders shall be responsible for all Transaction Expenses and, to the extent any
Transaction Expenses are not satisfied at Closing pursuant to Section 3.1(a)
above or deducted in determining the Purchase Price under Section 3.1(a), the
Selling Holders shall pay all such Transaction Expenses when due.
12.3 Holder Representative.
(a) Each Selling Holder hereby irrevocably appoints Summit
Partners, L.P. (the "Holder Representative") as such Selling Holder's
representative, attorney-in-fact and agent, with full power of substitution to
act in the name, place and stead of such Selling Holder with respect to the
transfer of such Selling Holder's Company Stock and LLC Units, as applicable, in
accordance with the terms and provisions of this Agreement and to act on behalf
of such Selling Holder in any amendment of or litigation or arbitration
involving this Agreement and to do or refrain from doing all such further acts
and things, and to execute all such documents, as such Holder Representative
shall deem necessary or appropriate in conjunction with any of the transactions
contemplated by this Agreement, including, without limitation, the power:
(i) to take all action necessary or desirable in connection with
the waiver of any condition to the obligations of the Selling Holders to
consummate the transactions contemplated by this Agreement;
(ii) to negotiate, execute, deliver and receive all ancillary
agreements, statements, certificates, notices, approvals, extensions,
waivers, undertakings, amendments and other documents required or
permitted to be given in connection
63
with the consummation of the transactions contemplated by this Agreement
(it being understood that such Selling Holder shall execute and deliver
any such documents which the Holder Representative agrees to execute);
(iii) to terminate this Agreement if the Selling Holders are
entitled to do so;
(iv) to give and receive all notices and communications to be given
or received under this Agreement and to receive service of process in
connection with the any claims under this Agreement, including service of
process in connection with arbitration; and
(v) to negotiate the settlement of any disputes, as contemplated
and in the manner set forth herein; and
(vi) to take all actions which under this Agreement may be taken by
the Selling Holders and to do or refrain from doing any further act or
deed on behalf of the Selling Holders which the Holder Representative
deems necessary or appropriate in his sole discretion relating to the
subject matter of this Agreement as fully and completely as such Selling
Holder could do if personally present.
(b) The Holder Representative will not be liable for any act taken
or omitted by it as permitted under this Agreement, except if such act is taken
or omitted in bad faith, gross negligence or by willful misconduct. The Holder
Representative will also be fully protected in relying upon any written notice,
demand, certificate or document that it in good faith believes to be genuine
(including facsimiles thereof).
(c) The Selling Holders agree, jointly and severally, to indemnify
the Holder Representative for, and to hold the Holder Representative harmless
against, any loss, liability or expense incurred without willful misconduct,
gross negligence or bad faith on the part of the Holder Representative, arising
out of or in connection with the Holder Representative's carrying out it duties
under this Agreement, including costs and expenses of successfully defending
Holder Representative against any claim of liability with respect thereto. The
Holder Representative may consult with counsel of its own choice and will have
full and complete authorization and protection for any action taken and suffered
by it in good faith and in accordance with the opinion of such counsel.
(d) The Holder Representative shall not compromise or settle any
claim or amount which disproportionately affects the interests of any Selling
Holder in relation to all Selling Holders, without the prior written consent of
the Selling Holder so affected.
Purchaser shall be fully protected in dealing with the Holder
Representative under this Agreement and may rely upon the authority of the
Holder Representative to act as the Selling Holders' agent under this Agreement.
Any payments or deliveries (including without limitation notices required or
permitted hereunder) by Purchaser to the Holder Representative under this
Agreement for the benefit of the
64
Selling Holders, or any of them, shall be considered payments or deliveries made
by Purchaser to the Selling Holders.
If Summit Partners, L.P. becomes unable to serve as Holder
Representative, Xxxxxxx Xxxxxxxxxx, or such other Person or Persons as may be
designated by a majority of the Selling Holders, shall succeed as the Holder
Representative. The Holder Representative shall provide to Xxxxxxx Xxxxxxxxxx a
full and complete copy of each item of correspondence between the Holder
Representative and the Purchaser or any of the Purchaser's representatives.
12.4 Submission to Jurisdiction; Consent to Service of Process.
(a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or state court located within the
State of Delaware over any dispute arising out of or relating to this Agreement
or any of the transactions contemplated hereby and each party hereby irrevocably
agrees that all claims in respect of such dispute or any suit, or action
proceeding related thereto may be heard and determined in such courts. The
parties hereby irrevocably waive, to the fullest extent permitted by applicable
law, any objection which they may now or hereafter have to the laying of venue
of any such dispute brought in such court or any defense of inconvenient forum
for the maintenance of such dispute. Each of the parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding by
delivery of a copy thereof in accordance with the provisions of Section 12.7.
12.5 Entire Agreement; Amendments and Waivers. This Agreement
(including the schedules and exhibits hereto) and the Confidentiality Agreement
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof. This Agreement can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
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12.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and performed in such State.
12.7 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally by hand (with written confirmation of receipt), (ii) when sent by
facsimile (with written confirmation of transmission) or (iii) one (1) Business
Day following the day sent by overnight courier (with written confirmation of
receipt), in each case at the following addresses and facsimile numbers (or to
such other address or facsimile number as a party may have specified by notice
given to the other party pursuant to this provision):
If to any Selling Holder, to the Holder Representative as provided
below:
Holder Representative:
c/o Summit Partners
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: 617.772.8333
Attention: Xxxxx Xxxxxx
Xxxxxxx Xxxxxxxxxx
0000 Xxxx Xxxx Xxxx
Xxxxxxxx Xxx, XX 00000
Facsimile: 000-000-0000
If to Company or LLC (pre-Closing):
c/o Summit Partners, L.P.
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Facsimile: 617.824.1110
Attention: Xxxxxx X. Xxxxxxx
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: 617.772.8333
66
Attention: Xxxxx Xxxxxx, Esq.
If to Purchaser (or Company or LLC post-Closing):
Xxxxx Corporation
0000 Xxxx Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax: 000-000-0000
With a copy to:
Xxxxxxx & Xxxxx, LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Fax: 000-000-0000
12.8 Severability. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any law or public policy,
all other terms or provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
12.9 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement except as contemplated by Section 9.7. No assignment of this Agreement
or of any rights or obligations hereunder may be made by either Company, LLC,
Selling Holders or Purchaser, directly or indirectly (by operation of law or
otherwise), without the prior written consent of the other parties hereto and
any attempted assignment without the required consents shall be void; provided,
that Purchaser shall be permitted at any time to, and following the Closing,
Company and LLC shall be permitted to, assign to an Affiliate of Purchaser all
or any portion of their respective rights or obligations under this Agreement
without the consent of the other parties hereto. No assignment of any
obligations hereunder shall relieve the parties hereto of any such obligations.
Upon any such permitted assignment, the references in this Agreement to
Purchaser shall also apply to any such assignee unless the context otherwise
requires.
12.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and
67
all of which, when taken together, will be deemed to constitute one and the same
agreement. Facsimile copies of signatures shall constitute valid and binding
obligations of the signing party once delivered to the other parties.
12.11 Specific Performance. THE PARTIES HERETO AGREE THAT, PRIOR TO
CLOSING, IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS
OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR
WERE OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE
ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT
AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE
UNITED STATES OR ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY
OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK **
68
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first written above.
XXXXX CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
EMED CO., INC.
By: /s/ Xxxxxx X. Xxx
---------------------------------
Name: Xxxxxx X. Xxx
Title: President
SUMMIT/EMED HOLDINGS, LLC
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Secretary
Signature Page to Securities Purchase Agreement
FOUNDING STOCKHOLDERS:
/s/ Xxxx X. Xxxxxxxxxx
---------------------------------------
Xxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxxxx
Xxxx Xxxxxxxxxx Childs Trust
By /s/ Xxxx Xxxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxxx Trust
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxxx Trust
By /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxxxx Trust
By /s/ Xxxx X. Xxxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxxx Trust
By /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------------
/s/ Xxxxx X. Xxxxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxxxx
/s/ Xxxxx X. Xxxxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxxxx
/s/ Xxxx X. Xxxxxxxxxx
---------------------------------------
Xxxx X. Xxxxxxxxxx
2
/s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxx
---------------------------------------
Xxxxxx X. Xxx
3
LLC UNITHOLDERS:
SUMMIT SUBORDINATED DEBT FUND II, L.P.
By: Summit Partners SD II, LLC
Its General Partner
By: Stamps, Xxxxxxx & Co. IV
Its Managing Member
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
General Partner
SUMMIT VENTURES V, L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Member
SUMMIT V COMPANION FUND, L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Member
4
SUMMIT V ADVISORS FUND, L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Member
SUMMIT V ADVISORS FUND (QP), L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Member
SUMMIT INVESTORS III, L.P.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
General Partner
SQUAM LAKE INVESTORS, III, L.P.
By: GPI, Inc., Its General Partner
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Title Vice President
SUNAPEE SECURITIES, INC.
By /s/ Xxxx X. Xxxxx
------------------------------------
Title: Assistant Treasurer
5
/s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxx
---------------------------------------
Xxxxxx X. Xxx
/s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx
/s/ J. Xxxxxxx Xxxxxx
---------------------------------------
J. Xxxxxxx Xxxxxx
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxx
---------------------------------------
Xxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxxx Xxxxxxx
---------------------------------------
Xxxxxxxx Xxxxxxx
6
EXHIBIT A
SELLING HOLDER INFORMATION
NUMBER OF SHARES OF NUMBER OF SHARES OF
FOUNDING STOCKHOLDER PREFERRED STOCK OWNED COMMON STOCK OWNED
-------------------- --------------------- -------------------
Xxxxxxx X. Xxxxxxxxxx Trust 31,251.8800 8,360.1122
Xxxx X. Xxxxxxxxxx Trust 7,813.3400 2,090.0257
Xxxxx X. Xxxxxxxxxx Trust 7,813.3400 2,090.0257
Xxxxx X. Xxxxxxxxxx Trust 7,813.3400 2,090.0257
Xxxx Xxxxxxxxxx Child Trust 7,813.3400 2,090.0257
Xxxx X. Xxxxxxxxxx 1,302.2200 348.3408
Xxxxxx X. Xxxxxxxxxx 1,302.2200 348.3408
Xxxxxxx X. Xxxxxxxxxx 544.4500 145.6358
Xxxxx X. Xxxxxxxxxx 294.8700 78.8758
Xxxx X. Xxxxxxxxxx 147.4400 39.4426
Xxxxx X. Xxxxxxxxxx 147.4400 39.4426
Xxxxxx X. Xxx 0.0000 4,674.5707
----------- -----------
Total 66,243.88 22,394.8641
=========== ===========
NUMBER OF CLASS A NUMBER OF CLASS B
LLC UNITHOLDER UNITS OWNED UNITS OWNED
-------------- ----------------- -----------------
Summit Ventures V, L.P. 268,090.8271 69,013.1900
Summit V Companion Fund, L.P. 49,809.6707 12,821.5200
Summit Sub Debt Fund II, L.P. 0.0000 8,936.0000
Summit V Advisors Fund (QP), L.P. 18,216.9125 4,689.3700
Summit V Advisors Fund, L.P. 5,566.9661 1,432.9200
Summit Investors III, L.P. 4,097.5589 1,161.8800
Squam Lake Investors III, L.P. 5,326.4307 1,509.6200
Sunapee Securities, Inc. 400.9141 113.6300
Xxxxxxx X. Xxxxxxxxxx 1,246.8399 645.6472
Xxxxxx X. Xxx 0.0000 5,246.2370
Xxxxxx X. Xxxxx 0.0000 3,500.6759
J. Xxxxxxx Xxxxxx 0.0000 2,422.3586
Xxxxx X. Xxxxxxx 0.0000 1,400.2704
Xxxxx X. Xxxxxxxx 0.0000 1,295.1087
Xxxx X. Xxxxx 0.0000 709.8694
Xxxxx X. Xxxxxxxx 0.0000 678.7119
Xxxxxxxx Xxxxxxx 0.0000 518.0000
------------ ------------
Total 352,756.1200 116,095.0091
============ ============
7
