AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BERNEX INC.,
M-A ACQUISITION CORP.,
ANDAL CORP.
AND
MULTI-ARC INC.
TABLE OF CONTENTS
Page
1. Definitions. . . . . . . . . . . . . . . . . . . . . . 1
"Acquisition". . . . . . . . . . . . . . . . . . . . . 1
"Acquired Companies" . . . . . . . . . . . . . . . . . 1
"Affiliate" . . . . . . . . . . . . . . . . . . . . . 2
"Agent". . . . . . . . . . . . . . . . . . . . . . . . 2
"Andal". . . . . . . . . . . . . . . . . . . . . . . . 2
"Andal Common Stock" . . . . . . . . . . . . . . . . . 2
"Andal Escrow Agreement" . . . . . . . . . . . . . . . 2
"Andal Escrow Fund". . . . . . . . . . . . . . . . . . 2
"Andal SEC Documents". . . . . . . . . . . . . . . . . 2
"Andal Shareholders" . . . . . . . . . . . . . . . . . 2
"Andal Shareholders Meeting" . . . . . . . . . . . . . 2
"Applicable Contract". . . . . . . . . . . . . . . . . 2
"Balance Sheet". . . . . . . . . . . . . . . . . . . . 2
"Best Efforts" . . . . . . . . . . . . . . . . . . . . 2
"Breach" . . . . . . . . . . . . . . . . . . . . . . . 2
"Business Day" . . . . . . . . . . . . . . . . . . . . 2
"Certificate of Merger". . . . . . . . . . . . . . . . 2
"Certificates" . . . . . . . . . . . . . . . . . . . . 2
"Claims" . . . . . . . . . . . . . . . . . . . . . . . 3
"Closing". . . . . . . . . . . . . . . . . . . . . . . 3
"Closing Agreements" . . . . . . . . . . . . . . . . . 3
"Closing Date" . . . . . . . . . . . . . . . . . . . . 3
"Closing Merger Consideration" . . . . . . . . . . . . 3
"Company". . . . . . . . . . . . . . . . . . . . . . . 3
"Company Common Stock" . . . . . . . . . . . . . . . . 3
"Company Debentures" . . . . . . . . . . . . . . . . . 3
"Company Shareholders" . . . . . . . . . . . . . . . . 3
"Consent" . . . . . . . . . . . . . . . . . . . . . . 3
"Contemplated Transactions". . . . . . . . . . . . . . 3
"Contract" . . . . . . . . . . . . . . . . . . . . . . 3
"Control" . . . . . . . . . . . . . . . . . . . . . . 3
"Damages". . . . . . . . . . . . . . . . . . . . . . . 4
"Deferred Taxes" . . . . . . . . . . . . . . . . . . . 4
"Delivered Certificates" . . . . . . . . . . . . . . . 4
"DGCL" . . . . . . . . . . . . . . . . . . . . . . . . 4
"Disclosure Letter". . . . . . . . . . . . . . . . . . 4
"Dissenting Shares". . . . . . . . . . . . . . . . . . 4
"Effective Time" . . . . . . . . . . . . . . . . . . . 4
"Employment Agreements". . . . . . . . . . . . . . . . 4
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"Encumbrance". . . . . . . . . . . . . . . . . . . . . 4
"Environment". . . . . . . . . . . . . . . . . . . . . 4
"Environmental, Health, and Safety Liabilities". . . . 4
"Environmental Law". . . . . . . . . . . . . . . . . . 5
"ERISA". . . . . . . . . . . . . . . . . . . . . . . . 5
"ERISA Affiliate". . . . . . . . . . . . . . . . . . . 5
"Escrow Agreement" . . . . . . . . . . . . . . . . . . 6
"Escrow Amount". . . . . . . . . . . . . . . . . . . . 6
"Escrow Fund". . . . . . . . . . . . . . . . . . . . . 6
"Exchange Act" . . . . . . . . . . . . . . . . . . . . 6
"Expense Escrow Agreement" . . . . . . . . . . . . . . 6
"Expense Escrow Amount". . . . . . . . . . . . . . . . 6
"Expense Fund" . . . . . . . . . . . . . . . . . . . . 6
"Expenses" . . . . . . . . . . . . . . . . . . . . . . 6
"Facilities" . . . . . . . . . . . . . . . . . . . . . 6
"Federal Tax". . . . . . . . . . . . . . . . . . . . . 6
"Final Determination". . . . . . . . . . . . . . . . . 6
"GAAP" . . . . . . . . . . . . . . . . . . . . . . . . 6
"Governmental Authorization" . . . . . . . . . . . . . 6
"Governmental Body". . . . . . . . . . . . . . . . . . 7
"Hazardous Activity" . . . . . . . . . . . . . . . . . 7
"Hazardous Materials". . . . . . . . . . . . . . . . . 7
"HSR Act". . . . . . . . . . . . . . . . . . . . . . . 7
"Indemnified Persons". . . . . . . . . . . . . . . . . 7
"Intellectual Property Assets" . . . . . . . . . . . . 7
"Interim Balance Sheet". . . . . . . . . . . . . . . . 7
"IRC". . . . . . . . . . . . . . . . . . . . . . . . . 7
"IRS". . . . . . . . . . . . . . . . . . . . . . . . . 7
"Joint Venture Companies". . . . . . . . . . . . . . . 7
"Knowledge". . . . . . . . . . . . . . . . . . . . . . 8
"Legal Requirement". . . . . . . . . . . . . . . . . . 8
"Material Adverse Effect". . . . . . . . . . . . . . . 8
"Merger" . . . . . . . . . . . . . . . . . . . . . . . 8
"Merger Consideration" . . . . . . . . . . . . . . . . 8
"Multi-Arc Division" . . . . . . . . . . . . . . . . . 8
"Multiemployer Plan" . . . . . . . . . . . . . . . . . 8
"Noncompetition Agreements". . . . . . . . . . . . . . 8
"Non-Joint Venture Acquired Companies" . . . . . . . . 8
"Occupational Safety and Health Law" . . . . . . . . . 8
"Order". . . . . . . . . . . . . . . . . . . . . . . . 8
"Ordinary Course of Business". . . . . . . . . . . . . 8
"Organizational Documents" . . . . . . . . . . . . . . 9
"Parent" . . . . . . . . . . . . . . . . . . . . . . . 9
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"PBGC" . . . . . . . . . . . . . . . . . . . . . . . . 9
"Person" . . . . . . . . . . . . . . . . . . . . . . . 9
"Plan" . . . . . . . . . . . . . . . . . . . . . . . . 9
"Post-Closing Tax Period". . . . . . . . . . . . . . . 9
"Pre-Closing Tax Period" . . . . . . . . . . . . . . . 9
"Principal Andal Shareholders" . . . . . . . . . . . . 10
"Principal Andal Shareholders' Agreement". . . . . . . 10
"Proceeding" . . . . . . . . . . . . . . . . . . . . . 10
"Proprietary Rights Agreement" . . . . . . . . . . . . 10
"Proxy Statement". . . . . . . . . . . . . . . . . . . 10
"Related Person" . . . . . . . . . . . . . . . . . . . 10
"Release". . . . . . . . . . . . . . . . . . . . . . . 11
"Representative" . . . . . . . . . . . . . . . . . . . 11
"Rights" . . . . . . . . . . . . . . . . . . . . . . . 11
"SEC". . . . . . . . . . . . . . . . . . . . . . . . . 11
"Section 338(h)(10) Election". . . . . . . . . . . . . 11
"Securities Act" . . . . . . . . . . . . . . . . . . . 11
"Shares" . . . . . . . . . . . . . . . . . . . . . . . 11
"Subsidiary" . . . . . . . . . . . . . . . . . . . . . 11
"Surviving Corporation". . . . . . . . . . . . . . . . 11
"Tax". . . . . . . . . . . . . . . . . . . . . . . . . 12
"Tax Asset". . . . . . . . . . . . . . . . . . . . . . 12
"Tax Indemnification Period" . . . . . . . . . . . . . 12
"Tax Return" . . . . . . . . . . . . . . . . . . . . . 12
"Tax Sharing Agreements" . . . . . . . . . . . . . . . 12
"Taxing Authority" . . . . . . . . . . . . . . . . . . 12
"Threat of Release". . . . . . . . . . . . . . . . . . 13
"Threatened" . . . . . . . . . . . . . . . . . . . . . 13
"Transmittal Letter" . . . . . . . . . . . . . . . . . 13
2. THE MERGER . . . . . . . . . . . . . . . . . . . . . . 13
2.1 THE MERGER . . . . . . . . . . . . . . . . . . 13
2.2 CLOSING. . . . . . . . . . . . . . . . . . . . 13
2.3 CONSUMMATION OF THE MERGER AND EFFECTIVE TIME. 14
2.4 MERGER CONSIDERATION . . . . . . . . . . . . . 14
2.5 CERTIFICATE OF INCORPORATION AND BY-LAWS . . . 15
2.6 DIRECTORS AND OFFICERS . . . . . . . . . . . . 15
2.7 EFFECTS OF THE MERGER. . . . . . . . . . . . . 15
2.8 DISSENTING SHARES. . . . . . . . . . . . . . . 15
2.9 NOTICES; PAYMENT FOR SHARES. . . . . . . . . . 16
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3. REPRESENTATIONS AND WARRANTIES OF ANDAL AND THE COMPANY 18
3.1 ORGANIZATION AND GOOD STANDING . . . . . . . . 18
3.2 AUTHORITY; NO CONFLICT . . . . . . . . . . . . 19
3.3 CAPITALIZATION . . . . . . . . . . . . . . . . 21
3.4 FINANCIAL STATEMENTS . . . . . . . . . . . . . 21
3.5 BOOKS AND RECORDS. . . . . . . . . . . . . . . 22
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. . . . . . . 22
3.7 CONDITION AND SUFFICIENCY OF ASSETS. . . . . . 24
3.8 ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . 24
3.9 NO UNDISCLOSED LIABILITIES . . . . . . . . . . 25
3.10 TAXES. . . . . . . . . . . . . . . . . . . . . 25
3.11 NO MATERIAL ADVERSE CHANGE . . . . . . . . . . 27
3.12 EMPLOYEE BENEFITS. . . . . . . . . . . . . . . 27
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS . . . . . . . . . . . . . . . . 29
3.14 LEGAL PROCEEDINGS; ORDERS . . . . . . . . . . . 31
3.15 ABSENCE OF CERTAIN CHANGES AND EVENTS . . . . . 32
3.16 CONTRACTS; NO DEFAULTS. . . . . . . . . . . . . 34
3.17 INSURANCE . . . . . . . . . . . . . . . . . . . 37
3.18 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . 39
3.19 EMPLOYEES . . . . . . . . . . . . . . . . . . . 40
3.20 LABOR RELATIONS; COMPLIANCE . . . . . . . . . . 40
3.21 INTELLECTUAL PROPERTY . . . . . . . . . . . . . 41
3.22 CERTAIN PAYMENTS. . . . . . . . . . . . . . . . 44
3.23 DISCLOSURE. . . . . . . . . . . . . . . . . . . 45
3.24 RELATIONSHIPS WITH RELATED PERSONS. . . . . . . 46
3.25 BROKERS OR FINDERS. . . . . . . . . . . . . . . 46
3.26 SEC DOCUMENTS . . . . . . . . . . . . . . . . . 46
3.27 INFORMATION SUPPLIED. . . . . . . . . . . . . . 46
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION 47
4.1 ORGANIZATION AND GOOD STANDING. . . . . . . . . 47
4.2 AUTHORITY; NO CONFLICT. . . . . . . . . . . . . 47
4.3 CERTAIN PROCEEDINGS . . . . . . . . . . . . . . 48
4.4 BROKERS OR FINDERS. . . . . . . . . . . . . . . 48
5. COVENANTS OF ANDAL AND THE COMPANY . . . . . . . . . 48
5.1 ACCESS AND INVESTIGATION. . . . . . . . . . . . 48
5.2 OPERATION OF THE BUSINESS OF THE ACQUIRED
COMPANIES . . . . . . . . . . . . . . . . . . 48
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5.3 NEGATIVE COVENANT . . . . . . . . . . . . . . . 49
5.4 APPROVALS OF GOVERNMENTAL BODIES. . . . . . . . 50
5.5 NOTIFICATION. . . . . . . . . . . . . . . . . . 50
5.6 INDEBTEDNESS OF RELATED PERSONS; OTHER
AGREEMENTS. . . . . . . . . . . . . . . . . . 50
5.7 NO NEGOTIATION. . . . . . . . . . . . . . . . . 51
5.8 OTHER APPROVALS . . . . . . . . . . . . . . . . 51
5.9 BEST EFFORTS. . . . . . . . . . . . . . . . . . 51
5.10 ANDAL LIQUIDATION . . . . . . . . . . . . . . . 51
5.11 INSURANCE . . . . . . . . . . . . . . . . . . . 52
6. COVENANTS OF PARENT AND ACQUISITION PRIOR TO CLOSING
DATE. . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 APPROVALS OF GOVERNMENTAL BODIES. . . . . . . . 52
6.2 BEST EFFORTS. . . . . . . . . . . . . . . . . . 52
7. CONDITIONS PRECEDENT TO PARENT'S AND ACQUISITION'S
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . 52
7.1 ACCURACY OF REPRESENTATIONS . . . . . . . . . . 52
7.2 ANDAL'S AND THE COMPANY'S PERFORMANCE . . . . . 53
7.3 CONSENTS; TERMINATION OF AGREEMENTS . . . . . . 53
7.4 ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . 53
7.5 NO PROCEEDINGS. . . . . . . . . . . . . . . . . 54
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE
PROCEEDS. . . . . . . . . . . . . . . . . . . 54
7.7 NO PROHIBITION. . . . . . . . . . . . . . . . . 54
7.8 EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . 54
7.9 COMPLIANCE WITH ISRA. . . . . . . . . . . . . . 54
7.10 COMPLIANCE WITH HSR ACT . . . . . . . . . . . . 55
7.11 FILING OF ASSIGNMENTS . . . . . . . . . . . . . 55
7.12 CONVERSION OF COMPANY DEBENTURES. . . . . . . . 55
7.13 TROY, MI REMEDIATION . . . . . . . . . . . . . 55
8. CONDITIONS PRECEDENT TO ANDAL'S AND THE COMPANY'S
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . 56
8.1 ACCURACY OF REPRESENTATIONS . . . . . . . . . . 56
8.2 PARENT'S AND ACQUISITION'S PERFORMANCE. . . . . 56
8.3 CONSENTS. . . . . . . . . . . . . . . . . . . . 56
8.4 ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . 57
8.5 NO PROCEEDINGS. . . . . . . . . . . . . . . . . 57
8.6 NO PROHIBITION. . . . . . . . . . . . . . . . . 57
8.7 COMPLIANCE WITH HSR ACT . . . . . . . . . . . . 57
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9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . 57
9.1 TERMINATION EVENTS. . . . . . . . . . . . . . . 57
9.2 EFFECT OF TERMINATION . . . . . . . . . . . . . 58
10. INDEMNIFICATION; REMEDIES. . . . . . . . . . . . . . 58
10.1 SURVIVAL. . . . . . . . . . . . . . . . . . . . 58
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
COMPANY SHAREHOLDERS. . . . . . . . . . . . . 58
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
COMPANY SHAREHOLDERS -- ENVIRONMENTAL MATTERS 59
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
PARENT AND THE SURVIVING CORPORATION. . . . . 60
10.5 LIMITATIONS ON INDEMNIFICATION. . . . . . . . . 61
10.6 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY
CLAIMS. . . . . . . . . . . . . . . . . . . . 61
10.7 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS . 62
10.8 COSTS AND EXPENSES. . . . . . . . . . . . . . . 63
11. TAX MATTERS. . . . . . . . . . . . . . . . . . . . . 63
11.1 COOPERATION ON TAX MATTERS. . . . . . . . . . . 63
11.2 TAX INDEMNIFICATION . . . . . . . . . . . . . . 64
11.3 PURCHASE PRICE ADJUSTMENT AND INTEREST. . . . . 65
11.4 TERMINATION OF EXISTING TAX SHARING AGREEMENTS. 65
11.5 PAYMENT OF TAXES. . . . . . . . . . . . . . . . 65
11.6 338 ELECTION. . . . . . . . . . . . . . . . . . 65
11.7 ANDAL TAX ASSESSMENTS . . . . . . . . . . . . . 66
12. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . 67
12.1 AUTHORIZATION OF THE AGENT. . . . . . . . . . . 67
12.2 PAYMENTS OF EXPENSES; HOLDBACKS . . . . . . . . 69
12.3 COMPENSATION; EXCULPATION; INDEMNITY. . . . . . 70
12.4 NOTICES . . . . . . . . . . . . . . . . . . . . 71
12.5 NO THIRD PARTY RIGHTS . . . . . . . . . . . . . 71
12.6 RESIGNATION OR REMOVAL; SUCCESSOR AGENT . . . . 71
13. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 72
13.1 EXPENSES. . . . . . . . . . . . . . . . . . . . 72
13.2 PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . 72
13.3 CONFIDENTIALITY . . . . . . . . . . . . . . . . 72
13.4 NOTICES . . . . . . . . . . . . . . . . . . . . 72
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13.5 JURISDICTION; SERVICE OF PROCESS. . . . . . . . 74
13.6 FURTHER ASSURANCES. . . . . . . . . . . . . . . 75
13.7 WAIVER. . . . . . . . . . . . . . . . . . . . . 75
13.8 ENTIRE AGREEMENT AND MODIFICATION . . . . . . . 75
13.9 DISCLOSURE LETTER . . . . . . . . . . . . . . . 75
13.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY
RIGHTS. . . . . . . . . . . . . . . . . . . . 75
13.11 SEVERABILITY. . . . . . . . . . . . . . . . . . 76
13.12 SECTION HEADINGS, CONSTRUCTION. . . . . . . . . 76
13.13 TIME OF ESSENCE . . . . . . . . . . . . . . . . 76
13.14 GOVERNING LAW . . . . . . . . . . . . . . . . . 76
13.15 COUNTERPARTS. . . . . . . . . . . . . . . . . . 76
EXHIBITS
2.2(b)(ii) Form of Noncompetition Agreement
2.2(b)(iii) Form of Escrow Agreement
2.2(b)(v) Form of Andal Escrow Agreement
2.9(c)(ii) Form of Expense Escrow Agreement
7.4(a) Form of Opinion of Xxxx, Weiss, Rifkind, Xxxxxxx
& Xxxxxxxx
7.4(b) Form of Opinion of Xxxxxx, Xxxxx & Xxxxxx
7.4(c) Form of Estoppel Certificate
8.4(a) Form of Opinion of Xxxx, Scholer, Fierman, Xxxx
& Handler, LLP
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is
made as of June 9, 1997, by and among BERNEX INC., a Delaware
corporation ("Parent"), M-A ACQUISITION CORP., a Delaware
corporation ("Acquisition"), ANDAL CORP., a New York corporation
("Andal"), and MULTI-ARC INC., a Delaware corporation (the
"Company").
RECITALS
The respective Boards of Directors of Parent,
Acquisition, Andal and the Company have approved the acquisition
of the Company by Parent, by means of the merger of Acquisition
with and into the Company, upon the terms and subject to the
conditions set forth in this Agreement;
Simultaneously with the execution and delivery of this
Agreement, and as partial consideration therefor, each of the
Principal Andal Shareholders (as hereinafter defined), Xxxxx X.
Xxxxx, Xxxxxx X. Xxxxx, Xx. and Xxxxx Xxx has entered into a
shareholder agreement (each individually, and collectively, the
"Principal Andal Shareholders' Agreement") with Parent and
Acquisition pursuant to which it has agreed to vote at the Andal
Shareholders Meeting (as hereinafter defined) or in connection
with any written consent of Andal Shareholders (as hereinafter
defined) all of its shares of Andal Common Stock (as hereinafter
defined) in favor of the sale of the Company pursuant to the
Merger (as hereinafter defined) and approval of this Agreement,
and, to the extent not so voted, granted its irrevocable proxy to
Parent and Acquisition to vote such shares in such manner; and
Parent, Acquisition, Andal and the Company desire to
make certain representations, warranties, covenants and
agreements in connection with the Merger as set forth in this
Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as
follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms
have the meanings specified or referred to in this Section 1:
"Acquisition" -- as defined in the Preamble to this
Agreement.
"Acquired Companies" -- the Company, its Subsidiaries
and the Joint Venture Companies, collectively.
2
"Affiliate" of any Person -- any other Person which,
directly or indirectly, controls or is controlled by that Person,
or under common control with that Person.
"Agent" -- as defined in Section 12.1.
"Andal" -- as defined in the Preamble to this
Agreement.
"Andal Common Stock" -- the common shares of Andal, par
value $20.00 per share.
"Andal Escrow Agreement" -- as defined in Section
2.2(b)(v).
"Andal Escrow Fund" -- as defined in the Andal Escrow
Agreement.
"Andal SEC Documents" -- as defined in Section 3.26.
"Andal Shareholders" -- holders of Andal Common Stock.
"Andal Shareholders Meeting" -- as defined in Section
3.2.
"Applicable Contract" -- any Contract (a) to which any
Non-Joint Venture Acquired Company is a party, (b) under which
any Non-Joint Venture Acquired Company has or may acquire any
rights, (c) under which any Non-Joint Venture Acquired Company
has or may become subject to any obligation or liability, or (d)
by which any Non-Joint Venture Acquired Company or any of the
assets owned or used by it is or may become bound.
"Balance Sheet" -- as defined in Section 3.4.
"Best Efforts" -- the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances
to ensure that such result is achieved as expeditiously as
possible.
"Breach" -- a "Breach" of a representation, warranty,
covenant, obligation, or other provision of this Agreement or any
instrument delivered pursuant to this Agreement will be deemed to
have occurred if there is or has been any inaccuracy in or breach
of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other
provision.
"Business Day" -- any day that is not a Saturday or
Sunday or a day on which banks located in New York City are
authorized or required to be closed.
"Certificate of Merger" -- as defined in Section 2.3.
"Certificates" -- certificates or other documents
representing Shares or Rights.
3
"Claims" -- as defined in the Escrow Agreement.
"Closing" -- as defined in Section 2.2.
"Closing Agreements" -- the Escrow Agreement, Expense
Escrow Agreement, Andal Escrow Agreement, Noncompetition
Agreements and Employment Agreements.
"Closing Date" -- the date and time as of which the
Closing actually takes place.
"Closing Merger Consideration" -- as defined in Section
2.9(c).
"Company" -- as defined in the Preamble to this
Agreement.
"Company Common Stock" -- the common stock of the
Company, par value $.01 per share.
"Company Debentures" -- the 6% convertible subordinated
debentures of the Company due 2004.
"Company Shareholders" -- holders of Company Common
Stock.
"Consent" -- any approval, consent, ratification,
waiver, or other authorization (including any Governmental
Authorization).
"Contemplated Transactions" -- all of the transactions
contemplated by this Agreement, including:
(a) the Merger;
(b) the execution, delivery, and performance of the
Closing Agreements;
(c) the performance by the parties of their
respective covenants and obligations under this Agreement; and
(d) Parent's acquisition and ownership at the
Closing of the Company through the Merger and exercise of control
over the Company acquired at the Closing.
"Contract" -- any agreement, contract, obligation,
promise, or undertaking (whether written or oral and whether
express or implied) that is legally binding.
"Control" -- (including, with correlative meaning, the
terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of
the management and
4
policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Damages" -- as defined in Section 10.2.
"Deferred Taxes" -- any deferred tax liability for
accounting purposes which is reflected on the Interim Balance
Sheet.
"Delivered Certificates" -- as defined in Section
2.9(b).
"DGCL" -- as defined in Section 2.1.
"Disclosure Letter" -- the disclosure letter delivered
by Andal and the Company to Parent and Acquisition concurrently
with the execution and delivery of this Agreement.
"Dissenting Shares" -- as defined in Section 2.8.
"Effective Time" -- as defined in Section 2.3.
"Employment Agreements" -- as defined in Section 7.8.
"Encumbrance" -- any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge,
security interest, right of first refusal, mortgage, easement,
servitude, right of way or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"Environment" -- soil, land surface or subsurface
strata, surface waters (including navigable waters, ocean waters,
streams, ponds, drainage basins, and wetlands), groundwaters,
drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life.
"Environmental, Health, and Safety Liabilities" -- any
cost, damages, expense, liability, obligation, fines, penalties,
judgments, awards, settlements, legal or administrative
proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses or
other responsibility, including reasonable consultants', experts'
and attorneys' fees incurred as a result of violations of, or
obligations under, Environmental Law or Occupational Safety and
Health Law and consisting of or relating to:
(a) any environmental, health, or safety matters or
conditions (including on-site or off-site contamination,
occupational safety and health, and regulation of chemical
substances or products);
(b) clean up or corrective action, including any
investigation, cleanup, removal, containment, or other
remediation or response actions ("Cleanup") required by
5
applicable Environmental Law or Occupational Safety and Health
Law (whether or not such Cleanup has been required or requested
by any Governmental Body or any other Person) and for any natural
resource damages as a result of a Release of Hazardous Materials
on or prior to the Closing Date; or
(c) any compliance activity or measures, including,
without limitation, operational constraints and recordkeeping
required as a result of violations of or obligations under
Environmental Law or Occupational Safety and Health Law arising
out of activities on or prior to the Closing Date.
"Environmental Law" -- any Legal Requirement:
(a) regulating intended, actual or threatened
releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and
activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the
release of pollutants or hazardous substances or materials into
the Environment;
(c) reducing the quantities, preventing the
release, or minimizing the hazardous characteristics of wastes
that are generated;
(d) protecting resources, species, or ecological
amenities;
(e) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such
clean up or prevention; or
(f) making responsible parties pay private parties,
or groups of them, for damages done to their health or the
Environment, or permitting self-appointed representatives of the
public interest to recover for injuries done to public assets or
otherwise relating to human health and the environment.
"ERISA" -- the Employee Retirement Income Security Act
of 1974 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
"ERISA Affiliate" -- as applied to any Person, means
(a) any corporation which is a member of a controlled group of
corporations, within the meaning of Section 414(b) of the IRC, of
which that Person is a member, (b) any trade or business (whether
or not incorporated) which is a member of a group of trades or
businesses under common control, within the meaning of Section
414(c) of the IRC, of which that Person is a member, and (c) any
member of an affiliated service group, within the meaning of
Section 414(m) and (o) of the IRC, of which that Person or any
entity described in clause (a) or (b) is a member.
6
"Escrow Agreement" -- as defined in Section 2.2(b).
"Escrow Amount" -- as defined in Section 2.9(c).
"Escrow Fund" -- as defined in the Escrow Agreement.
"Exchange Act" -- the Securities Exchange Act of 1934
or any successor law, and regulations and rules issued pursuant
to that Act or any successor law.
"Expense Escrow Agreement" -- an escrow agreement in
the form of Exhibit 2.9(c)(ii) to be executed by or on behalf of
the Company Shareholders.
"Expense Escrow Amount" -- as defined in Section
2.9(c).
"Expense Fund" -- as defined in the Expense Escrow
Agreement.
"Expenses" -- as defined in the Expense Escrow
Agreement.
"Facilities" -- any real property, leaseholds, or other
interests currently or formerly owned, leased or operated by any
Acquired Company (or any predecessor Person, including, with
respect to the Multi-Arc Division, Andal) and any buildings,
plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated
by any Acquired Company (or any predecessor Person, including,
with respect to the Multi-Arc Division, Andal).
"Federal Tax" -- any Tax imposed under Subtitle A of
the IRC.
"Final Determination" -- (i) with respect to Federal
Taxes, a "determination" as defined in Section 1313(a) of the IRC
or execution of an IRS Form 870AD and, with respect to Taxes
other than Federal Taxes, any final determination of liability in
respect of a Tax that, under applicable law, is not subject to
further appeal, review or modification through proceedings or
otherwise (including the expiration of a statute of limitations
or a period for the filing of claims for refunds, amended returns
or appeals from adverse determinations) or (ii) the payment of
Tax by Parent, Acquisition, Andal, the Company or any other
Acquired Company or any of their Affiliates, whichever is
responsible for payment of such Tax under applicable law, with
respect to any item disallowed or adjusted by a Taxing Authority,
provided that such responsible party determines that no action
should be taken to recoup such payment and the other party
agrees.
"GAAP" -- U.S. generally accepted accounting
principles.
"Governmental Authorization" -- any approval, consent,
license, permit, waiver, or other authorization issued, granted,
given, or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement.
7
"Governmental Body" -- any:
(a) nation, state, county, city, town, village,
district, or other governmental jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or
other government;
(c) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch,
department, official, or entity and any court or other tribunal);
or
(d) multi-national organization or body, or other
body, in each case, exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or governmental power of any
nature.
"Hazardous Activity" -- the distribution, generation,
handling, importing, management, manufacturing, processing,
production, refinement, Release, storage, transfer,
transportation, treatment, or use (including any withdrawal or
other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the
Environment.
"Hazardous Materials" -- any waste or other substance
that is listed, defined, designated, or classified as, or
otherwise determined to be, hazardous, radioactive, or toxic or a
pollutant or a contaminant under or pursuant to any Environmental
Law, including any admixture or solution thereof, and
specifically including petroleum and all derivatives thereof or
synthetic substitutes therefor and asbestos or asbestos-
containing materials.
"HSR Act" -- the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 or any successor law, and regulations
and rules issued pursuant to that Act or any successor law.
"Indemnified Persons" -- as defined in Section 10.2.
"Intellectual Property Assets" -- as defined in Section
3.21.
"Interim Balance Sheet" -- as defined in Section 3.4.
"IRC" -- the Internal Revenue Code of 1986 or any
successor law, and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS" -- United States Internal Revenue Service and any
successor Governmental Body.
"Joint Venture Companies" -- Multi-Arc Scientific
Coatings (S) Pte, Ltd., Multi-Arc India Limited, Preci-Coat S.A.
and Multi-Arc Eifeler Beschichtungs GmbH.
8
"Knowledge" -- an individual will be deemed to have
"Knowledge" of a particular fact or other matter if such
individual is actually aware of such fact or other matter. Andal
and the Acquired Companies will be deemed to have "Knowledge" of
a particular fact or other matter if any of Xxxxxx X. Xxxxxxx,
Xxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Xx., Xxxxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxx, Xxxxxxx X.
Xxxxxxxx, Xxxx Xxxxxxx or any General Manager of a coating center
or the Systems Division of the Company has, or at any time had,
Knowledge of such fact or other matter. Parent and Acquisition
will be deemed to have "Knowledge" of a particular fact or other
matter if either of Xxxxx Xxxxxxx or Xxxxxx Xxxxxxxxxx has, or at
any time had, Knowledge of such fact or other matter.
"Legal Requirement" -- any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of
common law, regulation, statute, or treaty.
"Material Adverse Effect" -- a material adverse effect
on the business, assets, properties, operations, prospects or
financial condition of the Acquired Companies, as a whole, or the
Company or Multi-Arc (UK) Limited, individually.
"Merger" -- as defined in Section 2.1.
"Merger Consideration" -- as defined in Section 2.4(a).
"Multi-Arc Division" -- the business, assets,
properties and operations of the Multi-Arc Division (as referred
to in Andal's Proxy Statement dated July 19, 1994, relating to
the Annual Meeting of Andal Shareholders held on August 16, 1994)
operated by Andal prior to October 1, 1994.
"Multiemployer Plan" -- as defined in Section 3.12.
"Noncompetition Agreements" -- as defined in Section
2.2(b)(ii).
"Non-Joint Venture Acquired Companies" -- the Acquired
Companies other than the Joint Venture Companies.
"Occupational Safety and Health Law" -- any Legal
Requirement designed to provide safe and healthful working
conditions and to reduce occupational safety and health hazards.
"Order" -- any award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or
rendered by any court, administrative agency, or other
Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by a
Person will be deemed to have been taken in the "Ordinary Course
of Business" only if:
9
(a) such action is consistent with the past
practices of such Person and is taken in the ordinary course of
the normal day-to-day operations of such Person;
(b) with respect to any such action taken after the
date of this Agreement, such action is not required to be
authorized by the board of directors of such Person (or by any
Person or group of Persons exercising similar authority) and is
not required to be specifically authorized by the parent company
(if any) of such Person; and
(c) with respect to any such action taken on or
prior to the date of this Agreement, (i) such action was similar
in nature and magnitude to actions customarily taken, without any
authorization by the board of directors (or by any Person or
group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of such Person, or
(ii) such action was similar in nature and magnitude to actions
taken only with the authorization by the board of directors (or
by any Person or group of Persons exercising similar authority),
and such authorization was, in fact, obtained.
"Organizational Documents" -- (a) the articles or
certificate of incorporation and the bylaws of a corporation; (b)
the partnership agreement and any statement of partnership of a
general partnership; (c) the limited partnership agreement and
the certificate of limited partnership of a limited partnership
or limited liability partnership; (d) the limited liability
company agreement or operating agreement and certificate of
formation of a limited liability company; (e) any charter or
similar document adopted or filed in connection with the
creation, formation, or organization of a Person; and (f) any
amendment to any of the foregoing.
"Parent" -- as defined in the Preamble to this
Agreement.
"PBGC" -- Pension Benefit Guaranty Corporation
"Person" -- any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, limited liability partnership, joint venture,
estate, trust, association, organization, labor union, or other
entity or Governmental Body.
"Plan" -- as defined in Section 3.12.
"Post-Closing Tax Period" -- any Tax period beginning
after the close of business on the Closing Date and those days
which follow the Closing Date and are included in the Tax period
which begins before the Closing Date and ends after the Closing
Date.
"Pre-Closing Tax Period" -- any Tax period ending on or
before the close of business on the Closing Date and those days
which precede and include the Closing Date and are included in
the Tax period which begins before the Closing Date and ends
after the Closing Date.
10
"Principal Andal Shareholders" -- Frankhill Associates,
Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxx Family Company LLC and Xxxx X.
Xxxxx.
"Principal Andal Shareholders' Agreement" -- as defined
in the Recitals to this Agreement.
"Proceeding" -- any action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil,
criminal or administrative) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental Body
or arbitrator.
"Proprietary Rights Agreement" -- as defined in Section
3.19(b).
"Proxy Statement" -- as defined in Section 3.2.
"Related Person" -- with respect to a particular
individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly
controlled by such individual or one or more members of such
individual's Family;
(c) any Person in which such individual holds
(individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such
individual serves as a director, officer, partner, executor, or
trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly
controls, is directly or indirectly controlled by, or is directly
or indirectly under common control with such specified Person;
(b) any Person that holds a Material Interest in
such specified Person;
(c) each Person that serves as a director, officer,
partner, executor, or trustee of such specified Person (or in a
similar capacity);
(d) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar
capacity); and
(e) any Related Person of any individual described
in clause (b).
11
For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's
spouse, (iii) any other natural person who is related to the
individual or the individual's spouse within the second degree,
and (iv) any other natural person who resides with such
individual, and (b) "Material Interest" means direct or indirect
ownership (as defined in Rule 13d-3 under the Exchange Act) of
voting securities or other voting interests representing at least
5% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 5% of
the outstanding equity securities or equity interests in a
Person.
"Release" -- any spilling, leaking, emitting,
discharging, depositing, escaping, leaching, dumping, or other
releasing into the Environment, whether intentional or
unintentional.
"Representative" -- with respect to a particular
Person, any director, officer, employee, agent, consultant,
advisor, or other representative of such Person, including legal
counsel, accountants, and financial advisors.
"Rights" -- all options, warrants and other securities
(including indebtedness) convertible into, exchangeable or
exercisable for or otherwise carrying the right to receive shares
of Company Common Stock.
"SEC" -- the Securities and Exchange Commission and any
successor thereto.
"Section 338(h)(10) Election" -- with respect to the
purchase and sale of Company Common Stock, the election under
Section 338(h)(10) of the IRC and Treasury Regulations thereunder
and any corresponding elections under state, local or foreign law
including, if no election may be made pursuant to such law under
Section 338(h)(10) of the IRC or corresponding state, local or
foreign law provision, the election under Section 338(g) of the
IRC or corresponding state, local or foreign provisions.
"Securities Act" -- the Securities Act of 1933, as
amended, or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
"Shares" -- as defined in Section 3.3.
"Subsidiary" -- with respect to any Person (the
"Owner"), any corporation or other Person of which securities or
other interests having the power to elect a majority of that
corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other
than securities or other interests having such power only upon
the happening of a contingency that has not occurred) are held by
the Owner or one or more of its Subsidiaries; when used without
reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"Surviving Corporation" -- as defined in Section 2.1.
12
"Tax" -- (i) any tax imposed under Subtitle A of the
IRC and any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding on amounts
paid to or by any Acquired Company, payroll, employment, excise
including the golden parachute excise tax imposed by Section 4999
of the IRC and the greenmail excise tax imposed by Section 5881
of the IRC, severance, stamp, capital stock, occupation,
property, environmental or windfall profit tax, premium, custom,
duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest,
penalty, addition to tax or additional amount imposed by any
Governmental Body (a "Taxing Authority") responsible for the
imposition of any such tax (domestic or foreign), (ii) liability
of any Acquired Company for the payment of any amounts of the
type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group or having
been operated as a division of Andal or being a party to any
agreement or arrangement whereby liability of any Acquired
Company for payments of such amounts was determined or taken into
account with reference to the liability of any other Person for
any period during the Tax Indemnification Period, and (iii)
liability of any Acquired Company for the payment of any amounts
as a result of being party to any Tax Sharing Agreement or with
respect to the payment of any amounts of the type described in
(i) or (ii) as a result of any express or implied obligation to
indemnify any other Person.
"Tax Asset" -- any net operating loss, net capital
loss, investment tax credit, foreign tax credit, charitable
deduction or any other credit or tax attribute which could reduce
Taxes (including without limitation deductions and credits
related to alternative minimum Taxes).
"Tax Indemnification Period" -- (i) with respect to
any Tax described in clause (i) or (ii) of the definition of
"Tax," any Pre-Closing Tax Period of any Acquired Company, and
(ii) with respect to any Tax described in clause (iii) of the
definition of "Tax," the survival period of the obligation under
the applicable contract or arrangement.
"Tax Return" -- any return (including any information
return), report, statement, schedule, notice, form, or other
document or information (including estimated tax or information
returns and reports) filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"Tax Sharing Agreements" all existing Tax sharing
agreements or arrangements (whether or not written) binding on
any Acquired Company (including without limitation any agreements
or arrangements which afford any other Person the benefit of any
Tax Asset of any Acquired Company, afford any Acquired Company
the benefit of any Tax Asset of any other Person or require or
permit the transfer or assignment of income, revenues, receipts,
or gains).
"Taxing Authority" -- as defined in the definition of
"Tax".
13
"Threat of Release" -- a substantial likelihood of a
Release that may require action in order to prevent or mitigate
damage to the Environment that may result from such Release.
"Threatened" -- a claim, Proceeding, dispute, action,
or other matter will be deemed to have been "Threatened" if any
demand or statement has been made (orally or in writing) or any
notice has been given (orally or in writing).
"Transmittal Letter" -- as defined in Section 2.9.
2. THE MERGER.
2.1 THE MERGER. Upon the terms and subject to the
conditions hereof, and in accordance with the provisions of the
Delaware General Corporation Law (the "DGCL"), Acquisition shall
be merged with and into the Company (the "Merger") at the
Effective Time. Following the Merger, the Company shall continue
its existence under the laws of the State of Delaware as the
surviving corporation (the "Surviving Corporation") under the
name Multi-Arc Inc. and as a wholly-owned subsidiary of Parent.
2.2 CLOSING. (a) The closing of the Merger (the
"Closing") shall take place at the offices of Xxxx, Scholer,
Fierman, Xxxx & Handler, LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, at (a) 10:00 A.M., New York City time, on the third
business day after all of the conditions set forth in Sections 7
and 8 hereof shall be fulfilled or waived in accordance with this
Agreement and applicable law or (b) at such other time, date
and/or place as the Company and Acquisition may agree. Subject
to the provisions of Section 9, failure to consummate the Merger
on the date and time and at the place determined pursuant to this
Section 2.2 will not result in the termination of this Agreement
and will not relieve any party of any obligation under this
Agreement.
(b) At the Closing, Andal and the Company will
deliver to Parent and Acquisition:
(i) all Delivered Certificates;
(ii) noncompetition agreements in the form of
Exhibit 2.2(b)(ii) (the "Noncompetition Agreements"), duly
executed by Andal, each Principal Andal Shareholder and Messrs.
Xxxxx X. Xxxxx and Xxxxxx X. Xxxxx, Xx.;
(iii) an escrow agreement in the form of
Exhibit 2.2(b)(iii) duly executed by or on behalf of the Company
Shareholders (the "Escrow Agreement");
(iv) the Expense Escrow Agreement duly
executed by or on behalf of the Company Shareholders and the
escrow agent thereunder;
14
(v) an escrow agreement in the form of Exhibit
2.2(b)(v) duly executed by Andal (the "Andal Escrow Agreement");
(vi) resolutions of the shareholders,
directors and/or other applicable body of each Non-Joint Venture
Acquired Company (other than the Company) removing all directors
and officers of such Non-Joint Venture Acquired Company other
than Messrs. Flood and Xxxxx, and electing Messrs. Flood and
Xxxxx (to the extent not already serving in such capacities) as
the sole directors (or equivalent position) and officers of such
Non-Joint Venture Acquired Company, and the resignation of each
director of the Company listed on Schedule 2.2(b)(vi); and
(vii) certificates executed by a duly
authorized executive officer of each of Andal and the Company
certifying compliance by Andal and the Company, respectively,
with the conditions to Closing set forth in Sections 7.1 and 7.2.
(c) At the Closing, Parent and Acquisition will
deliver to Andal and the Company:
(i) the Escrow Agreement and the Andal Escrow
Agreement, each duly executed by Parent and the Surviving
Corporation; and
(ii) certificates executed by a duly
authorized executive officer of each of Parent and Acquisition
certifying compliance by Parent and Acquisition, respectively,
with the conditions to Closing set forth in Sections 8.1 and 8.2.
2.3 CONSUMMATION OF THE MERGER AND EFFECTIVE TIME. The
Merger shall be consummated by filing of a duly executed
certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware pursuant to Section
251 of the DGCL. Upon the terms and subject to the conditions
hereof, as soon as practicable after the Closing, the Company
shall cause to be filed with the Secretary of State of the State
of Delaware the Certificate of Merger (the date and time of such
filing being the "Effective Time") and the parties hereto shall
take all such other and further actions as may be required by law
to make the Merger effective.
2.4 MERGER CONSIDERATION. The manner of converting or
canceling shares of the Company and Acquisition in the Merger
shall be as follows:
(a) At the Effective Time, each Share issued and
outstanding immediately prior to the Effective Time, other than
Shares held in the treasury of the Company, shall, by virtue of
the Merger and without any action on the part of the holder
thereof, be converted into the right to receive in cash, without
interest, an amount per Share equal to a pro rata (based on the
number of shares of Company Common Stock issued and outstanding
as of the Closing Date, assuming the exercise, conversion or
exchange, as the case may be, of all Rights) portion of Twenty-
Nine Million and Two Hundred Thousand Dollars ($29,200,000) (such
pro rata amount, the "Merger Consideration"), subject to
reduction by the pro rata portion of any payments made
15
from the Escrow Fund or the Expense Escrow Fund (and, in the case
of Andal, subject to reduction by any and all payments made from
the Andal Escrow Fund). The Company shall cause all outstanding
Rights to be exercised, converted or exchanged, as the case may
be, or redeemed prior to the Closing, such that there shall be no
outstanding Rights immediately prior to the Effective Time. All
outstanding Shares, by virtue of the Merger and without any
action on the part of the holders thereof, shall no longer be
outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a Certificate representing Shares shall
thereafter cease to have any rights with respect to such Shares,
except the right to receive the Merger Consideration for such
Shares (other than Shares held in the treasury and Dissenting
Shares) upon the surrender of such Certificate.
(b) At the Effective Time, each share of capital
stock of Acquisition issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any
action on the part of Acquisition or the holders of such shares,
be converted into an equivalent share of the Surviving
Corporation's capital stock.
2.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The
Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter
amended in accordance with applicable law.
(b) The By-Laws of Acquisition, as in effect
immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation (except that the name in the heading
thereof shall be changed to "Multi-Arc Inc.") until thereafter
amended in accordance with applicable law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
2.6 DIRECTORS AND OFFICERS. The individuals listed on
Schedule 2.6 shall be the directors of the Surviving Corporation,
and the officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving
Corporation, in each case until their respective successors are
duly elected and qualified.
2.7 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all
properties, rights, privileges, powers and franchises of the
Company and Acquisition shall vest in the Surviving Corporation,
and all debts, liabilities, obligations and duties of the
Company and Acquisition shall become the debts, liabilities,
obligations and duties of the Surviving Corporation.
2.8 DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding
immediately prior to the Effective Time and that are held by a
holder of such Shares who does not vote in favor of the Merger
and who complies with all of the relevant provisions of Section
262 of the DGCL (the "Dissenting Shares") shall not be converted
into the right to receive the Merger Consideration, but instead,
the holder
16
thereof shall be entitled to receive such consideration as shall
be determined pursuant to Section 262 of the DGCL; provided,
however, that if such holder shall have failed to perfect or
shall have effectively withdrawn or lost its rights to dissent
under the DGCL, each of such holder's Shares shall thereupon be
deemed to have been converted into the right to receive, as of
the Effective Time, the Merger Consideration without any interest
thereon in accordance with Section 2.4 and such holder shall
forfeit its dissenter's rights as provided by Section 262 of the
DGCL. The Company shall give Parent notice of all such
Dissenting Shares immediately upon its receipt of notice thereof,
and Parent shall have the right to participate in all
negotiations and proceedings with respect to any demands for
payments by the holder of any Dissenting Shares. The Company
shall not, except with the prior written consent of Acquisition,
voluntarily make or agree to make any payment with respect to, or
settle or offer to settle, any such demands for payment. The
Company Shareholders shall be solely liable for and obligated to
pay any and all amounts paid or payable to any holder of
Dissenting Shares in excess of an amount equal to the Merger
Consideration and shall indemnify and hold harmless each of
Parent and the Surviving Corporation for any such amounts paid by
it and any and all costs and expenses (including attorney's fees
and expenses) ("Dissenting Share Payments") incurred by Parent or
the Surviving Corporation in connection with such negotiations
and proceedings. Any and all Dissenting Share Payments for which
the Company Shareholders may become liable or obligated pursuant
to the preceding sentence shall be made payable solely out of the
Escrow Fund, provided, that if at any time there are no funds
remaining in the Escrow Fund, Andal shall promptly pay by wire
transfer into the Escrow Fund additional funds in an amount
sufficient to satisfy any outstanding Claims, up to a maximum
aggregate amount equal to the aggregate Dissenting Share
Payments, whether or not previously paid (in addition to any
amounts deposited therein pursuant to Section 7.13).
2.9 NOTICES; PAYMENT FOR SHARES. (a) As soon as
practicable upon execution of this Agreement, the Company shall
give notice of the proposed Merger to each registered holder of
Shares in accordance with Section 228(d) and 262(d) of the DGCL.
Simultaneously therewith the Company shall send notice of the
Proposed Merger to each holder of Rights. As soon as practicable
after the later of the Andal Shareholders Meeting and 20 days
after the date of mailing of such notices, the Company shall mail
and/or make available to each registered holder of Shares (other
than those Shares held in the treasury of the Company and
Dissenting Shares) or Rights, a notice and instructions for use
in effecting the surrender of Share Certificates in exchange for
the Merger Consideration, subject to the consummation of the
Merger. Such notice shall specify that delivery shall be
effected, and risk of loss and title to Certificates evidencing
Shares shall pass, only upon proper delivery of the Certificates
to the Company or the Surviving Corporation, as the case may be,
together with a transmittal letter (the "Transmittal Letter")
indicating, among other things, (i) the address to which payment
of Merger Consideration should be delivered, (ii) that execution
of the Transmittal Letter constitutes execution of the Escrow
Agreement and Expense Escrow Agreement and (iii) in the case of
the notice to holders of Rights, the terms and conditions under
which the holder may exercise, convert or exchange, as the case
may be, such Rights for Shares.
(b) The Company shall give notice to Parent at
least three (3) Business Days prior to the Closing Date
specifying the Certificates received by it as of the date of such
notice
17
(the "Delivered Certificates"), including (i) in the case of
Certificates evidencing Shares, the Certificate number,
registered holder and number of Shares represented by each such
Delivered Certificate, and (ii) in the case of Certificates
evidencing Rights, the Certificate number, if any, the registered
holder and the aggregate number of shares of Company Common Stock
issuable pursuant thereto.
(c) At the Closing, upon filing of the Certificate
of Merger, Parent shall
(i) make payment by wire transfer of
immediately available funds to the escrow agent under the Escrow
Agreement of an amount equal to Two Million Nine Hundred and
Twenty Thousand Dollars ($2,920,000) (the "Escrow Amount");
(ii) make payment by wire transfer of
immediately available funds to the escrow agent under the Expense
Escrow Agreement of an amount equal to Seven Hundred Fifty
Thousand Dollars ($750,000) plus any amounts required to be
deposited in the Expense Escrow Fund pursuant to Section 7.13
(the "Expense Escrow Amount"; the Merger Consideration less the
pro rata (based on the number of Shares issued and outstanding as
of the Closing Date, assuming the exercise, conversion or
exchange, as the case may be, of all Rights) portion of the
Escrow Amount and the Expense Escrow Amount being referred to
herein as the "Closing Merger Consideration");
(iii) make payment of an amount equal to the
Closing Merger Consideration payable in respect of the Shares
with respect to which Delivered Certificates have been delivered
at the Closing, such payments to be made to the respective
registered holders of such Delivered Certificates by check,
provided, that, with respect to payment of the Merger
Consolidation in respect of Shares held by Andal, such payment
shall be made as follows:
(A) Nine Hundred Fifty Five Thousand
Dollars ($955,000) shall be paid by wire transfer of immediately
available funds to the escrow agent under the Andal Escrow
Agreement; and
(B) the remaining Merger Consideration
payable in respect of Shares held by Andal shall be paid by wire
transfer of immediately available funds to an account designated
in writing by Andal.
With respect to Certificates received by the Company before the
Closing but after the notice referred to in paragraph (b) above,
and Certificates received by the Surviving Corporation after the
Effective Time, Parent shall make payment to the registered
holder thereof as soon as practicable after receipt of such
Certificates by check in an amount equal to (i) the Closing
Merger Consideration attributable to the number of Shares
represented by such Certificates plus (ii) if the Escrow Amount
shall have been distributed to the Company Shareholders pursuant
to
18
the Escrow Agreement (other than any portion retained for the
benefit of holders of undelivered Certificates) and the Escrow
Agreement has been terminated, that portion of the Escrow Amount
attributable to the number of Shares represented by such
Certificates.
(d) No interest shall be paid or accrued in respect
of payments of the Merger Consideration. If payment is to be
made to a Person other than the Person in whose name the
Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the
Person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a Person other than
the registered holder of the surrendered Certificate or establish
to the satisfaction of the Surviving Corporation that such Tax
has been paid or is not applicable. At and after the Effective
Time, until surrendered in accordance with the provisions of this
Section 2.9, each Certificate (other than Certificates
representing Shares held in the treasury of the Company and
Dissenting Shares) shall represent for all purposes the right to
receive the Merger Consideration in respect of the Shares (or
Shares issuable upon exercise, conversion or exchange, as the
case may be, of Rights) represented by such Certificate, without
any interest thereon, subject to the escrow provisions of this
Article 2. At and after the Effective Time, any holder of Shares
or Rights shall cease to have any rights as a stockholder or
holder of other securities of the Company, except to surrender
its Certificates in exchange for payment of the Merger
Consideration attributable thereto as provided in this Section 2.
(e) Any amounts payable to the Company pursuant to
Section 4(d) of the Expense Escrow Agreement shall be paid to the
Company in accordance with the terms thereof. Any failure to
make such payments shall constitute a breach of this Agreement by
Andal and the other Company Shareholders.
3. REPRESENTATIONS AND WARRANTIES OF ANDAL AND THE COMPANY.
Andal and the Company, jointly and severally, represent
and warrant to Parent and Acquisition as follows (it being agreed
that Andal shall have no liability for any breach of its
representations and warranties contained in this Article 3 other
than as a Company Shareholder pursuant to and in accordance with
Article 10):
3.1 ORGANIZATION AND GOOD STANDING. (a) Part 3.1 of
the Disclosure Letter contains a complete and accurate list for
each Acquired Company of its name, its jurisdiction of
incorporation, other jurisdictions in which it is authorized to
do business, and its capitalization (including the identity of
each stockholder and the number of shares held by each). Each
Non-Joint Venture Acquired Company is a corporation duly
organized, validly existing, and in good standing under the laws
of its jurisdiction of incorporation, with full corporate power
and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under
Applicable Contracts. Each Non-Joint Venture Acquired Company is
duly qualified to do business as a foreign corporation and is in
good standing under the laws of each other jurisdiction in which
either the ownership or use of the properties owned or used by
it, or the nature of the activities
19
conducted by it, requires such qualification, except in such
jurisdictions where the failure to be so qualified would not have
a Material Adverse Effect.
(b) The Company has delivered to Acquisition copies
of the Organizational Documents of each Acquired Company, as
currently in effect.
3.2 AUTHORITY; NO CONFLICT. (a) This Agreement
constitutes the legal, valid, and binding obligation of each of
Andal and the Company, enforceable against it in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency and other similar laws affecting creditors' rights
generally or general equitable principles. Upon the execution
and delivery by Andal and the Company of the Closing Agreements
to which it is a party, such Closing Agreements will constitute
the legal, valid, and binding obligations of Andal and/or the
Company, as the case may be, enforceable against it in accordance
with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency and other similar laws
affecting creditors' rights generally or general equitable
principles. Each of Andal and the Company have the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Closing Agreements to which it is
a party and to perform its obligations hereunder and thereunder.
(b) Except as set forth in Part 3.2 of the
Disclosure Letter, neither the execution and delivery of this
Agreement or any Closing Document by Andal or the Company, nor
the consummation or performance of any of the Contemplated
Transactions by Andal or the Company will, directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of
Andal or the Acquired Companies, or (B) any resolution adopted by
the board of directors or the Andal Shareholders or any Acquired
Company;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the
right to challenge successfully any of the Contemplated
Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which Andal or any
Acquired Company, or any of the assets owned or used by any
Acquired Company, may be subject;
(iii) contravene, conflict with, or result in
a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate, or modify, any Governmental Authorization that is held
by Andal or any Acquired Company or that otherwise relates to the
business of, or any of the assets owned or used by, any Acquired
Company, except for any of the foregoing the occurrence of which
would not have a Material Adverse Effect;
20
(iv) cause any Acquired Company to become
subject to, or to become liable for the payment of, any Tax,
except for any Tax arising as a result of the Section 338(h)(10)
Election, to the extent made in accordance with Section 11.6;
(v) cause any of the assets owned by any
Acquired Company to be reassessed or revalued by any taxing
authority or other Governmental Body, except for any reassessment
or revaluation arising as a result of the Section 338(h)(10)
Election, to the extent made in accordance with Section 11.6;
(vi) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract, except for any of
the foregoing the occurrence of which would not have a Material
Adverse Effect; or
(vii) result in the imposition or creation of
any Encumbrance upon or with respect to any of the assets owned
or used by any Acquired Company.
Except as set forth in Part 3.2 of the Disclosure
Letter, neither Andal nor any Acquired Company is or will be
required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the
Contemplated Transactions, other than (i) compliance with any
applicable requirement of the HSR Act; (ii) the giving of notice
pursuant to Section 228(d) of the DGCL to any Company Shareholder
who has not consented to the execution, delivery and performance
of this Agreement and consummation of the Contemplated
Transactions by the Company, (iii) the filing with the SEC of a
proxy statement in definitive form relating to a meeting of Andal
Shareholders (the "Andal Shareholders Meeting") to approve the
sale of the Company pursuant to the Merger (such proxy statement
as amended or supplemented from time to time being hereinafter
referred to as the "Proxy Statement"), and the approval thereof
by the holders of a majority of the outstanding shares of Andal
Common Stock, (iv) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware, (v) compliance
with any other applicable requirements of the Federal or state
securities laws and (vi) such other notices, filings or Consents,
the absence of which would not materially impair the performance
of the Contemplated Transactions. Each Principal Andal
Shareholder has delivered to Parent and Acquisition the Principal
Andal Shareholders' Agreement, duly executed by it. The
Principal Andal Shareholders' Agreement is the legal, valid and
binding obligation of each Principal Andal Shareholder,
enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency and other
similar laws affecting creditors' rights generally or general
equitable principles. Pursuant to the Principal Shareholders'
Agreement, Andal Shareholders holding a majority of the issued
and outstanding shares of Andal Common Stock have agreed to vote
in favor of the sale of the Company pursuant to the Merger at the
Andal Shareholders Meeting.
21
3.3 CAPITALIZATION. The authorized equity securities of
Andal consist of 1,500,000 shares of Andal Common Stock, of which
447,359 shares are issued and outstanding. No shares of Andal
Common Stock are held in the treasury of Andal. The authorized
equity securities of the Company consist of 100,000 shares of
Company Common Stock, of which 100,000 shares (the "Shares") are
issued and outstanding. No shares of Company Common Stock are
held in the treasury of the Company. The Persons set forth in
Part 3.1 of the Disclosure Letter are and will be on the Closing
Date the record and beneficial owners and holders of all Shares
and Rights, free and clear of all Encumbrances, except as set
forth on Part 3.3 of the Disclosure Letter. With the exception
of the Shares, all of the outstanding equity securities and other
securities of each Non-Joint Venture Acquired Company are owned
of record and beneficially by one or more of the Acquired
Companies, free and clear of all Encumbrances. No legend or
other reference to any purported Encumbrance appears upon any
certificate representing equity securities of any Acquired
Company, except as set forth on Part 3.3 of the Disclosure
Letter. All of the outstanding equity securities of each
Acquired Company have been duly authorized and validly issued and
are fully paid and nonassessable. There are no Contracts
relating to the issuance, sale, or transfer of any equity
securities or other securities of any Acquired Company, except as
set forth on Part 3.3 of the Disclosure Letter. None of the
outstanding equity securities or any other securities of any
Acquired Company was issued in violation of the Securities Act or
any other Legal Requirement. Except as set forth in Part 3.3 of
the Disclosure Letter, no Acquired Company owns, or has any
Contract to acquire, any equity securities or other securities of
any Person (other than Acquired Companies) or any direct or
indirect equity or ownership interest in any other business.
Andal owns of record and beneficially all of the Shares set forth
in Part 3.1 of the Disclosure Letter identified as being owned by
it, free and clear of all Encumbrances, except as set forth in
Part 3.3 of the Disclosure Letter, and has the unrestricted right
to vote such Shares.
3.4 FINANCIAL STATEMENTS. Andal and the Company have
delivered to Acquisition: (i) a consolidated balance sheet of
the Company and its Subsidiaries as at September 30 in each of
the years 1994 through 1996 (such balance sheet as at September
30, 1996, the "Balance Sheet"), and the related consolidated
statements of income, changes in stockholders' equity, and cash
flow for the fiscal years then ended, including in each case the
notes thereto, together with the report thereon of Ernst & Young,
LLP, independent certified public accountants, (ii) an unaudited
consolidated balance sheet of the Company and its Subsidiaries as
at December 31, 1996, and (iii) an unaudited consolidated balance
sheet of the Company and its Subsidiaries as at March 31, 1997
(the "Interim Balance Sheet") and the related unaudited
consolidated statements of income, changes in stockholders'
equity, and cash flow for the three months then ended, including
in each case the notes thereto. Such financial statements and
notes fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the
Company and its Subsidiaries as at the respective dates of and
for the periods referred to in such financial statements, all in
accordance with GAAP; the financial statements referred to in
this Section 3.4 reflect the consistent application of such
accounting principles throughout the periods involved. No
financial statements of any Person other than the Acquired
Companies are required by GAAP to be included in the consolidated
financial statements of the Company.
22
3.5 BOOKS AND RECORDS. The books of account, minute
books, stock record books, and other records of the Acquired
Companies (and, with respect to the Multi-Arc Division, Andal),
all of which have been made available to Acquisition, are
complete and correct in all material respects and have been
maintained in accordance with sound business practices. The
minute books of the Acquired Companies (and, with respect to the
Multi-Arc Division, Andal) contain accurate and complete records
of all meetings held of, and corporate action taken by, the
stockholders, the Boards of Directors, and committees of the
Boards of Directors, of the Acquired Companies (and, with respect
to the Multi-Arc Division, Andal) since January 1, 1992, and no
meeting of any such stockholders, Board of Directors, or
committee has been held since January 1, 1992, for which minutes
have not been prepared and are not contained in such minute
books. At the Closing, all of the Acquired Companies' books and
records will be in the possession of the Acquired Companies.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. (a) Part 3.6 of
the Disclosure Letter contains a complete and accurate list of
all real property owned by the Non-Joint Venture Acquired
Companies and all leases, subleases, licenses and other
agreements under which any Non-Joint Venture Acquired Company has
the right to use or occupy, now or in the future, any real
property. The Company has delivered or made available to
Acquisition copies of the deeds and other instruments (as
recorded) by which the Non-Joint Venture Acquired Companies
acquired such real property and interests, and copies of all
title insurance policies and surveys in the possession of Andal
or the Acquired Companies and relating to such property or
interests. The Acquired Companies own (with good and marketable
title in the case of real property, subject only to the matters
permitted by the following sentence) all the properties and
assets (whether real, personal, or mixed and whether tangible or
intangible) that they purport to own, including, in the case of
the Non-Joint Venture Acquired Companies, all of the properties
and assets reflected in the Balance Sheet and the Interim Balance
Sheet (except for assets held under capitalized leases disclosed
or not required to be disclosed in Part 3.6 of the Disclosure
Letter and personal property sold since the date of the Balance
Sheet or the Interim Balance Sheet, as the case may be, in the
Ordinary Course of Business), and all of the properties and
assets purchased or otherwise acquired by the Non-Joint Venture
Acquired Companies since the date of the Balance Sheet (except
for personal property acquired and sold since the date of the
Balance Sheet in the Ordinary Course of Business and consistent
with past practice), which subsequently purchased or acquired
properties and assets (other than inventory and short-term
investments) are listed in Part 3.6 of the Disclosure Letter.
All material personal property and real property owned by the
Non-Joint Venture Acquired Companies are free and clear of all
Encumbrances, except as set forth in Part 3.6 of the Disclosure
Letter, and except (i) with respect to all such properties and
assets, (a) mortgages or security interests shown on the Balance
Sheet or the Interim Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or
event that, with notice or lapse of time or both, would
constitute a default) exists, (b) mortgages or security interests
incurred in connection with the purchase of property or assets
after the date of the Interim Balance Sheet (such mortgages and
security interests being limited to the property or assets so
acquired), with respect to which no default (or event that, with
notice or lapse of time or both, would constitute a default)
exists, (c) liens for current taxes not yet due, (d) statutory or
common law liens to secure landlords, lessors or renters under
leases or rental
23
agreements confined to the premises rented, and (e) deposits or
pledges made in connection with, or to secure payment of,
workers' compensation, unemployment insurance, old age pension
programs mandated under applicable legal requirements or other
social security, and (ii) with respect to real property, (a)
encumbrances of a minor nature that do not, individually or in
the aggregate, (x) interfere in any material respect with, or
materially increase the cost of, the use, occupancy or operation
of the applicable parcel of owned or leased property as currently
used, occupied and operated or (y) materially reduce the fair
market value of the applicable parcel of owned or leased property
below the fair market value such parcel would have but for such
encumbrances, and (b) zoning laws and other land use
restrictions, not violated by existing improvements on or the
current use of the real property or any portion thereof, that do
not materially impair the present use of the property subject
thereto. There are no encroachments or other facts or conditions
affecting any parcel of real property owned or leased by any Non-
Joint Venture Acquired Company that would be revealed by an
accurate survey or physical inspection thereof which would (i)
interfere in any material respect with, or materially increase
the cost of, the use, occupancy or operation thereof as currently
used, occupied and operated or (ii) materially reduce the fair
market value thereof below the fair market values such parcel
would have had but for such encroachment or other fact or
condition. No portion of any improvements on the owned or leased
property by any Non-Joint Venture Acquired Company encroaches
upon the property, or otherwise conflicts with the property
rights of any other Person.
(b) None of the properties set forth in Part 3.6 of
the Disclosure Letter is in violation in any material respect of
any applicable building, zoning, health or other law, ordinance
or regulation in respect of its buildings or other structures or
its operation. There are no pending or, to the Knowledge of
Andal and the Acquired Companies, Threatened lawsuits or
administrative actions relating to such properties or other
matters which would have a material adverse effect upon the use,
occupancy or value thereof. All such properties have received
all material Governmental Authorizations required in connection
with the ownership or operation thereof. Each such property and
the operation thereof conforms to the requirements of all
restrictive covenants or other Encumbrances affecting all or any
material part of such property.
(c) None of Andal or the Non-Joint Venture Acquired
Companies has received notice or has Knowledge that either the
whole or any portion of any property set forth in Part 3.6 of the
Disclosure Letter is subject to any Order to be sold or is being
condemned, expropriated or otherwise taken by any Governmental
Body or other Person with or without payment or compensation
therefor, nor, to the Knowledge of Andal and the Acquired
Companies, has any such condemnation, expropriation or taking
been proposed.
(d) None of the property set forth in Part 3.6 of
the Disclosure Letter is located within a special flood hazard
zone or in any conservation or historic district. To the
Knowledge of Andal and the Acquired Companies, none of such
property has been designated as a landmark.
(e) All utilities necessary for the operation of
the businesses at the properties set forth in Part 3.6 of the
Disclosure Letter (including, without limitation, electricity,
gas,
24
telephone, water and sanitary sewers) have been connected to and
are currently serving all buildings or the real property.
(f) To the Knowledge of Andal and the Acquired
Companies, there are no outstanding options or rights of first
refusal to purchase any of the properties, or any portion thereof
or interest therein.
(g) Each of the leasehold interests listed on Part
3.6 of the Disclosure Letter (the "Leases") is in full force and
effect in accordance with its terms and has not been modified
except as set forth on Part 3.6 of the Disclosure Letter. The
Company has delivered to Parent and Acquisition a true and
complete copy of each Lease. No default under any Lease has been
asserted by any party thereto against the other, and there is no
default or event which alone or with notice or lapse of time, or
both, would constitute a default thereunder by any Non-Joint
Venture Acquired Company, or to the Knowledge of Andal and the
Acquired Companies, any other party thereto.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. The coating
equipment (including both "PVD" and "CVD" equipment), cleaning
lines and quality control, blasting and vacuum heat treatment
equipment, and all other material buildings, plants, structures,
and equipment (including, without limitation, the electrical,
mechanical, plumbing, elevator, heating, ventilating, air
conditioning and fire safety systems) owned, leased or used by
the Non-Joint Venture Acquired Companies (and, to the Knowledge
of the Company and the Acquired Companies, the Joint Venture
Companies) are structurally sound, are in good operating
condition and repair (except as set forth in Part 3.7 of the
Disclosure Letter), and are adequate for the uses to which they
are being put, and none of such material buildings, plants,
structures, or equipment is in need of maintenance or repairs, in
both cases, except for ordinary, routine maintenance and repairs
that are not material in nature or cost. The Non-Joint Venture
Acquired Companies (and, to the Knowledge of the Company and the
Acquired Companies, the Joint Venture Companies) own or have the
legal right to use (and at the Closing will own or have the legal
right to use) all assets, properties and rights necessary for the
continued conduct of their respective businesses immediately
after the Closing in substantially the same manner as conducted
prior to the Closing.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of the
Non-Joint Venture Acquired Companies that are reflected on the
Balance Sheet or the Interim Balance Sheet or on the accounting
records of the Acquired Companies (collectively, the "Accounts
Receivable") represent or will represent valid obligations
arising from sales actually made or services actually performed
in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the
Closing Date current and collectible net of the respective
reserves shown on the Balance Sheet or the Interim Balance Sheet
or on the accounting records of the Acquired Companies as of the
Closing Date (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserves as
of the Closing Date, will not represent a greater percentage of
the Accounts Receivable as of the Closing Date than the reserves
reflected in the Interim Balance Sheet or on the accounting
records of the Acquired Companies represented of the Accounts
Receivable reflected therein and
25
will not represent a material adverse change in the composition
of such Accounts Receivable in terms of aging). Subject to such
reserves, 95% of the accounts receivable of the Company
outstanding on the Closing Date will be collected in full,
without any set-off, within 90 days (120 days with regard to the
remaining 5%) after the respective days on which such receivables
first become due and payable, provided that each of the accounts
receivable of the Company outstanding on the Closing Date in
respect of sales of coating equipment will be collected, in full,
without any set-off, within 180 days after the day on which it
first becomes due and payable. There is no contest, claim, or
right of set-off under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such
Accounts Receivable, other than (i) returns in the Ordinary
Course of Business and (ii) such contests, claims or rights of
set-off which in the aggregate will not exceed the respective
reserves for Accounts Receivable shown on the Balance Sheet or
the Interim Balance Sheet or on the accounting records of the
Acquired Companies. Part 3.8 of the Disclosure Letter contains
complete and accurate list of all Accounts Receivable as of
December 31, 1996 and as of the date of the Interim Balance
Sheet, which list sets forth the aging of such Accounts
Receivable. Within three (3) Business Days after the end of the
calendar month in which the Closing occurs, the Company shall
deliver to Parent a complete and accurate list of all accounts
receivable of the Non-Joint Venture Acquired Companies as of the
Closing Date.
3.9 NO UNDISCLOSED LIABILITIES. Except as set forth in
Part 3.9 of the Disclosure Letter, the Non-Joint Venture Acquired
Companies (and, to the Knowledge of the Company and the Acquired
Companies, the Joint Venture Companies) have no liabilities or
obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except for
liabilities or obligations (i) reflected or reserved against in
the Balance Sheet or the Interim Balance Sheet, (ii) current
liabilities incurred in the Ordinary Course of Business since the
respective dates thereof and (iii) of the type which are covered
by any of the other representations and warranties contained
herein, which representations and warranties are not violated
thereby.
3.10 TAXES. (a) The Non-Joint Venture Acquired
Companies (and, with respect to the Multi-Arc Division and any
Tax Returns that include any of the Acquired Companies, Andal)
have filed or caused to be filed on a timely basis all federal
and other material Tax Returns (including with respect to all
Taxes required by Legal Requirements to be withheld or collected)
that are or were required to be filed by or with respect to any
of them, either separately or as a member of a group of
corporations, pursuant to applicable Legal Requirements. Andal
and the Company have delivered to Parent and Acquisition copies
of, and Part 3.10 of the Disclosure Letter contains a complete
and accurate list of, all such Tax Returns filed with respect to
all years ending on or after September 30, 1991. The Non-Joint
Venture Acquired Companies (and, with respect to the Multi-Arc
Division and any Tax Returns that include any of the Acquired
26
Companies, Andal) have paid, or made provision for the payment
of, all Taxes (including all Taxes required by Legal Requirements
to be withheld or collected) that are shown as due on such Tax
Returns (including any payments made pursuant to any Tax Sharing
Agreement), or pursuant to any assessment received by any Non-
Joint Venture Acquired Company (and, with respect to the Multi-
Arc Division and any Tax Returns that include any of the Acquired
Companies, Andal) with respect to such returns, except such
Taxes, if any, as are listed in Part 3.10 of the Disclosure
Letter and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been
provided in the Balance Sheet and the Interim Balance Sheet.
(b) All federal and other material income Tax
Returns of each Non-Joint Venture Acquired Company (and, with
respect to the Multi-Arc Division and any Tax Returns that
include any of the Acquired Companies, Andal) have been audited
by the relevant Taxing Authority limitations for all taxable
years since 1981 and through 1992. Part 3.10 of the Disclosure
Letter contains a complete and accurate list of all audits of all
such Tax Returns. All deficiencies proposed as a result of such
audits have been paid, reserved against, settled, or, as
described in Part 3.10 of the Disclosure Letter, are being
contested in good faith by appropriate proceedings. Except as
described in Part 3.10 of the Disclosure Letter, neither Andal
(in respect of any Tax Return relating to the Multi-Arc Division
or that includes any of the Acquired Companies) nor any Non-Joint
Venture Acquired Company (or any member of any affiliated,
consolidated, combined or unitary group of which Andal (in
respect of any Tax Return relating to the Multi-Arc Division or
that includes any of the Acquired Companies) or any Non-Joint
Venture Acquired Company has been a member) has given waivers or
extensions of any statute of limitations relating to the payment
of Taxes of any Non-Joint Venture Acquired Company or for which
any Non-Joint Venture Acquired Company may be liable, which
period (after giving effect to such waiver or extension) has not
yet expired. There are no requests for rulings or determinations
in respect of any Tax or Tax Asset pending between Andal (in
respect of any Tax Return relating to the Multi-Arc Division or
that includes any of the Acquired Companies) or any Non-Joint
Venture Acquired Company and any Taxing Authority.
(c) There is no tax sharing agreement that will
require any payment by any Non-Joint Venture Acquired Company
after December 31, 1996. No Acquired Company is, or within the
five-year period preceding the Closing Date has been, an "S"
corporation. None of the property owned or used by a Non-Joint
Venture Acquired Company is subject to a tax benefit transfer
lease executed in accordance with Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended. None of Andal or any
Non-Joint Venture Acquired Company nor any other Person on behalf
of any Non-Joint Venture Acquired Company has entered into nor
will it enter into any agreement or consent pursuant to Section
341(f) of the IRC. Except as described in Section 11.7, there
are no liens for Taxes upon the assets of any Non-Joint Venture
Acquired Company except liens for current Taxes not yet due.
Except as disclosed in Part 3.10 of the Disclosure Letter, no
Non-Joint Venture Acquired Company will be required to include
any adjustment in taxable income for any Post-Closing Tax Period
under Section 481(c) of the IRC (or any similar provision of the
Tax laws of any jurisdiction) as a result of a change in method
of accounting for a Pre-Closing Tax Period or pursuant to the
provisions of any agreement entered into with any Taxing
Authority with regard to the Tax liability of any Non-Joint
Venture Acquired Company for any Pre-Closing Tax Period. No Non-
Joint Venture Acquired Company is currently under any contractual
obligation to pay any amounts of the type described in clause
(ii) or (iii) of the definition of "Tax".
27
(d) Between the date of this Agreement and the
Closing Date, no Non-Joint Venture Acquired Company or, with
respect to the Acquired Companies, Andal, shall without the
consent of Parent, which consent shall not be unreasonably
withheld, make or change any tax election, change any annual tax
accounting period, adopt or change any method of tax accounting,
file any amended Tax Return, enter into any closing agreement,
settle any Tax claim or assessment, surrender any right to claim
a Tax refund, consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment or
take or omit to take any other action, to the extent that any
such action or omission is inconsistent with its past practices,
except as required by applicable law.
(e) All federal and other material Tax Returns
required to be filed by any Non-Joint Venture Acquired Company
or, with respect to the Acquired Companies, Andal, on or before
the Closing Date will be filed on or before the Closing Date and
be filed when due in accordance with all Legal Requirements (with
respect to timeliness of filing (including extensions) and other
such procedural requirements). As of the time of filing, all
Taxes shown as due on such Tax Returns will be paid.
(f) To the Knowledge of Andal and the Acquired
Companies, no Joint Venture Company is in default in the payment
of Taxes to any Governmental Body.
3.11 NO MATERIAL ADVERSE CHANGE. Since the date of the
Balance Sheet, there has not been any material adverse change in
the business, operations, properties, prospects, assets, or
condition of any Acquired Company, and, to the Knowledge of Andal
and the Acquired Companies, no event has occurred or circumstance
exists that is reasonably likely to result in such a material
adverse change.
3.12 EMPLOYEE BENEFITS. (a) Except as set forth in
Part 3.12(a) of the Disclosure Letter, no Acquired Company or
ERISA Affiliate thereof (i) maintains or contributes to or has
any obligation with respect to, and none of the employees of any
Acquired Company are covered by, any material bonus, deferred
compensation, severance pay, pension, profit-sharing, retirement,
insurance, stock purchase, stock option, or other fringe benefit
plan, arrangement or practice, written or otherwise, or any other
material "employee benefit plan," as defined in Section 3(3) of
ERISA, whether formal or informal (collectively, "Plans"), or
(ii) is a party to any contract for the employment of any
employee of any Acquired Company or any ERISA Affiliate or any
other Person who renders services to any Acquired Company or any
ERISA Affiliate. None of the Plans is subject to Title IV of
ERISA or a funded welfare benefit plan, as defined in Section 419
of the IRC. Except as set forth in Part 3.12(a) of the
Disclosure Letter, no Acquired Company or ERISA Affiliate has any
agreement or commitment to create any additional Plan, enter into
any employment agreement or to amend, modify or change any
existing Plan or employment agreement in any material respect,
except as may be required by the IRC.
(b) With respect to each Plan, Andal and the
Company have heretofore delivered or caused to be delivered or
made available to Parent and Acquisition true, correct and
complete copies of (i) all documents which comprise the most
current version of each of such
28
Plan, including any related trust agreements, insurance
contracts, or other funding or investment agreements and any
written amendments thereto, and (ii) with respect to each Plan
that is an "employee benefit plan," as defined in Section 3(3) of
ERISA, (A) the most recent Annual Report (Form 5500 Series) and
accompanying schedules for each of the Plans for which such a
report is required, (B) the most current summary plan description
(and any current summary of material modifications), (C) the most
recent certified financial statements for each of the Plans for
which such a statement is required or was prepared, (D) Form
PBGC-1 filed in the most recent plan year for each of the Plans
for which such form was required to be filed, and (E) for each
Plan intended to be "qualified" within the meaning of Section
401(a) of the IRC, the most recent IRS determination letter
issued with respect to such Plan. Since the date of the docu-
ments delivered, there has not been any material change in the
assets or liabilities of any of the Plans or any change in their
terms and operations which could reasonably be expected to affect
or alter the tax status or materially affect the cost of main-
taining such Plan (other than any changes required by law). Each
of the Plans subject to Section 401(a) of the IRC can be amended,
modified or terminated by any Acquired Company or ERISA Affiliate
within a period of thirty (30) days.
(c) Each Acquired Company and ERISA Affiliate has
performed and complied in all material respects with all of its
obligations under and with respect to the Plans and each of the
Plans has, at all times, in form, operation and administration
complied in all material respects with its terms, and, where
applicable, the requirements of the IRC, ERISA and all other
applicable laws. Each Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the IRC has been
determined by the IRS to be so qualified and, to the Knowledge of
Andal and the Acquired Companies, nothing has occurred which
reasonably could be expected to adversely affect such qualified
status.
(d) There are no unpaid contributions due prior to
the date hereof with respect to any Plan that are required to
have been made under the terms of the Plan or any applicable law.
With respect to each plan subject to Section 412 of the IRC
maintained for employees of the Acquired Companies or any ERISA
Affiliate, there has occurred no failure to meet the minimum
funding standards of Section 412 of the IRC (whether or not
waived in accordance with Section 412(d) of the IRC) or failure
to make by its due date a required installment under Section
412(m) of the IRC.
(e) None of the Acquired Companies has any
obligation to provide health benefits or other non-pension
benefits to retired or other former employees, except as
specifically required by Section 4980B of the IRC or Part 6 of
Title I of ERISA (or similar state law) or as set forth in Part
3.12(e) of the Disclosure Letter, and the Acquired Companies have
complied with the requirements of IRC Section 4980B and such Part
6. None of the Acquired Companies will have any liability under
any item listed in Part 3.12(e).
(f) Neither the Acquired Companies nor any other
"disqualified person" or "party in interest," as defined in Sec-
tion 4975 of the IRC and Section 3(14) of ERISA, respectively,
has engaged in any "prohibited transaction," as defined in Sec-
tion 4975 of the IRC or Sec-
29
tion 406 of ERISA, with respect to any Plan nor have there been
any fiduciary violations under ERISA which could subject any
Acquired Company or any ERISA Affiliate (or any officer, director
or employee thereof) to any material penalty or tax under Section
502(i) of ERISA or Sections 4971 or 4975 of the IRC.
(g) Except as set forth in Part 3.12(g) of the
Disclosure Letter, with respect to any Plan: (i) no filing,
application or other matter is pending with the IRS, the PBGC,
the United States Department of Labor or any other governmental
body, (ii) there is no material action, suit or similar type of
claim pending (nor, to the Knowledge of Andal and the Acquired
Companies, any basis for such a claim), other than routine claims
for benefits, and (iii) there are no material outstanding
liabilities for taxes, penalties or fees.
(h) Except as set forth in Part 3.12(h) of the
Disclosure Letter, neither the execution and delivery of this
Agreement nor the consummation of any or all of the Contemplated
Transactions will: (i) entitle any current or former employee of
the Acquired Companies or any ERISA Affiliate to severance pay,
unemployment compensation or any similar payment, (ii) accelerate
the time of payment or vesting or increase the amount of any
compensation due to any such employee or former employee, (iii)
directly or indirectly result in any payment made or to be made
to or on behalf of any person to constitute a "parachute payment"
within the meaning of Section 280G of the IRC or (iv) entitle any
current or former employee to any other payment or compensation
of any kind (other than payment of the Merger Consideration in
respect of Company Common Stock held by such employee).
(i) No Plan has been established or amended since
September 30, 1996.
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. (a) Except as set forth in Part 3.13(a) of the
Disclosure Letter (and except as to the Joint Venture Companies
as to which all of the representations in this Section 3.13(a)
are given to the Knowledge of Andal and the Acquired Companies):
(i) each Acquired Company (and, with respect
to the Multi-Arc Division, Andal) is, and at all times since
January 1, 1992 has been, in compliance in all material respects
with each Legal Requirement that is or was applicable to it or to
the conduct or operation of its business or the ownership or use
of any of its assets;
(ii) no event has occurred or circumstance
exists that (with or without notice or lapse of time) (A) is
reasonably likely to constitute or result in a violation by any
Acquired Company (or, with respect to the Multi-Arc Division,
Andal) of, or a failure on the part of any Acquired Company (or,
with respect to the Multi-Arc Division, Andal) to comply with,
any Legal Requirement, or (B) is reasonably likely to give rise
to any obligation on the part of any Acquired Company (or, with
respect to the Multi-Arc Division, Andal) to undertake, or to
bear all or any portion of the cost of, any remedial action of
any nature; and
30
(iii) to the Knowledge of Andal and the
Acquired Companies, no Acquired Company (or, with respect to the
Multi-Arc Division, Andal) has received, at any time since
January 1, 1992, any notice or other communication (whether oral
or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal Requirement,
or (B) any actual, alleged, possible, or potential obligation on
the part of any Acquired Company (or, with respect to the Multi-
Arc Division, Andal) to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature.
(b) Part 3.13(b) of the Disclosure Letter contains
a complete and accurate list of each material Governmental
Authorization that is held by any Non-Joint Venture Acquired
Company (or, with respect to the Multi-Arc Division, Andal) or
that otherwise relates to the business of, or to any of the
assets owned or used by, any Non-Joint Venture Acquired Company
(or, with respect to the Multi-Arc Division, Andal). Each
Governmental Authorization listed or required to be listed in
Part 3.13 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.13 of the Disclosure
Letter:
(i) each Non-Joint Venture Acquired Company
(and, with respect to the Multi-Arc Division, Andal) is, and at
all times since January 1, 1992 has been, in full compliance with
all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Part
3.13 of the Disclosure Letter;
(ii) no event has occurred or circumstance
exists that is reasonably likely to (with or without notice or
lapse of time) (A) constitute or result in a violation of or a
failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in
Part 3.13 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in
Part 3.13 of the Disclosure Letter;
(iii) no Non-Joint Venture Acquired Company
(or, with respect to the Multi-Arc Division, Andal) has received,
at any time since January 1, 1992, any notice or other
communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of or failure to comply with any
term or requirement of any material Governmental Authorization,
or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or
modification to any material Governmental Authorization; and
(iv) all applications required to have been
filed for the renewal of the Governmental Authorizations listed
or required to be listed in Part 3.13 of the Disclosure Letter
have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been
made with respect to such Governmental
31
Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.13 of the
Disclosure Letter collectively constitute all of the material
Governmental Authorizations necessary to permit the Non-Joint
Venture Acquired Companies to lawfully conduct and operate their
business in the manner they currently conduct and operate such
business and to permit the Non-Joint Venture Acquired Companies
to own and use their assets in the manner in which they currently
own and use such assets.
(c) To the Knowledge of Andal and the Acquired
Companies, (i) the Joint Venture Companies have all material
Governmental Authorizations necessary to permit the Joint Venture
Companies to lawfully conduct and operate their respective
businesses in the manner they currently conduct and operate such
businesses and to permit the Joint Venture Companies to own and
use their assets in the manner in which they currently own and
use such assets, (ii) all such Governmental Authorizations are in
full force and effect, and (iii) each Joint Venture Company is,
and at all times since January 1, 1992 has been, in full
compliance with all of the terms and requirements of such
Governmental Authorizations.
Notwithstanding the foregoing, neither Andal nor any
Acquired Company makes any representation or warranty in this
Section 3.13 with respect to Taxes.
3.14 LEGAL PROCEEDINGS; ORDERS. (a) Except as set
forth in Part 3.14 of the Disclosure Letter, there is no pending
Proceeding, and, to the Knowledge of the Company and the Acquired
Companies, no investigation:
(i) that has been commenced by or against any
Acquired Company (or, with respect to the Multi-Arc Division,
Andal) or that otherwise relates to or may affect the business
of, or any of the assets owned or used by, any Acquired Company
(or, with respect to the Multi-Arc Division, Andal); or
(ii) that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions.
To the Knowledge of Andal and the Acquired Companies, no such
Proceeding or investigation has been Threatened. The Company has
delivered to Acquisition copies of all pleadings, correspondence,
and other documents relating to each Proceeding and investigation
listed in Part 3.14 of the Disclosure Letter. The Proceedings and
investigations listed in Part 3.14 of the Disclosure Letter will
not have a material adverse effect on the business, operations,
assets, condition, or prospects of any Acquired Company.
(b) Except as set forth in Part 3.14 of the
Disclosure Letter:
32
(i) there is no Order to which any of the
Acquired Companies, or any of the assets owned or used by any
Acquired Company, is subject;
(ii) Andal is not subject to any Order that
relates to the business of, or any of the assets owned or used
by, any Acquired Company; and
(iii) to the Knowledge of Andal and the
Acquired Companies, no officer, director, agent, or employee of
any Acquired Company is subject to any Order that prohibits such
officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the
business of any Acquired Company.
(c) Except as set forth in Part 3.14 of the
Disclosure Letter:
(i) each Acquired Company (and, with respect
to the Multi-Arc Division, Andal) is, and at all times since
January 1, 1992 has been, in full compliance with all of the
terms and requirements of each Order to which it, or any of the
assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance
exists that may constitute or result in (with or without notice
or lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which any Acquired Company
(or, with respect to the Multi-Arc Division, Andal), or any of
the assets owned or used by any Acquired Company, is subject; and
(iii) neither Andal or any Acquired Company
has received, at any time since January 1, 1992, any notice or
other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual,
alleged, possible, or potential violation of, or failure to
comply with, any term or requirement of any Order to which any
Acquired Company (or, with respect to the Multi-Arc Division,
Andal), or any of the assets owned or used by any Acquired
Company (or, with respect to the Multi-Arc Division, Andal), is
or has been subject.
Notwithstanding the foregoing, neither Andal nor any
Acquired Company makes any representation or warranty in this
Section 3.14 with respect to Taxes.
3.15 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
set forth in Part 3.15 of the Disclosure Letter (and except as to
the Joint Venture Companies, as to which all of the
representations in this Section 3.15 are given to the Knowledge
of Andal and the Acquired Companies), since the date of the
Balance Sheet, the Acquired Companies have conducted their
business only in the Ordinary Course of Business and there has
not been any:
(a) change in any Acquired Company's authorized or
issued capital stock; grant of any stock option or right to
purchase shares of capital stock of any Acquired Company;
issuance of any security convertible into such capital stock;
grant of any registration rights;
33
purchase, redemption, retirement, or other acquisition by any
Acquired Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of
any Acquired Company;
(c) (i) increase or, except in the Ordinary Course
of Business, payment by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director,
officer or employee or (ii) entry into any employment, severance,
or similar Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or
benefits under, any profit sharing, bonus, deferred compensation,
savings, insurance, pension, retirement, or other employee
benefit plan for or with any employees of any Acquired Company;
(e) damage to or destruction or loss of any asset
or property of any Acquired Company, whether or not covered by
insurance, materially and adversely affecting the properties,
assets, business, financial condition, or prospects of the
Acquired Companies, taken as a whole;
(f) entry into, termination of, or receipt of
notice of termination of (i) any license, distributorship,
dealer, sales representative, joint venture, credit, or similar
agreement, or (ii) any Contract or transaction (other than
customer orders) involving a total remaining commitment by or to
any Acquired Company of at least $100,000;
(g) other than in the Ordinary Course of Business,
sale, lease, or other disposition of any asset or property of any
Acquired Company or mortgage, pledge, or imposition of any lien
or other encumbrance on any material asset or property of any
Acquired Company, including the sale, lease, or other disposition
of any of the Intellectual Property Assets;
(h) purchase or other acquisition of any assets or
property by any Acquired Company for a purchase price in excess
of $100,000;
(i) cancellation or waiver of any claims or rights
with a value to any Acquired Company or forgiveness of any debt
of another party due to any Acquired Company in excess of $25,000
individually, or $100,000 in the aggregate;
(j) material change in the accounting methods used
by any Acquired Company;
(k) any transaction between any Acquired Company
and Andal or any other Affiliate of the Company which is not an
Acquired Company;
34
(l) any incurrence of indebtedness or borrowing of
funds, by any Acquired Company from any third party in excess of
$100,000 individually, or $250,000 in the aggregate;
(m) any payment, discharge or satisfaction of any
material claim, liability or obligation (fixed or contingent) by
any Acquired Company, other than in the Ordinary Course of
Business; or
(n) agreement, whether oral or written, by any
Acquired Company to do any of the foregoing.
Notwithstanding the foregoing, neither Andal nor any
Acquired Company makes any representation or warranty in this
Section 3.15 with respect to Taxes.
3.16 CONTRACTS; NO DEFAULTS. (a) Part 3.16(a) of the
Disclosure Letter contains a complete and accurate list, and the
Company has delivered to Acquisition true and complete copies,
of:
(i) each Applicable Contract (other than
customer orders) that involves performance of services or
delivery of goods by one or more Acquired Companies of an amount
or value in excess of $100,000;
(ii) each Applicable Contract that involves
performance of services or delivery of goods to one or more
Acquired Companies of an amount or value in excess of $100,000;
(iii) each lease, rental or occupancy
agreement, license, installment and conditional sale agreement,
and other Applicable Contract affecting the ownership of, leasing
of, title to, use of, or any leasehold or other interest in, any
real or personal property (except personal property leases and
installment and conditional sales agreements having a value per
item or aggregate payments of less than $100,000 and with terms
of less than one year);
(iv) each licensing agreement or other
Applicable Contract with respect to patents, trademarks,
copyrights, or other intellectual property, including agreements
with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(v) each collective bargaining agreement and
other Applicable Contract to or with any labor union or other
employee representative of a group of employees;
(vi) each joint venture, partnership, and
other Applicable Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by any Acquired Company
with any other Person;
35
(vii) each Applicable Contract containing
covenants that in any way purport to restrict the business
activity of any Acquired Company or any director, officer or
employee of an Acquired Company or limit the freedom of any
Acquired Company or any director, officer or employee of an
Acquired Company to engage in any line of business or to compete
with any Person;
(viii) each material power of attorney granted
by any Acquired Company that is currently effective and
outstanding;
(ix) each Applicable Contract entered into
other than in the Ordinary Course of Business that contains or
provides for an express undertaking by any Acquired Company to be
responsible for consequential damages;
(x) each Applicable Contract for capital
expenditures in excess of $100,000;
(xi) each Applicable Contract under which any
Acquired Company is liable or obligated for any indebtedness in
excess of $100,000 individually, or $250,000 in the aggregate;
(xii) each written warranty, guaranty, and or
other similar undertaking with respect to contractual performance
extended by any Acquired Company other than in the Ordinary
Course of Business;
(xiii) each Applicable Contract (including any
Applicable Contract evidencing outstanding indebtedness) with
Andal, other Affiliates of the Company which are not Acquired
Companies or any Related Person of Andal or such Affiliate;
(xiv) each Applicable Contract relating to the
ION Bond(R) Network of the Acquired Companies; and
(xv) each binding amendment, supplement, and
modification (whether oral or written) in respect of any of the
foregoing.
(b) Except as set forth in Part 3.16(b) of the
Disclosure Letter:
(i) neither Andal or other Affiliates of the
Company which are not Acquired Companies nor any Related Person
of Andal or any such Affiliate has or may acquire any rights
under, and may not become subject to any obligation or liability
under, any Contract that relates to the business of, or any of
the assets owned or used by, any Acquired Company; and
(ii) to the Knowledge of Andal and the
Acquired Companies, no officer, director, agent, employee,
consultant, or contractor of any Acquired Company is
36
bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to
(A) engage in or continue any conduct, activity, or practice
relating to the business of any Acquired Company, or (B) assign
to any Acquired Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Except as set forth in Part 3.16(c) of the
Disclosure Letter, each Applicable Contract identified or
required to be identified in Part 3.16(a) of the Disclosure
Letter is in full force and effect and is valid and enforceable
in accordance with its terms.
(d) Except as set forth in Part 3.16(d) of the
Disclosure Letter:
(i) each Acquired Company (and, with respect
to the Multi-Arc Division, Andal) is, and at all times since
January 1, 1994 has been, in compliance with all material
applicable terms and requirements of each Applicable Contract;
(ii) each other Person that has or had any
obligation or liability under any Applicable Contract under which
any Acquired Company is liable or obligated for an amount in
excess of $100,000 individually, or $250,000 in the aggregate,
is, and at all times since January 1, 1994 has been, in
compliance with all material applicable terms and requirements of
such Contract;
(iii) no event has occurred or circumstance
exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a violation or breach of,
or give any Acquired Company or other Person the right to declare
a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify,
any Applicable Contract; and
(iv) to the Knowledge of Andal and the
Acquired Companies, neither any Acquired Company nor, with
respect to the Multi-Arc Division, Andal has given to or received
from any other Person, at any time since January 1, 1994, any
notice or other communication (whether oral or written) regarding
any actual, alleged, possible, or potential violation or breach
of, or default under, any Applicable Contract.
(e) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material
amounts paid or payable to any Acquired Company under current or
completed Applicable Contracts with any Person and no demand of
any such Person for such renegotiation has been received by any
Acquired Company.
(f) The Contracts relating to the provision of
products or services by the Acquired Companies have been entered
into in the Ordinary Course of Business and have been entered
into without the commission of any act alone or in concert with
any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal
Requirement.
37
Notwithstanding the foregoing, neither Andal nor any
Acquired Company makes any representation or warranty in this
Section 3.16 with respect to Taxes.
3.17 INSURANCE. (a) The Company has delivered to
Acquisition:
(i) true and complete copies of all policies
of insurance to which any Non-Joint Venture Acquired Company is a
party or under which any Non-Joint Venture Acquired Company, or
any director (in his capacity as a director) of any Non-Joint
Venture Acquired Company, is or has been covered at any time
within the three years preceding the date of this Agreement;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) any statement by the auditor of Andal's
or any Non-Joint Venture Acquired Company's financial statements
with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Part 3.17(b) of the Disclosure Letter
describes:
(i) any self-insurance arrangement by or
affecting any Non-Joint Venture Acquired Company, including any
reserves established thereunder;
(ii) any contract or arrangement, other than a
policy of insurance, for the transfer or sharing of any risk by
any Non-Joint Venture Acquired Company (or, with respect to any
Acquired Company, by Andal); and
(iii) all obligations of the Non-Joint Venture
Acquired Companies (and, with respect to any Acquired Company, of
Andal) to third parties with respect to insurance (including such
obligations under leases and service agreements) and identifies
the policy under which such coverage is provided.
(c) Part 3.17(c) of the Disclosure Letter sets
forth, by year, for the current policy year and each of the three
preceding policy years:
(i) a summary of the loss experience under
each policy;
(ii) a statement describing each claim under
an insurance policy for an amount in excess of $25,000
individually, or $100,000 in the aggregate, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by
insurer, type of insurance, and period of coverage; and
38
(C) the amount and a brief description of
the claim; and
(iii) a statement describing the loss
experience for all claims that were self-insured, including the
number and aggregate cost of such claims.
(d) Except as set forth on Part 3.17(d) of the
Disclosure Letter:
(i) All policies to which any Non-Joint
Venture Acquired Company is a party or that provide coverage to
any Non-Joint Venture Acquired Company, or any director or
officer of a Non-Joint Venture Acquired Company:
(A) are valid, outstanding, and
enforceable;
(B) taken together, provide adequate
insurance coverage for the assets and the operations of the Non-
Joint Venture Acquired Companies for all risks normally insured
against by a Person carrying on the same business or businesses
as the Non-Joint Venture Acquired Companies;
(C) are sufficient for compliance with
all Legal Requirements and Contracts to which any Non-Joint
Venture Acquired Company is a party or by which any of them is
bound;
(D) will continue in full force and
effect following the consummation of the Contemplated
Transactions; and
(E) do not provide for any retrospective
premium adjustment or other experienced-based liability on the
part of any Acquired Company.
(ii) Neither Andal (with respect to the Multi-
Arc Division) nor any Non-Joint Venture Acquired Company has
received (A) any refusal of coverage or any notice that a defense
will be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy is
no longer in full force or effect or will not be renewed or that
the issuer of any policy is not willing or able to perform its
obligations thereunder.
(iii) Andal, all Affiliates of Andal and the
Non-Joint Venture Acquired Companies have paid all premiums due,
and have otherwise performed all of their respective obligations,
under each policy that provides coverage to any Non-Joint Venture
Acquired Company or director thereof.
(iv) The Non-Joint Venture Acquired Companies
have given notice to the insurer of all claims that may be
insured thereby.
39
3.18 ENVIRONMENTAL MATTERS. Except as set forth in Part
3.18 of the Disclosure Letter:
(a) The operations and Facilities of each Acquired
Company and, with respect to the Multi-Arc Division, Andal are,
and at all times since January 1, 1992 have been, in compliance
in all material respects with and are not liable under any
applicable Environmental Laws. Neither Andal nor any Acquired
Company has any basis to expect, nor has any of them or any other
Person for whose conduct they are or may be held to be
responsible received, any actual or Threatened order, notice, or
other communication from (i) any Governmental Body, private
citizen acting in the public interest, or other party, or (ii)
the current or prior owner or operator of any Facilities, of any
actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to
undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any
other properties or assets (whether real, personal, or mixed) in
which any Acquired Company (or, with respect to the Multi-Arc
Division, Andal) has had an interest, or with respect to any
property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used,
treated, stored or processed by any Acquired Company (or, with
respect to the Multi-Arc Division, Andal) or any other Person for
whose conduct they are or may be held responsible, or from which
Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of
Andal and the Acquired Companies, Threatened claims,
Encumbrances, or other restrictions of any nature, resulting from
any Environmental, Health, and Safety Liabilities or arising
under or pursuant to any Environmental Law, with respect to or
affecting any of the Facilities or any other properties and
assets (whether real, personal, or mixed) in which any Acquired
Company (or, with respect to the Multi-Arc Division, Andal) has
or had an interest.
(c) Neither Andal nor any Acquired Company, nor any
other Person for whose conduct they are or may be held
responsible, has any Environmental, Health, and Safety
Liabilities with respect to the Facilities or with respect to any
other properties and assets (whether real, personal, or mixed) in
which any Acquired Company (or, with respect to the Multi-Arc
Division, Andal) (or any predecessor), has or had an interest, or
at any property geologically or hydrologically adjoining the
Facilities or any such other property or assets.
(d) There has been no Release or, to the Knowledge
of Andal and the Acquired Companies, Threat of Release, of any
Hazardous Materials at or from the Facilities or at any other
locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used,
treated, stored or processed from or by the Facilities, or from
or by any other properties and assets (whether real, personal, or
mixed) in which any Acquired Company (or, with respect to the
Multi-Arc Division, Andal) has or had an interest, or any
geologically or hydrologically adjoining property, whether by
Andal, any Acquired Company, or any other Person.
40
(e) The Company has delivered to Acquisition true
and complete copies and results of any reports, studies,
analyses, tests, or monitoring results, containing material
information, possessed or initiated by Andal or any Acquired
Company pertaining to Hazardous Materials or Hazardous Activities
in, on, or under the Facilities, or concerning compliance by any
Acquired Company (or, with respect to the Multi-Arc Division,
Andal) or any other Person for whose conduct they are or may be
held responsible, with Environmental Laws.
3.19 EMPLOYEES. (a) Part 3.19 of the Disclosure
Letter contains a complete and accurate list of the following
information for each employee or director of the Non-Joint
Venture Acquired Companies, including each employee on leave of
absence or layoff status: employer; name; job title; current
compensation paid or payable and any change in compensation since
January 1, 1995; vacation accrued; and service credited for
purposes of vesting and eligibility to participate under any Non-
Joint Venture Acquired Company's pension, retirement, profit-
sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including
investment credit or payroll stock ownership), severance pay,
insurance, medical, welfare, or vacation plan, or any other Plan.
(b) No employee or director of any Non-Joint
Venture Acquired Company is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights
Agreement") that in any way adversely affects or will affect (i)
the performance of his duties as an employee or director of the
Non-Joint Venture Acquired Companies, or (ii) the ability of any
Acquired Company to conduct its business, including any
Proprietary Rights Agreement with Andal or the Acquired Companies
by any such employee or director. To the Knowledge of Andal and
the Acquired Companies, no director, officer, or other key
employee of any Acquired Company intends to terminate his
employment with such Acquired Company.
(c) Part 3.19 of the Disclosure Letter also
contains a complete and accurate list of the following
information for each retired employee or director of the Non-
Joint Venture Acquired Companies, or their dependents, receiving
benefits or scheduled to receive benefits in the future: name,
pension benefit, pension option election, retiree medical
insurance coverage, retiree life insurance coverage, and other
benefits.
3.20 LABOR RELATIONS; COMPLIANCE. Since January 1,
1994, neither any Acquired Company (nor, with respect to the
Multi-Arc Division, Andal) has been or is a party to any
collective bargaining or other labor Contract. Since January 1,
1994, there has not been, there is not presently pending or
existing, and to the Knowledge of Andal and the Acquired
Companies there is not Threatened, (a) any strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any
Proceeding against or affecting any Acquired Company (or, with
respect to the Multi-Arc Division, Andal) relating to the alleged
violation of any Legal Requirement pertaining to labor relations
or employment matters, including any charge or complaint filed by
an employee or union with the National Labor Relations Board, the
Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational
41
activity, or other labor or employment dispute against or
affecting any of the Acquired Companies or their premises, or (c)
any application for certification of a collective bargaining
agent. No event has occurred or circumstance exists that could
reasonably be expected to provide the basis for any work stoppage
or other labor dispute. There is no lockout of any employees by
any Acquired Company, and no such action is contemplated by any
Acquired Company. Each Acquired Company (and with respect to the
Multi-Arc Division, Andal) has complied in all material respects
with all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social
security and similar taxes, occupational safety and health, and
plant closing. Neither any Acquired Company nor, with respect to
the Multi-Arc Division, Andal is liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts,
however designated, for failure to comply with any of the
foregoing Legal Requirements.
3.21 INTELLECTUAL PROPERTY. (a) Intellectual Property
Assets -- The term "Intellectual Property Assets" includes:
(i) the name "Multi-Arc", all trade names,
registered and material unregistered trademarks, service marks,
and applications (collectively, "Marks");
(ii) all patents, patent applications,
including continuations, continuations-in-part, and divisional
applications, and inventions and discoveries that may be
patentable (collectively, "Patents");
(iii) all copyrights in both published works
and unpublished works (collectively, "Copyrights"); and
(iv) all confidential information, including
know-how, trade secrets, customer lists, computer software,
technical information, data, process technology, plans, drawings,
and blue prints (collectively, "Trade Secrets");
owned, used, or licensed by any Acquired Company as licensee or
licensor.
(b) Agreements -- Part 3.21(b) of the Disclosure
Letter contains a complete and accurate list and summary
description of all Applicable Contracts relating to Intellectual
Property Assets, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available
software programs with a value of less than $10,000 under which
an Acquired Company (or, with respect to the Multi-Arc Division,
Andal) is the licensee. There are no outstanding and, to Andal's
and the Acquired Companies' Knowledge, no Threatened disputes or
disagreements with respect to any such agreement, and each
Acquired Company party to any such agreement is in material
compliance therewith.
42
(c) Know-How Necessary for the Business
(i) Except as disclosed in Part 3.21(c) of the
Disclosure Letter, one or more of the Acquired Companies is the
owner of all right, title, and interest in and to or is otherwise
licensed or has the right to use each of the Intellectual
Property Assets used in the operation of the Acquired Companies'
business as currently conducted, free and clear of all liens,
security interests, charges, encumbrances, equities, and other
adverse claims, and has the right to use without payment to a
third party all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.21(c) of
the Disclosure Letter, all former and current managerial or
engineering employees, and consultants and independent
contractors performing similar functions of each Acquired Company
have executed written Contracts with one or more of the Acquired
Companies that assign to one or more of the Acquired Companies
all rights to any inventions, improvements, discoveries, or
information relating to the business of any Acquired Company. No
employee of any Acquired Company has entered into any Contract
that restricts or limits in any material respect the scope or
type of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning
his work to anyone other than one or more of the Acquired
Companies or their agents or representatives.
(d) Patents
(i) Part 3.21 (d) of the Disclosure Letter
contains a complete and accurate list and summary description of
all patents and patent applications issued or filed. One or more
of the Acquired Companies is the owner of all right, title, and
interest in and to each of such patents and patent applications,
free and clear of any and all liens, security interests, charges,
encumbrances, entities, and other adverse claims.
(ii) All of the issued Patents are currently
in compliance with formal legal requirements (including payment
of filing, examination, and maintenance fees and proofs of
working or use), to the Knowledge of Andal and the Acquired
Companies are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety
days after the Closing Date.
(iii) No Patent has been or is now involved in
any interference, reissue, reexamination, or opposition
proceeding. To the Knowledge of Andal and the Acquired
Companies, there is no potentially interfering patent or patent
application of any third party.
(iv) Except as set forth in Part 3.21(d) of
the Disclosure Letter, to the Knowledge of Andal and the Acquired
Companies, no Patent is being infringed. There has been no
challenge to the validity or enforceability of any Patent, nor,
to the
43
Knowledge of Andal and the Acquired Companies, no threat of any
such challenge. None of the products manufactured and sold, nor
any process or know-how used, by any Acquired Company infringes
or, to the Knowledge of Andal and the Acquired Companies, is
alleged to infringe any patent or other proprietary right of any
other Person.
(v) All products made or sold by or for any
Acquired Company (or, with respect to the Multi-Arc Division,
Andal) which are covered by claims of Patents have been marked
with the patent or patent pending notice as required by
applicable Legal Requirements.
(e) Trademarks
(i) Part 3.21(e) of Disclosure Letter contains
a complete and accurate list and summary description of all
Marks. One or more of the Acquired Companies is the owner of all
right, title, and interest in and to each of the Marks, free and
clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) All Marks that have been registered with
the United States Patent and Trademark Office are currently in
compliance with all formal legal requirements (including the
timely post-registration filing of affidavits of use and
incontestability and renewal applications), to the Knowledge of
Andal and the Acquired Companies are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the Closing Date.
(iii) No Xxxx has been or is now involved in
any opposition, invalidation, or cancellation and, to the
Knowledge of Andal and the Acquired Companies, no such action is
Threatened with the respect to any of the Marks.
(iv) To the Knowledge of Andal and the
Acquired Companies, there is no potentially infringing or
interfering trademark or trademark application of any third
party.
(v) Except as set forth in Part 3.21(e) of the
Disclosure Letter, to the Knowledge of Andal and the Acquired
Companies, no Xxxx is infringed or has been challenged or
threatened in any way. None of the Marks used by any Acquired
Company infringes or, to the Knowledge of Andal and the Acquired
Companies, is alleged to infringe any trade name, trademark, or
service xxxx of any third party.
(vi) All products and materials containing a
Xxxx xxxx the proper federal registration notice where permitted
by law.
44
(f) Copyrights
(i) Part 3.21(f) of the Disclosure Letter
contains a complete and accurate list and summary description of
all registered or material Copyrights. One or more of the
Acquired Companies is the owner of all right, title, and interest
in and to each of the Copyrights, free and clear of all liens,
security interests, charges, encumbrances, equities, and other
adverse claims.
(ii) All registered Copyrights are currently
in compliance with formal legal requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes
or actions falling due within ninety days after the date of
Closing.
(iii) Except as set forth in Part 3.21(f) of
the Disclosure Letter, to the Knowledge of Andal and the Acquired
Companies, no Copyright is infringed or, to the Knowledge of
Andal and the Acquired Companies, has been challenged or
threatened in any way. None of the subject matter of any of the
Copyrights infringes or is alleged to infringe any copyright of
any third party or is a derivative work based on the work of a
third party.
(iv) All works encompassed by the Copyrights
have been marked with the proper copyright notice as required by
applicable Legal Requirements.
(g) Trade Secrets
(i) The Acquired Companies (and, with respect
to the Multi-Arc Division, Andal) have taken all reasonable
precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(ii) One or more of the Acquired Companies has
good title and an absolute (but not necessarily exclusive) right
to use the Trade Secrets. The Trade Secrets are not part of the
public knowledge or literature, and, to the Knowledge of Andal
and the Acquired Companies, have not been used, divulged, or
appropriated either for the benefit of any Person (other than one
or more of the Acquired Companies) or to the detriment of the
Acquired Companies. No Trade Secret is subject to any adverse
claim or has been challenged or threatened in any way.
3.22 CERTAIN PAYMENTS. Since January 1, 1994, except as
permitted by Section 30A(b) of the Exchange Act, no Non-Joint
Venture Acquired Company (or, with respect to the Multi-Arc
Division, Andal) or director, officer, agent, or employee of any
Non-Joint Venture Acquired Company (or, with respect to the
Multi-Arc Division, Andal), or to the Knowledge of Andal and the
Acquired Companies, any other Person associated with or acting
for or on behalf of any Non-Joint Venture Acquired Company (or,
with respect to the Multi-Arc Division, Andal), has directly or
indirectly (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form,
45
whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable
treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or
in respect of any Non-Joint Venture Acquired Company (or, with
respect to the Multi-Arc Division, Andal) or any Affiliate of an
Non-Joint Venture Acquired Company or Andal, or (iv) in
violation of any Legal Requirement, or (b) established or
maintained any fund or asset that has not been recorded in the
books and records of the Non-Joint Venture Acquired Companies.
Since January 1, 1994, to the Knowledge of Andal and the Acquired
Companies, none of the Joint Venture Companies or any director,
officer, agent or employee of any of the Joint Venture Companies
or any other Person associated with or acting for or on behalf of
any Joint Venture Company has directly or indirectly done any of
the foregoing, other than as permitted by Section 30A(b) of the
Exchange Act.
3.23 DISCLOSURE. (a) No representation or warranty of
Andal or the Company in this Agreement and no statement in the
Disclosure Letter contains an untrue statement or omits to state
a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made,
not misleading.
(b) No notice given pursuant to Section 5.5 will
contain any untrue statement or omit to state a material fact
necessary to make the statements therein or in this Agreement, in
light of the circumstances in which they were made, not
misleading.
(c) There is no fact known to Andal or any Acquired
Company that has specific application to any Acquired Company or,
with respect to the Multi-Arc Division, Andal (other than general
economic or industry conditions) and that materially adversely
affects or, as far as Andal or any Acquired Company can
reasonably foresee, materially adversely threatens, the assets,
business, prospects, financial condition, or results of
operations of the Acquired Companies (on a consolidated basis)
that has not been set forth in this Agreement or the Disclosure
Letter.
3.24 RELATIONSHIPS WITH RELATED PERSONS. Except as set
forth in Part 3.24 of the Disclosure Letter, neither Andal nor
any Related Person of Andal or of any Acquired Company has, or
since September 30, 1994 has had, any interest in any property
(whether real, personal, or mixed and whether tangible or
intangible), used in or pertaining to the Acquired Companies'
business. Except as set forth in Part 3.24 of the Disclosure
Letter, neither Andal nor any Related Person of Andal or of any
Acquired Company is, or since September 30, 1994 has owned (of
record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any
transaction with any Acquired Company other than business
dealings or transactions conducted in the Ordinary Course of
Business with the Acquired Companies at substantially prevailing
market prices and on substantially prevailing market terms, or
(ii) engaged in competition with any Acquired Company with
respect to any line of the products or services of such Acquired
Company (a "Competing Business") in any market presently served
by such Acquired Company except for less than one percent of the
outstanding capital stock of any Competing Business that is
publicly traded on any recognized exchange or in the over-the-
counter market. Except as set forth in
46
Part 3.24 of the Disclosure Letter, neither Andal nor or any
Related Person of Andal or of any Acquired Company is a party to
any Contract with, or has any claim or right against, any
Acquired Company.
3.25 BROKERS OR FINDERS. Andal and the Company and
their respective officers and agents have incurred no obligation
or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in
connection with this Agreement.
3.26 SEC DOCUMENTS. Andal has made available to Parent
and Acquisition a true and complete copy of each report,
schedule, registration statement and definitive proxy statement
filed by Andal with the SEC since September 30, 1994 and prior to
the date of this Agreement (solely as such documents relate to
the Acquired Companies, the "Andal SEC Documents"), which are all
the documents (other than preliminary material) that Andal was
required to file with the SEC since such date. As of their
respective dates, the Andal SEC Documents complied in all
material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Andal SEC
Documents, and none of the Andal SEC Documents contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of
Andal (including, in each case, the notes thereto) included in
the Andal SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as
permitted by Rule 10-01 of Regulation S-X of the SEC) and fairly
present in accordance with applicable requirements of generally
accepted accounting principles as so applied (subject, in the
case of the unaudited statements, to normal, recurring
adjustments, none of which were or are expected, individually or
in the aggregate, to be material in amount) the consolidated
financial position of Andal and its consolidated Subsidiaries as
of their respective dates and the consolidated results of
operations and the consolidated cash flows of Andal and its
consolidated Subsidiaries for the periods presented therein.
3.27 INFORMATION SUPPLIED. The Proxy Statement, at the
time it is filed with the SEC or any other regulatory authority,
on the date it is first mailed to Andal Shareholders, and at the
time of the Andal Shareholders Meeting, will not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they are made, not misleading (excluding statements or omissions,
made in reliance on and in conformity with written information
specifically relating to Parent or Acquisition furnished by
either of them to Andal expressly for use in the Proxy
Statement). If at any time prior to the Andal Shareholders
Meeting, any event with respect to Andal or any of its
Subsidiaries, or with respect to other information supplied by
Andal for inclusion in the Proxy Statement, shall occur which is
required to be described in an amendment of, or a supplement to,
the Proxy Statement, such event shall be so described, and such
amendment or supplement shall be promptly filed with the
47
SEC and, as required by law, disseminated to the Andal
Shareholders. The Proxy Statement will comply as to form, in all
material respects, with the provisions of the Exchange Act and
the rules and regulations thereunder.
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION.
Parent and Acquisition represent and warrant, jointly
and severally, to Andal and the Company as follows:
4.1 ORGANIZATION AND GOOD STANDING. Each of Parent and
Acquisition is a corporation duly organized, validly existing,
and in good standing under the laws of its jurisdiction of
incorporation.
4.2 AUTHORITY; NO CONFLICT. (a) This Agreement
constitutes the legal, valid, and binding obligation of each of
Parent and Acquisition, enforceable against it in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency and other similar laws affecting creditors' rights
generally or general equitable principles. Upon the execution
and delivery by Parent and Acquisition of the Closing Agreements
to which it is a party, such Closing Agreements will constitute
the legal, valid, and binding obligations of Parent and/or
Acquisition, as the case may be, enforceable against it in
accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency and other similar laws
affecting creditors' rights generally or general equitable
principles. Each of Parent and Acquisition have the absolute and
unrestricted right, power, authority and capacity to execute and
deliver this Agreement and the Closing Agreements to which it is
a party and to perform its obligations hereunder and thereunder.
(b) Except as set forth in Schedule 4.2, neither
the execution and delivery of this Agreement or any Closing
Document by Parent or Acquisition, nor the consummation or
performance of any of the Contemplated Transactions by Parent or
Acquisition will, directly or indirectly (with or without notice
or lapse of time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of
Parent or Acquisition, or (B) any resolution adopted by the board
of directors or the stockholders of Parent or Acquisition;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Parent or Acquisition may be
subject; or
(iii) contravene, conflict with, or result in
a violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Contract to which Parent or Acquisition
is
48
party or by which Parent or Acquisition is bound, except for any
of the foregoing the occurrence of which would not give any
Person the right to prevent, delay, or otherwise interfere with
any of the Contemplated Transactions.
Except as set forth in Schedule 4.2, neither Parent nor
Acquisition is or will be required to give any notice to or
obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions, other than
(i) compliance with any applicable requirement of the HSR Act,
(ii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (iii) compliance with any
other applicable requirements of the Federal or state securities
laws and (iv) such other notices, filings or Consents, the
absence of which would not materially impair the performance of
the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding
that has been commenced against Parent or Acquisition and that
challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To the Knowledge of Parent and
Acquisition, no such Proceeding has been Threatened.
4.4 BROKERS OR FINDERS. Parent and Acquisition and
their respective officers and agents have incurred no obligation
or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in
connection with this Agreement.
5. COVENANTS OF ANDAL AND THE COMPANY.
5.1 ACCESS AND INVESTIGATION. Between the date of this
Agreement and the Closing Date, Andal will, and will cause each
Acquired Company and its Representatives to, (a) afford Parent
and Acquisition and their respective Representatives reasonable
access to each Acquired Company's personnel, properties,
contracts, books and records, and other documents and data, (b)
furnish Parent and Acquisition and their respective
Representatives with copies of all such contracts, books and
records, and other existing documents and data as they may
reasonably request, and (c) furnish Parent and Acquisition and
their respective Representatives with such additional financial,
operating, and other data and information as they may reasonably
request.
5.2 OPERATION OF THE BUSINESS OF THE ACQUIRED COMPANIES.
Between the date of this Agreement and the Closing Date, Andal
and the Company will and will cause each other Acquired Company
to:
(a) conduct the business of such Acquired Company
only in the Ordinary Course of Business;
(b) use their Best Efforts to preserve intact the
current business organization of such Acquired Company, keep
available the services of the current officers,
49
employees, and agents of such Acquired Company, and maintain the
relations and good will with suppliers, customers, landlords,
creditors, employees, agents, and others having business
relationships with such Acquired Company;
(c) confer with Parent concerning operational
matters of the Acquired Companies of a material nature;
(d) provide to Parent copies of all information and
reports with respect to any Acquired Company that are provided to
Andal; and
(e) otherwise respond to Parent's reasonable
requests concerning the status of the business, operations, and
finances of such Acquired Company.
5.3 NEGATIVE COVENANT. Except as otherwise expressly
permitted by this Agreement, between the date of this Agreement
and the Closing Date, Andal and the Company will not, and will
cause each other Acquired Company not to, without the prior
written consent of Parent, take any affirmative action, or fail
to take any reasonable action within their or its control, as a
result of which any of the changes or events listed in Section
3.15 would occur or would be likely to occur (viewing such
changes or events between date of the Balance Sheet and the
Closing Date). Without limiting the generality of the foregoing,
except as set forth in Part 5.3 of the Disclosure Letter or as
otherwise permitted by this Agreement or consented to in writing
by Parent, each of the Company and the other Acquired Companies
will refrain from:
(a) incurring any obligation, liability (accrued,
contingent or otherwise) or indebtedness in excess of $100,000;
(b) except in the Ordinary Course of Business
selling, transferring or otherwise disposing of any properties or
assets, real, personal or mixed, which have a book value
(individually or collectively) in excess of $25,000 (other than
sales of Inventory in the Ordinary Course of Business);
(c) purchase or acquire any assets or properties
(other than the purchase of supplies in the ordinary course), for
an amount exceeding $100,000 individually, or $250,000 in the
aggregate;
(d) loaning money or extending credit;
(e) permitting any insurance policy of the Company
or any other Acquired Companies naming it as a beneficiary or a
loss payable payee to be canceled or terminated or any of the
coverage thereunder to lapse, unless simultaneously with such
termination or cancellation replacement policies providing
substantially the same coverage are in full force and effect;
50
(f) entering into or terminating any Contract or
transaction involving a total commitment by or to any Acquired
Company of at least $100,000; and
(g) in any other manner, modifying, changing or
otherwise altering the fundamental nature of the business of the
Company and the other Acquired Companies.
5.4 APPROVALS OF GOVERNMENTAL BODIES. As promptly as
practicable after the date of this Agreement, Andal and the
Company will, and will cause each other Acquired Company to, make
all filings required by Legal Requirements to be made by them in
order to consummate the Contemplated Transactions (including all
filings under the HSR Act and the filings contemplated by Section
5.8). Between the date of this Agreement and the Closing Date,
Andal and the Company will, and will cause each other Acquired
Company to, (a) cooperate with Parent and Acquisition with
respect to all filings that Parent and Acquisition are required
by Legal Requirements to make in connection with the Contemplated
Transactions, and (b) cooperate with Parent and Acquisition in
obtaining all consents identified in Section 4.2; provided that
this Agreement will not require Andal or any Acquired Company to
dispose of or make any change in any portion of its business or
to incur any other burden to obtain a Governmental Authorization.
5.5 NOTIFICATION. Between the date of this Agreement
and the Closing Date, Andal and the Company will promptly notify
Parent in writing if Andal, the Company or any other Acquired
Company becomes aware of any fact or condition that causes or
constitutes a Breach of any of Andal's or the Company's
representations and warranties as of the date of this Agreement,
or if Andal, the Company or any other Acquired Company becomes
aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by
this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty
been made as of the time of occurrence or discovery of such fact
or condition. Should any such fact or condition require any
change in the Disclosure Letter if the Disclosure Letter were
dated the date of the occurrence or discovery of any such fact or
condition, Andal and the Company will promptly deliver to Parent
and Acquisition a supplement to the Disclosure Letter specifying
such change. During the same period, Andal and the Company will
promptly notify Parent and Acquisition of the occurrence of any
Breach of any covenant of Andal or the Company in this Section 5
or of the occurrence of any event that may make the satisfaction
of the conditions in Section 7 impossible or unlikely.
5.6 INDEBTEDNESS OF RELATED PERSONS; OTHER AGREEMENTS.
(a) Except as expressly provided in this Agreement, Andal will
cause all indebtedness owed to an Acquired Company by Andal, any
Affiliate of Andal which is not an Acquired Company or any
Related Person of Andal or such Affiliate (including without
limitation all outstanding principal and accrued interest under
loans to directors, officers and employees by any Acquired
Company) to be paid in full at or prior to Closing, and all
indebtedness owed by any Acquired Company to Andal, any Affiliate
of Andal which is not an Acquired Company or any Related Person
of Andal or such Affiliate shall be cancelled.
51
(b) Except as disclosed in Part 5.6 of the Disclosure
Letter, at or prior to the Closing, all Contracts between (x)
Andal (or any Affiliate of Andal which is not an Acquired
Company) and (y) any Acquired Company or any officer, director or
employee of any Acquired Company, shall be terminated.
5.7 NO NEGOTIATION. Until such time, if any, as this
Agreement is terminated pursuant to Section 9, Andal and the
Company will not, and will cause each other Non-Joint Venture
Acquired Company and each of their Representatives not to, and
will use their Best Efforts to cause each of the Joint Venture
Companies and each of their Representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public
information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Parent or
Acquisition) relating to any transaction involving the sale of
the business or assets (other than in the Ordinary Course of
Business) of Andal or any Acquired Company, or any of the
capital stock of Andal or any Acquired Company, or any merger,
consolidation, business combination, or similar transaction
involving Andal, the Company or any other Acquired Company.
5.8 OTHER APPROVALS. (a) As promptly as practicable
following the date of this Agreement, Andal shall prepare and
file with the SEC the Proxy Statement. Andal shall use its Best
Efforts to respond to all SEC comments with respect to the Proxy
Statement and to cause the Proxy Statement to be mailed to Andal
Shareholders and thereafter to convene and hold the Andal
Shareholders Meeting for the purpose of approving the sale of the
Company pursuant to the Merger at the earliest practicable date.
Parent and Acquisition shall furnish all information concerning
itself to Andal as may be reasonably requested in connection with
such preparation, filing and response.
(b) Simultaneously with the execution and delivery
of this Agreement, Andal has delivered to Parent and Acquisition
a copy of the written consent executed by it in which Andal, in
its capacity as a shareholder of the Company, consented (subject
to the approval of Andal Shareholders) to the execution, delivery
and performance of this Agreement and consummation of the
Contemplated Transactions by the Company.
5.9 BEST EFFORTS. Except as set forth in the proviso of
the last sentence of Section 5.4, between the date of this
Agreement and the Closing Date, Andal and the Company will use
their Best Efforts to cause the conditions in Sections 7 and 8 to
be satisfied.
5.10 ANDAL LIQUIDATION. Nothing in this Agreement shall
be construed so as to restrict the right of the Andal
Shareholders to proceed with adoption of a plan of liquidation of
Andal, provided, that, in any such liquidation, separate reserves
will be maintained in amounts sufficient to satisfy (i) the
obligations of Andal under the last sentence of Section 2.8,
under Section 7.13 and under Section 11.7 and (ii) to the extent
required under applicable law, any other obligations of Andal
under this Agreement.
52
5.11 INSURANCE. Following the Closing, the Surviving
Corporation shall maintain products liability insurance in such
amounts as are customarily maintained by businesses engaged in
the same or similar businesses similarly situated; provided,
however, that the Surviving Corporation shall not be obligated to
pay aggregate annual premiums in respect of such insurance in
excess of the aggregate annual premiums currently paid by the
Company.
6. COVENANTS OF PARENT AND ACQUISITION PRIOR TO CLOSING DATE.
6.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as
practicable after the date of this Agreement, Parent and
Acquisition will make all filings required by Legal Requirements
to be made by them to consummate the Contemplated Transactions
(including all filings under the HSR Act). Between the date of
this Agreement and the Closing Date, Parent and Acquisition will
cooperate with Andal and the Company with respect to all filings
that Andal and the Company are required by Legal Requirements to
make in connection with the Contemplated Transactions, and (ii)
cooperate with Andal and the Company in obtaining all consents
identified in Section 3.2; provided that this Agreement will not
require Parent or Acquisition to dispose of or make any change in
any portion of its business or to incur any other burden to
obtain a Governmental Authorization.
6.2 BEST EFFORTS. Except as set forth in the proviso of
the last sentence of Section 6.1, between the date of this
Agreement and the Closing Date, Parent and Acquisition will use
their Best Efforts to cause the conditions in Sections 7 and 8 to
be satisfied.
7. CONDITIONS PRECEDENT TO PARENT'S AND ACQUISITION'S
OBLIGATION TO CLOSE.
Acquisition's obligation to consummate the Merger and
Parent's and Acquisition's obligations to take the other actions
required to be taken by them at the Closing are subject to the
satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Parent and
Acquisition, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. (a) Except for the
representations and warranties of Andal and the Company set forth
in Section 3.18, all of Andal's and the Company's representations
and warranties in this Agreement (considered collectively), and
each of these representations and warranties (considered
individually), must have been accurate in all material respects
(except for representations and warranties which are qualified by
any of the terms "material," "in all material respects," or
"Material Adverse Effect," which must have been accurate in all
respects, as so qualified) as of the date of this Agreement, and
must be accurate in all material respects (except for
representations and warranties which are qualified by any of the
terms "material," "in all material respects," or "Material
Adverse Effect," which must have been accurate in all respects,
as so qualified) as of the Closing Date as if made on the Closing
Date, without giving effect to any supplement to the Disclosure
Letter.
(b) Each of Andal's and the Company's
representations and warranties in Sections 3.3 and 3.4 must have
been accurate in all respects as of the date of this Agreement,
and
53
must be accurate in all respects as of the Closing Date as if
made on the Closing Date, without giving effect to any supplement
to the Disclosure Letter.
(c) Each of Andal's and the Company's
representations and warranties in Section 3.18 must have been
accurate in all respects as of the date of this Agreement, and
must be accurate in all respects as of the Closing Date as if
made on the Closing Date, without giving effect to any supplement
to the Disclosure Letter, except for such breaches or
inaccuracies with respect to which the liability resulting
therefrom could not reasonably be expected to exceed $50,000, in
the aggregate.
7.2 ANDAL'S AND THE COMPANY'S PERFORMANCE. (a) All of
the covenants and obligations that Andal and the Company are
required to perform or to comply with pursuant to this Agreement
at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must
have been duly performed and complied with in all material
respects.
(b) Each document required to be delivered pursuant
to Section 2.2(b) must have been delivered, and each of the
covenants and obligations in Section 5.8 must have been performed
and complied with in all respects.
7.3 CONSENTS; TERMINATION OF AGREEMENTS. Each of the
Consents identified in Schedule 7.3 must have been obtained and
must be in full force and effect, and the original copy of such
Consents (or other evidence thereof reasonably satisfactory to
Parent and Acquisition) must have been delivered to Parent and
Acquisition. Termination statements reflecting a complete
release of the UCC-1 financing statements listed on Schedule 7.3
must have been obtained and must be in full force and effect, and
evidence of filing of such termination statements with the
applicable jurisdictions must have been delivered to Parent and
Acquisition. Each of the agreements listed on Schedule 7.3 must
have been terminated at no cost to any Acquired Company and with
no further liability or obligation on the part of any Acquired
Company, and evidence of such termination must have been
delivered to Parent and Acquisition at the Closing, each in form
and substance reasonably satisfactory to Parent and Acquisition.
7.4 ADDITIONAL DOCUMENTS. Each of the following
documents must have been delivered to Parent and Acquisition:
(a) an opinion of Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx, dated the Closing Date, in the form of Exhibit 7.4(a);
(b) an opinion of Xxxxxx, Xxxxx & Xxxxxx, dated the
Closing Date, in the form of Exhibit 7.4(a);
(c) estoppel certificates executed on behalf of
each of the lessors listed on Schedule 7.4(c),
54
dated as of the Closing Date, each in the form of Exhibit 7.4(c),
(d) opinions of local counsel with respect to the
due organization, good standing, corporate power and authority
and capitalization of each of the Subsidiaries of the Company, in
form and substance reasonably satisfactory to Parent and
Acquisition; and
(e) such other documents as Parent or Acquisition
(or their counsel) may reasonably request for the purpose of
facilitating the consummation or performance of any of the
Contemplated Transactions.
7.5 NO PROCEEDINGS. Since the date of this Agreement,
there must not have been commenced or Threatened against Parent
or Acquisition or against any Affiliate of Parent or Acquisition,
any Proceeding (a) involving any challenge to, or seeking damages
or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of
the Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.
There must not have been made or Threatened by any Person any
claim (other than claims which, if adversely determined, would
not result in any liability to or obligation of Parent or the
Surviving Corporation) asserting that such Person (a) is the
holder or the beneficial owner of, or has the right to acquire or
to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, any of the Acquired
Companies, or (b) is entitled to all or any portion of the Merger
Consideration payable for the Shares.
7.7 NO PROHIBITION. Neither the consummation nor the
performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material
violation of, or cause Parent or Acquisition or any Affiliate of
Parent or Acquisition to suffer any material adverse consequence
under, (a) any applicable Legal Requirement or Order, or (b) any
Legal Requirement or Order that has been published, introduced,
or otherwise proposed by or before any Governmental Body.
7.8 EMPLOYMENT AGREEMENTS. Acquisition must have
entered into employment agreements with each of Xxxxx X. Xxxxx
and Xxxxxx X. Xxxxx, Xx., in the form heretofore prepared and
initialed by the parties thereto (the "Employment Agreements").
7.9 COMPLIANCE WITH ISRA. Andal shall have, pursuant to
the New Jersey Industrial Site Recovery Act ("ISRA"), obtained a
"No Further Action Letter" from or entered into a Remediation
Agreement, in form and substance satisfactory to Parent and
Acquisition, with the New Jersey Department of Environmental
Protection ("NJDEP"), with respect to the Company's Rockaway, New
Jersey property. Parent and Acquisition agree to cooperate with
all reasonable requests of Andal in complying with ISRA,
including providing information reasonably requested by NJDEP,
provided that all costs and expenses associated with or in any
way relating to or arising from compliance with ISRA shall be
borne solely by the Company Shareholders.
55
7.10 COMPLIANCE WITH HSR ACT. The requirements of the
HSR Act applicable to the Contemplated Transactions must have
been complied with, and the waiting period thereunder must have
expired or been terminated.
7.11 FILING OF ASSIGNMENTS. Assignments from Andal to
the Company of all patents and trademarks listed as being held by
Andal or Multi-Arc Scientific Coatings on Parts 3.21(d) and
3.21(e), respectively, of the Disclosure Letter must have been
filed with the relevant filing authority in each country listed
on such Parts of the Disclosure Letter. All costs and expenses
associated with such filings, including without limitation
foreign associate fees, foreign government fees, legalizations
and attorneys' fees and expenses, shall be paid by Andal.
7.12 CONVERSION OF COMPANY DEBENTURES. Company
Debentures representing 90% of the aggregate principal amount of
the Company Debentures outstanding on the date hereof must have
been converted into Company Common Stock in accordance with the
conversion provisions thereof, with any portion thereof not
converted having been redeemed by the Company in accordance with
the redemption provisions thereof.
7.13 TROY, MI REMEDIATION. Attached as Schedule
7.13 are the reports of Xxxxxxx Consultants, Inc. ("ECI") and
Michigan Environmental Services ("MES") regarding potential
releases of hazardous materials at the Acquired Companies'
facility located in Troy, Michigan. Prior to the Closing, Andal
and the Company shall have fully investigated the potential
releases described in such reports, and performed any and all
remediation with respect thereto recommended by MES and/or ECI.
Parent and Acquisition shall be entitled to review and approve
any and all investigation and remediation plans proposed to be
pursued in connection such investigation and remediation, and the
results of such investigation and remediation shall be
satisfactory to Parent and Acquisition in all respects, in their
sole discretion. All costs and expenses associated with the
activities to be performed under this Section 7.13 shall be paid
for by the Company Shareholders. If all investigation and
remediation recommended by ECI and/or MES shall not have been
completed in full prior to the Closing Date in accordance with
the foregoing, a portion of the aggregate Merger Consideration
equal to the estimated cost of such remaining investigation or
remediation, as estimated by ECI, shall be deposited with the
escrow agent in a separate account under the Expense Escrow
Agreement (in addition to the amount to be deposited therein
under Section 2.9(c)) (the "Environmental Escrow") and the
Expense Escrow Agreement shall be modified to the extent
necessary (i) to reflect such deposit, (ii) to provide for the
funding of all investigation and remediation costs and expenses
hereunder out of such separate account of the Expense Escrow
Fund, (iii) to add Parent and the Surviving Corporation as
parties thereto, and (iv) to make any other modifications deemed
necessary or appropriate by the parties and consistent with this
Section 7.13. If the Environmental Escrow is insufficient to
satisfy all such investigation and remediation costs and
expenses, Parent and/or the Surviving Corporation may make a
claim for indemnification from the Escrow Fund for all such costs
and expenses which remain unpaid. Notwithstanding any other
provisions of this Agreement, the limitations on indemnification
set forth in Section 10.5 shall not apply to any such claim. If
at any time there are no funds remaining in the Escrow Fund,
Andal shall promptly pay by wire transfer into the Escrow Fund
additional funds in an
56
amount sufficient to satisfy any outstanding Claims, up to a
maximum aggregate amount equal to the aggregate amount of
remediation costs and expenses paid out of the Escrow Fund
pursuant to this Section 7.13 (in addition to any amounts
deposited therein pursuant to Section 2.8). From and after the
Effective Time, Parent and the Surviving Corporation will be
entitled to control any investigation and/or remediation and any
related Proceeding under this Section 7.13.
8. CONDITIONS PRECEDENT TO ANDAL'S AND THE COMPANY'S OBLIGATION
TO CLOSE.
The Company's obligation to consummate the Merger and
Andal's and the Company's obligations to take the other actions
required to be taken by them at the Closing are subject to the
satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Andal and the
Company, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. (a) All of Parent's
and Acquisition's representations and warranties in this
Agreement (considered collectively), and each of these
representations and warranties (considered individually), must
have been accurate in all material respects (except for
representations and warranties which are qualified by any of the
terms "material," "in all material respects," or "material
adverse effect," which must have been accurate in all respects,
as so qualified) as of the date of this Agreement and must be
accurate in all material respects (except for representations and
warranties which are qualified by any of the terms "material,"
"in all material respects," or "material adverse effect," which
must have been accurate in all respects, as so qualified) as of
the Closing Date as if made on the Closing Date.
(b) Since the date of this Agreement, no event or
condition shall have occurred causing a material breach of any
representation or warranty of Andal and the Company (i) which
event or condition is beyond the control of Andal and the
Acquired Companies, (ii) which event or condition has had or is
likely to have a Material Adverse Effect, and (iii) with respect
to which Parent and the Acquired Companies have not waived their
right to indemnification under this Agreement after five (5)
Business Days' prior written notice of such event or condition.
The Closing shall be delayed to the extent necessary in order to
allow such five-Business Day period to run.
8.2 PARENT'S AND ACQUISITION'S PERFORMANCE. (a) All of
the covenants and obligations that Parent and Acquisition are
required to perform or to comply with pursuant to this Agreement
at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must
have been performed and complied with in all material respects.
(b) Each document required to be delivered pursuant
to Section 2.2(c) must have been delivered, and Parent and
Acquisition must have made payment of the Merger Consideration in
accordance with Section 2.9.
8.3 CONSENTS. Each of the Consents identified in
Schedule 8.3, must have been obtained and must be in full force
and effect and the original copy of such Consents (or other
57
evidence thereof reasonably satisfactory to Andal and the
Company) must have been delivered to Andal and the Company.
8.4 ADDITIONAL DOCUMENTS. Parent and Acquisition must
have caused the following documents to be delivered to Andal and
the Company:
(a) an opinion of Xxxx, Scholer, Fierman, Xxxx &
Handler, LLP, dated the Closing Date, in the form of Exhibit
8.4(a); and
(b) such other documents as Andal or the Company
(or their counsel) may reasonably request for the purpose of
facilitating the consummation of any of the Contemplated
Transactions.
8.5 NO PROCEEDINGS. Since the date of this Agreement,
there must not have been commenced or Threatened against Andal or
the Company or against any Affiliate of Andal or the Company, any
Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of
the Contemplated Transactions.
8.6 NO PROHIBITION. Neither the consummation nor the
performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material
violation of, or cause Andal or any Acquired Company or any
Affiliate of Andal or any Acquired Company to suffer any material
adverse consequence under, (a) any applicable Legal Requirement
or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any
Governmental Body.
8.7 COMPLIANCE WITH HSR ACT. The requirements of the
HSR Act applicable to the Contemplated Transactions must have
been complied with, and the waiting period thereunder must have
expired or been terminated.
9. TERMINATION.
9.1 TERMINATION EVENTS. This Agreement may, by notice
given prior to or at the Closing, be terminated:
(a) (i) by Parent and Acquisition if a material Breach
of any provision of this Agreement has been committed by either
Andal or the Company and such breach has not been cured or
waived; or (ii) by Andal and the Company if a material Breach of
any provision of this Agreement has been committed by Parent or
Acquisition and such Breach has not been cured or waived;
58
(b) (i) by Parent and Acquisition if any of the
conditions in Section 7 has not been satisfied as of the Closing
Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Parent or
Acquisition to comply with its obligations under this Agreement)
and Parent and Acquisition have not waived such condition on or
before the Closing Date; or (ii) by Andal and the Company, if
any of the conditions in Section 8 has not been satisfied as of
the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Andal or
the Company to comply with their obligations under this
Agreement) and Andal and the Company have not waived such
condition on or before the Closing Date;
(c) by mutual consent of Parent and Acquisition, on
the one hand, and Andal and the Company, on the other; or
(d) by either Parent and Acquisition, on the one
hand, or Andal and the Company on the other if the Closing has
not occurred (other than through the failure of any party seeking
to terminate this Agreement to comply fully with its obligations
under this Agreement) on or before September 30, 1997 (subject
to the last sentence of Section 8.1(b)) or such later date as the
parties may agree upon.
9.2 EFFECT OF TERMINATION. Each party's right of
termination under Section 9.1 is in addition to any other rights
it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies.
If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 13.1 and 13.3
and this Section 9.2 will survive; provided, however, that if
this Agreement is terminated by a party because of the Breach of
the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's
failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES.
10.1 SURVIVAL. All representations, warranties,
covenants, and obligations in this Agreement, the Disclosure
Letter, the supplements to the Disclosure Letter and any
certificate or document delivered pursuant to this Agreement will
survive the Closing.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY COMPANY
SHAREHOLDERS. Subject to the limitations set forth in Section
10.5, the Company Shareholders will, jointly and severally,
indemnify and hold harmless Parent for, and will pay to Parent
the amount of, any loss, liability, claim, damage, expense
(including costs of investigation and defense and reasonable
experts', consultants' and attorneys' fees) or diminution of
value, whether or not involving a third-party claim
(collectively, "Damages"), of Parent, Acquisition, the Surviving
Corporation, the Acquired Companies, and their respective
Representatives, stockholders,
59
controlling persons, and affiliates (collectively, the
"Indemnified Persons") arising, directly or indirectly, from or
in connection with:
(a) (i) any Breach of any representation or
warranty (without giving effect to any supplement to the
Disclosure Letter), made by Andal or the Company in this
Agreement, including the Disclosure Letter delivered on the date
hereof, and (ii) any Breach of any representation or warranty
made by Andal or the Company in any other certificate or document
(including any supplement to the Disclosure Letter) delivered by
Andal or the Company pursuant to this Agreement;
(b) any Breach by Andal or the Company of any
covenant or obligation of Andal or the Company in this Agreement;
(c) any product shipped or manufactured by, or
services provided by any Acquired Company prior to the Closing
Date, to the extent that the Damages resulting therefrom (i) are
not Damages that are incurred by the Acquired Companies in the
Ordinary Course of Business and (ii) are not covered by insurance
maintained by the Acquired Companies;
(d) any liabilities of Andal existing or arising
from or in connection with events or circumstances occurring on
or before September 30, 1994 which were not assumed by the
Company pursuant to the acquisition of assets and assumption of
liabilities of the Multi-Arc Division consummated on such date;
and
(e) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by any such
Person with either Andal or any Acquired Company (or any Person
acting on their behalf) in connection with any of the
Contemplated Transactions.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY COMPANY
SHAREHOLDERS -- ENVIRONMENTAL MATTERS. In addition to the
provisions of Section 10.2, with the exception of Damages which
are fully covered by insurance programs in effect as of the
Closing Date and transferred as a result of the Contemplated
Transactions, the Company Shareholders will, jointly and
severally, indemnify and hold harmless Parent for, and will pay
to Parent the amount of, any Damages incurred by Parent,
Acquisition, the Surviving Corporation and the Acquired
Companies, and the other Indemnified Persons (including costs of
cleanup, containment, or other remediation) arising, directly or
indirectly, from or in connection with:
(a) any Environmental, Health, and Safety
Liabilities arising out of or relating to: (i) (A) the
ownership, operation, or condition at any time on or prior to the
Closing Date of the Facilities or any other properties and assets
(whether real, personal, or mixed and whether tangible or
intangible) in which Andal, the Company or any other Non-Joint
Venture Acquired Company has or had an interest, or (B) any
Hazardous Materials or other contaminants that were present on
the Facilities or such other properties and assets
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at any time on or prior to the Closing Date; or (ii) (A) any
Hazardous Materials or other contaminants, wherever located, that
were generated, transported, stored, treated, Released, or
otherwise handled by Andal, the Company or any other Non-Joint
Venture Acquired Company or by any other Person for whose conduct
they are or may be held responsible at any time on or prior to
the Closing Date, or (B) any Hazardous Activities that were
conducted by Andal, the Company or any other Non-Joint Venture
Acquired Company or by any other Person for whose conduct they
are or may be held responsible; or
(b) any bodily injury (including illness,
disability, and death, and regardless of when any such bodily
injury occurred, was incurred, or manifested itself), personal
injury, property damage (including trespass, nuisance, wrongful
eviction, and deprivation of the use of real property), or other
damage of or to any Person, including any employee or former
employee of Andal, the Company or any other Non-Joint Venture
Acquired Company or any other Person for whose conduct they are
or may be held responsible, in any way arising from or allegedly
arising from any Hazardous Activity conducted or allegedly
conducted with respect to the Facilities or the operation of the
Non-Joint Venture Acquired Companies prior to the Closing Date,
or from Hazardous Material that was (i) present or suspected to
be present on or before the Closing Date on or at the Facilities
(or present or suspected to be present on any other property, if
such Hazardous Material emanated or allegedly emanated from any
of the Facilities and was present or suspected to be present on
any of the Facilities on or prior to the Closing Date) or (ii)
Released or allegedly Released by Andal, the Company or any other
Non-Joint Venture Acquired Company or any other Person for whose
conduct they are or may be held responsible, at any time on or
prior to the Closing Date.
Parent and the Surviving Corporation will be entitled to control
any Cleanup, any related Proceeding, and, except as provided in
the following sentence, any other Proceeding with respect to
which indemnity may be sought under this Section 10.3. The
procedure described in Section 10.6 will apply to any claim
solely for monetary damages relating to a matter covered by this
Section 10.3.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY PARENT
AND THE SURVIVING CORPORATION. Parent and the Surviving
Corporation, jointly and severally, will indemnify and hold
harmless the Company Shareholders, and will pay to the Company
Shareholders the amount of any Damages arising, directly or
indirectly, from or in connection with (a) any Breach of any
representation or warranty made by Parent or Acquisition in this
Agreement or in any certificate delivered by Parent or
Acquisition pursuant to this Agreement, (b) any Breach by Parent
or Acquisition of any covenant or obligation of Parent or
Acquisition in this Agreement, or (c) any claim by any Person
for brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding alleged to have been
made by such Person with Parent or Acquisition (or any Person
acting on its behalf) in connection with any of the Contemplated
Transactions.
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10.5 LIMITATIONS ON INDEMNIFICATION. (a) If the
Closing occurs, the Company Shareholders will have no liability
(for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date unless on
or before March 31, 1999 Parent or the Surviving Corporation
notifies Andal, as agent of the Company Shareholders pursuant to
Article 12 hereof, of a claim, specifying the factual basis of
that claim in reasonable detail to the extent then known by
Parent or the Surviving Corporation. If the Closing occurs,
neither Parent nor the Surviving Corporation will have any
liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, unless on
or before Xxxxx 00, 0000 Xxxxx, as agent of the Company
Shareholders pursuant to Article 12 hereof, notifies Parent or
the Surviving Corporation of a claim, specifying the factual
basis of that claim in reasonable detail to the extent then known
by it.
(b) The Company Shareholders will have no liability
with respect to the matters described in clause (a) or (b) of
Section 10.2, Section 10.3, Section 11.2(a) or Section 11.3 until
the total of all Damages with respect to such matters exceeds
$700,000, and then only for the amount by which such Damages
exceed such amount. Parent and the Surviving Corporation will
have no liability with respect to the matters described in clause
(a) or (b) of Section 10.4, Section 11.2(c) or Section 11.3 until
the total of all Damages with respect to such matters exceeds
$700,000, and then only for the amount by which such Damages
exceed such amount.
(c) In no event shall the Company Shareholders, on
one hand, or Parent and the Surviving Corporation on the other,
have any liability under this Article 10, Section 11.2 or Section
11.3 following the Closing in excess of Two Million Nine Hundred
and Twenty Thousand Dollars ($2,920,000). In the case of Claims
thereunder against the Company Shareholders, the exclusive remedy
for such Claims shall be recourse to the Escrow Fund.
10.6 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY
CLAIMS. (a) Promptly after receipt by an indemnified party
under Section 10.2, 10.3 (to the extent provided in the last
sentence of Section 10.3), Section 10.4, Section 11.2, Section
11.3, Section 11.6 or Section 11.7 of notice of the commencement
of any Proceeding against it, such indemnified party will, if a
claim is to be made against an indemnifying party under such
Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of any
liability that it may have to any indemnified party, except to
the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section
10.6(a) is brought against an indemnified party and it gives
notice to the indemnifying party of the commencement of such
Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith
that joint representation would be inappropriate, or
62
(ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to
defend such Proceeding and provide indemnification with respect
to such Proceeding), to assume the defense of such Proceeding
with counsel satisfactory to the indemnified party and, after
notice from the indemnifying party to the indemnified party of
its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this
Section 10 for any fees of other counsel or any other expenses
with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with
the defense of such Proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of
a Proceeding, (i) it will be conclusively established for
purposes of this Agreement that the claims made in that
Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified
party's consent unless (A) there is no finding or admission of
any violation of Legal Requirements or any violation of the
rights of any Person and no effect on any other claims that may
be made against the indemnified party, (B) the sole relief
provided is monetary damages that are paid in full by the
indemnifying party, and (C) if the claim involves Taxes, such
settlement could not adversely affect any Tax liability of the
indemnified party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within ten days after the
indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a
reasonable probability that a Proceeding may adversely affect it
or its affiliates other than as a result of monetary damages for
which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the
indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the indemnifying party
will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its
consent (which may not be unreasonably withheld).
(d) In the event that a Proceeding relating to
Taxes involves multiple claims, the indemnifying party may
participate in or assume the defense of such Proceeding under
Section 10.6(b) only with respect to those claims for which it is
liable for indemnification. In the event that there is a choice
of forum with respect to a Proceeding relating to Taxes, and the
indemnifying party assumes the defense of less than all of the
claims in such Proceeding under Section 10.6(b), the choice of
forum shall be made by the party controlling those claims which
represent the greatest aggregate potential Tax liability.
10.7 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A
claim for indemnification for any matter not involving a third-
party claim may be asserted by notice to the party from whom
indemnification is sought.
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10.8 COSTS AND EXPENSES. In any action or proceeding
brought by a party to enforce any provision of this Agreement,
the prevailing party shall be entitled to recover the costs and
expenses incurred by it in connection with that action or
proceeding (including, but not limited to, reasonable attorneys'
fees and expenses).
11. TAX MATTERS.
11.1 COOPERATION ON TAX MATTERS. (a) From and after the
Closing, Andal on the one hand, and Parent and the Surviving
Corporation on the other shall cooperate fully, as and to the
extent reasonably requested by the other, in connection with the
preparation and filing of any Tax return, statement, report or
form (including any report required pursuant to Section 6043 of
the IRC and all regulations promulgated thereunder), any audit,
litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other
party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. Andal and the
Surviving Corporation agree (i) to retain all books and records
with respect to Tax matters pertinent to the Acquired Companies
relating to any Pre-Closing Tax Period, and to abide by all
record retention agreements entered into with any Taxing
Authority, or (ii) to give the other party reasonable written
notice prior to destroying or discarding any such books and
records and, if the other party so requests, allow such other
party to take possession of such books and records.
(b) From and after the Closing, Andal on the one hand,
and Parent and the Surviving Corporation on the other further
agree, upon request, to use all reasonable efforts to obtain any
certificate or other document from any Governmental Authority or
customer of any Acquired Company or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including but not limited to with respect to the
transactions contemplated hereby).
(c) Andal will prepare or cause to be prepared all
federal Tax Returns which include Andal and all other Tax Returns
for the Acquired Companies for any tax period ending on or before
the close of business on the Closing Date except those state
returns of the Acquired Companies, including unitary or combined
returns with Andal, which include the reporting of the impact of
any Section 338 Elections. Parent will prepare or cause to be
prepared all tax returns of the Acquired Companies for any tax
period ending after the close of business on the Closing Date and
those state returns of the Acquired Companies, including unitary
or combined returns with Andal, which include the reporting of
the impact of any Section 338 Elections. Andal will cooperate
with the Parent by providing information necessary for Parent's
preparation of any combined returns which include Andal and the
Acquired Companies.
(d) Andal agrees to provide Parent with a copy of its
consolidated federal income tax return for 1997 at least thirty
(30) Business Days prior to filing with the IRS. Andal agrees to
provide Parent for its review and comment a copy of any and all
other Tax Returns for
64
or including any Acquired Company for which it has responsibility
for preparation pursuant to the preceding paragraph at least ten
(10) Business Days prior to filing with the applicable Government
Body. Andal agrees to allow Parent and its representatives
reasonable access to workpapers supporting the Tax Returns.
Andal agrees not to take any position in such Tax returns
inconsistent with the positions taken in the Tax Returns set
forth on Part 3.10 of the Disclosure Letter or as provided in
Section 11.6, except as required by applicable law.
(e) Parent agrees to provide Andal with a copy of any
combined or unitary tax return which includes Andal and which
Parent has responsibility for preparing pursuant to paragraph (c)
above at least ten (10) Business Days prior to filing with the
applicable Government Body.
(f) The foregoing provisions of this Section 11.1
shall apply to Andal only to the extent that Andal has not
formally liquidated and still has employees and/or other
personnel capable of fulfilling its responsibilities thereunder.
11.2 TAX INDEMNIFICATION. (a) The Company Shareholders
will, jointly and severally, indemnify and hold harmless Parent
for, and will pay to Parent, the amount of any (x) Tax of any
Acquired Company for the Tax Indemnification Period, except for
Taxes arising out of or resulting from the Section 338(h)(10)
Elections or any transaction not in the Ordinary Course of
Business occurring on the Closing Date but after the Effective
Time, in excess of the sum of the amount reflected in reserves on
the Interim Balance Sheet (excluding any provision for Deferred
Taxes) plus Tax liabilities incurred in the Ordinary Course of
Business since the date of the Interim Balance Sheet as a
consequence of an adjustment which increases the Tax liability of
any Acquired Company for any Pre-Closing Tax Period, (y) Tax of
any Acquired Company resulting from a breach of the provisions of
Section 3.10, and (z) Damages incurred by any of Parent,
Acquisition, the Surviving Corporation, the Acquired Companies,
and the other Indemnified Persons arising out of or incident to
the imposition, assessment or assertion of any Tax described in
(x) or (y) including those incurred in the contest in good faith
in appropriate proceedings relating to the imposition, assessment
or assertion of any such Tax, and any liability as transferee,
provided, that in the event that Section 338(h)(10) Elections are
not made, the amount of any Damages for which indemnification is
provided under this Section 11.2(a) shall be reduced by any
related Tax benefit if and when actually realized or received in
respect of such Damages. The amount of any such Tax benefit
shall be determined by the independent accountants for the
Surviving Corporation.
(b) For purposes of this Section, in the case of
any Taxes that are imposed on a periodic basis and are payable
for a Tax period that includes (but does not end on) the Closing
Date, the portion of such Tax related to the portion of such Tax
period ending on and including the Closing Date shall (x) in the
case of any Taxes other than gross receipts, sales or use Taxes
and Taxes based upon or related to income, be deemed to be the
amount of such Tax for the entire Tax period multiplied by a
fraction the numerator of which is the number of days in the Tax
period ending on and including the Closing Date and the
denominator of which is the number of days in the entire Tax
period, and (y) in the case of any Tax based upon or related to
income and any gross receipts, sales or use Tax, be deemed equal
to the amount which would be
65
payable if the relevant Tax period ended on and included the
Closing Date. The portion of any credits relating to a Tax
period that begins before and ends after the Closing Date shall
be determined as though the relevant Tax period ended on and
included the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner
consistent with prior practice of Andal and the Acquired
Companies.
(c) Parent and the Surviving Corporation will,
jointly and severally, indemnify and hold harmless the Company
Shareholders for, and will pay to the Company Shareholders the
amount of any (x) Tax imposed on income of the Company earned
after the Closing Date and (y) Damages arising out of or incident
to the imposition, assessment or assertion of any Tax described
in (x) including those incurred in the contest in good faith in
appropriate proceedings relating to the imposition, assessment or
assertion of any such Tax, and any liability as transferee.
11.3 PURCHASE PRICE ADJUSTMENT AND INTEREST. Any amount
paid by the Company Shareholders, Parent or the Surviving
Corporation under Article 10, Section 11.2 or Section 11.7 will
be treated as a purchase price adjustment followed, in the event
of any payment by the Company Shareholders, by a capital
contribution to the Surviving Corporation by Parent. In the
event that Section 338(h)(10) Elections are not made and a Final
Determination causes any such amount paid by the Company
Shareholders, Andal, Parent or the Surviving Corporation pursuant
to Sections 11.2 or 11.7 not to constitute a purchase price
adjustment for federal Tax purposes, the Company Shareholders,
Andal, Parent or the Surviving Corporation shall pay as Damages
subject to the limitations on indemnification provided in Section
10.5 an amount that reflects the actual Tax consequences, as
determined by the independent accountants for the indemnified
party, of the receipt or accrual of such payment.
11.4 TERMINATION OF EXISTING TAX SHARING AGREEMENTS.
Any and all existing Tax Sharing Agreements shall be terminated
as of the Closing Date. After the Closing, no Acquired Company
shall have any further rights or liabilities thereunder,
including with respect to any period prior to the Closing. This
Agreement shall be the sole Tax sharing agreement relating to any
Acquired Company for all Pre-Closing Tax Periods.
11.5 PAYMENT OF TAXES. All transfer, documentary,
sales, use, stamp, registration, value added and other such Taxes
and fees (including any penalties and interest) incurred in
connection with this Agreement (including any real property
transfer tax and any similar Tax) or the Contemplated
Transactions shall be paid by the Company Shareholders when due,
and the Company Shareholders (or if applicable, the Company)
will, at the expense of the Company Shareholders, file all
necessary Tax Returns and other documentation with respect to all
such Taxes and fees, and, if required by applicable Legal
Requirements, Parent will, and will cause its Affiliates to, join
in the execution of any such Tax Returns and other documentation.
11.6 338 ELECTION. Parent shall have the option to have
Section 338(h)(10) Elections made with respect to the acquisition
of Company Common Stock pursuant to the Merger wherever available
under the laws of any relevant jurisdiction. Andal agrees to
join with
66
parent in the making of all Section 338(h)(10) Elections
(including filing with Parent IRC Form 8023-A). Parent shall
provide notice of any such proposed election to Andal within 180
days after the Closing, together with a schedule setting forth
Parent's allocation of the aggregate Merger Consideration among
the Acquired Companies' assets (the "Allocation"). Within thirty
(30) days after receipt of the Allocation, Andal shall provide to
Parent its good faith estimate of the AMT (as defined below)
payable by Andal in respect of the Contemplated Transactions,
based on the Allocation. Within fifteen (15) days of receipt of
Andal's estimate of AMT, Parent shall notify Andal as to whether
it intends to make Section 338 (h)(10) Elections with respect to
the Contemplated Transactions, and, if so, of any changes to the
Allocation. Andal agrees not to take a position inconsistent
with Parent's Allocation in any Tax Return, provided such
Allocation is reasonable, and, consistent with Section 11.1(d),
to provide a copy of any Tax Return relating to any Tax for which
Andal is entitled to be reimbursed pursuant to this Section 11.6
to Parent for its review and approval (not to be unreasonably
withheld) prior to the filing thereof with the applicable
Governmental Body. The parties agree to file IRS Form 8594 (or
any substitute therefor) consistent with such Allocation when
required by applicable Legal Requirements. With regard to Taxes
imposed on any of the Acquired Companies as a result of the
making of Section 338(h)(10) Elections, the Acquired Companies
shall pay all such Taxes imposed on them. With regard to Taxes
imposed on Andal as a result of the making of Section 338(h)(10)
Elections, Parent and the Surviving Corporation, jointly and
severally, will indemnify and hold harmless Andal for, and will
pay to Andal, (x) all state and local Taxes arising from such
Elections, (y) any federal alternative minimum tax imposed under
Section 55 of the IRC ("AMT") in excess of $170,000 arising from
such Elections and (z) any additional Taxes imposed as a result
of any payment under this Section 11.6, in each case, to the
extent that such amounts are in excess of what such amounts would
have been had no Section 338(h)(10) Elections been made.
11.7 ANDAL TAX ASSESSMENTS. (a) The parties acknowledge
that there are certain outstanding judgments against Andal for
Taxes imposed or assessed by New York City ("NYC Taxes"),
including an assessment for unpaid taxes and interest with
respect to taxable years 1978-1982 (the "Second Assessment"), and
that a statutory lien may have arisen on Andal's and/or the
Acquired Companies' assets as a result of such judgments. Andal
hereby agrees to indemnify and hold harmless Parent for, and will
pay to Parent, the amount of (i) any NYC Taxes imposed on or
assessed against Andal for which the Acquired Companies are
liable and (ii) any Damages incurred by any of Parent,
Acquisition, the Surviving Corporation, the Acquired Companies
and the other Indemnified Persons arising out of or incident to
the imposition or assessment of any such NYC Tax. The exclusive
remedy for claims for indemnification under this Section 11.7
shall be recourse to the Andal Escrow Fund. Any such claims may
be made at any time on or before July 31, 2002. Andal agrees to
use commercially reasonable efforts to obtain either a final
written determination from New York City or other evidence, in
either case, in form and substance reasonably satisfactory to
Parent and the Surviving Corporation, that the lien referred to
above does not exist or has been released. In the event that
such a final determination or other evidence has not been
obtained prior to July 31, 2002, Andal agrees to pay the
Surviving Corporation the sum of Three Hundred Thousand Dollars
($300,000), plus interest from the Closing Date as earned in
accordance with the Andal Escrow Agreement, such amount to be
payable out of the Andal Escrow Fund in accordance with the Andal
67
Escrow Agreement, to the extent that the funds therein are
sufficient to satisfy such payment, with any remaining unpaid
amounts to be paid by Andal to the Surviving Corporation by wire
transfer no later than August 15, 2002.
(b) In the event that the Second Assessment is paid
in full by Andal (including all accrued interest through the date
of payment), and written evidence of such payment, in form and
substance reasonably satisfactory to Parent, is provided to
Parent, Andal shall be entitled to withdraw from the Andal Escrow
Fund in accordance with the Andal Escrow Agreement an amount
equal to the lesser of (i) the amount of such payment and (ii)
$455,000.
(c) Notwithstanding any other provision of this
Agreement, the limitations on indemnification set forth in
Section 10.5 shall not apply to this Section 11.7.
12. THE AGENT.
12.1 AUTHORIZATION OF THE AGENT. Upon adoption of this
Agreement by the Board of Directors of the Company and approval
of this Agreement by the Company Shareholders pursuant to the
Certificate of Incorporation and By-Laws of the Company and the
applicable provisions of the DGCL, Andal hereby is appointed,
authorized and empowered to act, as a representative, on behalf
of the Company Shareholders (other than any holder of Dissenting
Shares), in connection with any and all activities to be
performed by or on behalf of the Company Shareholders (other than
any holder of Dissenting Shares) under this Agreement, the Escrow
Agreement and the Expense Escrow Agreement and each other
agreement, document, instrument or certificate referred to herein
or therein or the transactions provided for herein or therein
(including, without limitation, in connection with any and all
claims for indemnification brought under Article 10 or Section
11.2 of this Agreement or Section 3 of the Escrow Agreement)
(Andal, acting in such representative capacity shall be referred
to herein as the "Agent"), for the purposes and with the powers
and authority set forth herein or in the Escrow Agreement or the
Expense Escrow Agreement or in such other agreement, document,
instrument or certificate, which shall include, without
limitation, the power and authority:
(a) To execute and deliver this Agreement, the
Escrow Agreement in substantially the form annexed to this
Agreement as Exhibit 2.2(b)(iii) hereto, and the Expense Escrow
Agreement in substantially the form annexed to this Agreement as
Exhibit 2.9(c)(ii) (with such modifications or changes therein as
to which the Agent, in its sole discretion, shall have consented)
and to agree to such amendments or modifications hereto or
thereto as the Agent, in its sole discretion, may deem necessary
or desirable;
(b) To execute and deliver such notices, waivers
and consents in connection with this Agreement, the Escrow
Agreement or the Expense Escrow Agreement and the consummation of
the transactions contemplated hereby or thereby as the Agent, in
its sole discretion, may deem necessary or desirable;
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(c) To enforce and protect the rights and interests
of the Company Shareholders (other than any holder of Dissenting
Shares) and to enforce and protect the rights and interests of
the Agent arising out of or under or in any manner relating to
this Agreement, the Escrow Agreement or the Expense Escrow
Agreement and each other agreement, document, instrument or
certificate referred to herein or therein or the transactions
provided for herein or therein (including, without limitation, in
connection with any and all claims for indemnification brought
under Article 10 or Section 11.2 of this Agreement or Section 3
of the Escrow Agreement) and, in connection therewith, to (i)
assert any claim or institute any action, proceeding or
investigation; (ii) investigate, defend, contest or litigate any
claim, action, proceeding or investigation initiated by any
Person against the Agent, the Escrow Fund and/or the Expense
Fund, and receive process on behalf of any or all Company
Shareholders (other than any holder of Dissenting Shares) in any
such claim, action, proceeding or investigation and compromise or
settle on such terms as the Agent shall determine, in its sole
discretion, to be appropriate, and give receipts, releases and
discharges on behalf of all of the Company Shareholders (other
than any holder of Dissenting Shares) with respect to, any such
claim, action, proceeding or investigation; (iii) file any proofs
of debt, claims and petitions as the Agent may deem advisable or
necessary; (iv) settle or compromise any claims asserted under
Article 10 or Section 11.2 of this Agreement or Section 3 of the
Escrow Agreement or under the Expense Escrow Agreement; (v)
assume, on behalf of all of the Company Shareholders (other than
any holder of Dissenting Shares) the defense of any third party
claim that is the basis of any claim asserted under Article 10 or
Section 11.2 of this Agreement or Section 3 of the Escrow
Agreement or under the Expense Escrow Agreement; and (vi) file
and prosecute appeals from any decision, judgment or award
rendered in any of the foregoing actions, proceedings or
investigations, it being understood that the Agent shall not have
any obligation to take any such actions, and shall not have any
liability for any failure to take any such actions;
(d) To enforce payment of the Escrow Fund and the
Expense Fund and any other amounts payable to the Company
Shareholders (other than any holder of Dissenting Shares), in
each case on behalf of the Company Shareholders (other than any
holder of Dissenting Shares) and each of them to the extent of
each of their respective interest therein, in the name of the
Agent or, if the Agent so elects, in the name of one or more of
the Company Shareholders (other than any holder of Dissenting
Shares);
(e) To cause to be paid out of the Escrow Fund the
full amount of any judgment or judgments and legal interest and
costs awarded in favor of the Surviving Corporation or Parent
arising out of the indemnification provisions set forth in
Article 10 or Section 11.2 of this Agreement or Section 3 of the
Escrow Agreement or any amounts payable to the Surviving
Corporation or Parent in respect of any compromise or settlement
of any claim for indemnification under such Sections agreed to by
the Agent in its sole discretion; and to cause to be paid out of
the Expense Fund the full amount of any Expenses to the
applicable obligee as provided in Section 3 of the Expense Escrow
Agreement and any judgment or judgments and legal interest and
costs awarded in favor of any such obligee in connection with any
such Expenses;
69
(f) To refrain from enforcing any right of the
Company Shareholders (other than any holder of Dissenting shares)
or any of them and/or of the Agent arising out of or under or in
any manner relating to this Agreement, the Escrow Agreement or
the Expense Escrow Agreement or any other agreement, instrument
or document in connection with the foregoing; provided, however,
that no such failure to act on the part of the Agent, except as
otherwise provided herein or in the Escrow Agreement or the
Expense Escrow Agreement, shall be deemed a waiver of any such
right or interest by the Agent or by the Company Shareholders
unless such waiver is in a writing signed by the waiving party or
by the Agent;
(g) To receive distributions and other payments
from the Escrow Fund or otherwise to or for the benefit of the
Company Shareholders (other than any holder of Dissenting Shares)
or any of them pursuant to this Agreement, the Escrow Agreement
or the Expense Escrow Agreement;
(h) To make, execute, acknowledge and deliver all
such other agreements, guarantees, orders, receipts,
endorsements, notices, requests, instructions, certificates,
stock powers, letters and other writings, and, in general, to do
any and all things and to take any and all action that the Agent,
in its sole and absolute discretion, may consider necessary or
proper or convenient in connection with or to carry out the
activities described in this Section 12.1 and the transactions
contemplated hereby or by the Escrow Agreement or the Expense
Escrow Agreement and all other agreements, documents or
instruments referred to therein or executed in connection
therewith.
The grant of authority provided for in this Section
12.1: (i) is coupled with an interest and being granted, in
part, as an inducement to Parent and Acquisition to enter into
this Agreement and the Escrow Agreement and the other agreements,
documents, instruments and certificates contemplated hereby or
thereby and shall be irrevocable and survive the death,
incompetency, bankruptcy or liquidation of any Company
Shareholder (other than any holder of Dissenting Shares) and
shall be binding on any successor thereto; (ii) may be exercised
by any authorized officer of the Agent; and (iii) shall survive
the delivery of an assignment by a Company Shareholder (other
than any holder of Dissenting Shares) of the whole or any
fraction of his or her interest hereunder.
12.2 PAYMENTS OF EXPENSES; HOLDBACKS. (a) The Agent
shall withhold and retain from any distributions to the Company
Shareholders (other than any holder of Dissenting Shares) out of
the Escrow Fund or the Expense Escrow Fund such amount or amounts
as shall be sufficient to pay all known (or reasonably
anticipated) expenses which are required to be paid or borne by
the Company Shareholders (other than any holder of Dissenting
Shares) pursuant to this Agreement, the Escrow Agreement or the
Expense Escrow Fund, or are otherwise incurred by the Agent in
performance of its duties hereunder, including, without
limitation, its out-of-pocket expenses and shall pay all such
expenses out of the amount or amounts so withheld.
(b) In connection with the performance of its
obligations hereunder and under the Escrow Agreement and the
Expense Escrow Agreement, the Agent shall have the right at any
70
time and from time to time to select and engage, at the cost and
expense of the Company Shareholders (other than any holder of
Dissenting Shares), attorneys, accountants, investment bankers,
advisors, consultants (including, without limitation, consultants
specializing in product liability, environmental liability and
similar matters) and clerical personnel and obtain such other
professional and expert assistance, and maintain such records, as
the Agent may deem necessary or desirable and incur other out-of-
pocket expenses.
12.3 COMPENSATION; EXCULPATION; INDEMNITY. (a) The
Agent shall not be entitled to any fee, commission or other
compensation for the performance of its services as such, but
shall be entitled to the payment of all of its expenses incurred
as Agent, and in furtherance of the foregoing, may pay or cause
to be paid or reimburse itself for the payment of any and all
such expenses out of amounts payable from the Escrow Fund or the
Expense Escrow Fund to the Company Shareholders (other than any
holder of Dissenting Shares).
(b) In dealing with this Agreement, the Escrow
Agreement and the Expense Escrow Fund, and any instruments,
agreements or documents relating thereto, and in exercising or
failing to exercise all or any of the powers conferred upon the
Agent hereunder, (i) the Agent assumes and shall incur no
responsibility whatsoever to any Company Shareholder by reason of
any error in judgment or other act or omission performed or
omitted hereunder or in connection with this Agreement, the
Escrow Agreement or the Expense Escrow Agreement or any such
other agreement, instrument or document, excepting only
responsibility for any act or failure to act which represents
gross negligence or willful misconduct, and (ii) the Agent shall
be entitled to rely on the advice of counsel, public accountants
or other independent experts experienced in the matter at issue,
and any error in judgment or other act or omission of the Agent
pursuant to such advice shall in no event subject the Agent to
liability to any Company Shareholder.
(c) Each Company Shareholder (other than any holder
of Dissenting Shares), severally, shall indemnify the Agent (up
to, but not exceeding, an amount equal to the distributions due
to such Company Shareholder from the Escrow Fund) against all
damages, liabilities, claims, obligations, costs and expenses,
including reasonable attorneys', accountants' and other experts'
fees and the amount of any judgment against them, of any nature
whatsoever, arising out of or in connection with any claim,
investigation, challenge, action or proceeding or in connection
with any appeal thereof, relating to the acts or omissions of the
Agent under this Agreement, the Escrow Agreement or the Expense
Escrow Agreement or otherwise. The foregoing indemnification
shall not be deemed exclusive of any other right to which the
Agent may be entitled apart from the provisions hereof. The
foregoing indemnification shall not apply in the event of any
action or proceeding which finally adjudicates the liability of
the Agent for its gross negligence or willful misconduct.
(d) All of the indemnities, immunities and powers
granted to the Agent under this Agreement shall survive the
Closing and/or any termination of this Agreement, the Escrow
Agreement and/or the Expense Escrow Agreement.
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12.4 NOTICES. Any notice given to the Agent pursuant to
this Agreement, the Escrow Agreement or the Expense Escrow
Agreement or any other agreement, document, instrument or
certificate contemplated hereby or thereby shall constitute
effective notice to all Company Shareholders. Parent, the
Surviving Corporation and any other Person may rely on any
notice, consent, election or other communication received from
the Agent as if such notice, consent, election or other
communication had been received from all Company Shareholders.
12.5 NO THIRD PARTY RIGHTS. Notwithstanding anything
contained in this Agreement or elsewhere to the contrary, no
Person other than the Agent shall (i) be entitled to exercise any
of the rights or powers of the Agent hereunder or under the
Escrow Agreement or the Expense Escrow Agreement, (ii) have any
right to demand upon any of the Company Shareholders to
contribute any amounts to cover expenses of the Agent, or (iii)
as a result of the provisions of this Section 12 have any claims
or rights against any of the Company Shareholders other than any
claims or rights that would exist in any event absent the
provisions of this Section 12.
12.6 RESIGNATION OR REMOVAL; SUCCESSOR AGENT. (a) The
Agent may resign upon 20 days' prior written notice to Parent,
the Surviving Corporation and each Company Shareholder, provided,
that no such resignation may take effect unless a successor Agent
shall have been duly appointed and shall have accepted such
appointment and notice thereof shall have been given as set forth
below. The Company Shareholders may remove the Agent at any
time, by written consent of the Required Majority of Shareholders
(as defined below), provided, that no such removal may take
effect unless a successor Agent shall have been duly appointed
and shall have accepted such appointment and notice thereof shall
have been given as set forth below.
(b) Upon the resignation or removal of the Agent,
the Company Shareholders shall appoint a successor Agent by
written consent of the Company Shareholders holding 66 2/3% of
the Company Common Stock immediately prior to the Effective Time
(the "Required Majority of Shareholders"), and any successor
Agent so appointed shall constitute the Agent as provided in this
Article 12 to the same effect as if such successor Agent had been
named in this Article 12. The Company Shareholders shall give
Parent and the Surviving Corporation written notice of the
removal of any Agent as well as of the appointment of and
acceptance of appointment by the successor to such Agent,
including a copy of the written consent of the Required Majority
of Shareholders relating thereto, the executed acceptance of
appointment by the successor to such Agent, and the successor
Agent's address (including telephone and telecopy numbers and the
name of the authorized Agent of such successor Agent) as soon as
practicable after any such removal and appointment. The Agent
shall give Parent and the Surviving Corporation written notice of
the resignation of such Agent as well as of the appointment of
and acceptance of appointment by the successor to such Agent,
including the executed acceptance of appointment by the successor
to such Agent and the successor Agent's address (including
telephone and telecopy numbers and the name of the authorized
Agent of such successor Agent) as soon as practicable after any
such resignation and appointment. Any such resignation, removal
or appointment shall not be effective against Parent or the
Surviving Corporation until such notice shall have been given.
72
13. GENERAL PROVISIONS.
13.1 EXPENSES. Except as otherwise expressly provided
in this Agreement, each party to this Agreement will bear its
respective expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants; provided, that Andal
shall cause the Acquired Companies not to incur any out-of-pocket
expenses in connection with this Agreement or the Contemplated
Transactions, all of which shall be paid out of the Expense
Escrow Fund. Andal will pay one-half and Parent will pay one-
half of the HSR Act filing fee. In the event of termination of
this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from
a breach of this Agreement by another party.
13.2 PUBLIC ANNOUNCEMENTS. Any public announcement or
similar publicity with respect to this Agreement or the
Contemplated Transactions will be issued, if at all, at such time
and in such manner as Andal and Parent mutually determine,
provided, that Andal will be permitted to make such public
announcements to the extent required by applicable law so long as
it uses its Best Efforts to provide a copy of any such
announcement to Parent for its review and comment prior to the
release thereof. Andal and the Company, and Parent and
Acquisition will consult with each other concerning the means by
which the Acquired Companies' employees, customers, and suppliers
and others having dealings with the Acquired Companies will be
informed of the Contemplated Transactions, and Parent will have
the right to be present for any such communication.
13.3 CONFIDENTIALITY. Between the date of this
Agreement and the Closing Date, Parent and Acquisition on the one
hand, and Andal and the Company on the other will maintain in
confidence, and will cause their respective directors, officers,
employees, agents, and advisors to maintain in confidence, any
written, oral, or other information obtained in confidence from
the other or, in the case of Parent or Acquisition, from an
Acquired Company, in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is
already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available
through no fault of such party, (b) the use of such information
is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such
information is required by legal proceedings. If the
Contemplated Transactions are not consummated, Parent and
Acquisition on the one hand, and Andal and the Company on the
other will return or destroy as much of such written information
as the other may reasonably request.
13.4 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will
be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to
the appropriate addresses and telecopier numbers set forth
73
below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Parent, Acquisition or the Surviving Corporation:
Bernex Inc.
x/x Xxxxxx XX
Xxxxxxxxxxxx 0
XX- 0000 Xxxxx
Xxxxxxxxxxx
Attention: Xxxxx Xxxxxxx, Director
Telephone No.: 00-00-000-0000
Facsimile No.: 00-00-000-0000
and
Bernex Inc.
x/x Xxxxx XX Xxxxx
Xxxxxxxxxxxxxxxx 000
XX- 0000 Xxxxx
Xxxxxxxxxxx
Attention: Xxxxxx Xxxxxxxxxx, Chairman of the
Board
Telephone No.: 00-00-000-0000
Facsimile No.: 00-00-000-0000
and
Bernex Inc.
c/o Saurer Textile Systems Charlotte Inc.
0000 Xxxxxxxxxxx Xxxx
X.X. Xxx 000000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx III
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxx, Esq.
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
74
Andal or the Company:
c/o Messrs. Xxxxxx X. Xxxxxxx and Xxxx X. Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Multi-Arc Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx, Xxxxx & Xxxxxx
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, III, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxxx, Esq. and
Xxxxxx Xxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
13.5 JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any
of the parties in the courts of the State of New York, County of
New York, or, if it has or can acquire jurisdiction, in the
United States District Court for the Southern District of New
York, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such
action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the
world.
75
13.6 FURTHER ASSURANCES. The parties agree (a) to
furnish upon request to each other such further information, (b)
to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.
13.7 WAIVER. The rights and remedies of the parties to
this Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right,
power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by
a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a
party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party
will be deemed to be a waiver of any obligation of such party or
of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
13.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between the parties with respect
to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged
with the amendment.
13.9 DISCLOSURE LETTER. In the event of any
inconsistency between the statements in the body of this
Agreement and those in the Disclosure Letter (other than an
exception expressly set forth as such in the Disclosure Letter
with respect to a specifically identified representation or
warranty), the statements in the body of this Agreement will
control.
13.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY
RIGHTS. Neither Andal or the Company, on the one hand, nor Parent
or Acquisition on the other may assign any of its rights under
this Agreement without the prior consent of the other, except
that Parent and Acquisition shall be entitled to assign this
Agreement to any Affiliate of Parent, provided that such
assigning party shall remain liable for all of its liabilities
and obligations hereunder. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon,
and inure to the benefit of the successors and permitted assigns
of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the
parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
76
13.11 SEVERABILITY. If any provision of this Agreement
is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain
in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or
unenforceable.
13.12 SECTION HEADINGS, CONSTRUCTION. The headings of
Sections in this Agreement and the headings of Parts of the
Disclosure Letter or schedules hereto are provided for
convenience only and will not affect the construction or
interpretation of this Agreement, the Disclosure Letter or such
schedules. All references to "Section" or "Sections" refer to
the corresponding Section or Sections of this Agreement. All
words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the
preceding words or terms.
13.13 TIME OF ESSENCE. With regard to all dates and
time periods set forth or referred to in this Agreement, time is
of the essence.
13.14 GOVERNING LAW. This Agreement will be governed by
the laws of the State of New York without regard to conflicts of
laws principles.
13.15 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 all of which, when taken
together, will be deemed to constitute one and the same
agreement.
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IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first written above.
BERNEX INC.
XXXXXX XXXXXXXXXX
By: __________________________
Name: Xxxxxx Xxxxxxxxxx
Title: Chairman of the Board
M-A ACQUISITION CORP.
XXXXXX XXXXXXXXXX
By: __________________________
Name: Xxxxxx Xxxxxxxxxx
Title: Chairman of the Board
ANDAL CORP.
XXXXX X. XXXXX
By: __________________________
Name: Xxxxx X. Xxxxx
Title: Chairman, President
& CEO
MULTI-ARC INC.
XXXXX X. XXXXX
By: __________________________
Name: Xxxxx X. Xxxxx
Title: President
