Exhibit 2.2
EXECUTION
STOCK PURCHASE AGREEMENT
BY AND AMONG
MWM HOLDING, INC.
THE STOCKHOLDERS
LISTED ON THE SCHEDULE 1 ATTACHED HERETO
AND
PLYGEM INDUSTRIES, INC.
DATED AS OF JULY 23, 2004
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STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS...............................................................................1
SECTION 1.1. DEFINITIONS...............................................................................1
SECTION 1.2. TABLE OF DEFINITIONS......................................................................5
ARTICLE II PURCHASE AND REDEMPTION OF SHARES, WARRANTS AND OPTIONS...................................8
SECTION 2.1. AGREEMENT FOR THE PURCHASE AND SALE OF
SHARES/CANCELLATION OF OPTIONS AND CLASS B WARRANTS.......................................8
SECTION 2.2. AGGREGATE PURCHASE PRICE..................................................................8
SECTION 2.3. NET WORKING CAPITAL.......................................................................9
SECTION 2.4. PAYMENT OF THE PURCHASE PRICE.............................................................9
SECTION 2.5. PAYMENTS OF OTHER AMOUNTS PAYABLE AT CLOSING.............................................10
SECTION 2.6. CLOSING DATE.............................................................................10
SECTION 2.7. POST-CLOSING PURCHASE PRICE ADJUSTMENT...................................................11
SECTION 2.8. FINAL PURCHASE PRICE.....................................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................13
SECTION 3.1. CORPORATE ORGANIZATION...................................................................13
SECTION 3.2. CORPORATE AUTHORITY......................................................................14
SECTION 3.3. NO CONFLICTS; REQUIRED FILINGS AND CONSENTS..............................................14
SECTION 3.4. CAPITAL STOCK............................................................................15
SECTION 3.5. SUBSIDIARIES.............................................................................16
SECTION 3.6. FINANCIAL STATEMENTS.....................................................................17
SECTION 3.7. ABSENCE OF CERTAIN CHANGES...............................................................17
SECTION 3.8. NO UNDISCLOSED LIABILITIES...............................................................19
SECTION 3.9. TAXES....................................................................................19
SECTION 3.10. GOVERNMENTAL PERMITS.....................................................................21
SECTION 3.11. OWNED REAL PROPERTY......................................................................21
SECTION 3.12. REAL PROPERTY LEASES.....................................................................21
SECTION 3.13. INTELLECTUAL PROPERTY....................................................................22
SECTION 3.14. LABOR RELATIONS..........................................................................23
SECTION 3.15. EMPLOYEE BENEFIT PLANS...................................................................23
SECTION 3.16. CERTAIN CONTRACTS........................................................................25
SECTION 3.17. LITIGATION...............................................................................26
SECTION 3.18. ENVIRONMENTAL MATTERS....................................................................26
SECTION 3.19. INSURANCE................................................................................27
SECTION 3.20. FINDERS..................................................................................27
SECTION 3.21. TRANSACTIONS WITH AFFILIATES.............................................................27
SECTION 3.22. COMPLIANCE WITH LAWS.....................................................................28
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SECTION 3.23. INVENTORY................................................................................28
SECTION 3.24. RECEIVABLES..............................................................................28
SECTION 3.25. WARRANTY CLAIMS..........................................................................28
SECTION 3.26. CONDITION OF ASSETS AND PROPERTIES.......................................................28
ARTICLE IV INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE stockholders............................29
SECTION 4.1. AUTHORITY AND RELATED MATTERS............................................................29
SECTION 4.2. NO FINDER................................................................................30
ARTICLE V REPRESENTATIONS AND WARRANTIES OF the PURCHASER..........................................30
SECTION 5.1. ORGANIZATION.............................................................................30
SECTION 5.2. AUTHORITY RELATIVE TO THIS AGREEMENT.....................................................30
SECTION 5.3. NONCONTRAVENTION.........................................................................30
SECTION 5.4. GOVERNMENTAL CONSENTS....................................................................31
SECTION 5.5. NO FINDER................................................................................31
SECTION 5.6. INVESTMENT INTENT........................................................................31
SECTION 5.7. STATUS AS ACCREDITED INVESTOR............................................................31
SECTION 5.8. FINANCIAL CAPABILITY/SOLVENCY............................................................31
ARTICLE VI ADDITIONAL COVENANTS.....................................................................32
SECTION 6.1. CONDUCT OF BUSINESS OF THE MW COMPANIES..................................................32
SECTION 6.2. CONFIDENTIALITY..........................................................................34
SECTION 6.3. CERTAIN EFFORTS..........................................................................34
SECTION 6.4. NO PUBLIC ANNOUNCEMENT...................................................................35
SECTION 6.5. DIRECTORS' AND OFFICERS' INDEMNIFICATION.................................................35
SECTION 6.6. INVESTIGATION OF THE COMPANY BY THE PURCHASER............................................35
SECTION 6.7. TAX MATTERS..............................................................................36
SECTION 6.8. NO SOLICITATION OF ACQUISITION PROPOSALS.................................................37
SECTION 6.9. PAYMENT IN FULL OF CERTAIN COMPANY AND SUBSIDIARY INDEBTEDNESS...........................37
SECTION 6.10. FINANCING ASSISTANCE.....................................................................37
SECTION 6.11. FULFILLMENT OF FINANCING COMMITMENTS.....................................................38
SECTION 6.12. ISRA COMPLIANCE..........................................................................39
SECTION 6.13. FIRPTA CERTIFICATE.......................................................................39
ARTICLE VII CONDITIONS TO OBLIGATIONS OF the PURCHASER...............................................39
SECTION 7.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES...............................39
SECTION 7.2. NO MATERIAL ADVERSE EFFECT...............................................................39
SECTION 7.3. RESIGNATIONS OF DIRECTORS................................................................39
SECTION 7.4. LITIGATION...............................................................................40
SECTION 7.5. GOVERNMENTAL APPROVALS...................................................................40
SECTION 7.6. STOCK, WARRANT AND OPTION CERTIFICATES...................................................40
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SECTION 7.7. SATISFACTORY DOCUMENTATION...............................................................40
SECTION 7.8. RELEASE..................................................................................40
SECTION 7.9. FINANCING................................................................................40
SECTION 7.10. TERMINATION OF INVESTCORP AGREEMENT......................................................41
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLERS.......................41
SECTION 8.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES...............................41
SECTION 8.2. LITIGATION...............................................................................41
SECTION 8.3. GOVERNMENTAL APPROVALS...................................................................41
SECTION 8.4. SATISFACTORY DOCUMENTATION...............................................................41
ARTICLE IX TERMINATION..............................................................................42
SECTION 9.1. TERMINATION..............................................................................42
SECTION 9.2. EFFECT OF TERMINATION....................................................................42
ARTICLE X MISCELLANEOUS............................................................................43
SECTION 10.1. ENVIRONMENTAL MATTERS....................................................................43
SECTION 10.2. GENERAL INDEMNIFICATION..................................................................45
SECTION 10.3. AMENDMENT AND MODIFICATION...............................................................45
SECTION 10.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES...............................................45
SECTION 10.5. PARTIAL INVALIDITY.......................................................................45
SECTION 10.6. EXECUTION IN COUNTERPARTS................................................................45
SECTION 10.7. ASSIGNMENT; SUCCESSORS AND ASSIGNS.......................................................46
SECTION 10.8. TITLES AND HEADINGS......................................................................46
SECTION 10.9. SCHEDULES AND EXHIBITS...................................................................46
SECTION 10.10. KNOWLEDGE................................................................................46
SECTION 10.11. WAIVERS..................................................................................46
SECTION 10.12. WAIVER OF JURY TRIAL.....................................................................47
SECTION 10.13. EXPENSES.................................................................................47
SECTION 10.14. NOTICES..................................................................................47
SECTION 10.15. ENTIRE AGREEMENT.........................................................................48
SECTION 10.16. NO THIRD PARTY BENEFICIARIES.............................................................48
SECTION 10.17. GOVERNING LAW; JURISDICTION; FORUM.......................................................49
SECTION 10.18. NO IMPLIED REPRESENTATIONS...............................................................49
SECTION 10.19. STOCKHOLDERS REPRESENTATIVE..............................................................49
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SCHEDULES
SCHEDULE 1 STOCKHOLDERS
SCHEDULE 2.3 SAMPLE NET WORKING CAPITAL CALCULATION
SCHEDULE 3.1 FOREIGN QUALIFICATIONS
SCHEDULE 3.3 CONFLICTS
SCHEDULE 3.4(e) AGREEMENTS REGARDING CAPITAL STOCK
SCHEDULE 3.4(g) ACTIVITY OF THE COMPANY
SCHEDULE 3.5 SUBSIDIARIES
SCHEDULE 3.6 FINANCIAL STATEMENTS
SCHEDULE 3.7 ABSENCE OF CERTAIN CHANGES
SCHEDULE 3.8 LIABILITIES
SCHEDULE 3.9 TAXES
SCHEDULE 3.11 OWNED REAL PROPERTY
SCHEDULE 3.12(a) SCHEDULED LEASES
SCHEDULE 3.12(b) DEFAULTS UNDER SCHEDULED LEASES
SCHEDULE 3.12(c) LEASES TERMINABLE ON THIRTY-DAYS NOTICE OR LESS
SCHEDULE 3.13(a) REGISTERED INTELLECTUAL PROPERTY
SCHEDULE 3.13(b) LICENSES
SCHEDULE 3.13(C) ENCUMBRANCES ON INTELLECTUAL PROPERTY
SCHEDULE 3.14 LABOR RELATIONS
SCHEDULE 3.15 ERISA MATTERS
SCHEDULE 3.15(a) ERISA AFFILIATES
SCHEDULE 3.15(b) TITLE IV PLANS
SCHEDULE 3.16 COMPANY CONTRACTS
SCHEDULE 3.17 LITIGATION
SCHEDULE 3.18 ENVIRONMENTAL MATTERS
SCHEDULE 3.19 INSURANCE
SCHEDULE 3.20 FINDERS
SCHEDULE 3.21 TRANSACTIONS WITH AFFILIATES
SCHEDULE 3.24 RECEIVABLES
SCHEDULE 3.26 CONDITION OF ASSETS AND PROPERTIES
SCHEDULE 6.1 CONDUCT OF BUSINESS
SCHEDULE 6.9 AFFILIATE AGREEMENTS TERMINATED AT CLOSING
SCHEDULE 10.10 KNOWLEDGE
EXHIBITS
EXHIBIT A: CAPITALIZATION
EXHIBIT B: PER SHARE AMOUNT
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of July 23,
2004, is entered into by and among MWM Holding, Inc., a Delaware corporation
(the "Company"), and those Persons listed on Schedule 1 hereto (collectively,
the "Stockholders"), on the one hand, and Ply Gem Industries, Inc., a Delaware
corporation (the "Purchaser"), on the other hand.
RECITALS
A. The outstanding equity securities of the Company as of the date
hereof consist of shares of (i) Class A Common Stock, par value $0.01 per share
(the "Class A Common Stock"), held by the holders (the "Class A Stockholders")
and (ii) Class D Common Stock, par value $0.01 per share (the "Class D Common
Stock"), held by the holders (the "Class D Stockholders," who together with the
Class A Stockholders shall consist the Stockholders) listed on Exhibit A.
B. The Stockholders are, in the aggregate, the owners of 100% of the
outstanding capital stock of the Company as of the date hereof. The Class B
Warrantholders are, in the aggregate, the owners of 100% of the outstanding
Class B Warrants and the Option Holders are, in the aggregate, the owners of
100% of the outstanding Options.
C. The Stockholders desire to sell to the Purchaser and the Purchaser
desires to purchase from the Stockholders all of the outstanding shares of Class
A Common Stock and Class D Common Stock. The Class B Warrantholders desire to
cancel their Class B Warrants and the Option Holders desire to cancel their
Options in exchange for cash or other consideration and have this day entered
into an agreement respecting the same.
D. As a result of the foregoing and upon consummation of the other
transactions contemplated herein, the Purchaser will acquire ownership of 100%
of the outstanding shares of equity securities of the Company and all securities
convertible into or exchangeable for, and all rights to acquire, equity
securities of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, the following
words and terms shall have the meanings specified or referred to below:
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such specified Person.
"Aggregate Equity Amount" shall mean an amount equal to (a) the sum of
(i) $320,000,000, (ii) the aggregate Stockholder Loan Amount, (iii) the
aggregate Warrant Exercise Price for all Class B Warrants cancelled hereunder
and (iv) the aggregate Option Exercise Price for all Options cancelled
hereunder, minus (b)(i) Net Debt and (ii) the Seller Transaction Expenses to the
extent not paid prior to the Closing Date that are due and payable on the
Closing Date.
"Business Day" shall mean any day except Saturday, Sunday or any day on
which banks are generally not open for business in the city of New York, New
York.
"Cash" shall mean the result, whether positive or negative, produced by
(x) the sum of (i) all cash, all cash equivalents and marketable securities as
reflected in the bank accounts of the MW Companies or other financial
institution statements and (ii) all deposits in transit (subject to the clearing
and actual credit to the account of the applicable MW Company of such deposits),
each as of the Closing Date and net of Taxes or other costs associated with
liquidating to cash any of the items referred to in this definition less (y) the
amount of any checks or other instruments that have been written or issued by
any of the MW Companies each determined as of the close of business on the day
immediately prior to the Closing Date.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Control," "Controlling" or "Controlled by" shall mean, when used with
respect to any specified Person, the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
"Damages" shall mean all liabilities, demands, claims, actions or
causes of action, regulatory, legislative or judicial proceedings or
investigations, assessments, levies, losses, fines, penalties, damages, costs
and expenses, including, without limitation, reasonable attorneys',
accountants', and experts' fees and expenses, sustained or incurred in
connection with the defense of any claim or the enforcement of any rights under
Article X.
"Encumbrances" shall mean all mortgages, deeds of trust, liens,
pledges, security interests, charges, claims and encumbrances of any nature
whatsoever; provided, however, that the term "Encumbrances" shall not include
statutory liens for Taxes to the extent that the payment thereof is not in
arrears or otherwise due.
"Fayetteville Damages" shall mean Damages attributable to the
Fayetteville Environmental Condition.
"Fayetteville Environmental Condition" means environmental
contamination, if any, located at the property at the Fayetteville Facility
identified by Environ, the Purchaser's environmental consultant, pursuant to
environmental sampling on July 22, 2004.
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"Fayetteville Facility" shall mean the property at 000 Xxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fully Diluted Number" shall mean the sum of (a) the aggregate number
of shares of Class A Common Stock and Class D Common Stock outstanding as of
immediately prior to the Closing, (b) the aggregate number of share of Class B
Common Stock issuable upon exercise of all unexercised Class B Warrants
outstanding as of immediately prior to the Closing and (c) the aggregate number
of shares of Class A Common Stock issuable upon exercise of all unexercised
Options outstanding as of immediately prior to the Closing.
"Funded Indebtedness" shall mean all obligations under, including the
total required to prepay all amounts payable under and to fully retire (i) the
Senior Credit Facility; (ii) indebtedness for borrowed money; (iii) indebtedness
evidenced by notes, debentures or similar instruments; (iv) capitalized lease
obligations; (v) the deferred purchase price of assets, services or securities
(other than ordinary trade accounts payable); (vi) conditional sale or other
title retention agreements; (vii) reimbursement obligations, whether contingent
or matured, with respect to letters of credit, bankers' acceptances, surety
bonds, other financial guarantees and interest rate protection agreements
(without duplication of other indebtedness supported or guaranteed thereby)
other than the letters of credit set forth on Schedule 3.8; (viii) obligations
of other Persons of the nature described in clause (i) through (vii) that are
guaranteed by such Person; (ix) interest, premium, penalties, fees, expenses and
other amounts owing in respect of the items described in the foregoing clauses
(i) through (viii); and (ix) any remaining payment obligation under the
Acquisition Advisory Services Agreement dated as of January 17, 2003 between the
Company and Fenway Partners, Inc. to the extent not extinguished prior to the
Closing. Funded Indebtedness will be determined based upon payoff letters
received from the respective creditors or, if the concept of payoff letters are
not applicable to such Funded Indebtedness, the amount in fact outstanding as of
the close of business on the day immediately prior to the Closing Date.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Entity" shall mean any federal, state or local or foreign
government, any political subdivision thereof or any court, administrative or
regulatory agency, department, instrumentality, body or commission or other
governmental authority or agency, domestic or foreign.
"Hammonton Facility" shall mean the property at 000X Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000.
"Hammonton ISRA Damages" shall mean Damages attributable to remediation
of environmental contamination, if any, required to be performed at the
Hammonton Facility as a result of the process of obtaining clearance from the
New Jersey Department of Environmental Protection pursuant to ISRA for the
acquisition of the Company by Purchaser as contemplated hereby.
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"Independent Expert" shall mean Deloitte & Touche LLP or such other
independent accounting firm of national reputation as the Purchaser and the
Stockholders Representative may agree.
"Intellectual Property" means, as they exist anywhere in the world, all
(i) copyrights and mask works, including all renewals and extensions thereof,
and all applications and registrations therefor, (ii) domain names, Internet
addresses and other computer identifiers, web sites, web pages and similar
rights and items, (iii) patents, patent applications and inventions, designs and
improvements described and claimed therein, patentable inventions and other
patent rights (including any divisions, continuations, continuations-in-part,
reissues, reexaminations or interferences thereof, whether or not patents are
issued on any such applications and whether or no any such applications are
modified, withdrawn or resubmitted), (iv) computer software programs, including
all source code, object code, specifications, designs and documentation related
to such programs; (v) Trade Secrets; and (vi) trademarks, service marks, trade
dress, trade names, brand names, designs, logos or corporate names, whether
registered or unregistered, and all registrations and applications for
registration thereof, and all goodwill related thereto.
"Investcorp Agreement" means the Agreement for Management Advisory
Strategic Planning and Consulting Services between Investcorp International Inc.
and MW Manufacturers Inc. dated January 17, 2003.
"Laws" shall mean any federal, state, local or foreign law, code,
regulation rule or decree.
"MW Companies" shall mean the Company and each Subsidiary of the
Company.
"Net Debt" shall mean Funded Indebtedness less Cash.
"Option Exercise Price" shall mean, with respect to any Option, the per
share exercise price to be paid upon the exercise of such Option in accordance
with the terms thereof.
"Ordinary Course" shall mean the ordinary course of business consistent
with past practice.
"Per Share Amount" shall mean the Aggregate Equity Amount divided by
the Fully Diluted Number (carried up to 6 decimal places as designated by the
Company). For the avoidance of doubt, a sample calculation of the Per Share
Amount is set forth on Exhibit B.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, trust, unincorporated organization,
Governmental Entity or other legally recognized entity.
"Rollover Options" means those Options which are being cancelled at the
Closing (a) as set forth on Schedule 2.5 or, (b) subsequent to the date hereof
but prior to the Closing Date, as agreed to in writing by each of the Purchaser
and such Option Holder and notified to the Stockholders Representative no later
than 3 Business Days prior to the Closing.
"Securities Act" means the Securities Act of 1933, as amended.
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"Sellers" shall mean the Stockholders, the Class B Warrantholders and the
Option Holders, collectively.
"Seller Transaction Expenses" shall mean (i) the legal, accounting,
financial advisory and other third party finder, advisory or consulting fees and
expenses incurred by any of the MW Companies, whether directly or for the
benefit of any of the Sellers in connection with the transactions contemplated
hereby, including, without limitation, amounts payable to Xxxxxx, Xxxx &
Xxxxxxxx LLP, UBS Securities LLC and Deutsche Bank Securities Inc., (ii) amounts
payable under the commitments with certain debt and equity providing sources in
relation to a recapitalization of MW Manufacturers Inc. and (iii) amounts paid
by the Company to procure officers' and directors' liability insurance and
fiduciary liability insurance in accordance with Section 6.5(b); provided,
however, Seller Transaction Expenses shall expressly exclude any fees and
expenses incurred by the MW Companies or the Purchaser in connection with any
financings required to consummate the transactions contemplated herein.
"Senior Credit Facility" shall mean the borrowings of the Company and/or
its Subsidiaries under the Credit Agreement, dated as of February 17, 2004, by
and among MW Manufacturers Inc., the several Lenders from time to time parties
thereto, The Royal Bank of Scotland plc, as lead arranger, bookrunner,
administrative agent and collateral agent, Madison Capital Funding LLC, as
syndication agent, and General Electric Capital Corporation, as documentation
agent.
"Stock Option Adjustment Amount" shall mean, with respect to each Rollover
Option, the amount represented by the product of (a) the number of shares of
Class A Stock issuable upon exercise of such Rollover Option and (b) the
difference between the Per Share Amount and the Option Exercise Price of such
Rollover Option.
"Stockholders Representative" shall mean Investcorp International,
Inc.
"Target" shall mean $6,422,000. Schedule 2.3 sets forth a sample
calculation of the Target and the parties agree that the final Net Working
Capital will be calculated in a manner consistent with such schedule.
"Tax Return" shall mean any and all reports, returns, declarations, claims
for refund, elections, disclosures, estimates or other information, returns or
statements required to be supplied to a Governmental Entity in connection with
Taxes, including any schedule or attachment thereto and any amendment thereof.
"Taxes" shall mean (i) any and all federal, state, provincial, local,
foreign and other taxes, levies, fees, imposts, duties, and similar governmental
charges (including any interest, fines, assessments, penalties or additions to
tax imposed in connection therewith or with respect thereto) including, without
limitation (x) taxes imposed on, or measured by, income, franchise, profits or
gross receipts, and (y) ad valorem, value added, capital gains, sales, goods and
services, use, real or personal property, capital stock, license, branch,
payroll, estimated withholding, employment, social security (or similar),
unemployment, compensation, utility, severance, production, excise, stamp,
occupation, premium, windfall profits, transfer and gains
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taxes, and customs duties, and (ii) any transferee liability in respect of any
items described in clause (i) above.
"Trade Secrets" means all trade secrets, know-how, inventions, processes,
procedures, databases, confidential business information and other proprietary
information and rights, whether or not patentable or subject to copyright, mask
work or trade secret protection.
"Treasury Regulations" shall mean the Income Tax Regulations, promulgated
under the Code.
"Warrant Exercise Price" shall mean, with respect to each Class B Warrant,
the per share purchase price to be paid upon exercise of such Class B Warrant in
accordance with the terms thereof.
Section 1.2. Table of Definitions. The following terms have
the meanings set forth in the Sections set forth below:
Definition Section
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Acquisition Proposal 6.9
Affiliate Transactions 3.21
Agreed Fayetteville Costs 10.1(b)
Agreed NJ Costs 10.1(h)
Agreement Preamble
Audited Financial Statements 3.6
Claim (for purpose of definition of Solvent) 5.8(b)
Class A Common Stock Recitals
Class A Stockholders Recitals
Class B Common Stock 3.4(a)
Class B Warrantholders 3.4(c)
Class B Warrants 3.4(c)
Class D Common Stock Recitals
Class D Stockholders Recitals
Closing 2.6
Closing Date 2.6
COBRA 3.15(d)
Company Preamble
Company Fayetteville Consultant 10.1(b)
Company Contracts 3.16
Company Fayetteville Report 10.1(b)
Company Intellectual Property 3.13(c)
Company NJ Consultant 10.1(h)
Company Option Plan 3.4(d)
Company NJ Report 10.1(h)
Company Review Period 10.1(b)
Contests 6.8(e)
Debt (for purpose of definition of Solvent) 5.8(b)
Debt Financing Commitments 5.8(a)
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Definition Section
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Differences 2.7(e)
Discussion Period 2.7(d)
Draft Final Statement 2.7(a)
Employee Plan 3.15(a)
Fayetteville Threshold 10.1(a)
Environmental Laws 3.18
ERISA 3.15(a)
ERISA Affiliate 3.15(a)
Escrow Agreement 2.2(a)
Escrow Amount 2.2(a)
Final Statement 2.7(d)
Financial Statements 3.6
Financing Commitments 5.8(a)
Governmental Permits 3.10
HSR Act 3.3(f)
Indemnified Party 10.1(e)
Indemnified Parties 10.1(e)
Fayetteville Independent Consultant 10.1(c)
Interim Financial Statements 3.6
IRS 3.9(k)
ISRA 6.13
Leased Real Property 3.12(a)
Likely Fayetteville Costs 10.1(a)
Likely NJ Costs 10.1(h)
Material Adverse Effect 3.1
Net Working Capital 2.3
Net Working Capital Adjustment Amount 2.2
Net Working Capital Materials 2.7(b)
Notice of Objections 2.7(c)
Option Agreements 3.4(d)
Option Holders 3.4(d)
Options 3.4(d)
Owned Real Property 3.11
PBGC 3.15(b)
Permitted Encumbrances 3.11
Post Signing Returns 6.8(a)
Preferred Stock 3.4(a)
Preliminary Purchase Price 2.2
Present Fair Salable Value (for purpose of 5.8(b)
definition of Solvent)
Pro Rata Amount 2.2(a)
Purchase Price 2.2
Purchaser Preamble
Purchaser Fayetteville Consultant 10.1(a)
Purchaser Fayetteville Report 10.1(a)
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Definition Section
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Purchaser NJ Consultant 10.1(h)
Purchaser NJ Report 10.1(h)
Purchaser Review Period 10.1(h)
Registered Intellectual Property 3.13(a)
Representatives 6.2
Resolved Objections 2.7(d)
Review Period 2.7(b)
Scheduled Leases 3.12(a)
SEC 6.10(c)
Shares 2.1
Solvent/Solvency 5.8(b)
Stockholders Recitals
Stockholder Loan Amount 2.4(a)
Subsidiary 3.5
Tax Sharing Agreement 3.9(g)
Title IV Plan 3.15(a)
Termination Date 9.1(b)
Transferred Company Products 3.25
Undesignated Common Stock 3.4(a)
WARN Act 3.15(h)
Warrant Agreement 3.4(c)
ARTICLE II
PURCHASE AND REDEMPTION OF SHARES, WARRANTS AND OPTIONS
Section 2.1. Agreement for the Purchase and Sale of Shares/Cancellation of
Options and Class B Warrants.
(a) On the basis of the representations, warranties, covenants and
agreements and subject to the satisfaction or waiver of the conditions set
forth in Articles VII and VIII herein, at the Closing
the Stockholders will sell, transfer and deliver to the Purchaser, and the
Purchaser will purchase and acquire from the Stockholders all of the shares of
Class A Common Stock and Class D Common Stock outstanding as of the Closing
Date (collectively, the "Shares").
(b) The Company and the Option Holders (other than with respect to
any Rollover Options) shall cause all of the Options (other than any Rollover
Options) to be cancelled at the Closing. The Purchaser shall cause the Company
to pay to each applicable Option Holder of Options that are or become vested
as of the Closing, the amounts provided in Section 2.5(d). Prior to the
Closing, the Company and the applicable Option Holders shall take all actions
necessary to give effect to the transactions contemplated by this Section
2.1(b).
(c) The Company and the Class B Warrantholders shall cause all of
the Class B Warrants to be cancelled at the Closing. The Purchaser shall cause
the Company to
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pay to the Class B Warrantholders the amounts provided in Section 2.5(d).
Prior to the Closing, the Company and the Class B Warrantholders shall take
all actions necessary to give effect to the transactions contemplated by this
Section 2.1(c).
Section 2.2. Aggregate Purchase Price.
(a) The aggregate cash amount to be paid by the Purchaser at the
Closing shall be Three Hundred Twenty Million Dollars ($320,000,000) minus the
sum of (A) the amount of Net Debt, (B) the aggregate amount of all Seller
Transaction Expenses to the extent not paid prior to the Closing Date that are
due and payable on the Closing Date and (C) the aggregate Stock Option
Adjustment Amounts (the "Preliminary Purchase Price"); provided, however, one
and one-half percent (1.5%) of the sum of (x) the Preliminary Purchase Price
plus (y) the aggregate Stock Option Adjustment Amounts (together, the "Escrow
Amount") shall be delivered to an escrow agent (which escrow agent shall be a
bank or trust company with a branch located in the City of New York) appointed
prior to the Closing by the Stockholders Representative, subject to approval
by the Purchaser, which approval shall not be unreasonably withheld or
delayed, pursuant to an Escrow Agreement (the "Escrow Agreement") to be
entered into by the Purchaser, the Stockholders Representative and the Escrow
Agent. Such Escrow Amount shall be held and disbursed by the escrow agent in
accordance with the terms and conditions in this Article II and in the Escrow
Agreement. Prior to the Closing, the Stockholder Representative shall prepare
a schedule (based upon the respective amounts payable to each Seller net of
any amount payable by such Seller hereunder, but assuming that individually
and in the aggregate each holder of Rollover Options held a like number of
Options that were not Rollover Options in lieu of the Rollover Options so
held) setting forth the respective percentages of the aggregate Escrow Amount
applicable to each Seller, which schedule shall be utilized to determine any
distributions to Sellers from the Escrow Amount or any other adjustments to
the Purchase Price and corresponding payments to or by the Sellers (the "Pro
Rata Amount").
(b) As used herein, the "Net Working Capital Adjustment Amount"
shall be the difference between the final Net Working Capital amount as set
forth in the Final Statement minus the Target. In accordance with Sections 2.7
and 2.8, the Preliminary Purchase Price shall be (1) increased by the Net
Working Capital Adjustment Amount, if the Net Working Capital Adjustment
Amount is a positive integral, or (2) decreased by the Net Working Capital
Adjustment Amount, if the Net Working Capital Adjustment Amount is a negative
integral. The Preliminary Purchase Price as so adjusted shall constitute the
"Purchase Price."
Section 2.3. Net Working Capital As used herein, "Net Working Capital"
shall be determined in the same manner as the parties calculated the Target as
of the close of business on the day immediately prior to the Closing Date.
Schedule 2.3 sets forth the calculation of Net Working Capital used by the
parties to negotiate the Target and all calculations of Net Working Capital
pursuant to this Agreement shall be made in the same manner as Schedule 2.3.
Current assets shall only be included in the calculation of Net Working Capital
to the extent the MW Companies continue to retain the benefit thereof
immediately after closing (it being understood and agreed that prepaid items
directly related to the officers' and directors' insurance will not be governed
by this sentence). Any current assets and current liabilities attributable to
the
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incurrence of expenses directly related to the transactions contemplated by this
Agreement and any tax effect thereof (including, without limitation,
cancellation of the Options and payment of Funded Indebtedness) shall not be
considered in calculating Net Working Capital.
Section 2.4. Payment of the Purchase Price.
(a) Subject to the terms and conditions hereof, on the Closing
Date, the Purchaser shall pay, to such account or accounts as specified by the
Company, in writing, on behalf of such intended recipient at least two
Business Days prior to the Closing Date:
(i) to each Class A Stockholder an amount (rounded to the
nearest whole cent) equal to (A) 0.985 multiplied by (B) the Per Share
Amount multiplied by (C) the number of shares of Class A Common Stock owned
by such Class A Common Stockholder as of the Closing less (D) all amounts
outstanding and payable under any notes receivables of any MW Companies
(including the outstanding principal balance and any accrued but unpaid
interest) owed by such Class A Stockholder as of the Closing Date, if any
(the "Stockholder Loan Amount");
(ii)to each Class D Stockholder an amount (rounded to the
nearest whole cent) equal to (A) 0.985 multiplied by (B) the Per Share
Amount multiplied by (C) the number of shares of Class D Common Stock owned
by such Class D Common Stockholder as of the Closing;
(b) All payments required pursuant to Section 2.4(a), Section 2.5
and Section 2.7 shall be made by wire transfer of immediately available funds
against delivery of, if applicable: (i) stock certificates representing the
shares of Class A Common Stock and Class D Common Stock being sold, in each
case in proper form as reasonably requested by the Purchaser and (ii)
documentation reasonably satisfactory to the Purchaser that all of the
outstanding Class B Warrants and all of the outstanding Options shall be
cancelled prior to or at the Closing.
(c) With respect to each payment made pursuant to Section 2.4(a),
Section 2.5 and Section 2.7, the Purchaser shall be entitled to, or to cause
the appropriate MW Company to, deduct, withhold and remit to the appropriate
Governmental Entities (or cause to be deducted, withheld and remitted) any and
all Taxes required by Law with respect to such payment. Any such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the party who otherwise would have received such amounts but for such
withholding of Taxes.
Section 2.5. Payments of Other Amounts Payable at Closing. On the Closing
Date, the Purchaser shall pay or cause to be paid to such account or accounts as
the Stockholders Representative specifies to the Purchaser in writing at least
two Business Days prior to the Closing Date:
(a) the aggregate amount of all Funded Indebtedness as of
the Closing Date;
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(b) the aggregate amount of all Seller Transaction Expenses, to
the extent not paid prior to the Closing Date that are due and payable on the
Closing Date;
(c) to each Class B Warrantholder an amount (rounded to the
nearest whole cent) equal to (i) 0.985 multiplied by (ii)(A) the Per Share
Amount minus (B) the Warrant Exercise Price of such Class B Warrant multiplied
by (iii) the number of shares of Class B Common Stock issuable upon conversion
of each such Class B Warrant owned by such Class B Warrantholder as of the
Closing; and
(d) to each Option Holder with respect to each outstanding Option
that is or becomes as of the Closing vested (other than with respect to any
Rollover Options) an amount (rounded to the nearest whole cent) equal to
(i)(A) 0.985 multiplied by (B)(1) the Per Share Amount minus (2) the Option
Exercise Price of such Option, multiplied by (C) the number of shares of Class
A Common Stock issuable upon the exercise of each such outstanding Option
(other than any Rollover Options) owned by such Option Holder as of the
Closing minus (ii)(A) 0.015 multiplied by (B)(1) the Per Share Amount minus
(2) the Option Exercise Price of the Rollover Option multiplied by (C) the
number of shares of Class A Common Stock issuable upon the exercise of such
Rollover Option owned by such Option Holder, if any.
Section 2.6. Closing Date. Subject to the terms and conditions hereof, the
consummation of the transactions provided for in this Article II (the "Closing")
shall take place at the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 A.M. on the later
of (a) the second Business Day after the date on which each of the conditions
set forth in Articles VII and VIII have been satisfied or waived by the party or
parties entitled to the benefit of such conditions (it being understood that, in
the case of a waiver of any conditions for the benefit of the Company and the
Stockholders, such waiver may be made by the Company on behalf of itself and
each of the Stockholders) and (b) such other date, time or place as the
Purchaser and the Company (on behalf of itself and the Stockholders) mutually
agree; provided, however, notwithstanding anything herein to the contrary, the
Company shall have the right, in its sole discretion, to postpone the Closing
until after the expiration of the Company Review Period. Subject to the
foregoing, each of the parties will use its commercially reasonably efforts to
consummate the transactions contemplated by this Agreement as soon as
practicable. The date on which the Closing actually occurs is hereinafter
referred to as the "Closing Date."
Section 2.7. Post-Closing Purchase Price Adjustment.
(a) No later than 45 days following the Closing Date, the
Purchaser shall prepare or cause to be prepared and shall deliver to the
Stockholders Representative a draft final statement setting forth in
reasonable detail the Purchaser's calculation of the final Purchase Price
which shall include a calculation of final Net Working Capital amount, Net
Debt, Seller Transaction Expenses and the Net Working Capital Adjustment
Amount (the "Draft Final Statement"). Seller Transaction Expenses shall be
reconciled to the actual amount thereof. The Draft Final Statement will be
accompanied by a report of the Company's independent accountants stating that
the calculation of the final Net Working Capital amount was prepared in the
same manner as Schedule 2.3.
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(b) The Stockholders Representative shall have 45 days following
the Purchaser's delivery or deemed delivery of the Draft Final Statement to
the Stockholders Representative (the "Review Period") to review and respond to
the Draft Final Statement, during which period the Purchaser shall grant the
Stockholders Representative and its advisors (including independent
accountants and legal counsel) reasonable access to all books and records and
other materials used to prepare the Draft Final Statement and any work papers
prepared by the Purchaser or (subject to execution of customary exculpation
letters) its independent accountants with respect to the Draft Final Statement
(collectively, the "Net Working Capital Materials").
(c) In the event the Stockholders object to all or any part of the
Draft Final Statement, the Stockholders Representative shall so notify the
Purchaser in writing (such notice, a "Notice of Objections") prior to the
expiration of the Review Period setting forth a description of such objections
in reasonable detail and the amount of the adjustment which the Stockholders
believe should be made to each item of their objection. If the Stockholders
Representative fails to deliver a Notice of Objections within the Review
Period, the Draft Final Statement shall be deemed to have been accepted by the
Stockholders and shall become the Final Statement.
(d) As soon as practicable but in no event later than 20 Business
Days following the delivery by the Stockholders Representative of the Notice
of Objections (the "Discussion Period"), the Purchaser and the Stockholders
Representative shall meet and endeavor to resolve the matters set forth in the
Notice of Objections. Any matters set forth in the Notice of Objection that
are resolved by the Purchaser and the Stockholders Representative shall
collectively be referred to herein as the "Resolved Objections." The Draft
Final Statement shall be revised to reflect any Resolved Objections. To the
extent the parties are able to resolve all matters set forth in the Notice of
Objections, the Draft Final Statement as so adjusted by the Resolved
Objections shall become the "Final Statement."
(e) In the event the Purchaser and the Stockholders
Representative are unable to resolve all matters set forth in the Notice of
Objections within such Discussion Period, the following procedures shall
apply:
(i) After the end of the Discussion Period, upon written
request of either the Purchaser or the Stockholders Representative, the
parties shall jointly appoint the Independent Expert to assist in the
resolution of the outstanding objections;
(ii)Upon appointment of the Independent Expert, each party
shall provide to the Independent Expert and to the other party, within five
Business Days of such appointment, a copy of the Draft Final Statement and
the Notice of Objections and any other written submission or materials such
party may wish to make, or provide, in support of its position, including
the Net Working Capital Materials;
(iii) Each party may submit a reply brief in response to the
written submissions referred to in clause (ii) above, such reply brief to
be delivered to the Independent Expert and to the other party within five
Business Days after the receipt of the other party's written submissions;
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(iv)The Independent Expert shall review the matters set
forth in the Notice of Objections that are not Resolved Objections (the
"Differences") and the written submissions, if any, of the parties and
shall determine, based on the requirements set forth in this Article II
(and related definitions), and only with respect to the Differences
submitted, whether and to what extent the Draft Final Statement requires
adjustment; provided, however, that in no event shall any determination
made by the Independent Expert of any Differences result in an adjustment
greater than the amount of the adjustment requested with respect to such
Difference in the Notice of Objections. It is the understanding and
agreement of the parties that time is of the essence in the resolution of
the Differences, and each party shall use its reasonable best efforts to
cause the Independent Expert to make its determination as expeditiously as
possible.
(v) The Independent Expert shall have the discretion to
determine whether to convene a meeting or meetings of the parties to assist
in the resolution of the Differences.
(vi)The fees and expenses of the Independent Expert shall be
borne by the Purchaser and the Stockholders Representative (on behalf of
the Sellers) in inverse proportion as each of them may prevail on the
Differences resolved by the Independent Expert, which proportionate
allocation shall be calculated on an aggregate basis based on the relative
dollar values of the amounts in dispute.
(vii) The Independent Expert's resolution of the Differences
shall be conclusive and binding upon the parties. The Draft Final
Statement, as adjusted to reflect any such determination of by the
Independent Expert, shall become the Final Statement.
Section 2.8. Final Purchase Price.
(a) In the event that the Purchase Price as set forth in the Final
Statement exceeds the Preliminary Purchase Price (i) the Purchaser shall pay
each of the Stockholders, the Option Holders and the Class B Warrantholders
their respective Pro Rata Amount of such excess and (ii) the respective Pro
Rata Amount of the Escrow Amount shall be released and disbursed by the escrow
agent in accordance with the terms of the Escrow Agreement to each of the
Stockholders, the Option Holders and the Class B Warrantholders.
(b) In the event that the Preliminary Purchase Price is greater
than the Purchase price as set forth in the Final Statement, the escrow agent
shall disburse from the Escrow Amount, in accordance with the terms of the
Escrow Agreement: (i) to the Purchaser an amount equal to the amount of such
excess and (ii) to each of the Stockholders, the Option Holders and the Class
B Warrantholders their respective Pro Rata Amount of the balance remaining of
the Escrow Amount, if any. If the amount payable to Purchaser in accordance
with this Section 2.8(b) exceeds the Escrow Amount, the Sellers shall pay
their respective Pro Rata Amount of the difference to the Purchaser, it being
understood that the Escrow Amount is not a limitation on the amount payable to
the Purchasers under this Section 2.8(b).
(c) If the Escrow Amount exceeds the amount to which the Purchaser
may be entitled based on the Draft Final Statement, then the escrow agent
shall be authorized under
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the Escrow Agreement to release and discharge such excess amount as soon as
practicable after the date of the Draft Final Statement and prior to the final
determination of the Net Working Capital Adjustment Amount.
(d) The amounts payable pursuant to this Section 2.8 shall be paid
to the applicable recipient, whether disbursed by the escrow agent or paid by
the Sellers or the Purchaser, within ten Business Days following the date on
which the Draft Final Statement becomes the Final Statement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
Section 3.1. Corporate Organization.
(a) Each of the MW Companies (a) is a corporation duly organized
and in good standing under the laws of the State of Delaware, (b) is duly
qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which the ownership, leasing or
operation of its properties or assets or the conduct of its business requires
such qualification or licensing, and (c) has the requisite corporate power to
own, lease or operate its properties and assets and to carry on its business
as now conducted, except, in the case of clause (b), for any such failures
that have not had and are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect. Schedule 3.1 lists all jurisdictions
in which each MW Company is duly qualified to conduct business. As used
herein, "Material Adverse Effect" means any circumstance, change in or effect
that is materially adverse to the business, assets or the results of
operations or financial condition of the MW Companies, taken as a whole;
provided, however, that none of the following, either alone or in combination,
shall be considered in determining whether there has been a Material Adverse
Effect: (i) circumstances, changes or effects resulting from any general
national, international or regional economic, political or financial
conditions, including any such circumstances, changes or effects resulting
from acts of war (whether or not declared) or terrorism or other force majeure
events, (ii) circumstances, changes or effects generally affecting the vinyl,
vinyl-wood, clad-wood and composite window and patio door industry in which
the MW Companies operate (including legal and regulatory changes) and (iii)
circumstances, changes or effects resulting from any action taken at the
specific request of the Purchaser. The Company has delivered to the Purchaser
complete and correct copies of the certificate of incorporation and bylaws of
each of the MW Companies, each as in effect on the date hereof.
(b) The Company has delivered to the Purchaser complete and
correct copies of the certificate of incorporation and bylaws of each of the
MW Companies, each as in effect on the date hereof. The certificate of
incorporation and bylaws of each of the MW Companies are in full force and
effect and none of the MW Companies are in violation of any
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of the provisions of their respective certificates of incorporation or bylaws.
The minute books (or comparable records) of each of the MW Companies have been
delivered to the Purchaser and accurately reflect in all material respects all
transactions and actions referred to in such minutes and consents in lieu of
meetings. The Company has previously delivered to the Purchaser all stock
books (or comparable records) of each MW Company in the possession of the MW
Companies. The stock book (or comparable record) of the Company that has been
delivered to the Purchaser is true and complete.
Section 3.2. Corporate Authority. The Company has the requisite corporate
power to execute and deliver this Agreement and to fulfill its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by the Company have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by the Company and, assuming due execution by the
counterparties, constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms, except that such enforceability (a)
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights
generally, and (b) is subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
Section 3.3. No Conflicts; Required Filings and Consents. Except as set
forth in Schedule 3.3, neither the execution and delivery by the Company or any
Seller of this Agreement nor the consummation by the Company or any Seller of
the transactions contemplated hereby, nor compliance by the Company or any
Seller with or fulfillment of its respective obligations hereunder will:
(a) conflict with or violate any provision of the
Company's certificate of incorporation or bylaws;
(b) contravene, conflict with or result in a violation of, or
constitute a failure to comply with in any material respects any Law material
to the Company or any Seller;
(c) result in the acceleration of, or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both), any
debt obligation of any of the MW Companies in excess of $250,000 in the
aggregate;
(d) constitute a material default under or materially violate, or
result, with giving of notice or lapse of time or both in any default under or
violation of, or result in the creation or imposition of, any Encumbrance upon
any of the assets or properties any of the MW Companies or any of the Shares
pursuant to any provision of, any material mortgage, lease, agreement,
indenture, license or instrument to which any of the MW Companies is a party
or by which any of them or any of their respective properties or assets is
bound;
(e) constitute an event permitting modification, amendment or
termination of a material mortgage, lease, agreement, indenture, license,
instrument, order, arbitration award, judgment or decree to which any of the
MW Companies is a party or by which any of them or any of their assets or
properties is bound; or
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(f) except as may be required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976, as amended ("HSR Act"), require the
approval, consent, authorization or act of, or the making by any of the MW
Companies, of any material declaration, filing or registration with any
Governmental Entity or other Person.
Section 3.4. Capital Stock.
(a) The authorized capital stock of the Company consists of (i)
1,500,000 shares of Class A Common Stock, (ii) 28,200 shares of Class B Common
Stock, par value $0.01 per share (the "Class B Common Stock"), (iii) 2,500
shares of Class D Common Stock, (iv) 1,530,700 shares of Common Stock, par
value $0.01 per share (the "Undesignated Common Stock") and (v) 500,000 shares
of Preferred Stock, par value $0.01 per share (the "Preferred Stock").
(b) As of the date hereof, (i) 997,500 shares of Class A Common
Stock are outstanding, (ii) 2,500 shares of Class D Common Stock are
outstanding, (iii) no shares of Preferred Stock are outstanding and (iv) no
shares of Undesignated Common Stock or Class B Common Stock are outstanding.
As of the date hereof, all of the outstanding shares of Class A Common Stock
are held by the Class A Stockholders in the respective amounts listed on
Exhibit A hereto. As of the date hereof, all of the outstanding shares of
Class D Common Stock are held by the Class D Stockholders in the respective
amounts listed on Exhibit A hereto.
(c) As of the date hereof, warrants (the "Class B Warrants") to
purchase 25,641 shares of Class B Common Stock are outstanding pursuant to a
Warrant Agreement, dated as of January 17, 2003 (the "Warrant Agreement"), by
and among the Company and the initial purchasers named therein (the "Class B
Warrantholders"). As of the date hereof, all of the Class B Warrants are held
by the Class B Warrantholders in the respective amounts listed on Exhibit A
hereto. The exercise price of each Class B Warrant is listed on Exhibit A
hereto.
(d) As of the date hereof, options (the "Options") to purchase
113,486.8807 shares of Class A Stock are outstanding pursuant to stock option
agreements (the "Option Agreements") entered into pursuant to the Company's
2003 Management Stock Incentive Plan (the "Company Option Plan"). As of the
date hereof, all of the Options are held by the holders (the "Option Holders")
in the respective amounts listed on Exhibit A hereto. The exercise price of
each Option is listed on Exhibit A hereto.
(e) Except for this Agreement, the Class B Warrants, the Options
and as disclosed in Schedule 3.4(e), there are no agreements, warrants, puts,
calls, rights, options or other commitments of any character to which the
Company is a party relating to the issuance, sale, purchase, redemption,
conversion, exchange, registration, voting or transfer of any shares of
capital stock of the Company or that provides for any stock appreciation or
similar right. Except as set forth in Section 3.4, the Company does not have
any capital stock, equity securities or securities containing any equity
features authorized, issued or outstanding.
(f) All outstanding shares of Class A Common Stock and Class D
Common Stock are duly authorized and validly issued and fully paid and
nonassessable, free of any
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preemptive or subscription rights, and upon delivery to the Purchaser pursuant
to Article II hereof, will be free of any preemptive or subscription rights
and free and clear of all Encumbrances, other than those created by the
Purchaser. There are no unsatisfied preemptive rights relating to the capital
stock of the Company.
(g) Except as set forth on Schedule 3.4(g), since its founding,
the Company has not engaged in any business other than the ownership of all of
the capital stock of MW Manufacturers Holding Corp.
(h) No Person other than the record holders of the Shares are or
will be entitled to receive any payment from the Purchaser or the Company on
account of any beneficial or similar interest any such Person may have had in
any Shares at any time prior to the Closing.
Section 3.5. Subsidiaries. Schedule 3.5 lists each Subsidiary of the
Company. As used in this Agreement, "Subsidiary" means any corporation,
partnership, joint venture or other legal entity of which the Company owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holders of which generally are entitled to vote for the election of the board of
directors or other governing body of such corporation, partnership, joint
venture or other legal entity. Except as set forth in Section 3.4(c) and (d)
above, there are no agreements, warrants, puts, calls, rights, options,
subscriptions, preemptive rights or other commitments of any character to which
any of the MW Companies is a party or by which any of the MW Companies is bound
which obligates any of the MW Companies to issue, deliver or sell any
outstanding or additional shares of capital stock of any Subsidiary or any
securities or instruments convertible into or exchangeable for any such
outstanding or additional shares of capital stock. Each outstanding share of
capital stock of each Subsidiary is duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights, and each such share is owned by
the Company or another Subsidiary, free and clear of Encumbrances, except those
arising under the Funded Indebtedness outstanding as of the date hereof. Except
for the Subsidiaries, no MW Company owns any equity interest in any Person.
Section 3.6. Financial Statements. The Company has delivered to the
Purchaser (a) the audited consolidated balance sheet of MW Manufacturers Inc.
and its Subsidiaries as of December 29, 2001, December 28, 2002 and December 27,
2003, and the related audited consolidated statements of operations,
stockholders' equity and cash flows of MW Manufacturers Inc. and its
Subsidiaries for the periods from January 18, 2003 through December 27, 2003 and
from December 29, 2002 through January 17, 2003, and for the years ended
December 28, 2002 and December 29, 2001, together with all related notes and
schedules thereto (the "Audited Financial Statements") and (b) the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of April 3,
2004 and the related unaudited consolidated statements of operations,
stockholders' equity and cash flows of the Company and its Subsidiaries for the
three-month period ended April 3, 2004, together with all related notes and
schedules thereto (the "Interim Financial Statements"). The Audited Financial
Statements and the Interim Financial Statements are referred to collectively as
the "Financial Statements"). The Financial Statements have been prepared from,
and are in accordance with, the books and records of the Company and its
Subsidiaries. Except as set forth in Schedule 3.6, the Financial Statements were
prepared in accordance with GAAP applied on a consistent basis and fairly
present, in all material respects,
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the consolidated financial position of the Company and its Subsidiaries as of
the applicable dates thereof and for the applicable periods then ended (subject,
in the case of the Interim Financial Statements, to reclassifications, normal
year-end adjustments and the absence of notes to such statements).
Section 3.7. Absence of Certain Changes. Except as described in Schedule
3.7 and except for the transactions permitted or contemplated by this Agreement,
since December 27, 2003:
(a) there has not been a Material Adverse Effect or any event or
circumstance that, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect;
(b) the business of the MW Companies has been conducted, in all
material respects, in the Ordinary Course; and
(c) none of the MW Companies has taken any of the following
actions:
(i) amended its certificate of incorporation or bylaws;
(ii)declared, set aside, made or paid any dividends or other
distributions (whether in cash, stock, property or otherwise) with respect
to any of its capital stock, except for dividends, distributions or other
payments by any Subsidiary of the Company to any other Subsidiary of the
Company or to the Company;
(iii) reclassified, combined, split, subdivided or redeemed,
purchased or otherwise acquired for any consideration any outstanding
shares of its capital stock or securities carrying the right to acquire or
which are convertible into or exchangeable or exercisable for, with or
without additional consideration, such capital stock, except the redemption
or repurchase of shares of Class A Common Stock from employees in
connection with the termination of such employee's employment;
(iv)acquired stock or other securities or all or any
portion of the business of any Person;
(v) acquired the assets of any Person or disposed of any
asset, except acquisitions or dispositions of inventory and equipment in
the Ordinary Course or otherwise not in excess of $250,000 in the
aggregate;
(v) incurred any indebtedness for borrowed money, other than
borrowings under the Senior Credit Facility and other indebtedness not in
excess of $250,000 in the aggregate;
(vi)merged or consolidated with any corporation or other
entity or acquired any capital stock or business of any Person, or
consummated any business combination transaction, in each case, whether in
a single transaction or series of related transactions;
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(vii) created, assumed or suffered to be incurred any
Encumbrance of any kind on any of its properties or assets, other than
liens created pursuant to the Senior Credit Facility, Permitted
Encumbrances and other Encumbrances having a value, in the aggregate, not
in excess of $250,000;
(viii) changed its accounting methods, principles or
practices, except as may be required by GAAP and as disclosed in the
Interim Financial Statements;
(ix) paid or committed to pay any bonus, or additional
salary or compensation to any of the employees, directors, officers or
consultants of the Company and the Subsidiaries, other than the payment or
commitment to pay bonuses or additional salary or compensation in the
Ordinary Course;
(x) sold, assigned or transferred (A) any patents,
trademarks, tradenames, copyrights or trade secrets or (B) any other
intangible assets with an aggregate value in excess of $250,000 in the
aggregate;
(xi)suffered any extraordinary losses, casualties, damage or
destruction, or waived or cancelled any rights of value in excess of
$250,000 in the aggregate;
(xii) granted or announced any increase in the salaries,
bonuses or other benefits payable by the Company or any of its Subsidiaries
to any of their employees, other than as required by Law or pursuant to any
plans, programs or agreements existing on the date hereof, including normal
merit increases to non-executive officers of the Company or any of its
Subsidiaries, in each case, consistent with the past practices of the
Company or such Subsidiary;
(xiii) granted any severance or termination pay to any of
the employees, directors, officers or consultants of the Company and its
Subsidiaries or increased any benefits payable under any existing severance
or termination pay policies or employment agreements with any of the
employees, directors, officers or consultants of the Company and its
Subsidiaries;
(xiv) entered into, amended, supplemented or modified any
agreement material to the MW Companies taken as a whole, except in the
Ordinary Course; or
(xv)committed, authorized or agreed to do any of the
foregoing.
Section 3.8. No Undisclosed Liabilities. Except as set forth in the
Financial Statements and in Schedule 3.8, none of the MW Companies is subject to
any claims, obligations or liabilities of any nature (whether accrued, absolute,
known, xxxxxx, contingent or otherwise) and whether or not of the type required
to be reflected on a balance sheet prepared in accordance with GAAP, other than
(a) obligations pursuant to or in connection with this Agreement or the
transactions contemplated hereby, (b) liabilities and obligations incurred in
the Ordinary Course since April 3, 2004 and (c) other liabilities and
obligations not in excess of $250,000 in the aggregate.
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Section 3.9. Taxes. Except as set forth in Schedule 3.9:
(a) each of the MW Companies has timely filed or caused to be
timely filed all material Tax Returns (taking into account applicable
extension periods) required to be filed as of the date hereof, has paid, or
will pay, all Taxes required to be paid (whether or not shown on any Tax
Return) and has made adequate provision for any Taxes that are not yet due and
payable for all taxable periods, or portions thereof, ending on or before the
date hereof;
(b) the Sellers and the MW Companies have given or otherwise made
available to the Purchaser true, correct and complete copies of all material
Tax Returns, examination reports and statements of deficiencies for taxable
periods, or transactions consummated, for which the applicable statutory
periods of limitations have not expired;
(c) there are no outstanding agreements extending or waiving the
statutory period of limitations applicable to any claim for, or the period for
the collection or assessment or reassessment of, Taxes due from the MW
Companies for any taxable period and no request for any such waiver or
extension is currently pending;
(d) no audit or other proceeding by any Governmental Entity is
pending or, to the knowledge of the Sellers or the MW Companies, threatened
with respect to any Taxes due from or with respect to the MW Companies, no
Governmental Entity has given notice of any intention to assert any deficiency
or claim for additional Taxes against any of the MW Companies, and no claim in
writing has been made by any Governmental Entity in a jurisdiction where none
of the MW Companies files a Tax Return that any of the MW Companies is or may
be subject to taxation by that jurisdiction, and all deficiencies for Taxes
asserted or assessed against any of the MW Companies have been fully and
timely paid, settled or properly reflected in the Financial Statements;
(e) there are no Encumbrances for Taxes upon the assets or
properties of any of the MW Companies;
(f) none of the MW Companies have taken any reporting position on
a Tax Return, which reporting position (i) if not sustained would be
reasonably likely, absent disclosure, to give rise to a penalty for
substantial understatement of federal income Tax under Section 6662 of the
Code (or any similar provision of state, local, or foreign Tax law), and (ii)
has not adequately been disclosed on such Tax Return in accordance with
Section 6662(d)(2)(B) of the Code (or any similar provision of state, local,
or foreign Tax law);
(g) none of the MW Companies is a party to any agreement relating
to the sharing, allocation or indemnification of Taxes, or any similar
agreement, contract or arrangement, (collectively, "Tax Sharing Agreements")
or has any liability for Taxes of any Person (other than members of the
affiliated group, within the meaning of Section 1504(a) of the Code, filing
consolidated federal income tax returns of which the Company is the common
parent) under Treasury Regulation Section 1.1502-6, Treasury Regulation
Section 1.1502-78 or similar provision of state, local Or foreign law, as a
transferee or successor, by contract, or otherwise;
(h) each of the MW Companies has withheld (or will withhold) from
their respective employees, independent contractors, creditors, stockholders
and third parties and
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timely paid to the appropriate Governmental Entity proper and accurate amounts
in all material respects for all periods ending on or before the Closing Date
in compliance with all Tax withholding and remitting provisions of applicable
laws and have each complied in all material respects with all Tax information
reporting provisions of all applicable laws;
(i) none of the MW Companies has constituted a "distributing
corporation" or a "controlled corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of shares qualifying for tax-free
treatment under Section 355 of the Code (i) in the two years prior to the date
of this Agreement or (ii) in a distribution that could otherwise constitute
part of a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with this acquisition;
(j) none of the MW Companies has agreed, or is required to make,
any adjustment under Section 481(a) of the Code, and to the knowledge of the
Sellers and the MW Companies, no Governmental Entity has proposed any such
adjustment or change in accounting method;
(k) any adjustment of Taxes of any of the MW Companies made by the
Internal Revenue Service (the "IRS"), which adjustment is required to be
reported to the appropriate state, local, or foreign Governmental Entity, has
been so reported;
(l) none of the MW Companies has executed or entered into a
closing agreement pursuant to Section 7121 of the Code or any similar
provision of state, local or foreign law, and none of the MW Companies has is
subject to any private letter ruling of the IRS or comparable ruling of any
other Governmental Entity;
(m) there is no contract, agreement, plan, or arrangement covering
any person that, individually or collectively, will give rise to the payment
of any amount in connection with the transactions contemplated by this
Agreement that would not be deductible by the Purchaser or any of the MW
Companies by reason of Section 280G of the Code.
(n) The Company is not, nor has it been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
Section 3.10. Governmental Permits. Each of the MW Companies has all
governmental licenses, franchises, permits, privileges, immunities, approvals
and other authorizations which are reasonably necessary and material for the
ownership, leasing, operation and use of its assets and properties and which are
reasonably necessary and material to their carrying on and conducting their
respective businesses as currently conducted (herein collectively called
"Governmental Permits"). Each such Governmental Permit is valid and in full
force and effect in all material respects and, to the knowledge of the Company,
no suspension or cancellation of any of them is threatened.
Section 3.11. Owned Real Property. All real property owned by any of the
MW Companies is identified in Schedule 3.11 and is hereinafter referred to as
the "Owned Real Property". The MW Company shown on such Schedule 3.11 as owning
such Owned Real Property holds good, valid and marketable fee title to the Owned
Real Property shown as so
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owned, free of all Encumbrances except (i) for easements, covenants,
restrictions and other matters that do not impair in any material respect the
use and enjoyment of the property, (ii) for liens for Taxes not yet due and
payable or being contested in good faith by appropriate proceedings for which
adequate reserves have been created in accordance with GAAP, (iii) for liens of
carriers, warehousemen, mechanics, materialmen and other similar liens incurred
in the Ordinary Course for amounts which are not delinquent and which are not
individually or in the aggregate, material (the matters set forth in the
foregoing clauses (i), (ii) and (iii) are referred to herein as "Permitted
Encumbrances"), and (iv) liens created pursuant to the Senior Credit Facility
and (v) as set forth in Schedule 3.11.
Section 3.12. Real Property Leases.
(a) Schedule 3.12(a) contains an accurate and complete list of all
real property leased by any of the MW Companies (the "Scheduled Leases").
Except as set forth on Schedule 3.12(a), the Company has heretofore delivered
to the Purchaser true, correct and complete copies of all Scheduled Leases
(including all modifications, amendments and supplements). The applicable MW
Company holds good and valid leasehold title to each of the properties which
are the subject of the Scheduled Leases (the "Leased Real Property"), in each
case free of all Encumbrances, except for liens created pursuant to the Senior
Credit Facility and Permitted Encumbrances.
(b) Except as disclosed in Schedule 3.12(b), each Scheduled Lease
is valid, binding and in full force and effect and there are no existing
defaults under any Scheduled Lease, and no event has occurred which, to the
knowledge of the Company, with notice or lapse of time, or both, would
constitute an event of default under any Scheduled Lease, except in each case
for matters that would not have a Material Adverse Effect.
(c) Schedule 3.12(c) sets forth all Scheduled Leases that are
terminable by the landlord thereunder on thirty-days notice or less. In the
event that the landlords under the leases set forth on Schedule 3.12(c) were
to terminate those leases, such terminations would not individually or, in the
aggregate, have a Material Adverse Effect.
Section 3.13. Intellectual Property.
(a) Schedule 3.13(a) lists all patents, patent applications,
registered trademarks, trademark applications, registered service marks,
service xxxx applications, trade names and registered copyrights that are
owned by any of the MW Companies and included in the Intellectual Property
(collectively, "Registered Intellectual Property").
(b) Schedule 3.13(b) lists all licenses or other agreements
relating to Intellectual Property to which any of the MW Companies is a party,
other than any "shrink wrap" and "click wrap" software license agreements and
any other software license agreements that do not involve prospective material
license fees or royalty payments by any of the MW Companies.
(c) One of the MW Companies owns, or otherwise has the right
pursuant to a valid agreement, to use the Intellectual Property necessary or
material to the business of the MW Companies as presently conducted (the
"Company Intellectual Property"). Except for the
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liens in connection with the Senior Credit Facility, all of the Registered
Intellectual Property is free and clear of all Encumbrances. To the knowledge
of the Company, all of the rights of the MW Companies in and to the Registered
Intellectual Property are valid and enforceable. Each of the MW Companies has
taken all actions reasonably necessary to maintain and protect each item of
Company Intellectual Property owned or purported to be owned by it, and to
protect the secrecy, confidentiality and value of its Trade Secrets that are
material to the business of the MW Companies as presently conducted and taken
as a whole.
(d) To the knowledge of the Company, none of the Intellectual
Property, products or services owned, used, developed, provided, sold,
licensed, imported or otherwise exploited by the MW Companies infringes upon
or otherwise violates in any material respect any Intellectual Property rights
of others. None of the MW Companies has received written notice that is still
pending to the effect that any of the MW Companies has infringed any patent,
trademark, service xxxx, trade name, copyright, brand name, logo, symbol or
other intellectual property right of any third party and there is no action
pending or, to the knowledge of the Company, threatened against any of the MW
Companies, and to the knowledge of the Company, there is no fact, event,
condition or circumstance that reasonably would be expected to give rise to
the commencement of a claim, that any of the MW Companies has infringed or
misappropriated any such intellectual property right of any Person in any
material respects.
(e) To the knowledge of the Company, no Person is infringing any
Company Intellectual Property or opposing or attempting to cancel any rights
of the MW Companies in or to the Company Intellectual Property.
(f) No past or present employee or consultant of any MW Company
owns or has any right in or to any portion of any Company Intellectual
Property.
Section 3.14. Labor Relations. No MW Company is a party to any collective
bargaining agreement, contract or legally binding commitment to any trade union
or employee organization or group in respect of or affecting employees. Except
as set forth on Schedule 3.14, (a) no MW Company is currently engaged in any
negotiation with any trade union or employee organization; (b) in the last six
years, no MW Company has engaged in any unfair labor practice within the meaning
of the National Labor Relations Act, and, there is no pending or, to the
knowledge of the Company, threatened complaint regarding any alleged unfair
labor practices as so defined; (c) there is no strike, labor dispute, work slow
down or stoppage pending or, to the knowledge of the Company, threatened against
any MW Company; (d) in the last six years, no MW Company has experienced any
material work stoppage; (e) to the knowledge of the Company, no MW Company is
the subject of any union organization effort; and (f) except as to matters that
are not individually or in the aggregate likely to have a Material Adverse
Effect, the MW Companies are and have been in material compliance with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including, without limitation, any
such Laws respecting employment discrimination, occupational safety and health,
and unfair labor practices.
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Section 3.15. Employee Benefit Plans.
(a) As used in this Agreement, the term "Employee Plan" means any
pension, retirement, profit-sharing, deferred compensation, stock purchase,
stock option, bonus or incentive plan, any medical, vision, dental or other
health plan, any life insurance plan, vacation, employment, consulting,
severance, disability or other employee benefit plan, program, policy
agreement or arrangement, whether written or unwritten, including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which
any of the MW Companies maintains or contributes to or for which any of the MW
Companies has any actual, contingent, primary or secondary liability. Each
Employee Plan is listed on Schedule 3.15. Except as set forth in Schedule
3.15(a), no MW Company, or any entity which is considered to be under common
control with any of such MW Companies pursuant to Section 1001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate") sponsors, maintains,
contributes to or had any obligation with respect to, or in the past six years
preceding the date hereof has sponsored, maintained, contributed to or had any
obligation with respect to, any Employee Plan which is a single employer
defined benefit plan as defined in Section 3(35) of ERISA subject to Title IV
of ERISA (a "Title IV Plan"), or contributed to, participated in or had any
obligation with respect to, any multiemployer plan within the meaning of
Section 3(37) of ERISA or any plan subject to Section 4063 or 4064 of ERISA.
(b) Except as set forth in Schedule 3.15(b), for each Employee
Plan that is a Title IV Plan, (a) as of the last day of the most recent plan
year ended prior to the date hereof, there is no "amount of unfunded benefit
liabilities," as defined in Section 4001(a)(18) of ERISA, and there has been
no material change in the financial condition of any such Title IV Plan since
the last day of its most recent fiscal year, (b) there has been no "reportable
event" as that term is defined in Section 4043 of ERISA and the regulations
thereunder that would require the giving of notice or any event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA, (c) all premiums
due the Pension Benefit Guaranty Corporation ("PBGC") have been paid, (d) none
of the MW Companies has filed a notice of intent to terminate any Title IV
Plan and has not adopted any amendment to treat such Title IV Plan as
terminated, (e) the PBGC has not instituted, or threatened to institute,
proceedings to treat any Title IV Plan as terminated and (f) no event has
occurred or circumstance exists that may constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan. No "accumulated funding deficiency" as defined
in Section 302 of ERISA or Section 412 of the Code, whether or not waived,
exists with respect to any Employee Plan subject to Section 302 of ERISA or
Section 412 of the Code and the Company is not, and does not expect to be,
subject to (i) any requirement to post security pursuant to Section 412(f) of
the Code or (ii) any lien pursuant to Section 412(n) of the Code.
(c) Each Employee Plan that is intended to be qualified under
Section 401(a) of the Code and any trust relating to any such Employee Plan
that is intended to be exempt from income tax under Section 501(a) of the Code
is so qualified and exempt, as applicable, and each such Employee Plan has
received one or more favorable determination letters or opinion letters from
the U.S. Internal Revenue Service to such effect. Each Employee Plan intended
to be qualified under Section 401 of the Code has been administered in all
material respects according to its terms and applicable Law, and, to the
knowledge of the
-24-
Company, nothing has occurred which would be reasonably likely to adversely
affect its qualified status or the qualified status of any related trust.
(d) The Employee Plans are in compliance in all material respects
with all Laws (including, without limitation, ERISA and the Code) applicable
to Employee Plans. All material reports and material disclosures relating to
the Employee Plans required to be filed with or furnished to any Governmental
Entity have been filed or furnished in a timely manner and in accordance with
applicable Laws. With respect to any Employee Plan, no prohibited transaction
(within the meaning of Section 406 of ERISA and/or Section 4975 of the Code)
exists which could subject any of the MW Companies or any "disqualified
person" to any excise tax or penalty pursuant to Section 502(1) of ERISA or
under Section 4975 of the Code. Each of the MW Companies has made full and
timely payment of all amounts which are required to be paid as contributions
to each Employee Plan that is an employee pension benefit plan (as defined in
Section 3(2) of ERISA). Each of the MW Companies has complied in all material
respects with the continuation coverage requirements of Part 6 of Title I of
ERISA, as amended ("COBRA") and with the requirements of the Health Insurance
Portability and Accountability Act. There is no contract, agreement, plan or
arrangement with any person which provides for any payment to any employee by
any of the MW Companies, either in connection with this transaction or
otherwise, which payment would increase, be accelerated and/or would not be
deductible under Code Sections 162(m) or 404.
(e) With respect to any Employee Plan, other than routine claims
for benefits, no liens, lawsuits or complaints to or by any person or
Governmental Entity have been filed or made against such Employee Plan or any
MW Companies or, to the knowledge of the Company, against any other person or
party and, to the knowledge of the Company, no such liens, lawsuits or
complaints are contemplated or threatened and no individual who has performed
services for any MW Company has been improperly excluded from participation in
any Employee Plan. All liabilities or expenses of the MW Companies in respect
of any Employee Plan (including workers compensation) or which have not been
paid, have been properly accrued on the Company's Financial Statements in
compliance with GAAP. None of the MW Companies nor any organization to which
any MW Company is a successor or parent corporation, within the meaning of
Section 4069(b) of ERISA, has engaged in any transaction described in Sections
4069 or 4212(c) of ERISA.
(f) None of the MW Companies has an obligation to provide or make
available post-employment welfare benefits or welfare benefit coverage for any
employee or former employee, except as may be required under COBRA, and at the
expense of the employee or former employee.
(g) The Company has no contract or commitment to create any
additional employee benefit or compensation plans, policies or arrangements
or, except as may be required by applicable law, to modify any Employee Plan,
and the Company may amend or modify any Employee Plan at any time.
(h) The Company has not as of the date hereof incurred, and shall
not as of the Closing incur, any liability or obligation under the Worker
Adjustment and Retraining Notification Act, and the regulations promulgated
thereunder (the "WARN Act"), or any
-25-
similar state or local law which remains unsatisfied. The Company has no
material direct or indirect liability, whether absolute or contingent, with
respect to any misclassification of any person as an independent contractor
rather than as an employee, or with respect to any employee leased from
another employer.
Section 3.16. Certain Contracts. Except as set forth in
Schedule 3.16, none of the MW Companies is a party to, or bound by, nor are
any of their respective properties subject to, or bound by, any contract
or agreement relating to the following (the "Company Contracts"):
(a) payments by or to any of the MW Companies of more than
$250,000 in any 12-month period from or after January 1, 2003 (other than the
Funded Indebtedness);
(b) the employment of any officer or employee (other than any
contract which is terminable without liability upon notice of 90 days or
less), or any contract of employment with a former officer or employee, in
each case pursuant to which payments in excess of $250,000 are required to be
made by any of the MW Companies in any 12-month period after the date hereof;
(c) any outstanding indebtedness for borrowed money by any of the
MW Companies, other than borrowings under the Senior Credit Facility and other
indebtedness not in excess of $250,000 in the aggregate;
(d) the sharing of profits, losses, costs or liabilities with any
other Person in a joint venture agreement, partnership agreement, or limited
liability company agreement or other agreement (however named) that is
material to the Company or the Subsidiaries considered as a whole;
(e) non-competition or exclusivity obligations which would
prohibit the Company or any Subsidiary from freely engaging in business
anywhere in the world;
(f) any obligation to pay any "earnout" payment or
deferred or contingent purchase price or any similar payment respecting
the purchase of any business or assets;
(g) except for guarantees of obligations between or among the MW
Companies and except pursuant to the Funded Indebtedness, any material
guarantee or other material contingent liability in respect of any
indebtedness or obligation of any Person; and
(h) any other contract or agreement that is material to
the MW Companies taken as a whole.
True, correct and complete copies of all Company Contracts have been made
available to the Purchaser. The Company and the Subsidiaries have been in
compliance in all material respects with all applicable terms and requirements
of each Company Contract and to the Company's knowledge, each other Person that
is a party to any of the Company Contracts has been in compliance with all
applicable terms and requirements of such Company Contract, other than any
non-compliance by the Company and its Subsidiaries or such other party to such
Company Contract that would not have a Material Adverse Effect. Neither the
Company nor any Subsidiary has given to or received from any other Person any
written notice regarding any
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actual, alleged, possible or potential violation or breach of, or default under,
or any threat to terminate, any Company Contract.
Section 3.17. Litigation. Except as set forth in Schedule 3.17, there are
no suits, claims, actions, proceedings or investigations pending or, to the
knowledge of the Company, threatened against any of the MW Companies or any of
their respective properties or assets which, if determined adversely, (i)
require the payment individually in excess of $150,000, (ii) result in the entry
of any equitable relief or (iii) would reasonably be expected to prevent or
materially delay the consummation of the transactions contemplated hereby.
Except as set forth in Schedule 3.17, no MW Company is subject to any writ,
injunction or decree of any Governmental Entity that would have a Material
Adverse Effect.
Section 3.18. Environmental Matters. Except as set forth in Schedule 3.18,
(a) none of the MW Companies is subject to any order, decree or injunction
issued by any Governmental Entity relating to any Environmental Law; (b) none of
the MW Companies has been notified in writing that it may be liable under or in
violation of or out of compliance with any Environmental Law; (c) the MW
Companies are, and have been for the past three years, in compliance in all
material respects with applicable Environmental Laws; (d) to the knowledge of
the Company, there are no events or facts that would cause any of the MW
Companies to be liable under or in violation of or not in compliance with any
Environmental Law in any material respect; and (e) to the knowledge of the
Company, no real property currently or formerly owned or operated by any of the
MW Companies is contaminated with any pollutant, contaminant, hazardous waste or
hazardous substance to an extent or in a manner or condition now requiring
remediation under any Environmental Law. As used herein, "Environmental Laws"
means the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, the Federal Water Pollution Control Act, 33 U.S.C.
Section 1201, the Clean Water Act, 33 U.S.C. Section 1321, the Clean Air Act, 42
U.S.C. Section 7401 and thE Toxic Substances Control Act, 15 U.S.C. Section
2601, in each case, as amended from time to time, or any other applicable
federal, state, local or foreign law, ordinance, regulation or rule dealing with
pollution, the protection of natural resources and/or the environment or
occupational exposures to hazardous materials, or the handling, storage,
treatment, transport, disposal or recycling of hazardous materials.
Section 3.19. Insurance. Schedule 3.19 lists all currently effective
material insurance policies or binders of insurance which relate to the business
of the MW Companies (excluding insurance funded Employee Plans). Such policies
and binders are valid and binding in accordance with their terms, are in full
force and effect, and insure against risks and liabilities to an extent and in a
manner customary in all material respects in the industries in which the MW
Companies operate. The Company has made available to the Purchaser a brief
description (specifying the insurer and the policy number or covering note
number with respect to binders, describing each pending claim thereunder of more
than $25,000, setting forth the aggregate amounts paid out under each such
policy through the date hereof) or provided copies of all policies or binders of
fire, liability, worker's compensation, vehicular, products liability and other
insurance held by or on behalf of any of the MW Companies. None of the MW
Companies is in default under, or has otherwise failed to comply with, in any
material respect, any provision contained in any such policy or binder or has
failed to give any notice or present any claim under any such policy or binder
in due and timely fashion that would result in the cancellation of such
-27-
policy or binder. No MW Company has received (x) any refusal of coverage or any
notice that a defense will be afforded with reservation of rights, or (y) any
notice of cancellation or non-renewal of any such policy or binder. To the
Company's knowledge, no event has occurred or circumstance exists that may form
the basis for termination of any such policy or binder. Except as set forth on
Schedule 3.19, no MW Company has received any notice from any of their insurance
carriers that any insurance premiums will or may be materially increased in the
future or that any insurance coverage set forth on Schedule 3.19 will or may not
be renewed on substantially the same terms as now in effect.
Section 3.20. Finders. Except as set forth on Schedule 3.20, no MW Company
will be obligated to pay any fee or commission to any broker, finder or similar
intermediary for or on account of the transactions contemplated by this
Agreement.
Section 3.21. Transactions with Affiliates. Except as set forth on
Schedule 3.21 (collectively, the "Affiliate Transactions"), no officer or
director of any MW Company, no Person with whom any such officer or director has
any direct or indirect relation by blood, marriage or adoption, no entity in
which any such officer, director or Person owns any beneficial interest (other
than a publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than five percent of the
stock of which is beneficially owned by all such officers, directors and Persons
in the aggregate), no Affiliate of any of the foregoing and no current or former
Affiliate of any MW Company and no Seller has any interest in: (a) any contract,
arrangement or understanding with, or relating to, any MW Company or the
properties or assets of any MW Company or (b) any loan, arrangement,
understanding, agreement or contract for or relating to any MW Company or the
properties or assets of any MW Company.
Section 3.22. Compliance with Laws. The MW Companies are in compliance
with all applicable Laws of foreign, federal, state and local governments and
all agencies thereof, except where the failure to comply has not had and is not
reasonably likely to have, individually or in the aggregate, Material Adverse
Effect.
Section 3.23. Inventory. The inventories of the MW Companies are in good
and merchantable condition in all material respects, are saleable in all
material respects in the Ordinary Course for the purposes for which intended and
are in amounts consistent with prior practice at this time of year in all
material respects, except for shorts, obsolete or otherwise unusable inventory
for which adequate reserves have been reflected in the Interim Financial
Statements in accordance with GAAP consistently applied.
Section 3.24. Receivables. Except as set forth on Schedule 3.24, all
accounts and notes receivable reflected on the Interim Financial Statements, and
all accounts and notes receivable arising subsequent to the date of the Interim
Financial Statements, have arisen in all material respects from bona fide
transactions entered into by the Company and/or one or more of its Subsidiaries
involving the sale of inventory or the rendering of a service in the Ordinary
Course. The Company has provided the Purchaser with a true and complete list of
all accounts receivable, as of April 3, 2004, which list sets forth the aging of
such accounts receivable.
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Section 3.25. Warranty Claims. Within the last three years, there have
been no (a) citations or decisions by any Governmental Entity specifically
stating that any product manufactured, marketed or distributed at any time by
any MW Company (collectively, "Transferred Company Products") is defective or
unsafe or fails to meet any safety standards promulgated by such Governmental
Entity or (b) recalls ordered by any Governmental Entity with respect to any
Transferred Company Product. Except as would not reasonably be expected to have
a Material Adverse Effect or except pursuant to the standard merchandise return
policies of the MW Companies, which provide for the replacement or return for
credit of defective or damaged products or other returns for credit at the
request of the customer other than for the replacement or return for credit of
defective or damaged products, there are no pending or, to the Company's
knowledge, threatened warranty claims, against any MW Company which would, in
the aggregate, reasonably be expected to exceed the reserve for such claims
reflected in the Interim Financial Statements, as such reserve has been adjusted
in the Ordinary Course since the date of the Interim Financial Statements.
Section 3.26. Condition of Assets and Properties. Except as set forth on
Schedule 3.26 or defects that would not, in the aggregate, have a Material
Adverse Effect, all of the assets and properties of the MW Companies are in good
operating condition and repair, subject to ordinary wear and tear.
ARTICLE IV
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder severally (as to himself, herself or itself and not as to
any other Stockholder) hereby represents and warrants to the Purchaser as
follows:
Section 4.1. Authority and Related Matters.
(a) The Stockholder has full legal right, power, capacity and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and, for the Stockholders other than natural
persons, such Stockholder is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has taken all
corporate action necessary to authorize the execution, delivery and
performance by such Stockholder of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by such Stockholder and constitutes a valid and legally
binding obligation of such Stockholder enforceable against such Stockholder in
accordance with it terms, except that such enforceability (i) may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally, and (ii)
is subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(b) The Stockholder is the record owner of the aggregate number
and class of shares of capital stock of the Company listed beside its name on
Exhibit A and such shares are the only shares of capital stock of the Company
owned by such Stockholder. Except for
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this Agreement and the transactions contemplated hereby, there are no
agreements, arrangements, warrants, options, puts, calls or other rights, of
any character to which such Stockholder is a party or by which any shares of
capital stock of the Company owned by Stockholder are bound relating to the
issuance, sale, purchase, redemption, conversion, exchange, registration,
voting or transfer of any such shares, other than those which, pursuant to
their terms, will terminate immediately on the Closing Date. At Closing, the
Stockholder will transfer good and valid title to the Shares to be sold by
such Stockholder to the Purchaser free of any preemptive or subscription
rights and free and clear of all Encumbrances other than those created by the
Purchaser.
(c) The execution and delivery by the Stockholder of this
Agreement and the consummation by the Stockholder of the transactions
contemplated hereby not:
(i) violate, conflict with, result with the giving of notice
or lapse of time or both in a breach of the terms, conditions or provisions
of, or constitute a default, an event of default or an event creating
rights of acceleration, amendment, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any Encumbrance
upon, any of the assets or properties of such Stockholder or any of the MW
Companies, any articles of organization, bylaws, trust agreement,
partnership agreement or certificate of partnership or other constitutive
documents of such Stockholder, or, except as would not prevent or
materially delay the consummation of the transactions contemplated hereby,
any note, instrument, agreement, mortgage, lease, license, franchise,
Governmental Permit or judgment, order, award or decree to which such
Stockholder is a party or by which the Stockholder is bound, or any Law
affecting such Stockholder; or
(ii)except for compliance with the HSR Act, require the
approval, consent, authorization or act of, or the making by such
Stockholder of any declaration, filing or registration with, any
Governmental Entity or other Person.
Section 4.2. No Finder. Except as set forth on Schedule 3.20, the
Stockholder has not made any arrangement which would obligate the Purchaser or
the Company to pay any fee or commission (or reimburse expenses) to any broker,
finder or similar intermediary for or on account of the transactions
contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company and the
Sellers as follows:
Section 5.1. Organization. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. The Purchaser has delivered to the Company true
and correct copies of its certificate of incorporation and bylaws as in effect
on the date hereof and as proposed to be in effect immediately prior to the
Closing Date.
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Section 5.2. Authority Relative to this Agreement. The Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Purchaser and the consummation of the transactions contemplated hereby have been
duly and validly authorized and approved by all necessary corporate action and
no other corporate proceedings on the part of the Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
Each of this Agreement has been duly and validly executed and delivered by the
Purchaser and, assuming the due authorization, execution and delivery hereof by
the Company and the Stockholders, constitutes a valid and binding agreement of
the Purchaser, enforceable against it in accordance with its terms, except that
such enforceability (a) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally, and (b) is subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
Section 5.3. Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
conflict with or result in any violation of any provision of the certificate of
incorporation or bylaws (or equivalent governing instruments) of the Purchaser
or any of its Subsidiaries, (b) require any consent, approval or notice under,
or conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any contracts of the Purchaser or any of its Subsidiaries or
(c) subject to the approvals, filings and consents referred to in Section 5.4,
violate any legal requirements applicable to the Purchaser or any of its
Subsidiaries, except, in the case of clauses (b) and (c), with respect to
matters that would not impair the ability of the Purchaser to perform its
obligations under this Agreement in any material respect or otherwise delay in
any material respect or prevent the consummation of any of the transactions
contemplated by this Agreement.
Section 5.4. Governmental Consents. No consent, approval or authorization
of, or declaration or filing with, any Governmental Entity on the part of the
Purchaser or any of its Subsidiaries that has not been obtained or made is
required in connection with the execution or delivery by the Purchaser of this
Agreement or the consummation by the Purchaser of the transactions contemplated
hereby, other than (a) compliance with the notification and waiting period
requirements of the HSR Act, (b) such filings as may be required by any
applicable state securities or "blue sky" laws or state takeover laws, and (c)
consents, approvals, authorizations, declarations or filings that, if not
obtained or made, would not impair the ability of the Purchaser to perform its
obligations under this Agreement in any material respect or otherwise delay in
any material respect or prevent the consummation of any of the transactions
contemplated hereby.
Section 5.5. No Finder. Neither the Purchaser nor any party acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
Section 5.6. Investment Intent. The Purchaser is purchasing the shares of
capital stock of the Company pursuant to Article II solely for its own account
and with no intention of distributing or reselling such shares or any part
thereof, or interest therein, in any transaction that
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would be in violation of the Securities Act of 1933, as amended, or any other
securities laws of the United States of America or any state thereof.
Section 5.7. Status as Accredited Investor. The Purchaser is an
"accredited investor" (as that term is defined in Rule 501 of Regulation D under
the Securities Act). The Purchaser has such knowledge and experience in business
and financial matters so that the Purchaser is capable of evaluating the merits
and risks of an investment in the shares being acquired hereunder. The Purchaser
understands the full nature and risk of an investment in such shares. The
Purchaser further acknowledges that it has had access to the books and records
of the Company, is generally familiar with the business being conducted by the
Company and has had an opportunity to ask questions concerning the Company and
the Company's securities.
Section 5.8. Financial Capability/Solvency.
(a) The Purchaser has received binding commitments from UBS Loan
Finance LLC and UBS Securities LLC (together, the "Debt Financing
Commitments") and Xxxxxx-Xxxxxx Capital, Inc. (together with the Debt
Financing Commitments, the "Financing Commitments"). The Purchaser has
previously delivered to the Company true and complete copies of the executed
Financing Commitments.
(b) To the knowledge of the Purchaser based on information
heretofore provided by the Company to the Purchaser and assuming the accuracy
of the Company's representations and warranties under this Agreement,
immediately following the Closing, the Company shall be Solvent. For purposes
of this Agreement, "Solvent" when used with respect to the Company shall mean
that, immediately following the Closing, (i) the amount of the Present Fair
Salable Value of its assets will, as of such date, exceed all of its
liabilities, contingent or otherwise, as of such date, (ii) the Company will
not have, as of such date, an unreasonably small amount of capital for the
business in which it is engaged or will be engaged and (iii) the Company will
be able to pay its Debts as they become absolute and mature, taking into
account the timing of and amounts of cash to be received by it and the timing
or and amounts of cash to be payable on or in respect of its indebtedness. The
term "Solvency" shall have its correlative meaning. For purposes of the
definition of Solvent, (A) "Debt" shall mean liability on a Claim; (B) "Claim"
shall mean (I) any right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (II) the right
to an equitable remedy for breach on performance if such breach gives rise to
a right to payment, whether or not such equitable remedy is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; and (C) "Present
Fair Salable Value" shall mean the amount that may be realized if the
aggregate assets of the Company (including goodwill) are sold in its entirety
with reasonable promptness in an arm's length transaction under present
conditions for the sale of comparable business enterprises.
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ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1. Conduct of Business of the MW Companies. For the period
commencing on the date hereof and ending on the Closing Date, except as
expressly contemplated by this Agreement, or set forth in Schedule 6.1, or
otherwise consented to in advance in writing by the Purchaser (which consent
shall not be unreasonably withheld), the Company hereby agrees that:
(a) none of the MW Companies will:
(i) amend its certificate of incorporation or bylaws;
(ii) declare, set aside, make or pay any dividends or other
distributions (whether in cash, stock, property or otherwise) with respect
to any of its capital stock, except for dividends, distributions or other
payments by any Subsidiary to any other Subsidiary or to the Company;
(iii) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire for any consideration any outstanding shares
of its capital stock or securities carrying the right to acquire or which
are convertible into or exchangeable or exercisable for, with or without
additional consideration, such capital stock, except the redemption or
repurchase of shares of Class A Common Stock from employees in connection
with the termination of such employee's employment (if such redemption or
repurchase occurs after the date hereof, the Company and the Stockholders
will prior to the Closing Date amend Exhibit A to reflect such redemption
or repurchase);
(iv) acquire stock or other securities or assets of any
Person, or dispose of any assets, except acquisitions or dispositions of
inventory or equipment in the Ordinary Course or otherwise not in excess of
$250,000 in the aggregate;
(v) incur any indebtedness for borrowed money, other than
borrowings under the Senior Credit Facility and other indebtedness not in
excess of $250,000 in the aggregate;
(vi) merge or consolidate with any corporation or other
entity or acquire any capital stock or business of any Person, or
consummate any business combination transaction, in each case, whether in a
single transaction or series of related transactions;
(vii) create, assume or suffer to be incurred any
Encumbrance of any kind on any of its properties or assets, other than
liens created pursuant to the Senior Credit Facility, Permitted
Encumbrances and other Encumbrances having a value, in the aggregate, not
in excess of $250,000;
(viii) change its accounting methods, principles or
practices, except as may be required by GAAP and as disclosed in the
Interim Financial Statements;
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(ix) suffer any extraordinary losses, casualties, damage or
destruction, or waive or cancel any rights of value in excess of $250,000
in the aggregate
(x) grant or announce any increase in the salaries, bonuses
or other benefits payable by the Company or any of its Subsidiaries to any
of their employees, other than as required by Law or pursuant to any plans,
programs or agreements existing on the date hereof, including normal merit
increases to non-executive officers of the Company or any of its
Subsidiaries, in each case, consistent with the past practices of the
Company or such Subsidiary;
(xi) grant any severance or termination pay to any of the
employees, directors, officers or consultants of the Company and its
Subsidiaries or increase any benefits payable under any existing severance
or termination pay policies or employment agreements with any of the
employees, directors, officers or consultants of the Company and its
Subsidiaries;
(xii) make any payment or distribution to any Seller or any
Affiliate of any Seller (other than in the Ordinary Course in his or her
capacity as a director, officer or employee of the MW Companies);
(xiii) sell, assign or transfer any patents, trademarks,
trade names, copyrights, trade secrets or other intangible assets other
than in the Ordinary Course;
(xiv) enter into, amend, supplement or modify any agreement
material to the MW Companies taken as a whole, except in the Ordinary
Course; or
(xv) commit, authorize or agree to do any of the foregoing;
and
(b) each of the MW Companies will:
(i) conduct its business in all material respects in the
Ordinary Course; and
(ii) use its commercially reasonable efforts, consistent
with the past practices of the Company, to preserve in all material
respects the current business organization, existing business relationships
and goodwill of the MW Companies; and
(c) without limiting the generality of the foregoing, the MW
Companies shall continue to make capital expenditures in the Ordinary Course.
Section 6.2. Confidentiality. Any information provided to the Purchaser or
its directors, officers, employees, agents, accountants, advisors, bankers and
other representatives (collectively, the "Representatives") pursuant to this
Agreement shall be held by the Purchaser and its Representatives in accordance
with, and shall be subject to the terms of, the Confidentiality Agreement dated
May 14, 2004 by and between the Purchaser and the Company.
Section 6.3. Certain Efforts. Each of the parties hereto shall use his,
her or its reasonable efforts to perform such party's obligations hereunder and
to take, or cause to be taken,
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or do, or cause to be done, all things necessary, proper or advisable under
applicable Law to obtain all regulatory approvals and to cause the transactions
contemplated hereby to be completed in accordance with the terms hereof and
shall cooperate fully with each other party and their respective Representatives
in connection with any steps required to be taken as a part of their respective
obligations under this Agreement, including without limitation:
(a) Promptly upon execution and delivery of this Agreement, each
of the Purchaser and the Company shall prepare and file as promptly as
possible, or cause to be prepared and filed, with the appropriate Governmental
Entity, a notification with respect to the transactions contemplated by this
Agreement pursuant to the HSR Act, supply all information requested by such
Governmental Entity in connection with the HSR Act notification and cooperate
with each other in responding to any such request. Each of the parties shall
cooperate with each other in promptly filing any other necessary applications,
reports or other documents with any Governmental Entity having jurisdiction
with respect to this Agreement and the transactions contemplated hereby, and
in seeking necessary consultation with and prompt favorable action by such
Governmental Entity.
(b) Each party shall give prompt written notice to the others of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty of such party
contained in this Agreement or any other agreement or document contemplated
hereby to be materially untrue or inaccurate at any time from the date hereof
until the Closing or that will or may result in the failure to satisfy any of
the conditions specified in Articles VII and VIII and (ii) any failure of any
party hereto to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder. No such notification shall
limit or otherwise affect the terms of this Agreement or the Schedules
delivered by the parties pursuant to this Agreement on the date hereof.
Section 6.4. No Public Announcement. Prior to the Closing Date, neither
the Purchaser, the Company nor any Seller shall, without the approval of the
Purchaser and the Company (which shall not be unreasonably withheld), make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so obligated by Law, in which case the Purchaser and the Company shall
be advised, and the Purchaser and the Company shall use their reasonable efforts
to give the other party advance opportunity to review and comment on such
release or announcement.
Section 6.5. Directors' and Officers' Indemnification.
(a) The Purchaser agrees that (i) the certificate of incorporation
or the bylaws of the Company and its Subsidiaries immediately after the
Closing shall contain provisions with respect to indemnification and
exculpation from liability that are at least as favorable to the beneficiaries
of such provisions as those provisions that are set forth in the certificate
of incorporation and bylaws of the Company and its Subsidiaries, respectively,
on the date of this Agreement, which provisions shall not be amended, repealed
or otherwise modified for a period of six years following the Closing in any
manner that would adversely affect the rights thereunder of Persons who at or
prior to the Closing were Representatives of
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the Company or any of its Subsidiaries, unless such modification is required
by Law and (ii) all rights to indemnification as provided in any
indemnification agreements with any current or former Representative of the
Company or any of its Subsidiaries as in effect as of the date hereof with
respect to matters occurring at or prior to the Closing shall survive the
Closing in accordance with the terms thereof and shall not be amended,
modified or repealed without the prior written consent of the applicable
Representative.
(b) Prior to the Closing, the Company may at its option purchase
and pre-pay for six years from the Closing Date, officers' and directors'
liability insurance and fiduciary liability insurance covering the Persons
described in paragraph (a) of this Section 6.5 (whether or not they are
entitled to indemnification thereunder) who are currently covered by their
existing officers' and directors' or fiduciary liability insurance policies.
(c) This Section 6.5, which shall survive the Closing and shall
continue for the periods specified herein, is intended to benefit any Person
or entity referenced in this Section 6.5 or indemnified hereunder, each of
whom may enforce the provisions of this Section 6.5 (whether or not parties to
this Agreement).
Section 6.6. Investigation of the Company by the Purchaser. From the date
hereof until the earlier of the Closing or termination of this Agreement
pursuant to Article IX hereof, upon reasonable advance notice, the Company shall
afford to the Representatives of the Purchaser (including, without limitation,
independent public accountants and attorneys) reasonable access to the offices,
properties, senior management, and business and financial records of the MW
Companies, and shall furnish to the Purchaser or its Representatives such
additional information concerning the MW Companies and their respective
properties, assets, businesses and operations as shall be reasonably requested
by the Purchaser; provided, however, any such access or furnishing of
information shall be conducted at the Purchaser's expense, during normal
business hours, under the supervision of the Company's personnel and in such a
manner as not unreasonably to interfere with the normal operations of the
Company and its Subsidiaries. Nothing in this Section 6.6 or elsewhere in this
Agreement shall be interpreted so as to grant the Purchaser the right to perform
invasive or subsurface investigations of the properties or locations of any of
the MW Companies.
Section 6.7. Tax Matters. During the period from the date of this
Agreement to the Closing Date, the MW Companies shall (and the Stockholders
shall cause the MW Companies to):
(a) prepare, in the Ordinary Course (except as otherwise required
by law), and timely file all Tax Returns required to be filed by it (or them)
on or before the Closing Date ("Post Signing Returns");
(b) consult with the Purchaser with respect to all material
Post-Signing Returns and deliver drafts of such Post-Signing Returns to the
Purchaser no later than ten (10) business days prior to the date (including
extensions) on which such Post-Signing Returns are required to be filed;
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(c) fully and timely pay all Taxes shown due and payable
in respect of such Post Signing Returns that are so filed;
(d) properly accrue (and reflect such accrual in its books and
records and financial statements), to the extent required in accordance with
GAAP, in the Ordinary Course, for all Taxes payable by it (or them) for which
no Post Signing Return is due prior to the Closing Date;
(e) promptly notify the Purchaser of any material federal, state,
local or foreign income or franchise and any other suit, claim, contest,
investigation, administrative or judicial proceeding or audit pending against
or with respect to any of the MW Companies in respect of any Tax matter,
including (without limitation) Tax liabilities and refund claims
(collectively, "Contests"), and not settle or compromise any such Contest
without Purchaser's consent, which consent shall not be unreasonably withheld
or delayed;
(f) not make or revoke any material election with regard to Taxes
or file any material amended Tax Returns, in each case, other than consistent
with past practice;
(g) not make any significant change in any Tax or accounting
methods or systems of internal accounting controls (including procedures with
respect to the payment of accounts payable and collection of accounts
receivable), except, consistent with past practice, as may be appropriate to
conform to changes in Tax laws or regulatory accounting requirements or GAAP;
(h) terminate all Tax Sharing Agreements to which any of the MW
Companies is a party such that there is no further liability thereunder except
as provided as a current liability on the Interim Financial Statements; and
(i) take all actions that are reasonably necessary to ensure that
the Company shall not experience a loss of deduction pursuant to Section 280G
of the Code and/or any employee incur an excise tax pursuant to Section 4999
of the Code, as a result of making any payments to any current or former
employee of the Company or any of its subsidiaries in connection with the
transactions contemplated by this Agreement or otherwise.
Section 6.8. No Solicitation of Acquisition Proposals. As an inducement to
the Purchaser to enter into this Agreement, and in consideration of the time and
expense which it has devoted and will devote to the transactions contemplated
hereby during the period beginning on the date of this Agreement and ending on
the earlier of (a) the Closing Date and (b) the termination of this Agreement in
accordance with Article IX, except for the transactions contemplated hereby, the
Sellers shall not, and shall cause the MW Companies and each of the Affiliates
and authorized representatives of each of the MW Companies and the Sellers not
to, directly or indirectly, (i) initiate, solicit or encourage, or respond to,
any inquiry or proposal by any Person with respect to (a) a merger,
consolidation, share exchange, business combination, joint venture, liquidation,
dissolution or similar transaction involving any MW Company, (b) a sale, lease,
exchange or other disposition of all or any portion of the business, properties
or assets of any MW Company (other than in the Ordinary Course) or the
outstanding shares of capital stock of, or other ownership interests in, any MW
Company or (c) a sale of any securities of, or
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otherwise making an investment in, any MW Company (each, an "Acquisition
Proposal"), or (ii) enter into any discussions, negotiations or agreements
concerning an Acquisition Proposal with, or provide any information concerning
any MW Company or afford any access to properties, books and records of any MW
Company to, or otherwise assist or facilitate any effort relating to an
Acquisition Proposal by, any Person. The Sellers shall, and shall cause the MW
Companies and each of the Affiliates and authorized representatives of the MW
Companies and the Sellers to, immediately cease any existing discussions or
negotiations with any Person concerning any Acquisition Proposal.
Section 6.9. Payment in Full of Certain Company and Subsidiary
Indebtedness. The Company shall, on or prior to the Closing, pay or cause to be
paid in full or otherwise terminated in a manner satisfactory to the Purchaser
all Funded Indebtedness owed to the Company or any Subsidiary by a Seller or any
Affiliate of such Seller. Except as set forth on Schedule 6.9, on or before the
Closing, the Stockholder Representative shall cause all agreements disclosed or
required to be disclosed pursuant to Section 3.21 to be terminated and the
Company and its Subsidiaries will be fully and unconditionally released from all
obligations thereunder. At and as of the Closing, assuming compliance by
Purchaser with its obligations under Section 2.5(a), any Funded Indebtedness
owed by the Company or any Subsidiary to any Seller or to any Affiliate of any
of the Sellers shall be canceled.
Section 6.10. Financing Assistance.
(a) The Company shall cooperate with the Purchaser and its
Affiliates in connection with the Purchaser's efforts to obtain the necessary
financing to consummate the transactions hereunder, including without
limitation, causing the Company and the Subsidiaries and their respective
officers, employees, advisers and authorized representatives to (i) assist
with the preparation of such offering memoranda and documentation as may be
required under the Purchaser's financing commitments, and (ii) meet with
potential lenders and financing sources at the reasonable request of the
Purchaser.
(b) Upon the reasonable request of the Purchaser, to the extent
the Purchaser or any of its Affiliates conducts or intends to conduct an
offering of securities (and if the registration statement, prospectus or
offering memorandum for such offering includes or incorporates by reference
the financial statements relating to the Company and the Subsidiaries), the
Company shall use its commercially reasonable efforts to cause its independent
auditors to deliver a letter containing statements and information of the type
ordinarily included in accountant's "comfort letters" with respect to the
financial statements and financial information relating to the Company or its
Subsidiaries contained or incorporated by reference in any such document
relating to any such offering, within the time period reasonably requested by
the Purchaser or any of its Affiliates.
(c) The Company shall use its commercially reasonable efforts to
(i) cause the MW Companies to prepare and deliver to the Purchaser all
financial statements and financial information (and to provide assistance to
the Purchaser and its Affiliates with the preparation of pro forma financial
information) as may be required by the Purchaser or any of its Affiliates in
connection with their Securities Act or Exchange Act filings with the
Securities and Exchange Commission (the "SEC"), including without limitation
the
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Purchaser's Registration Statement on Form S-4 in connection with the issuance
of registered 9% Senior Subordinated Notes due 2012 in exchange for
unregistered 9% Senior Subordinated Notes due 2012, (ii) cause the financial
statements referred to in clause (i) to be audited by the Company's
independent auditor in accordance with SEC rules and (ii) cause the
independent auditors of the Company to execute and deliver any required
documentation in connection with the Purchaser's SEC filings referred to
above, including without limitation the consent to the use of the auditor's
name as required by SEC rules. The Sellers shall cooperate with the Company
and the Purchasers to effect the foregoing.
Section 6.11. Fulfillment of Financing Commitments.
(a) The Purchaser shall use its commercially reasonable efforts to
cause the Financing Commitments to be fulfilled in accordance with their
terms.
(b) In the event the condition to the Closing set forth in Section
7.9 fails to be satisfied because of a failure of the condition set forth in
clause (iv) of the Conditions in the Debt Financing Commitments (or a similar
provision in alternative sources of financing) solely due to a change having
occurred, or additional information having been disclosed to or discovered by
UBS Loan Finance LLC or UBS Securities LLC which has had or could reasonably
be expected to have a material adverse effect on the business, results of
operations, condition (financial or otherwise), assets or liabilities of Ply
Gem Holdings, Inc. and its Subsidiaries taken as a whole, the Purchaser hereby
unconditionally agrees to pay the sum of $15,000,000 to the Company within 3
Business Days after the termination of this Agreement in accordance with
Article IX by wire transfer in immediately available funds to an account
designated by the Company; provided, however, in the event the Purchaser fails
to pay such amount to the Company within such 3-Business Day period, the
Purchaser shall pay interest on such amount at a rate per annum of 10% from
such due date until paid.
Section 6.12. ISRA Compliance. The Sellers shall use their commercially
reasonable efforts to seek and obtain the necessary approvals required under the
New Jersey Industrial Site Recovery Act, N.J.S.A. Sect. 13:1K-6 et seq. ("ISRA")
for the consummation of the transactions contemplated by this Agreement.
Section 6.13. FIRPTA Certificate. Prior to the Closing Date, the Company
shall deliver to the Purchaser a statement from the Company meeting the
requirements of Treasury Regulation Section 1.1445-2(c)(3) that thE Company is
not a United States real property interest.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver in
writing by the Purchaser, on or prior to the Closing Date, of each of the
following conditions:
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Section 7.1. No Misrepresentation or Breach of Covenants and Warranties.
(a) The Company shall have performed in all material respects all
agreements required to be performed by it at or prior to Closing.
(b) The representations and warranties of the Company and the
Stockholders contained in this Agreement shall be true and correct (without
regard to the qualifications of "material" or "Material Adverse Effect") as of
the date hereof and as of the Closing Date as though made on and as of the
Closing Date (except for representations and warranties that speak as of a
specific date prior to the Closing Date which need only be true and correct as
of such earlier date), except respecting such matters which would not,
individually and in the aggregate, be reasonably likely to have a Material
Adverse Effect.
(c) Each Stockholder shall have performed in all material respects
all agreements required to be performed by such Stockholder at or prior to
Closing.
Section 7.2. No Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any Material Adverse Effect or any event or
circumstance that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
Section 7.3. Resignations of Directors. The Company shall have furnished
the Purchaser with signed resignations, effective as of the Closing of each
director of each MW Company, other than those directors of the MW Companies
identified at least two (2) Business Days prior to the Closing as Persons whose
resignations are not required by the Purchaser.
Section 7.4. Litigation. As of the Closing Date, there shall be no Law,
injunction, restraining order or decree of any nature of any court or other
Governmental Entity of competent jurisdiction that is in effect that restrains
or prohibits the consummation of the transactions or other material obligations
of the parties hereto as contemplated hereby. As of the Closing Date, no action,
suit or proceeding shall be pending wherein an unfavorable judgment, decree or
order would (a) lead to damages or other relief in connection with the
transactions contemplated hereby or (b) have the effect of preventing,
materially delaying, making illegal, imposing material limitations or conditions
on or otherwise materially interfering with the performance of this Agreement or
the consummation of any of the transactions contemplated hereby, or (c) declare
unlawful the transactions contemplated by this Agreement or cause such
transactions to be rescinded
Section 7.5. Governmental Approvals. The filing and waiting period
requirements of the HSR Act shall have been complied with to the extent
applicable. The approval required under ISRA and all other required
authorizations, consents and approvals of (or filings with) any Governmental
Entity shall have been obtained or made, except for those authorizations,
consents and approvals (other than under ISRA) which if not obtained would not
have a Material Adverse Effect.
Section 7.6. Stock, Warrant and Option Certificates. In accordance with
Section 2.4(b) of this Agreement, the Sellers and the Company shall have
delivered to the Purchaser (a) stock certificates representing all of the issued
and outstanding shares of Class A Common Stock and Class D Common Stock and
accompanying stock powers duly executed by the applicable
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Stockholder, evidencing the transfer of such shares to the Purchaser, (b)
documentation reasonably satisfactory to the Purchaser that all of the
outstanding Class B Warrants and all of the outstanding Options (other than any
Rollover Options) shall be cancelled immediately following the Closing and (c)
evidence reasonably satisfactory to the Purchaser that all Stockholder Loan
Amounts have been repaid.
Section 7.7. Satisfactory Documentation. All instruments and legal and
corporate proceedings in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to the
Purchaser.
Section 7.8. Release. Each of the MW Companies shall have been released as
a borrower or guarantor, as applicable, under all the Funded Indebtedness and
all Liens on the capital stock or assets of the MW Companies securing amounts
owed in respect of the Funded Indebtedness or any other outstanding indebtedness
shall have been released or terminated.
Section 7.9. Financing. The Purchaser and/or the Company shall have
received the amount of funds set forth in the Financing Commitments as a result
of funding thereunder or as a result of funding from one or more alternative
sources of financing on terms no less favorable to the Purchaser than under the
Financing Commitments; provided, however, that a failure to receive the amount
of funds set forth in the Debt Financing Commitments due to (a) a breach by
Xxxxxx-Xxxxxx Capital, Inc. of its obligations under its Financing Commitments,
(b) the failure to pay the required fees and expenses or (c) the failure to
provide accurate, complete and not misleading information (other than with
respect to information provided by the Sellers or the Company to the Purchaser
regarding the MW Companies) shall not relieve the Purchaser of its obligations
to consummate the transactions contemplated by this Agreement.
Section 7.10. Termination of Investcorp Agreement. The Investcorp
Agreement shall have been terminated and MW Manufacturers, Inc. shall have been
released of all of its obligations thereunder.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLERS
The obligations of the Company and the Stockholders to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
or waiver in writing by the Company, on or prior to the Closing Date, of each of
the following conditions:
Section 8.1. No Misrepresentation or Breach of Covenants and Warranties.
(a) The Purchaser shall have performed in all material
respects all agreements required to be performed by it at or prior to
Closing; and
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(b) Each of the representations and warranties of the Purchaser
contained in Article V of this Agreement shall be true and correct in all
material respects on the date hereof and on the Closing Date as though made on
and as of the Closing Date.
Section 8.2. Litigation. As of the Closing Date, there shall be no Law,
injunction, restraining order or decree of any nature of any court or other
Governmental Entity of competent jurisdiction that is in effect that restrains
or prohibits the consummation of the transactions or other material obligations
of the parties hereto as contemplated hereby.
Section 8.3. Governmental Approvals. The filing and waiting period
requirements of the HSR Act shall have been complied with to the extent
applicable. All other required authorizations, consents and approvals of (or
filings with) any Governmental Entity shall have been obtained or made, except
for those authorizations, consents and approvals which if not obtained would not
result in a Material Adverse Effect.
Section 8.4. Satisfactory Documentation. All instruments and legal and
corporate proceedings in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to the Company.
ARTICLE IX
TERMINATION
Section 9.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by written consent of the Purchaser and the Company (on behalf
of itself and the Stockholders);
(b) by the Purchaser or the Company (on behalf of itself and the
Stockholders) if:
(i) any court or other Governmental Entity of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the such
transaction and such order, decree, ruling or other action shall have
become final and nonappealable; or
(ii)the Closing shall not have occurred on or prior to
September 30, 2004 (the "Termination Date");
(c) by the Purchaser in the event of a material breach by the
Company or the Stockholders of this Agreement which would cause the conditions
to the Purchaser's obligations hereunder not to be satisfied and which has not
been cured within 30 days after the giving of written notice to the Company or
which is incapable of being cured prior to the Termination Date;
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(d) by the Company (on behalf of itself and the Stockholders) in
the event of a material breach by the Purchaser of this Agreement would cause
the conditions to the Sellers' obligations hereunder not to be satisfied and
which has not been cured within 30 days after the giving of written notice to
the Purchaser or which is incapable of being cured prior to the Termination
Date; and
(e) by the Company (on behalf of itself and the Stockholders) or
the Purchaser in the event the Agreed Fayetteville Costs and Agreed NJ Costs
in the aggregate exceed $5,000,000;
provided, however, no party may terminate this Agreement pursuant to Sections
9.1(b), (c), (d) if the failure of the condition (or failure of the condition to
be reasonably capable of being satisfied within the applicable time period)
giving rise to the right to terminate results from or is caused by the breach of
any obligation hereunder by such party.
Section 9.2. Effect of Termination. If this Agreement is terminated and
the transactions contemplated hereby are abandoned pursuant to Section 9.1, this
Agreement shall become null and void and of no further force or effect and all
obligations of the parties under this Agreement shall be terminated without
liability or penalty on the part of any party or its officers, directors or
shareholders to any other party, except for the provisions contained in Section
6.2 relating to confidentiality, Section 6.4 relating to public announcements,
Section 6.12(b) relating to the payment by the Purchaser of a termination fee
(if the termination of this Agreement is caused by the condition described in
such Section 6.12(b)), Section 10.10 relating to jury trials, Section 10.11
relating to expenses, Section 10.12 relating to notices, Section 10.14 relating
to third party beneficiaries, Section 10.15 relating to governing law and
submission to jurisdiction and this Section 9.2. No such termination shall
relieve any party from liability for damages resulting from any breach by such
party of this Agreement or otherwise limit any remedy available to a party or
parties on account of any such breach.
ARTICLE X
MISCELLANEOUS
Section 10.1. Environmental Matters.
(a) In the event that Environ, the Purchaser's environmental
consultant (the "Purchaser Fayetteville Consultant"), determines that the
costs of investigating and remediating one or more Fayetteville Environmental
Conditions (the "Likely Fayetteville Costs") are reasonably likely to exceed
$150,000 (the "Fayetteville Threshold"), the Purchaser shall submit to the
Company a written opinion of the Purchaser Fayetteville Consultant setting
forth such Likely Fayetteville Costs (the "Purchaser Fayetteville Report") no
later than 10 Business Days after the date hereof. Any fees and expenses of
the Purchaser Fayetteville Consultant shall be for the account of and shall be
paid for by the Purchaser.
(b) In the event that the Company receives a timely submission of
the Purchaser Fayetteville Report, the Company shall have, for a period of 10
Business Days
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thereafter (the "Company Review Period"), the right to review and respond to
the estimate of Likely Fayetteville Costs contained in the Purchaser
Fayetteville Report. During the Company Review Period, the Purchaser shall
grant to the Company and its advisors (including its environmental consultants
and legal counsel) reasonable access to all materials reviewed and used by the
Purchaser or the Purchaser Fayetteville Consultant in preparing the Purchaser
Fayetteville Report. Prior to the end of the Company Review Period, the
Company shall deliver to the Purchaser either (i) its written agreement to the
Likely Fayetteville Costs set forth in the Purchaser Fayetteville Report or
(ii) a separate written estimate of the Likely Fayetteville Costs determined
by the Company's environmental consultants (the "Company Fayetteville
Consultant") (such submission by the Company, the "Company Fayetteville
Report"). Any fees and expenses of the Company Fayetteville Consultant shall
be for the account of and shall be paid for by the Sellers. In the event the
Company fails to deliver the Company Fayetteville Report prior to the
expiration of the Company Review Period, the Likely Fayetteville Costs set
forth in the Purchaser Fayetteville Report shall be deemed to be the "Agreed
Fayetteville Costs" for the purposes hereunder.
(c) In the event that the difference between the Likely
Fayetteville Costs in the Purchaser Fayetteville Report and the Likely
Fayetteville Costs in the Company Fayetteville Report is greater than 25% of
the larger of the two estimates (unless the difference is less than $500,000
in which case the last sentence of this clause (c) shall apply), the Purchaser
Fayetteville Consultant and the Company Fayetteville Consultant shall jointly
select an environmental consultant of national repute or otherwise reasonably
acceptable to Purchaser (the "Fayetteville Independent Consultant") to make an
independent determination of the Likely Fayetteville Costs. The fees and
expenses of the Fayetteville Independent Consultant shall be shared equally
between the Purchaser and the Sellers. The parties shall grant to the
Fayetteville Independent Consultant reasonable access to all materials
reviewed and used by each of their consultants in preparing such estimates of
the Likely Fayetteville Costs. It is the understanding and agreement of the
parties that time is of the essence and each party shall use its reasonable
best efforts to cause the Fayetteville Independent Consultant to make its
determination as expeditiously as possible but in any event not later than 60
days from the date hereof. The average of the estimated Likely Fayetteville
Costs as determined by the Purchaser Fayetteville Consultant, the Company
Fayetteville Consultant and the Fayetteville Independent Consultant shall
constitute the Agreed Fayetteville Costs for purposes hereunder. In the event
that the difference in the Likely Fayetteville Costs as set forth in the
Purchaser Fayetteville Report and the Company Fayetteville Report is less than
25% of the larger of the two estimates, the average of the two estimates shall
be deemed to be the Agreed Fayetteville Costs for purposes hereunder.
(d) In the event that the Agreed Fayetteville Costs are less than
the Fayetteville Threshold, the provisions of this Section 10.1(a), (b), (c)
and e(iii) shall immediately terminate and shall have no further force or
effect.
(e) From and after the Closing Date, the Sellers shall indemnify
the Purchaser, the MW Companies and their respective Affiliates (each an
"Indemnified Party" and collectively, the "Indemnified Parties") against and
hold harmless from (i) the first $250,000 of Hammonton ISRA Damages; (ii)
seventy-five percent of Hammonton ISRA Damages in excess of those referred to
in clause (i) above; and (iii) seventy-five percent of any
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Fayetteville Damages in excess of the Fayetteville Threshold; provided,
however, (x) the aggregate liability of the Sellers pursuant to clause (ii)
and (iii) above for any Damages suffered by the Indemnified Parties shall in
no event exceed $5,500,000, and (y) the Indemnified Parties shall carry out
any investigation and remediation activities with respect to the foregoing
matters in the most cost-effective manner that complies with any applicable
Environmental Laws and does not interfere with operations at the Fayetteville
Facility or Hammonton Facility as they were conducted on the Closing Date.
(f) The Indemnified Parties, the Stockholder's Representative and
the Company will cooperate with one another as reasonably appropriate with
respect to spending plans, budgets, periodic historical spending results and
other pertinent information regarding the status of any remediation or other
activities conducted in connection with the matters covered by this Section
10.1. Purchaser agrees the Company following the Closing shall be responsible
for that portion of the Hammonton ISRA Damages and the Fayetteville Damages
not covered by the contribution levels required by Section 10.1(e)(ii) and
(iii).
(g) All obligations of the Sellers pursuant to Sections 10.1 and
10.2 hereof shall be (i) several and not joint, (ii) in proportion with each
of their Pro Rata Amounts and (iii) notwithstanding anything to the contrary
in this Article X or otherwise, in no event shall a Class B Warrantholder's
liability in respect of any Damages owed pursuant to Sections 10.1 or 10.2
exceed (together with all related liabilities and amounts paid in respect of
Section 10.19 herein or any other section of this Agreement and whether in
their capacity as Class B Warrantholders or Stockholders) the lesser of (A)
such Class B Warrantholder's Pro Rata Amount, in respect of its Shares and
Class B Warrants, of any such Damages and (B) the proceeds actually received
by such Class B Warrantholder in respect of its Shares and Class B Warrants
pursuant to this Agreement (except that such Class B Warrantholder shall be
liable up to the amount set forth in clause (A) for any Damages attributable
to any breach of representation by that Class B Warrantholder or in any
Warrant cancellation agreement entered into by such Class B Warrantholder).
(h)
(i) As soon as practicable after the Company has determined
that there are reasonably likely to be Hammonton ISRA Damages in excess of
$250,000, the Company will promptly notify the Purchaser and the Company will,
within 10 Business Days thereafter, submit to the Purchaser a written report of
an independent environmental consultant chosen by the Company ("Company NJ
Consultant") setting forth such consultant's estimate of the likely amount (the
"Likely NJ Costs") of Hammonton ISRA Damages (the "Company NJ Report"). Any fees
and expenses of the Company NJ Consultant shall be paid for by the Sellers.
(ii) In the event that the Purchaser receives a timely
submission of the Company NJ Report, the Purchaser shall have, for a period of
10 Business Days thereafter (the "Purchaser Review Period"), the right to review
and respond to the estimate of Likely NJ Costs contained in the Company NJ
Report. During the Purchaser Review Period, the Company shall grant to the
Purchaser and its advisors (including its environmental consultants and legal
counsel) reasonable access to all materials reviewed and used by the Company or
the Company NJ Consultant in preparing the Company NJ Report. Prior to the end
of the Purchaser Review
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Period, the Purchaser shall deliver to the Company either (i) its written
agreement to the Likely NJ Costs set forth in the Company NJ Report or (ii) a
separate written estimate of the Likely NJ Costs determined by the Purchaser's
environmental consultants (the "Purchaser NJ Consultant") (such submission by
the Purchaser, the "Purchaser NJ Report"). Any fees and expenses of the
Purchaser NJ Consultant shall be for the account of and shall be paid for by the
Purchaser. In the event the Purchaser fails to deliver the Purchaser NJ Report
prior to the expiration of the Purchaser Review Period, the Likely NJ Costs set
forth in the Company NJ Report shall be deemed to be the "Agreed NJ Costs" for
the purposes hereunder.
(iii) In the event that the difference between the Likely NJ
Costs in the Company NJ Report and the Likely NJ Costs in the Purchaser NJ
Report is greater than 25% of the larger of the two estimates (unless the
difference is less than $500,000 in which case the last sentence of this clause
(h)(iii) shall apply), the Company NJ Consultant and the Purchaser NJ Consultant
shall jointly select an environmental consultant of national repute or otherwise
reasonably acceptable to Company (the "NJ Independent Consultant") to make an
independent determination of the Likely NJ Costs. The fees and expenses of the
NJ Independent Consultant shall be shared equally between the Company and the
Sellers. The parties shall grant to the NJ Independent Consultant reasonable
access to all materials reviewed and used by each of their consultants in
preparing such estimates of the Likely NJ Costs. It is the understanding and
agreement of the parties that time is of the essence and each party shall use
its reasonable best efforts to cause the NJ Independent Consultant to make its
determination as expeditiously as possible. The average of the estimated Likely
NJ Costs as determined by the Company NJ Consultant, the Purchaser NJ Consultant
and the NJ Independent Consultant shall constitute the Agreed NJ Costs for
purposes hereunder. In the event that the difference in the Likely NJ Costs as
set forth in the Company NJ Report and the Purchaser NJ Report is less than 25%
of the larger of the two estimates, the average of the two estimates shall be
deemed to be the Agreed NJ Costs for purposes hereunder.
Section 10.2. General Indemnification .
(a) The Sellers shall indemnify, defend, save and keep harmless
the Indemnified Parties against and from all Damages sustained or incurred by
any of them resulting from or arising out of or by virtue of:
(i) an inaccuracy in or a breach by any Seller of the
representations and warranties of such Seller set forth in Section 4.1
(Authority and Related Matters); and
(ii) an inaccuracy in or breach by the Company of the
representations and warranties set forth in Sections 3.2 (Corporate
Authority), 3.4 (Capital Stock) or 3.5 (Subsidiary).
(b) The Sellers shall not be liable under this Section 10.2 unless
a claim has been asserted by written notice, setting forth the basis for such
claim, delivered to the Stockholders Representative with respect to a claim
for indemnification pursuant to Section 10.2 hereof, prior to ninety (90) days
following the expiration of the applicable statute of limitations (excluding
extensions thereunder, whether automatic or permissive).
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Section 10.3. Amendment and Modification. This Agreement may be amended
only by a written agreement signed by the Purchaser, the Stockholders and the
Company at any time prior to the Closing Date with respect to any of the terms
contained herein.
Section 10.4. Survival of Representations and Warranties. The respective
representations and warranties of the Purchaser, the Stockholders and the
Company contained in Articles III, IV and V of this Agreement shall terminate
at, and not survive, the Closing other than the representations and warranties
set forth in Sections 3.2 (Corporate Authority), 3.4 (Capital Stock), 3.5
(Subsidiary) and 4.1(a) and (b) (Authority and Related Matters) which shall
survive such date and consummation as set forth above in Section 10.2.
Section 10.5. Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable Law, but in the case that any provision contained herein shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision or provisions had never been contained herein
unless the deletion of such provision or provisions would result in such a
material change as to cause completion of the transactions contemplated hereby
to be unreasonable.
Section 10.6. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties and delivered to each of the Company and the Purchaser.
Section 10.7. Assignment; Successors and Assigns. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other parties
except that the Purchaser may, without the obligation to obtain the prior
written consent of any other party, assign this Agreement or all or any part of
its rights or obligations hereunder to one (1) or more direct or indirect
wholly-owned Subsidiaries of the Purchaser and may assign its rights under this
Agreement to its lenders for collateral security purposes (in all or any of
which cases the Purchaser shall remain responsible for the performance of all of
its obligations under this Agreement). In addition, without the obligation to
obtain the prior written consent of any other party, following the Closing the
Purchaser may assign its rights and delegate its duties under this Agreement to
any successor (by operation of law or otherwise), or any purchaser of a majority
of its or the Company's equity interest or substantially all of its assets.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors or permitted
assigns, heirs, legatees, distributees, executors, administrators and guardians.
Section 10.8. Titles and Headings. Titles and headings to sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement. Unless
otherwise specified herein, all references to Articles, Sections, Exhibits and
Schedules shall refer to the Articles, Sections, Exhibits and Schedules,
respectively, of this Agreement.
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Section 10.9. Schedules and Exhibits. The schedules and exhibits referred
to in this Agreement shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Except as expressly set forth herein, disclosure of any fact or item in any
schedule hereto shall, to the extent reasonably apparent by cross-reference from
the face of such schedule and relevant to any other schedule or schedules, be
deemed to be disclosed in such other schedule or schedules, notwithstanding the
lack of a specific cross-reference.
Section 10.10. Knowledge. In each provision of this Agreement in which a
representation or warranty is qualified to the "knowledge" of a Person or to the
"best of the knowledge" of a person, unless otherwise stated in such provision,
each such phrase means that the Person does not have actual knowledge after due
investigation thereof of any state of facts which is different from the facts
described in the warranty or representation. With respect to the Company, such
knowledge shall refer solely to the "knowledge" of one or more of the Persons
identified in Schedule 10.10.
Section 10.11. Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof, in each case in writing. The failure of any
party hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
Section 10.12. Waiver of Jury Trial. Each party acknowledges and agrees
that any controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this Agreement or the transactions contemplated hereby. Each party
certifies and acknowledges that (i) no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each
party understands and has considered the implications of this waiver, (iii) each
party makes this waiver voluntarily, and (iv) each party has been induced to
enter into this agreement by, among other things, the mutual waivers and
certifications in this Section 10.12.
Section 10.13. Expenses. The Company will pay all Seller Transaction
Expenses prior to or following the Closing. The Stockholder Representative shall
cause any other expenses incurred by the Company directly relating to the
transactions contemplated by this Agreement to be reimbursed by the Sellers. The
Purchaser shall bear all such costs and expenses incurred by the Purchaser in
connection with the transactions contemplated by this Agreement. The fees and
expenses related to any filing made pursuant to the HSR Act shall be paid one
half by Sellers and one half by the Purchaser.
Section 10.14. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given (a) upon receipt
if given by delivery in Person or if by facsimile, upon written confirmation of
receipt by facsimile, (b) on the next
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Business Day when sent by overnight courier service, or (c) on the earlier of
confirmed receipt or the third Business Day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid, to the parties at the following addresses (or such other address for a
party as shall be specified by like notice):
If to the Purchaser, to:
Ply Gem Industries, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
If to the Company, to:
MWM Holding, Inc.
Rocky Mount Window Plant No. 1
000 Xxxxx Xxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Investcorp International, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
and
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: E. Xxxxxxx Xxxxxxx, Esq.
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If to the Stockholders, to:
the addresses set forth on Exhibit A hereto;
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: E. Xxxxxxx Xxxxxxx, Esq.
Section 10.15. Entire Agreement. This Agreement and the Confidentiality
Agreement (including the exhibits and other documents referred to herein and
therein) embody the entire agreement and understanding of the parties hereto in
respect of the subject matter hereof and thereof and supersede all prior
agreements and understandings, both written and oral, among the parties, or
between any of them, with respect to the subject matter hereof and thereof.
Section 10.16. No Third Party Beneficiaries. Except as expressly provided
in Section 6.5, this Agreement is not intended to, and does not, create any
rights or benefits of any party other than the parties hereto.
Section 10.17. Governing Law; Jurisdiction; Forum. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to principles of conflicts or choice of laws. Any case,
proceeding or action concerning any dispute arising out of or relating to this
Agreement must be brought in a court situated in the State of New York, and each
party hereto consents and submits to the jurisdiction of any state or federal
court sitting in the State of New York for any such case, proceeding or action.
Each party hereto waives any objection to the laying of venue in such courts and
any claim that any such action has been brought in an inconvenient forum. To the
extent permitted by law, any judgment in respect of a dispute arising out of or
relating to this Agreement may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified copy of such
judgment being conclusive evidence of the fact and amount of such judgment.
Section 10.18. No Implied Representations.
(a) Notwithstanding any other provision of this Agreement, the
Purchaser acknowledges and agrees that neither the Company, the Sellers nor
any other Person has made any representation or warranty, express or implied
except as expressly set forth in this Agreement.
(b) In connection with the Purchaser's investigation of the MW
Companies in connection herewith, the Purchaser has received certain
projections and other forecasts regarding the MW Companies. The Purchaser
acknowledges that there are uncertainties inherent in attempting to make such
projections and other forecasts, that the Purchaser is familiar with such
uncertainties and that the Purchaser is taking full responsibility for making
its own evaluation of the adequacy and accuracy of all estimates, projections
and other forecasts so furnished to it (including the reasonableness of the
assumptions underlying such
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projections and other forecasts). Accordingly and without limiting the
foregoing, neither the Company nor any Sellers make any representation or
warranty with respect to such projections and other forecasts (including the
reasonableness of the assumptions underlying such projections and other
forecasts).
Section 10.19. Stockholders Representative.
(a) Each Stockholder, by the execution of this Agreement (and each
other Seller upon execution of such other instrument of similar import entered
into by such other Seller), agrees that the Stockholders Representative shall
be authorized to act on behalf of such Sellers for all purposes of this
Agreement with the full and exclusive power and authority to represent and
bind such Seller with respect to all matters arising under and pursuant to
this Agreement and the transactions contemplated hereby (including the taking
by the Stockholders Representative of any and all actions and the making of
any decisions required or permitted to be taken) on such Seller's behalf (a)
to consummate the transactions contemplated herein, (b) to pay such Seller's
expenses incurred in connection with the negotiation and performance of this
Agreement (whether incurred on or after the date hereof), (c) to disburse any
funds received hereunder to such Seller and each other Seller, (d) to endorse
and deliver any certificates or instruments representing the Shares, the
Options and the Class B Warrants and execute such further instruments of
assignment as the Purchaser shall reasonably request, (e) to execute and
deliver on behalf of such Seller any amendment or waiver hereto, (f) to take
all other actions to be taken by or on behalf of such Seller in connection
herewith, (g) to withhold funds to pay Seller related expenses and
obligations, and (h) to do each and every act and exercise any and all rights
which such Seller or the Sellers collectively are permitted or required to do
or exercise under this Agreement).
(b) As part of the power and authority granted under this Section
10.19 and not in limitation, each Seller specifically consents to the
Stockholders Representative's exercise of the power (i) to bring, defend
and/or resolve any claim made pursuant to Article X, (ii) to agree to,
negotiate, enter into settlements and compromises of, to bring suit or seek
arbitration and to comply with orders of courts and awards of arbitrators with
respect to such claims, and (iii) to take all actions necessary in the
judgment of the Stockholders Representative for the accomplishment of the
foregoing.
(c) Neither the Stockholders Representative nor any agent employed
by it shall incur any liability to any Seller by virtue of the failure or
refusal of the Stockholders Representative for any reason to consummate the
transactions contemplated hereby or relating to the performance of its other
duties hereunder, except for actions or omissions constituting fraud or bad
faith.
(d) In all matters in which action by the Stockholders
Representative is required or permitted, the Purchaser shall be entitled to
rely on any and all action taken by the Stockholders Representative under this
Agreement without any liability to, or obligation to inquire of, any of the
Sellers.
(e) Notwithstanding anything herein to the contrary, (i) in no
event shall the Stockholders Representative (A) take any action in respect of
any of the foregoing that does
-51-
not, in all respects, treat each Seller in a manner which is pro rata (based
on its ownership of the Company in the aggregate, including all Shares,
Options and Warrants, held by such Seller immediately prior to the Closing
calculated on a fully diluted basis) or (B) amend this Agreement in any manner
whatsoever to expand, increase or alter any Seller's liability and (ii) in no
event shall a Seller's liability with respect to any of the foregoing exceed
(together with all related liabilities and amounts paid in respect of Sections
10.1 and 10.2 herein or any other section of this Agreement) such Seller's pro
rata portion, based on the ownership of the Company in the aggregate,
including all Shares, Options and Warrants, held by such Seller immediately
prior to the Closing calculated on a fully-diluted basis, of any liability for
such amounts.
(signatures on next page)
-52-
IN WITNESS WHEREOF, each of the parties has caused this Stock Purchase
Agreement to be duly executed as of the day and year first above written.
MWM HOLDING, INC.
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: President
PLY GEM INDUSTRIES, INC.
By: /s/ Xxx X. Xxxxx
---------------------------------
Name: Xxx X. Xxxxx
Title: President & CEO
(signatures continue on next page)
CLASS A STOCKHOLDERS
/s/ Xxxxxxx Xxxxx
------------------------------------
Xxxxxxx Xxxxx
/s/ Xxxx Xxxxxxx
------------------------------------
Xxxx Xxxxxxx
/s/ X. Xxxxxx Xxxxxx
------------------------------------
X. Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx Xxxxx
/s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx Xx.
------------------------------------
Xxxxx X. Xxxxxx Xx.
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx
(signatures continue on next page)
MW IIP LIMITED
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: The Director Ltd.
Title: Director
VINYL EQUITY LIMITED
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: The Director Ltd.
Title: Director
WINDOWS HOLDINGS LIMITED
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: The Director Ltd.
Title: Director
WINDOWS EQUITY LIMITED
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: The Director Ltd.
Title: Director
MW INTERNATIONAL LIMITED
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: The Director Ltd.
Title: Director
(signatures continue on next page)
MW INVESTMENTS LIMITED
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: The Director Ltd.
Title: Director
MW EQUITY LIMITED
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: The Director Ltd.
Title: Director
XXXXXX LIMITED
/s/ Xxxxx Xxxxx
------------------------------------
Name: Martonmere Services Ltd.
Title: Director
PLYMOUTH LIMITED
/s/ Xxxxx Xxxxx
------------------------------------
Name: Martonmere Services Ltd.
Title: Director
CALVERTON LIMITED
/s/ Xxxxx Xxxxx
------------------------------------
Name: Martonmere Services Ltd.
Title: Director
(signatures continue on next page)
ALEXANDRIA LIMITED
/s/
------------------------------------
Name: Martonmere Services Ltd.
Title: Director
EQUITY MW LIMITED
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: The Director Ltd.
Title: Director
INVESTCORP MW LIMITED PARTNERSHIP
/s/ Xxxxxxx Xxxxxxx
------------------------------------
Name:
Title:
(signatures continue on next page)
MADISON CAPITAL FUNDING LLC
/s/ K. Xxxxxx Xxxxxxxx
------------------------------------
Name: K. Xxxxxx Xxxxxxxx
Title: Managing Director
(signatures continue on next page)
THE GeMROI COMPANY
/s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
(signatures continue on next page)
CLASS D STOCKHOLDERS
BALLET LIMITED
/s/ Mufeet Rajab
------------------------------------
Name: Mufeet Rajab
Title: Authorized Representative
DENARY LIMITED
/s/ Xxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Authorized Representative
GLEAM LIMITED
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Representative
HIGHLANDS LIMITED
/s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: Authorized Representative
NOBLE LIMITED
/s/ Xxxxx W. Jeyeratine
------------------------------------
Name: Xxxxx W. Jeyeratine
Title: Authorized Representative
(signatures continue on next page)
OUTRIGGER LIMITED
/s/ Xxxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Authorized Representative
QUILL LIMITED
/s/ Xxxxx X'Xxxx
------------------------------------
Name: Xxxxx X'Xxxx
Title: Authorized Representative
RADIAL LIMITED
/s/ Poralyn Fiel
------------------------------------
Name: Poralyn Fiel
Title: Authorized Representative
SHORTUNE LIMITED
/s/ Xxx Xxxxxx
------------------------------------
Name: Xxx Xxxxxx
Title: Authorized Representative
ZINNIA LIMITED
/s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Representative
(signatures continue on next page)
INVESTCORP INVESTMENT EQUITY LIMITED
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: The Director Ltd.
Title: Director
