EXHIBIT 2.1
RECAPITALIZATION AND
STOCK PURCHASE AGREEMENT
dated as of August 15, 1996
by and among
STRATA HOLDINGS L.P.
E&S HOLDINGS CORPORATION
and
ABARCO N.V.
TABLE OF CONTENTS
Page
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ARTICLE I
SALE OF ACQUIRED SHARES, RECAPITALIZATION AND CLOSING
1.01 Purchase and Sale........................................ 2
1.02 Recapitalization......................................... 2
1.03 Closing.................................................. 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT
2.01 Corporate Existence of Parent............................ 4
2.02 Authority................................................ 4
2.03 Corporate Existence of the Company....................... 4
2.04 Capital Stock............................................ 5
2.05 Subsidiaries............................................. 5
2.06 No Conflicts............................................. 6
2.07 Governmental Approvals and Filings....................... 6
2.08 Books and Records........................................ 7
2.09 Financial Statements and Condition....................... 7
2.10 Taxes.................................................... 8
2.11 Legal Proceedings........................................ 10
2.12 Compliance With Laws and Orders.......................... 10
2.13 Benefit Plans; ERISA..................................... 10
2.14 Real Property............................................ 13
2.15 Tangible Personal Property............................... 15
2.16 Intellectual Property Rights............................. 15
2.17 Contracts................................................ 16
2.18 Licenses................................................. 17
2.19 Insurance................................................ 18
2.20 Affiliate Transactions................................... 18
2.21 Labor Relations.......................................... 18
2.22 Environmental Matters.................................... 19
2.23 Product Liability Claims................................. 21
2.24 Product Recalls.......................................... 21
2.25 Absence of Undisclosed Liabilities....................... 22
2.26 Brokers.................................................. 22
2.27 Etonic Schedules......................................... 22
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01 Corporate Existence...................................... 22
3.02 Authority................................................ 23
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3.03 No Conflicts............................................. 23
3.04 Governmental Approvals and Filings....................... 23
3.05 Legal Proceedings........................................ 24
3.06 Purchase for Investment.................................. 24
3.07 Brokers.................................................. 24
3.08 Financing................................................ 24
3.09 Exon-Xxxxxx.............................................. 24
ARTICLE IV
COVENANTS OF PARENT
4.01 Regulatory and Other Approvals........................... 25
4.02 HSR Filings.............................................. 25
4.03 Investigation by Purchaser............................... 25
4.04 Conduct of Business...................................... 26
4.05 Certain Restrictions..................................... 27
4.06 Affiliate Transactions................................... 29
4.07 Employee Matters......................................... 29
4.08 Financial Statements and Reports......................... 29
4.09 No Shopping.............................................. 30
4.10 Disclosure............................................... 31
4.11 No Competition........................................... 31
4.12 Financing................................................ 31
4.13 Fulfillment of Conditions................................ 32
4.14 Post-Closing Status of the Company....................... 32
ARTICLE V
COVENANTS OF PURCHASER
5.01 Regulatory and Other Approvals........................... 32
5.02 HSR Filings.............................................. 33
5.03 Indemnification of Directors and Officers................ 33
5.04 Disclosure............................................... 34
5.05 Fulfillment of Conditions................................ 34
5.06 Financing................................................ 34
ARTICLE VI
CONDITIONS TO OBLIGATION OF PURCHASER
6.01 Representations and Warranties........................... 35
6.02 Performance.............................................. 35
6.03 Officer's Certificates................................... 35
6.04 Orders and Laws.......................................... 35
6.05 Regulatory Consents and Approvals........................ 35
6.06 Indebtedness............................................. 35
6.07 Pueblo Shares............................................ 36
6.08 Opinion of Counsel....................................... 36
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6.09 Environmental Diligence................................. 36
6.10 Financing............................................... 36
6.11 Pending Litigation...................................... 36
6.12 Share Repurchases....................................... 36
6.13 Trademarks.............................................. 36
6.14 Shareholders Agreement.................................. 37
6.15 Resignation of Directors................................ 37
6.16 Letter of Credit; Escrow................................ 37
ARTICLE VII
CONDITIONS TO OBLIGATION OF PARENT
7.01 Representations and Warranties.......................... 37
7.02 Performance............................................. 37
7.03 Officer's Certificates.................................. 37
7.04 Orders and Laws......................................... 37
7.05 Regulatory Consents and Approvals....................... 37
7.06 Stockholders Agreement.................................. 38
ARTICLE VIII
TAX MATTERS
8.01 Indemnity for Taxes..................................... 38
8.02 Apportionment of Taxes.................................. 39
8.03 Contests................................................ 40
8.04 Time of Payment......................................... 41
8.05 Cooperation and Exchange of Information................. 41
8.06 Conveyance Taxes........................................ 42
8.07 Miscellaneous........................................... 42
ARTICLE IX
EMPLOYEE BENEFITS MATTERS
9.01 Benefit Plan Maintenance................................ 43
9.02 Shareholder Approval.................................... 44
ARTICLE X
SURVIVAL; NO OTHER REPRESENTATIONS
10.01 Survival of Representations, Warranties,
Covenants and Agreements................................ 44
10.02 No Other Representations................................ 44
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ARTICLE XI
INDEMNIFICATION
11.01 Indemnification......................................... 45
11.02 Method of Asserting Claims.............................. 47
11.03 Tax Treatment of Indemnity Payments..................... 51
11.04 Exclusivity............................................. 52
11.05 Letter of Credit; Escrow................................ 52
11.06 Minimum Net Asset Requirement........................... 53
11.07 Other Arrangements...................................... 53
ARTICLE XII
TERMINATION
12.01 Termination............................................. 54
12.02 Effect of Termination................................... 54
ARTICLE XIII
DEFINITIONS
13.01 Definitions............................................. 55
ARTICLE XIV
MISCELLANEOUS
14.01 Notices................................................. 64
14.02 Entire Agreement........................................ 66
14.03 Expenses................................................ 66
14.04 Public Announcements.................................... 66
14.05 Confidentiality......................................... 66
14.06 Further Assurances; Post-Closing Cooperation............ 67
14.07 Waiver.................................................. 68
14.08 Amendment............................................... 68
14.09 No Third Party Beneficiary.............................. 68
14.10 No Assignment; Binding Effect........................... 68
14.11 Headings................................................ 69
14.12 Submission to Jurisdiction; Waivers..................... 69
14.13 Invalid Provisions...................................... 70
14.14 Governing Law........................................... 70
14.15 Counterparts............................................ 70
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This RECAPITALIZATION AND STOCK PURCHASE AGREEMENT dated as of
August 15, 1996 is made and entered into by and among STRATA HOLDINGS L.P., a
Delaware limited partnership ("Purchaser"), ABARCO N.V., a Netherlands Antilles
corporation ("Parent"), and E&S HOLDINGS CORPORATION, a Delaware corporation and
a wholly-owned subsidiary of Parent (the "Company"). Capitalized terms not
otherwise defined herein have the meanings set forth in Section 13.01.
WHEREAS, Parent owns 2000 shares of common stock, par value $1.00
per share, of the Company (the "Common Stock"), constituting all the issued and
outstanding shares of common stock of the Company;
WHEREAS, the Company desires to issue and sell to the Purchaser, and
the Purchaser desires to purchase from the Company, newly issued shares of
Common Stock (the "Acquired Shares"), on the terms and subject to the conditions
set forth herein;
WHEREAS, in connection with such sale of Acquired Shares, Parent,
the Company and Purchaser desire to recapitalize the Company by virtue of
extensions of credit to the Company, issuance of debt and equity securities by
the Company and certain related transactions as more fully set forth herein; and
WHEREAS, Parent, the Company and Purchaser desire that the proceeds
from such extensions of credit, security issuances and sale of Acquired Shares
to Purchaser be used to (i) repay certain indebtedness of the Company and its
Subsidiaries, (ii) redeem shares of Common Stock held by Parent (the
"Recapitalization Shares") such that approximately 11.6% of the shares of Common
Stock outstanding immediately after the recapitalization shall be retained by
Parent, (iii) redeem all of the shares of Spalding & Evenflo Companies, Inc.
("Spalding") and its subsidiaries not owned by the Company (other than directors
qualifying shares), including the redemption of shares of Spalding (the
"Management Shares") held by certain members of Spalding management, and (iv)
consummate certain other transactions as more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF ACQUIRED SHARES, RECAPITALIZATION AND CLOSING
1.01 Purchase and Sale. The Company agrees to issue and sell to
Purchaser, and Purchaser agrees to purchase from the Company, the Acquired
Shares at the Closing on the terms and subject to the conditions set forth in
this Agreement. The aggregate purchase price for the Acquired Shares (the
"Purchase Price") shall be calculated in accordance with the formula set forth
in Section 1.01 of the Disclosure Schedule, payable in immediately available
United States funds at the Closing in the manner provided in Section 1.03.
1.02 Recapitalization. (a) Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Parent shall cause the
Company and the Subsidiaries to borrow funds and to issue certain debt and
equity securities (together, the "Financing"), such that, when taken together
with the Purchase Price and other cash available to the Company and the
Subsidiaries, the Company has sufficient cash at the Closing (net of any fees,
expenses or other costs required to be paid by the Company in connection with
the transactions contemplated hereby) to, among other things, (i) repay the
Indebtedness of the Company and the Subsidiaries identified on Section 1.02 of
the Disclosure Schedule to be so repaid, (ii) redeem the Recapitalization Shares
for an aggregate redemption price calculated in accordance with the formula set
forth in Section 1.01 of the Disclosure Schedule (the "Recapitalization Amount")
and in connection therewith transfer to Parent the Xxxxxxxx Notes, the E&S
Realco Advance and the shares of E&S Realco, and (iii) repurchase all of the
shares of Spalding not owned by the Company, including the redemption of the
Management Shares pursuant to the terms and conditions of a Management Share
Repurchase Agreement attached as Exhibit A hereto (the "Management Share
Repurchase Agreement").
(b) The Financing may consist of any obligation instruments
acceptable to Purchaser, in its sole discretion, including, but not limited to,
senior debt, subordinated debt, preferred stock or other securities issued by
the Company.
1.03 Closing. The Closing will take place at the offices of Milbank,
Tweed, Xxxxxx & XxXxxx, 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as Parent, Purchaser and the Company mutually agree, at 10:00
A.M. local time, on the Closing Date. At the Closing, the following
will take place:
(i) Purchaser will pay the Company the Purchase Price by wire
transfer of immediately available funds to such account or accounts as the
Company may direct by written notice delivered to Purchaser by the Company
at least two
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(2) Business Days before the Closing Date. Simultaneously with such
payment, the Company will issue to Purchaser good and valid title in and
to the Acquired Shares, free and clear of all Liens, by delivering to
Purchaser a certificate or certificates representing the Acquired Shares,
in genuine and unaltered form, duly endorsed in blank or accompanied by
duly executed stock powers endorsed in blank, with requisite stock
transfer tax stamps, if any, attached;
(ii) the Company shall consummate the Financing on such terms and
conditions as Purchaser shall determine in its sole discretion;
(iii) immediately following the consummation of the Financing and
the sale of the Acquired Shares, and the receipt by the Company of the
proceeds therefrom, the Company will cause Spalding to redeem the
Management Shares in accordance with the provisions of the Management
Share Repurchase Agreement;
(iv) immediately following the redemption of the Management Shares
by Spalding, the Company will (A) transfer the Xxxxxxxx Notes to Parent,
(B) transfer the E&S Realco Advance and all the outstanding shares of E&S
Realco to Parent and (C) pay to Parent the Recapitalization Amount by wire
transfer of immediately available funds to such account or accounts as
Parent may direct by written notice delivered to the Company by Parent at
least two (2) Business Days before the Closing Date. Simultaneously with
such payment, Parent will assign and transfer to the Company good and
valid title in and to the shares of Common Stock held by Parent which are
being redeemed pursuant to the terms of this Agreement. Each such share of
Common Stock delivered by Parent to the Company shall be cancelled by the
Company;
(v) the Company and the Subsidiaries shall repay all amounts
outstanding under the Etonic Notes, the Credit Agreements and any other
Indebtedness of the Company and the Subsidiaries identified on Section
1.02 of the Disclosure Schedule to be so repaid, and Parent shall forgive
and extinguish all amounts owed by the Company or any of the Subsidiaries
to Parent or any other Affiliate (other than the Company or any of the
Subsidiaries);
(vi) the Company shall acquire the trademarks and other Intellectual
Property and the rights thereto from Sahara Corp. Ltd. pursuant to the
terms and conditions of an agreement mutually acceptable to Parent and
Purchaser; and
(vii) Parent, the Company and Purchaser shall enter into a
Shareholders Agreement (the "Shareholders Agreement"), the terms of which
are attached hereto as Exhibit B.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Purchaser as follows:
2.01 Corporate Existence of Parent. Parent is a corporation duly
incorporated, validly existing and in good standing under the Laws of the
Netherlands Antilles. Parent has full corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, including without limitation to
own, hold, sell and transfer (pursuant to this Agreement) the Recapitalization
Shares.
2.02 Authority. The execution and delivery by each of Parent and the
Company of this Agreement and the performance by each of Parent and the Company
of its obligations hereunder have been duly and validly authorized by the Board
of Managing Directors of Parent and the board of directors of the Company. This
Agreement has been duly and validly executed and delivered by Parent and the
Company and constitutes a legal, valid and binding obligation of Parent and the
Company enforceable against Parent and the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors rights generally or by general equitable principles relating to
enforceability (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
2.03 Corporate Existence of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware, and has full corporate power and authority to
execute this Agreement and to perform its obligations hereunder and to conduct
its business as and to the extent now conducted, and to own, use and lease its
Assets and Properties. The Company is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions specified in Section
2.03 of the Disclosure Schedule, which are the only jurisdictions in which the
ownership, use or leasing of its Assets and Properties, or the conduct or nature
of its business, makes such qualification, licensing or admission necessary,
except for those jurisdictions in which the adverse effects of all such failures
by the Company and the Subsidiaries to be qualified, licensed or admitted and in
good standing could not in the aggregate reasonably be expected to have a
material adverse effect on the Business or Condition of the Company. Parent has
prior to the execution of this Agreement made available to Purchaser true and
complete copies of the
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certificate of incorporation and by-laws of the Company as in effect on the date
hereof.
2.04 Capital Stock. The authorized capital stock of the Company
before the recapitalization consists solely of 2000 shares of Common Stock and
800 shares of Senior Preferred Stock, par value $0.01 per share, of which 541
shares are owned by EAC Acquisition Corporation, an indirect wholly-owned
subsidiary of the Company (the "Preferred Stock"). The Recapitalization Shares
are duly authorized, validly issued and outstanding, fully paid and
nonassessable, have not been issued in violation of any preemptive rights and
together with the shares of Common Stock to be retained by Parent and the
Preferred Stock are the only shares of capital stock of the Company outstanding.
Other than as set forth in Section 2.04 of the Disclosure Schedule, Parent owns
the Recapitalization Shares, beneficially and of record, free and clear of all
Liens. There are no outstanding Options with respect to the Company. The
Acquired Shares, when issued and delivered at the Closing in accordance
herewith, shall be duly authorized, validly issued, fully paid and
non-assessable. The delivery of certificates at the Closing representing the
Acquired Shares and the Recapitalization Shares in the manner provided in
Section 1.03 will transfer to Purchaser and the Company, respectively, good and
valid title to the Acquired Shares and the Recapitalization Shares, free and
clear of all Liens other than Liens created or suffered to exist by Purchaser.
2.05 Subsidiaries. Section 2.05 of the Disclosure Schedule lists
each Subsidiary. Each Subsidiary is a corporation validly existing and in good
standing under the Laws of its jurisdiction of incorporation identified in
Section 2.05 of the Disclosure Schedule, and has full corporate power and
authority to conduct its business as and to the extent now conducted and to own,
use and lease its Assets and Properties. Each Subsidiary is duly qualified,
licensed or admitted to do business and is in good standing in those
jurisdictions specified in Section 2.05 of
the Disclosure Schedule, which are the only jurisdictions in which the
ownership, use or leasing of such Subsidiary's Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for those jurisdictions in which the adverse effects
of all such failures by the Company and the Subsidiaries to be qualified,
licensed or admitted and in good standing could not in the aggregate reasonably
be expected to have a material adverse effect on the Business or Condition of
the Company. Section 2.05 of the Disclosure Schedule lists for each Subsidiary
the amount of its authorized capital stock, the amount of its outstanding
capital stock and the record owners of such outstanding capital stock. Except as
disclosed in Section 2.05 of the Disclosure Schedule, all of the outstanding
shares of capital stock of each Subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable, have not been issued in violation of
any preemptive rights and are owned, beneficially and of
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record, by the Company or a Subsidiary free and clear of all Liens. Except as
disclosed in Section 2.05 of the Disclosure Schedule, there are no outstanding
Options with respect to any Subsidiary. Parent has prior to the execution of
this Agreement made available to Purchaser true and complete copies of the
certificate or articles of incorporation and by-laws (or other comparable
corporate documents) of each of the Subsidiaries as in effect on the date
hereof.
2.06 No Conflicts. The execution and delivery by each of Parent and
the Company of this Agreement do not and the performance by each of Parent and
the Company of its obligations under this Agreement and the consummation of the
transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate or articles of incorporation
or by-laws (or other comparable corporate documents) of Parent, the Company or
any Subsidiary;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Section 2.07 of the Disclosure
Schedule, conflict with or result in a violation or breach of any term or
provision of any material Law or Order applicable to Parent, the Company or any
Subsidiary or any of their respective Assets and Properties (other than such
conflicts, violations or breaches as would occur solely as a result of the
identity or the legal or regulatory status of Purchaser or any of its
Affiliates); or
(c) except as disclosed in Section 2.06 of the Disclosure Schedule
or as could not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the Business or Condition of the Company or to
adversely affect the ability of Parent or the Company to consummate the
transactions contemplated hereby or to perform their obligations hereunder, (i)
conflict with or result in a violation or breach of or constitute a default
under, (ii) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to, or (iii)
result in the creation or imposition of any Lien upon Parent, the Company or any
Subsidiary or any of their respective Assets and Properties under, any Contract
or License to which Parent, the Company or any Subsidiary is a party or by which
any of their respective Assets and Properties is bound.
2.07 Governmental Approvals and Filings. Except as disclosed in
Section 2.07 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
Parent, the Company or any Subsidiary is required in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, except (i) where the failure to
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obtain any such consent, approval or action, to make any such filing or to give
any such notice could not reasonably be expected to adversely affect the ability
of Parent to consummate the transactions contemplated by this Agreement or to
perform its obligations hereunder, or to have a material adverse effect on the
Business or Condition of the Company, and (ii) those as would be required solely
as a result of the identity or the legal or regulatory status of Purchaser or
any of its Affiliates.
2.08 Books and Records. The minute books and other similar records
of the Company and the Subsidiaries as made available to Purchaser prior to the
execution of this Agreement contain a true and complete record, in all material
respects, of all actions taken at all meetings and by all written consents in
lieu of meetings of the stockholders, the boards of directors and committees of
the boards of directors of the Company and the Subsidiaries. The stock transfer
ledgers and other similar records of the Company and the Subsidiaries as made
available to Purchaser prior to the execution of this Agreement accurately
reflect all record transfers prior to the execution of this Agreement in the
capital stock of the Company and the Subsidiaries.
2.09 Financial Statements and Condition. (a) Prior to the execution
of this Agreement, Parent has delivered to Purchaser true and complete copies of
the following financial statements:
(i) The unaudited consolidated balance sheets of the Company and its
consolidated subsidiaries as of September 30, 1994 and September 30, 1995
and the related unaudited statement of earnings for each of the years then
ended;
(ii) the unaudited consolidated balance sheets of the Company and
its consolidated subsidiaries as of June 30, 1996 and the related
unaudited consolidated statement of earnings for the portion of the fiscal
year then ended;
(iii) the audited consolidated balance sheets of Spalding and its
consolidated subsidiaries as of September 30, 1994 and September 30, 1995
and the related audited statement of earnings, shareholders' equity and
cash flows for each of the fiscal years then ended, together with a true
and correct copy of the report on such audited information by Deloitte &
Touche; and
(iv) the unaudited consolidated balance sheets of Spalding and its
consolidated subsidiaries as of June 30, 1995 and June 30, 1996 and the
related unaudited consolidated statement of earnings and cash flows for
the portion of the fiscal year then ended.
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Except as set forth in any notes thereto or as disclosed in Section 2.09(a) of
the Disclosure Schedule, all such financial statements (including the notes
thereto) were prepared in accordance with GAAP and fairly present in all
material respects the consolidated financial position and results of operations
and, in the case of Spalding, shareholders' equity (in the case of audited
statements only) and cash flows, of the Company and Spalding and their
consolidated subsidiaries, as of the respective dates thereof and for the
respective periods covered thereby, subject, in the case of interim statements
(which do not contain any notes), to normal year end adjustments. Except for
those Subsidiaries listed in Section 2.09(a) of the Disclosure Schedule, the
financial condition and results of operations of each Subsidiary are, and for
all periods referred to in this Section 2.09 have been, consolidated with those
of the Company.
(b) Except for the execution and delivery of this Agreement and the
transactions (i) to take place pursuant hereto on or prior to the Closing Date,
(ii) contemplated by Section 4.04 or (iii) disclosed in Section 2.09(b) of the
Disclosure Schedule, since the date of most recent financial statements referred
to in Section 2.09 (a)(ii) the business of the Company and the Subsidiaries has
been operated in all material respects in the ordinary course, there has not
been any material adverse change in the Business or Condition of the Company,
and Parent has not, with respect to the Company or any Subsidiary, taken any
action since June 30, 1996 which, had it taken such action subsequent to the
date of this Agreement, would have required consent or approval of Purchaser
pursuant to Section 4.04.
2.10 Taxes. (a) Except as disclosed in Section 2.10 of the
Disclosure Schedule:
(i) the Company and each Subsidiary has timely filed (taking into
account all available extensions) all material Tax Returns (or such Tax
Returns have been filed on behalf of the Company and each Subsidiary)
required to be filed by applicable law, such Tax Returns are true, correct
and complete in all material respects, all Taxes required to be shown on
such Tax Returns or otherwise due or payable have been, or will be, timely
paid and all payments of estimated Taxes required to be made with respect
to the Company and each Subsidiary have been, or will be, timely made or
the subject of an adequate reserve or accrual reflected in the financial
statements referred to in Section 2.09;
(ii) as of the date hereof neither the Company nor any Subsidiary
has executed any outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any material
Taxes or Tax Returns;
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(iii) as of the date hereof, except for the audit of the 1994 and
1995 Tax Returns of the Company, no adjustment relating to such Tax
Returns has been proposed formally or informally by any Tax authority,
there are no outstanding subpoenas or other requests for information with
respect to any such Tax Returns or Taxes of the Company or any of the
Subsidiaries and there are no pending or threatened actions or proceedings
for the assessment or collection of Taxes against the Company, any of the
Subsidiaries or any other corporation that was included in the filing of a
Tax Return with the Company or any of the Subsidiaries on a consolidated,
combined or unitary basis;
(iv) all material Taxes required to be withheld, collected or
deposited by the Company or any of the Subsidiaries have been, or will be,
timely withheld, collected or deposited and, to the extent required,
timely paid to the relevant Tax authority;
(v) no consent under section 341(f) of the Code has been filed with
respect to the Company or any of the Subsidiaries and, except for E&S
Realco, neither the Company nor any of the Subsidiaries is or has been a
"United States real property holding corporation" within the meaning of
section 897(c)(2) of the Code during the applicable period specified in
section 897(c)(1)(A)(ii) of the Code;
(vi) as of the date hereof, to the Knowledge of Parent, there are no
Liens with respect to any material Taxes upon any of the Assets and
Properties of the Company or the Subsidiaries, other than (i) Taxes, the
payment of which is not yet due or payable, or (ii) Taxes being contested
pursuant to appropriate proceedings;
(vii) to the Knowledge of Parent, as of the date hereof there is no
proposed liability for any material Tax to be imposed upon it or any
Subsidiary for the year ended September 30, 1995 and all prior taxable
years (including for Taxes which are being contested) for which there is
not an adequate reserve reflected in the financial statements referred to
in Section 2.09; and
(viii) Neither the Company nor the Subsidiaries has, or will have, any
liability for the Taxes of any person (other than the Company or the
Subsidiaries) under Treasury regulation 1.1502-6, or any similar provision
of state, local or foreign law, or as a transferee or successor (by
contract or otherwise).
(b) Except for the complete and accurate copies of the tax sharing
agreements made available to Purchaser prior to the execution of this Agreement,
which is to be amended to include EAC Holdings Corporation, EAC Acquisition
Corporation, Etonic
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Worldwide Corporation and EWW Lisco, Inc., and except for tax indemnities
included in equipment leases, no agreements relating to allocating or sharing of
Taxes exist among Parent, the Company or any Subsidiary and neither the Company
nor any of the Subsidiaries owes any amount pursuant to any formal or informal
Tax sharing, allocation or indemnity agreement or arrangement or will have any
liability after the date hereof under or with respect to any formal or informal
Tax sharing, allocation or indemnity agreement executed or agreed prior to the
Closing Date, except among the Company and the Subsidiaries.
2.11 Legal Proceedings. Except as disclosed in Section 2.11 of the
Disclosure Schedule (with paragraph references corresponding to those set forth
below):
(a) there are no material Actions or Proceedings pending or, to the
Knowledge of Parent, threatened against the
Company or any Subsidiary or any of their respective Assets and
Properties; and
(b) there are no material Orders outstanding against the Company or
any Subsidiary.
2.12 Compliance With Laws and Orders. Except as disclosed in Section
2.12 of the Disclosure Schedule, to the Knowledge of Parent, neither the Company
nor any Subsidiary is in violation of or in default under any material Law or
Order applicable to the Company or any Subsidiary or any of their respective
Assets and Properties.
2.13 Benefit Plans; ERISA.
(a) Section 2.13(a) of the Disclosure Schedule contains a true and
complete list and description as of the date hereof of each Benefit Plan, and
identifies each such Benefit Plan that is a Qualified Plan.
(b) Except as set forth in Section 2.13(b)(1) of the Disclosure
Schedule, neither the Company nor any domestic Subsidiary maintains or is
obligated to provide benefits under any life, medical or health plan (other than
as an incidental benefit under a Qualified Plan) which provides benefits to
retirees or other terminated employees other than benefit continuation rights
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"). Except as set forth in Section 2.13(b)(2) of the Disclosure Schedule
(which schedule may be prepared by Parent within 30 days of the date of this
Agreement) no foreign subsidiary maintains or is obligated to provide benefits
under any life, medical or health plan (other than as an incidental benefit
under a Qualified Plan) which provides benefits to retirees or other terminated
employees other than benefit continuation rights under COBRA
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(c) Except as set forth in Section 2.13(c) of the Disclosure
Schedule, each Benefit Plan covers only employees who are employed by the
Company or a Subsidiary (or former employees or beneficiaries with respect to
service with the Company or a Subsidiary), so that the transactions contemplated
by this Agreement will require no spin-off of assets and liabilities or other
division or transfer of rights with respect to any such plan.
(d) Except as set forth in Section 2.13(d) of the Disclosure
Schedule, neither the Company, any Subsidiary, any Affiliate nor any other
corporation or organization controlled by or under common control with any of
the foregoing within the meaning of Section 4001 of ERISA (an "ERISA Affiliate")
has at any time contributed to any "multiemployer plan", as that term is defined
in Section 4001 of ERISA. Except as set forth in Section 2.13(d) of the
Disclosure Schedule, with respect to each such "multiemployer plan" in which the
Company, any Subsidiary or any ERISA Affiliate participates or has participated
within the last five years, (A) neither the Company nor any Subsidiary or ERISA
Affiliate has withdrawn, partially withdrawn, or received any notice of any
claim or demand for withdrawal liability or partial withdrawal liability; (B)
neither the Company nor any Subsidiary or ERISA Affiliate has received any
notice that any such plan is in reorganization, that increased contributions may
be required to avoid a reduction in plan benefits or the imposition of any
excise tax, or that any such plan is insolvent; and (C) neither the Company nor
any Subsidiary or ERISA Affiliate has failed to make any required contributions.
(e) Each Benefit Plan is, and its administration is and has been
since inception, in compliance with ERISA and the Code in all respects, except
for such failures to comply which, individually or in the aggregate, could not
reasonably be expected to result in a material liability.
(f) All contributions and other payments required to be made by
Parent, the Company or any Subsidiary to any Benefit Plan with respect to any
period ending before or at or including the Closing Date have been made or
reserves adequate for such contributions or other payments have been or will be
set aside therefor and have been or will be reflected in the Company's financial
statements in accordance with GAAP.
(g) To the Knowledge of Parent, no transaction contemplated by this
Agreement will result in material liability to the PBGC under Section
302(c)(ii), 4062, 4063, 4064 or 4069 of ERISA, with respect to the Company, any
Subsidiary or any ERISA Affiliate.
(h) To the Knowledge of Parent, there are no pending or threatened
claims by or on behalf of any Benefit Plan, by any Person covered thereby, or
otherwise, which allege violations of
-11-
Laws which, individually or in the aggregate, could reasonably be expected to
have a material adverse effect on the Business or Condition of the Company.
(i) Except as set forth on Section 2.13(i) of the Disclosure
Schedule, no event has occurred and no condition exists that (i) could subject
the Company or any ERISA Affiliate to any material tax, fine or penalty imposed
by ERISA, the Code or other applicable laws, rules and regulations including,
but not limited to the taxes imposed by Code sections 4971, 4972, 4975, 4977,
4979, 4980B, 4976(a) or fines imposed by ERISA sections 409 and 502(c) or (ii)
could be deemed a reportable event within the meaning of ERISA section 4043
which could result in a material liability to the Company or any member of its
Controlled Group (within the meaning of Section 414 of the Code) and no
condition exists which could subject the Company or any member of its Controlled
Group to a material fine under ERISA section 4071.
(j) Except as set forth on Section 2.13(j) of the Disclosure
Schedule, no Benefit Plan exists which could result in the payment to any
Company or Subsidiary employee of any money or other property or rights or
accelerate or provide any other rights or benefits to any Company or Subsidiary
employee as a result of the transaction contemplated by this Agreement, whether
or not such payment would constitute a parachute payment within the meaning of
Code section 280G.
(k) Except as set forth on Section 2.13(k) of the Disclosure
Schedule, with respect to each Benefit Plan which is not a multiemployer plan
within the meaning of section 4001(a)(3) of ERISA but is subject to Title IV of
ERISA, as of October 1, 1995, the most recent valuation date, the assets of each
such Benefit Plan are at least equal in value to the present value of the
accrued benefits (vested and unvested) of the participants in such Benefit Plan
on a termination and projected basis, based on the actuarial methods and
assumptions indicated in the most recent actuarial valuation reports dated June
1996.
(l) No "employer securities", "employer real property" (in each
case, as defined in ERISA) or other property of the Company or a Subsidiary is
included in the assets of any Benefit Plan.
(m) Complete and correct copies of the following documents as in
effect on the date hereof have been made available to Purchaser prior to the
execution of this Agreement:
(i) each Benefit Plan and any related trust agreements and insurance
contracts;
(ii) current summary plan descriptions of each Benefit Plan subject
to ERISA;
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(iii) the most recent Form 5500 and schedules thereto for each
Benefit Plan subject to ERISA reporting requirements;
(iv) the most recent determination of the IRS with respect to the
qualified status of each Qualified Plan;
(v) the most recent accountings with respect to any Benefit Plan
funded through a trust; and
(vi) the most recent actuarial report of the qualified actuary of
any Subject Defined Benefit Plan or any other Benefit Plan with respect to
which actuarial valuations are conducted.
2.14 Real Property. (a) Section 2.14(a) of the Disclosure Schedule
contains a true and correct list as of the date hereof by address and form of
ownership of (i) each parcel of real property owned by the Company or any
Subsidiary which is material to the Business or Condition of the Company
(including a legal description thereof), (ii) each parcel of real property
leased by the Company or any Subsidiary which is material to the Business or
Condition of the Company, and (iii) all Liens (other than Permitted Liens)
relating to or affecting any parcel of real property referred to in clause (i).
(b) Except as disclosed in Section 2.14(b) of the Disclosure
Schedule, the Company or a Subsidiary has good title to each parcel of real
property owned by it and referred to in clause (i) of paragraph (a) above free
and clear of all Liens except for Permitted Liens. The Company or a Subsidiary
is in possession of each such parcel of real property owned by it, together with
all buildings, structures, facilities, fixtures and other improvements thereon.
Except as specified in Section 2.14(b) of the Disclosure Schedule, with respect
to the real property referred to in clause (i) of paragraph (a) above, there are
no outstanding contracts involving in excess of $500,000 for any improvements
which have not been fully paid and no outstanding contracts for the sale of such
real property or any portion thereof or options or rights of first refusal to
purchase such real property or any portion thereof.
(c) The Company or a Subsidiary has a valid and subsisting leasehold
estate in and the right to quiet enjoyment of the real properties leased by it
as lessee under leases referred to in clause (ii) of paragraph (a) above for the
full term of the lease thereof free and clear of all Liens except for Permitted
Liens. Each such lease is a legal, valid and binding agreement, enforceable in
accordance with its terms, of the Company or a Subsidiary and, to the Knowledge
of Parent, of each other Person that is a party thereto and, except as set forth
in Section 2.14(c) of the Disclosure Schedule, to the Knowledge of Parent, there
is no material default, or events which (whether
-13-
with or without notice, lapse of time or the happening or occurrence of any
other event) would constitute a material default, thereunder.
(d) Parent has made available to Purchaser prior to the execution of
this Agreement true and complete copies of (i) all deeds, leases, mortgages and
deeds of trust and all amendments thereof, with respect to the real property
referred to in clause (i) of paragraph (a) above and (ii) all leases (including
any amendments and renewal letters) with respect to the real property referred
to in clause (ii) of paragraph (a) above.
(e) Except as disclosed in Section 2.14(e) of the Disclosure
Schedule, the improvements on the real property identified in Section 2.14(a) of
the Disclosure Schedule are in all material respects in good operating condition
and in a state of good maintenance and repair, ordinary wear and tear excepted,
are adequate and suitable for the purposes for which they are presently being
used and, to the Knowledge of Parent, there are no condemnation or appropriation
proceedings pending or threatened against any of such real property or the
improvements thereon.
(f) Section 2.14(f) of the Disclosure Schedule sets forth a true and
complete list of all real property agreements (including any amendments thereto)
pursuant to which the Company and the Subsidiaries lease, sublease or otherwise
permit any third party to occupy any of the real property referred to in clauses
(i) and (ii) of paragraph (a) above (collectively, the "Third Party Leases").
Each of the Third Party Leases is in full force and effect and in each case free
from defaults and events which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) would constitute a default, (by
landlord or tenant thereunder) except in either instance for defaults which
individually or in the aggregate would not have a material adverse effect on the
Business or Condition of the Company.
(g) Neither the Company nor any Subsidiary uses any fixtures,
furniture, improvements, machinery or equipment in the operations of the Company
or any Subsidiary which it does not own or lease. Except for molds and other
equipment used by vendors to the Company, all items of fixtures, furniture,
improvements, machinery and equipment used by the Company or the Subsidiaries
are in the possession or under the control of the Company or the Subsidiaries
and are located at one of the places of business of the Company or the
Subsidiaries. All items of such fixtures, furniture, improvements, machinery and
equipment have been constructed in workmanlike order and are in good operating
condition free from defects or damage which would render them unfit for their
continued use in the manner in which they are presently used, except for defects
or damage which individually
-14-
or in the aggregate would not have a material effect on the operations of the
Company and its Subsidiaries, as presently conducted.
2.15 Tangible Personal Property. The Company or a Subsidiary is in
possession of and has good title to, or has valid leasehold interests in or
valid rights under Contract to use, all tangible personal property used in and
material to the Business or Condition of the Company. All such tangible personal
property is free and clear of all Liens, other than Permitted Liens, Liens
disclosed in Section 2.15 of the Disclosure Schedule and Liens that neither
individually nor in the aggregate could reasonably be expected to have a
material adverse effect on the Business or Condition of the Company, and is in
all material respects in good working order and condition, ordinary wear and
tear excepted.
2.16 Intellectual Property Rights. Section 2.16 of the Disclosure
Schedule discloses as of the date hereof, (a) all Intellectual Property used in
and material to the Business or Condition of the Company or any Subsidiary and
(b) all Contracts granting a license with respect to such Intellectual Property
to third parties. The Company or a Subsidiary either has all right, title and
interest in or a valid and binding right under Contract to use the Intellectual
Property disclosed in Section 2.16 of the Disclosure Schedule. All such material
Contracts pursuant to which the Company has a right to use such Intellectual
Property are identified in Section 2.16 of the Disclosure Schedule. No employee
of the Company or any Subsidiary, or any independent contractor, subcontractor
or any other agent has, to the Knowledge of Parent, any claims which interfere
with the Company's or any Subsidiary's right, title or interest in such
Intellectual Property. Except as disclosed in Section 2.16 of the Disclosure
Schedule, as of the date hereof (i) the validity of the registrations with
Governmental or Regulatory Authorities in respect of any material Intellectual
Property owned by the Company or a Subsidiary and disclosed in Section 2.16 of
the Disclosure Schedule is not being questioned in any Action or Proceeding to
which the Company or any Subsidiary is a party, nor, to the Knowledge of Parent,
is any such Action or Proceeding threatened, which, individually or in the
aggregate with other such Actions or Proceedings reasonably could be expected to
have a material adverse effect on the use of such Intellectual Property, (ii)
there are no material restrictions on the direct or indirect transfer of any
Contract, or any interest therein,
held by the Company or any Subsidiary in respect of such material Intellectual
Property, (iii) in the case of any such Intellectual Property held pursuant to
Contract or licensed to third parties, the related Contract is in full force and
effect and constitutes a legal, valid and binding agreement, enforceable in
accordance with its terms, of the Company or a Subsidiary and, to the Knowledge
of Parent, of each other party thereto, and neither the Company nor any
Subsidiary or, to the Knowledge of Parent, any
-15-
other party thereto is in material violation or breach of or default under such
Contract and (iv) to the Knowledge of Parent, such Intellectual Property is not
being infringed by any other Person in any material respect. Except as disclosed
in Section 2.16 of the Disclosure Schedule, as of the date hereof neither
Parent, the Company nor any Subsidiary has received written notice that the
Company or any Subsidiary is infringing any material Intellectual Property of
any other Person in any material respect that has not been resolved and, to the
Knowledge of Parent, neither the Company nor any Subsidiary is infringing any
material Intellectual Property of any other Person.
2.17 Contracts. (a) Section 2.17(a) of the Disclosure Schedule (with
paragraph references corresponding to those set forth below) contains a true and
complete list as of the date hereof of each of the following Contracts (true and
complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto,
have been made available to Purchaser prior to the execution of this Agreement),
to which the Company or any Subsidiary is a party or by which any of their
respective Assets and Properties is bound:
(i) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or consultation services for a specified or
unspecified term exceeding 60 days or otherwise relating to employment or
the termination of employment, the name, position and rate of compensation
of each Person party to such a Contract and the expiration date of each
such Contract;
(ii) all Contracts (other than this Agreement and credit and other
agreements to be terminated at or prior to the Closing) with any Person
containing any provision or covenant prohibiting or materially limiting
the ability of the Company or any Subsidiary to engage in any business
activity or compete with any Person;
(iii) all material partnership, joint venture, shareholders' or
other similar Contracts with any Person;
(iv) all Contracts relating to Indebtedness of the Company or any
Subsidiary in excess of $3,000,000;
(v) all Contracts with domestic distributors, dealers,
manufacturer's representatives, sales agencies or franchises and
endorsement contracts, which in any case involve the payment, pursuant to
the terms of any such Contract, by or to the Company or any Subsidiary of
more than $300,000 annually;
(vi) all Contracts relating to the future disposition or acquisition
of any Assets and Properties individually or
-16-
in the aggregate material to the Business or Condition of the Company;
(vii) all collective bargaining or similar labor Contracts;
(viii) all Contracts (other than this Agreement, any Contract
disclosed pursuant to clause (iv) above and credit and other agreements to
be terminated at or prior to the Closing) that (A) limit or contain
restrictions on the ability of the Company or any Subsidiary to declare or
pay dividends on, to make any other distribution in respect of or to issue
or purchase, redeem or otherwise acquire its capital stock, to incur
Indebtedness, to incur or suffer to exist any Lien, to purchase or sell
any Assets and Properties, to change the lines of business in which it
participates or engages or to engage in any merger or other business
combination or (B) require the Company or any Subsidiary to maintain
specified financial ratios or levels of net worth or other indicia of
financial condition;
(ix) any material Contract which is terminable by the other party
thereto upon a change of control or recapitalization of the Company or one
of the Subsidiaries or Affiliates;
(x) any Contract between Parent and any of its Affiliates;
(xi) all other Contracts (other than Benefit Plans, leases listed in
Section 2.14(a) of the Disclosure Schedule, Contracts relating to
Intellectual Property listed in Section 2.16 of the Disclosure Schedule
and insurance policies listed in Section 2.19 of the Disclosure Schedule)
that (A) involve the payment or potential payment, pursuant to the terms
of any such Contract, by or to the Company or any Subsidiary of more than
$250,000 annually or (B) cannot be terminated within sixty (60) days after
giving notice of termination without resulting in any material cost or
penalty to the Company or any Subsidiary.
(b) Each material Contract is in full force and effect and
constitutes a legal, valid, and binding agreement, enforceable in accordance
with its terms, of the Company or a Subsidiary and, to the Knowledge of Parent,
of each other party thereto. Except as disclosed in Section 2.17(b) of the
Disclosure Schedule, neither the Company nor any Subsidiary and, to the
Knowledge of Parent, any other party thereto is in violation or breach, in any
material respect, or in default under any such Contract.
2.18 Licenses. Section 2.18 of the Disclosure Schedule contains a
true and complete list as of the date hereof
-17-
of all Licenses (not otherwise disclosed in Section 2.16 of the Disclosure
Schedule) used in and material to the Business or Condition of the Company (and
all pending applications for any such Licenses), setting forth the grantor, the
grantee, the function and the expiration and renewal date of each. Prior to the
execution of this Agreement, Parent has made available to Purchaser true and
complete copies of all such Licenses. Except as disclosed in Section 2.18 of the
Disclosure Schedule, the Company and each Subsidiary owns or validly holds all
such Licenses, each such License is valid, binding and in full force and effect
and, to the Knowledge of Parent, neither the Company nor any Subsidiary is in
default under any such License in any material respect.
2.19 Insurance. Section 2.19 of the Disclosure Schedule contains a
true and complete list as of the date hereof of all material current insurance
policies that insure the business, operations or employees of the Company or any
Subsidiary or affect or relate to the ownership, use or operation of any of the
Assets and Properties of the Company or any Subsidiary. The Company's insurance
coverage including the insurance coverage provided by any of the policies
described in Section 2.19 of the Disclosure Schedule will not terminate or lapse
by reason of the transactions contemplated by this Agreement. Each of the
Company's insurance policies is valid and binding and in full force and effect,
no premiums due thereunder have not been paid (within any applicable grace
period) and neither the Company nor any Subsidiary has received any notice of
cancellation or termination in respect of any such policy or is in default
thereunder in any material respect.
2.20 Affiliate Transactions. Except as disclosed in Section 2.20(a)
of the Disclosure Schedule, (i) there is no Indebtedness between the Company or
any Subsidiary, on the one hand, and Parent, any officer, director or Affiliate
(other than the Company or any Subsidiary) of Parent, on the other, (ii) neither
Parent nor any such officer, director or Affiliate provides or causes to be
provided any assets, services or facilities to the Company or any Subsidiary,
(iii) neither the Company nor any Subsidiary provides or causes to be provided
any assets, services or facilities to Parent or any such officer, director or
Affiliate and (iv) neither the Company nor any Subsidiary beneficially owns,
directly or indirectly, any Investment Assets issued by Parent or any such
officer, director or Affiliate.
2.21 Labor Relations. (a) Except as disclosed in Section 2.21(a) of
the Disclosure Schedule, as of the date hereof (i) no employee of the Company or
any Subsidiary is a member of a collective bargaining unit; (ii) to the
Knowledge of Parent, there are no threatened or contemplated attempts to
organize for collective bargaining purposes any of the employees of the Company
or any Subsidiary and (iii) neither the Company nor any
-18-
Subsidiary is a party to any collective bargaining agreement or other contract
or agreement with any labor organization or other representative of any of the
Company's employees, and no such contract or agreement is presently being
negotiated. Except as disclosed in Section 2.21(a) of the Disclosure Schedule,
since January 1, 1994 through the date hereof there has been no work stoppage,
strike or other concerted action taken or, to the Knowledge of Parent,
threatened, by employees of the Company or any Subsidiary.
(b) Except as disclosed in Section 2.21(b) of the Disclosure
Schedule, as of the date hereof neither the Company nor any Subsidiary has had a
layoff of any of its employees which constitutes a "plant closing" or "mass
layoff" under the Worker Adjustment and Retraining Notification Act of 1988, as
amended.
(c) Except as disclosed in Section 2.21(c) of the Disclosure
Schedule, neither the Company nor any Subsidiary will have any liability under
any benefit or severance policy, practice, agreement, plan or program, or under
any applicable law or otherwise, as a result of the transactions contemplated by
this Agreement.
2.22 Environmental Matters. (a) Except as disclosed in Section
2.22(a) of the Disclosure Schedule, each of the Company and the Subsidiaries has
obtained all material Licenses which are required under applicable Environmental
Laws in connection with the conduct of the business or operations of the Company
or such Subsidiary ("Environmental Permits"). No modification, revocation,
reissuance, alteration, transfer, or amendment of any of the Environmental
Permits, or any review by, or approval of, any third party of any of the
Environmental Permits is required in connection with the execution or delivery
of this Agreement or the consummation of the transactions contemplated hereby or
the continuation of the business of Company and the Subsidiaries following such
consummation. Each of the Environmental Permits is in full force and effect and
each of the Company and the Subsidiaries is and has been in material compliance
with the terms and conditions of all such Environmental Permits and with any
applicable Environmental Law and, to the Knowledge of Parent, there is no
condition that could prevent or materially interfere with such compliance in the
future.
(b) Except as disclosed in Section 2.22(b) of the Disclosure
Schedule, as of the date hereof, no notification of a material Release of a
Hazardous Material has been made by or on behalf of the Company or any
Subsidiary and no site or facility now or previously owned, operated or leased
by the Company or any Subsidiary is listed or proposed for listing on the NPL,
CERCLIS or any similar state or local list of sites requiring material
investigation or clean-up.
-19-
(c) Except as disclosed in Section 2.22(c) of the Disclosure
Schedule, as of the date hereof, neither the Company nor any Subsidiary has
received any Environmental Claim, and neither the Company nor any Subsidiary is
aware, after reasonable inquiry, of any threatened Environmental Claim.
(d) Except as disclosed in Section 2.22(d) of the Disclosure
Schedule, neither the Company nor any Subsidiary has entered into, has agreed
to, or is subject to any Order or other similar requirement of any Governmental
or Regulatory Authority under any Environmental Law, including without
limitation those relating to compliance with Environmental Laws or to
investigation, cleanup, remediation or removal of Hazardous Materials.
(e) Except as disclosed in Section 2.22(e) of the Disclosure
Schedule, there are no Hazardous Materials currently or formerly present at or
about any site or facility currently or formerly owned, operated or leased by
the Company or any Subsidiary that could reasonably be expected to give rise to
material liability under any Environmental Law.
(f) Except as disclosed in Section 2.22(f) of the Disclosure
Schedule, Hazardous Materials have not been generated, transported, treated,
stored, disposed of, arranged to be disposed of, released or threatened to be
released at, on, from or under any site or facility currently or formerly owned,
operated, leased or otherwise used by the Company or any Subsidiary, in
violation of, or in a manner or to a location that could reasonably be expected
to give rise to material liability under, any Environmental Law.
(g) Except as disclosed in Section 2.22(g) of the Disclosure
Schedule, neither the Company nor any Subsidiary has assumed, contractually or
by operation of law, any liabilities or obligations under any Environmental
Laws.
(h) To the Knowledge of Parent, none of the matters relating to
Section 2.22 of this Agreement that are listed in the Disclosure Schedule would
have, individually or in the aggregate, a material adverse effect on the
Business or Condition of the Company.
(i) As used herein:
(i) "Environmental Claim" means any written notice, claim, demand,
action, suit, complaint, proceeding or other communication by any person
alleging material liability or material potential liability (including
without limitation material liability or material potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or penalties)
arising out of, relating to,
-20-
based on or resulting from (i) the presence, discharge, emission, release
or threatened release of any Hazardous Material at any location, (ii)
circumstances forming the basis of any violation or alleged violation of
any Environmental Law or Environmental Permit, or (iii) otherwise relating
to obligations or liabilities under any Environmental Law.
(ii) "Environmental Law" means any Law or Order as in effect on the
date hereof of any Governmental or Regulatory Authority relating to the
regulation or protection of the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes into the environment;
and
(iii) "Hazardous Material" means (A) any petroleum or petroleum
products, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls
(PCBs) and (B) any chemicals or other materials or substances which as of
the date hereof are defined as or included in the definition of "hazardous
substances," "hazardous wastes," "toxic substances," or words of similar
import, under any Environmental Law.
2.23 Product Liability Claims. Section 2.23 of the Disclosure
Schedule sets forth a summary as of the date hereof of each Product Liability
Claim (as defined below) in excess of $250,000 paid by or, to the Knowledge of
Parent, on behalf of the Company or any Subsidiary during the past three fiscal
years, and each outstanding Product Liability Claim in excess of $250,000.
Except as set forth in Section 2.23 of the Disclosure Schedule, to the Knowledge
of Parent, there are no design or manufacturing defects in any of the products
previously sold or currently being manufactured by the Company or any Subsidiary
which could reasonably be expected to result in future Product Liability Claims
that, individually or in the aggregate, would have a material adverse effect on
the Business or Condition of the Company. For purposes of this Section 2.23, the
term "Product Liability Claim" shall mean any claim arising out of any injury to
an individual or property as a result of the ownership, possession, or use of
any product manufactured, sold, or delivered by the Company or any Subsidiary.
2.24 Product Recalls. Section 2.24 of the Disclosure Schedule sets
forth a summary as of the date hereof of each product recall of products
manufactured or sold by the Company or any Subsidiary during the past five
fiscal years, describing in each case the nature of the problem giving rise to
such recall, whether such recall was voluntary or by order of a Governmental or
Regulatory Authority, the number of products recalled, and the
-21-
aggregate costs incurred for each such recall. Except as set forth in Section
2.24 of the Disclosure Schedule, to the Knowledge of Parent, there are no
defects which could reasonably be expected to result in a future recall of
products manufactured or sold by the Company or any Subsidiary prior to the
Closing Date.
2.25 Absence of Undisclosed Liabilities. Neither the Company nor any
Subsidiary has any liabilities or obligations, whether currently due, accrued,
direct or indirect, matured or unmatured, absolute, contingent or otherwise, of
a nature required under GAAP to be reflected or reserved against in the
financial statements or otherwise reflected or reserved against in the notes or
schedules thereto, other than: (i) liabilities fully and adequately reflected or
reserved against in the June 30, 1996 Balance Sheet or otherwise specifically
disclosed in the Disclosure Schedule, (ii) liabilities incurred in the ordinary
course of business and consistent with past experience since June 30, 1996; and
(iii) liabilities incurred in connection with the acquisition of certain assets
of Etonic Inc.
2.26 Brokers. Except for Xxxxxx Xxxxxxx & Co. Incorporated and
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, whose fees, commissions and
expenses are the sole responsibility of Parent, all negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Parent directly with Purchaser without the intervention of any Person on behalf
of Parent in such manner as to give rise to any valid claim by any Person
against Purchaser, the Company or any Subsidiary for a finder's fee, brokerage
commission or similar payment.
2.27 Etonic Schedules. The disclosure schedules to the Asset
Purchase Agreement, dated July 25, 1996, between Etonic, Inc., EAC Acquisition
Corporation, EWW Corporation and EAC Holdings Corporation (the "Etonic Purchase
Agreement Disclosure Schedules") previously delivered to Purchaser are hereby
incorporated by reference herein as additional disclosure in respect of the
representations and warranties set forth in this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Parent as follows:
3.01 Corporate Existence. Purchaser is a limited partnership duly
incorporated, validly existing and in good standing under the Laws of the State
of Delaware. Purchaser has full power and authority to execute and deliver this
Agreement,
-22-
to perform its obligations hereunder and to consummate the transactions
contemplated hereby.
3.02 Authority. The execution and delivery by Purchaser of this
Agreement, and the performance by Purchaser of its obligations hereunder, have
been duly and validly authorized by the general partner of Purchaser, no other
action on the part of Purchaser being necessary. This Agreement has been duly
and validly executed and delivered by Purchaser and constitutes a legal, valid
and binding obligation of Purchaser enforceable against Purchaser in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors rights generally or by general equitable principles relating
to enforceability (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.03 No Conflicts. The execution and delivery by Purchaser of this
Agreement do not, and the performance by Purchaser of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of limited partnership or
by-laws (or other comparable documents) of Purchaser;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Schedule 3.04 hereto, conflict
with or result in a violation or breach of any term or provision of any Law or
Order applicable to Purchaser or any of its Affiliates or any of their
respective Assets and Properties (other than such conflicts, violations or
breaches which could not in the aggregate reasonably be expected to adversely
affect the validity or enforceability of this Agreement); or
(c) except as disclosed in Schedule 3.03 hereto (i) conflict with or
result in a violation or breach of or constitute a default under or (ii) require
Purchaser or any of its Affiliates to obtain any consent, approval or action of,
make any filing with or give any notice to, any Person as a result or under the
terms of any Contract or License to which Purchaser or any of its Affiliates is
a party or by which any of their respective Assets and Properties is bound,
except for such conflicts, violations, breaches or defaults, which in the
aggregate could not reasonably be expected to have a material adverse effect on
the ability of Purchaser to consummate any of the transactions contemplated by
this Agreement.
3.04 Governmental Approvals and Filings. Except as disclosed in
Schedule 3.04 hereto, no consent, approval or action
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of, filing with or notice to any Governmental or Regulatory Authority on the
part of Purchaser or any of its Affiliates is required in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
3.05 Legal Proceedings. There are no Actions or Proceedings pending
or, to the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Affiliates or any of their respective Assets and
Properties which could reasonably be expected to result in the issuance of an
Order restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.
3.06 Purchase for Investment. The Acquired Shares will be acquired
by Purchaser (or, if applicable, its assignee pursuant to Section 14.10) for its
own account for the purpose of investment, it being understood that the right to
dispose of such Acquired Shares shall be entirely within the discretion of
Purchaser (or such assignee, as the case may be). Purchaser (or such assignee,
as the case may be) will refrain from transferring or otherwise disposing of any
of the Acquired Shares, or any interest therein, in such manner as to cause the
Company to be in violation of the registration requirements of the Securities
Act or applicable state securities or blue sky laws.
3.07 Brokers. Except for Xxxxxxx Xxxxx & Co., whose fees,
commissions and expenses shall be paid by the Company after the Closing, all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried out by Purchaser directly with Parent without the intervention
of any Person on behalf of Purchaser in such manner as to give rise to any valid
claim by any Person against Parent for a finder's fee, brokerage commission or
similar payment.
3.08 Financing. Purchaser has obtained letters from financing
sources with respect to the Financing, true and complete copies of which have
been delivered to the Company.
3.09 Exon-Xxxxxx. Purchaser is not a "foreign person" for purposes
of the Exon-Xxxxxx Amendment.
ARTICLE IV
COVENANTS OF PARENT
Parent covenants and agrees with Purchaser that, at all times from
and after the date hereof until the Closing, Parent will comply with all
covenants and provisions of this Article IV, except to the extent Purchaser may
otherwise consent in writing.
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4.01 Regulatory and Other Approvals. Parent will, and will cause the
Company and the Subsidiaries to, (a) take all commercially reasonable steps
necessary or desirable to obtain all consents, approvals or actions of, make all
filings with and give all notices to Governmental or Regulatory Authorities or
any other Person required of Parent, the Company or any Subsidiary to consummate
the transactions contemplated hereby, including without limitation those
described in Sections 2.06 and 2.07 of the Disclosure Schedule, (b) provide such
other information and communications to such Governmental or Regulatory
Authorities or other Persons as such Governmental or Regulatory Authorities or
other Persons may reasonably request in connection therewith and (c) provide
reasonable cooperation to Purchaser in connection with the performance of its
obligations under Sections 5.01 and 5.02. Parent will provide prompt
notification to Purchaser when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Purchaser of any communications (and, unless
precluded by Law, provide copies of any such communications that are in writing)
with any Governmental or Regulatory Authority or other Person regarding any of
the transactions contemplated by this Agreement.
4.02 HSR Filings. In addition to and not in limitation of Parent's
covenants contained in Section 4.01, Parent will promptly take all actions
necessary to make the filings required of Parent or its Affiliates under the HSR
Act, (b) comply at the earliest practicable date with any request for additional
information received by Parent or its Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act and (c) cooperate with Purchaser in connection with Purchaser's
filing under the HSR Act and in connection with resolving any investigation or
other inquiry concerning the transactions contemplated by this Agreement
commenced by either the Federal Trade Commission or the Antitrust Division of
the Department of Justice or state attorneys general.
4.03 Investigation by Purchaser. Parent will, and will cause the
Company and the Subsidiaries to, (a) provide Purchaser and its officers,
employees, counsel, accountants, financial advisors, consultants (including
environmental consultants) and other representatives (together,
"Representatives") with full access, upon reasonable prior notice and during
normal business hours, to all officers, employees, agents and accountants of the
Company and the Subsidiaries and their Assets and Properties and Books and
Records, but only to the extent that such access does not unreasonably interfere
with the business and operations of the Company or the Subsidiaries and (b)
furnish Purchaser and such other Persons with all such information and data
(including without limitation copies of Contracts, Benefit Plans and other Books
and Records) concerning the business and operations of the Company and the
Subsidiaries
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as Purchaser or any of such other Persons reasonably may request in connection
with such investigation, except to the extent that furnishing any such
information or data would violate any Law, Order, Contract or License applicable
to Parent, the Company or any Subsidiary or by which any of their respective
Assets and Properties is bound.
4.04 Conduct of Business. (a) Except for the transactions
contemplated by this Agreement or as otherwise consented to in writing by
Purchaser, which consent shall not be unreasonably withheld, Parent will cause
the Company and the Subsidiaries to conduct business only in the ordinary course
and consistent with past practice. Without limiting the generality of the
foregoing, Parent will cause the Company and the Subsidiaries to use
commercially reasonable efforts, to the extent the officers of the Company and
the Subsidiaries believe such action to be in the best interests of the Company
and the Subsidiaries, to (i) preserve intact the present business organization
and reputation of the Company and the Subsidiaries in all material respects and
(ii) maintain the Assets and Properties of the Company and the Subsidiaries in
good working order and condition, ordinary wear and tear excepted.
(b) The Working Capital of the Company and the Subsidiaries on the
Closing Date ("Closing Date Working Capital") shall not be less than $93 million
or more than $97 million. For purposes of this Section 4.04(b), Working Capital
shall mean, as of any date of determination on a consolidated basis consistent
with the preparation of the audited consolidated balance sheet of Spalding as of
September 30, 1995, the sum of (i) trade accounts receivable and (ii)
inventories, less (iii) the current liabilities of Spalding after excluding (A)
indebtedness of Spalding (other than bankers acceptances arising in connection
with the purchase of inventory) and (B) income taxes. As soon as practicable
following the Closing Date, but in any event within 60 days thereafter,
Purchaser shall prepare a calculation of Closing Date Working Capital (the
"Closing Date Working Capital Calculation") and shall deliver the Closing Date
Working Capital Calculation to Parent. Parent shall, within 30 days after the
delivery by Purchaser of the Closing Date Working Capital Calculation, complete
their review of the calculation and shall in a written notice to Purchaser,
either accept the calculation or describe in reasonable detail any proposed
adjustments to the Closing Date Working Capital Calculation and the reasons
therefor. If no notice is received by Purchaser within such 30-day period,
Parent will be deemed to have accepted the Closing Date Working Capital
Calculation. Purchaser and Parent shall negotiate in good faith to resolve any
disputes over any proposed adjustment to the Closing Date Working Capital
Calculation raised by Parent; provided, that if they are unable to resolve any
disputes over any proposed adjustments within 15 days following Purchaser's
receipt of Parent's proposed adjustments, Purchaser and Parent shall engage
Price Waterhouse,
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or select jointly a mutually acceptable nationally recognized independent public
accounting firm to resolve such disputes, which resolution shall be final and
binding. The fees and expenses of such accounting firm shall be shared equally
by Purchaser and Parent. Within 5 business days of the acceptance of the Closing
Date Working Capital Calculation by Parent or the resolution of any disputes
arising out of any proposed adjustments, (i) Parent shall pay to Purchaser
immediately available funds equal to the amount by which the Closing Date
Working Capital, as set forth on the Closing Date Working Capital Calculation,
is less than $93 million or (ii) Purchaser shall pay to Parent immediately
available funds equal to the amount by which the Closing Date Working Capital,
as set forth on the Closing Date Working Capital Calculation is more than $97
million.
(c) Except as set forth in Section 4.04(c) of the Disclosure Schedule,
or otherwise consented to in writing by Purchaser, which consent shall not be
unreasonably withheld, Parent will cause the Company and the Subsidiaries to
conduct their respective businesses substantially in accordance with the 1996
financial outlook provided to Purchaser or any update thereof provided to
Purchaser, which, to the extent it changes in any material respect from the
financial outlook then in effect, shall be consented to by Purchaser, which
consent shall not be unreasonably withheld, and the 1997 Operating Plan.
4.05 Certain Restrictions. Except in connection with transactions
contemplated by Section 4.04 or except as disclosed in Section 4.04(c) of the
Disclosure Schedule, Parent will cause the Company and the Subsidiaries to
refrain from:
(a) amending their certificates or articles of incorporation or
by-laws (or other comparable corporate charter documents) or taking any action
with respect to any such amendment or any recapitalization, reorganization,
liquidation or dissolution of any such corporation;
(b) authorizing, issuing, selling or otherwise disposing of any
shares of capital stock or other equity, interests or options of the Company or
any Subsidiary, or modifying or amending any right of any holder of outstanding
shares of capital stock of the Company or any Subsidiary;
(c) declaring, setting aside or paying any dividend or other
distribution in respect of the capital stock of the Company or any Subsidiary,
or directly or indirectly redeeming, purchasing or otherwise acquiring any
capital stock of the Company or any Subsidiary not wholly owned, directly or
indirectly, by the Company (other than the acquisition of shares held by the
management);
-27-
(d) other than in the ordinary course of business, acquiring or
disposing of, or incurring any Lien (other than a Permitted Lien) on, any
material Assets and Properties;
(e) other than in the ordinary course of business, voluntarily
assuming, incurring or guaranteeing Indebtedness except as permitted under
paragraph (l) below;
(f) except to the extent required by applicable Law, making any
material change in accounting, financial reporting, Tax practice or policy;
(g) making any change in its fiscal year;
(h) entering into or amending any tax sharing agreements or
arrangements to which the Company and any Subsidiary is a party, except entering
into tax sharing agreements with EAC Holdings Corporation, EAC Acquisition
Corporation, Etonic Worldwide Corporation and EWW Lisco, Inc.;
(i) cancelling or compromising any debts owed to it other than in
the ordinary course of business or waiving or releasing any rights of material
value;
(j) amending, modifying or terminating any policies of title,
liability, fire, worker's compensation, property, products liability and any
other insurance covering the Assets and Properties or the operations of the
Company or any Subsidiary;
(k) amending, modifying or terminating or entering into any material
contract, commitment, lease or agreement to which any of the Company or any of
the Subsidiaries or its Assets and Properties is bound, other than in the
ordinary course of business consistent with past practice;
(l) entering into any Contract with Parent or any of Parent's
officers, directors or Affiliates (other than the Subsidiaries), except for
borrowings under the Interim Credit Agreement and loans under the Xxxxxxxx Notes
and the Pack-A-Snack Note which borrowings shall be paid at the Closing;
(m) settling or otherwise compromising any Tax audit or proceeding;
(n) purchasing the securities (except short-term debt securities for
investment purposes) of any other Person;
(o) closing any plants or facilities;
(p) entering into any material partnership, joint venture or other
material similar transaction; and
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(q) entering into any Contract or otherwise agreeing to do or engage
in any of the foregoing.
4.06 Affiliate Transactions. Except as set forth in Section 4.06 of
the Disclosure Schedule, prior to or concurrently with the Closing, all
Indebtedness and other amounts owing under Contracts between Parent, any
officer, director or Affiliate (other than the Company or any Subsidiary) of
Parent, on the one hand, and the Company or any Subsidiary, on the other, will
be paid in full and Parent will terminate and will cause any such officer,
director or Affiliate to terminate each Contract with the Company or any
Subsidiary.
4.07 Employee Matters. Except as may be required by applicable Laws,
Parent will refrain, and will cause the Company and the Subsidiaries to refrain,
from directly or indirectly:
(a) making any material representation or promise, oral or written,
to any officer or employee of the Company or any of the Subsidiaries concerning
any Benefit Plan, except for statements as to the rights or accrued benefits of
any officer or employee under the terms of any Benefit Plan;
(b) making any increase in the salary, wages or other compensation
of any officer or employee of the Company or any of the Subsidiaries or make any
bonus payments, except (i) for normal increases or bonus payments in the
ordinary course of business consistent with past practice or (ii) pursuant to
existing Contracts; and
(c) other than in the ordinary course of business, in connection
with the acquisition of certain assets of Etonic Inc., pursuant to transactions
contemplated by Section 4.04 or to the extent required by applicable Laws,
adopting, entering into or becoming bound by any Benefit Plan,
employment-related Contract or collective bargaining agreement, or amending,
modifying or terminating (partially or completely) any such Benefit Plan,
employment-related Contract or collective bargaining agreement.
Parent will cause the Company and each Subsidiary to administer each
Benefit Plan, or cause the same to be administered, in all material respects in
accordance with applicable law. Parent will promptly notify Purchaser of the
receipt of any notice of investigation or administrative proceeding by the IRS,
the United States Department of Labor, Pension Benefit Guaranty Corporation or
other governmental agency involving any Benefit Plan.
4.08 Financial Statements and Reports.
(a) As promptly as practicable and in any event no later than
forty-five (45) days after the end of each fiscal month ending after the date
hereof and before the Closing Date
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(other than the last fiscal month) or ninety (90) days after the end of each
fiscal year ending after the date hereof and before the Closing Date, as the
case may be, Parent will deliver to Purchaser true and complete copies of (in
the case of any such fiscal year) the audited and (in the case of any such
fiscal month) the unaudited consolidated and consolidating balance sheets, and
the related audited or unaudited consolidated and consolidating statements of
earnings, shareholders' equity (in the case of audited statements only) and cash
flows, of each of the Company, Spalding and its consolidated subsidiaries, in
each case, as of and for the fiscal year then ended or as of and for each such
fiscal month and the portion of the fiscal year then ended, as the case may be,
together with the notes, if any, relating thereto, which financial statements
shall be prepared on a basis consistent with the financial statements referred
to in Section 2.09.
(b) As promptly as practicable, Parent will deliver to Purchaser
true and complete copies of such other regularly-prepared financial statements,
reports and analyses as may be prepared by Parent, the Company or any Subsidiary
relating to the business or operations of the Company or any Subsidiary and
delivered to the lenders under the Credit Agreements.
4.09 No Shopping. Parent shall not and shall not permit any of its
agents or representatives (including, without limitation, investment bankers,
attorneys and accountants) and shall not permit any of the officers, employees,
agents, affiliates and representatives of the Company or any Subsidiary to,
directly or indirectly, (i) solicit, initiate or encourage the submission of any
inquiries, indications of interest, proposals of offers from any corporation,
partnership, person, entity or group, other than Purchaser (collectively, "Third
Parties"), concerning the sale of any equity security of, or any other interest
in, the Company or any Subsidiary, the sale of any assets of the Company or any
Subsidiary (other than sales in the ordinary course of business or any matters
specifically disclosed in the Disclosure Schedule hereto) or any merger,
recapitalization or other business combination transaction involving the Company
or any of its Subsidiaries (an "Acquisition Proposal"), (ii) participate in any
discussions or negotiations regarding, or enter into any agreements or
understandings relating to, any of the foregoing with, or provide any
information concerning the Company, its Subsidiaries or any of the foregoing to,
any Third Parties including any Third Parties that the Parent had conducted
negotiations with prior to the date of this Agreement, or (iii) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any Third Party to do or seek any of the foregoing.
Prior to the Closing, at Purchaser's request, Parent shall use its best efforts
to cause the Company to cause the destruction or return of all non-public,
confidential or proprietary information concerning the Company and the
Subsidiaries provided to potential
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purchasers of the Company or the assets thereof. Parent will immediately notify
Purchaser after the receipt by it or any of its agents of any inquiry,
indication of interest, proposal or offer with respect to an Acquisition
Proposal by any Third Party and will immediately deliver to Purchaser any
written documentation relating thereto.
4.10 Disclosure. Parent shall promptly notify Purchaser of, and
furnish Purchaser any information Purchaser may reasonably request with respect
to the occurrence, to the Knowledge of Parent, of any event or condition or the
existence of any fact that would cause any of the conditions to Purchaser's
obligations to consummate the transactions contemplated by this Agreement not to
be fulfilled.
4.11 No Competition. During the period commencing on the Closing
Date and ending on the third anniversary of the Closing Date, Parent will not,
and will cause any Affiliate not to, directly or indirectly conduct or engage in
any business that competes, directly or indirectly, with the business of the
Company or any Subsidiary as conducted as of the Closing Date (the "Restricted
Business"). Notwithstanding the foregoing, neither Parent nor any of its
existing or future Affiliates shall be in violation of this Section 4.11 if it
owns less than 5% of the equity securities of any business that is engaged in
the Restricted Business.
4.12 Financing. Parent shall provide, and will cause the Company and
the Subsidiaries and its and their respective officers and employees to provide,
all necessary cooperation in connection with the arrangement of any financing to
be consummated contemporaneous with or at or after the Closing in respect of the
transactions contemplated by this Agreement, including without limitation, the
preparation of audited financial statements in a form meeting the requirements
of Regulation S-X of the Securities Act, the execution and delivery of any
commitment letters, underwriting or placement agreements, pledge and security
documents, other definitive financing documents, or other requested agreements,
certificates or documents, including any indemnity agreements or any
certificates of officers of the Company with respect to solvency matters, as may
be requested by Purchaser. Parent agrees to use its best efforts to (i) cause
Deloitte & Touche LLP to assist in the preparation of any financial statements
required with respect to the Financing and (ii) obtain from Deloitte & Touche
LLP its consent to the inclusion of any statements or reports prepared by it
which relate to the transactions contemplated hereby in documents that may be
filed with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act by any of the parties hereto or their respective affiliates. The
parties acknowledge that the payment of any fees by the Company in connection
with any commitment letters shall be subject to the occurrence of the Closing.
In addition, in conjunction with the
-31-
obtaining of any such financing, the Company agrees, at the request of
Purchaser, to call for prepayment or redemption, or to prepay, redeem and/or
renegotiate, as the case may be, any then existing Indebtedness of the Company
to be repaid at the Closing; provided that no such prepayment or redemption
shall themselves actually be made until contemporaneously with the Closing.
Parent shall cooperate with any reasonable requests of Purchaser or
the SEC related to the recording of the transactions contemplated hereby as a
recapitalization for financial reporting purposes, including, without
limitation, to assist Purchaser and its affiliates with any presentation to the
SEC with regard to such recording and to include appropriate disclosure with
regard to such recording in all filings with the SEC in connection with the
transactions contemplated hereby. In furtherance of the foregoing, Parent shall
cause the Company to provide to Purchaser for the prior review of Purchaser's
advisors any description of the transactions contemplated by this Agreement
which is meant to be disseminated.
4.13 Fulfillment of Conditions. Parent will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each condition to the obligations of Purchaser contained in this
Agreement and will not, and will not permit the Company or any Subsidiary to,
take or fail to take any action that could reasonably be expected to result in
the nonfulfillment of any such condition.
4.14 Post-Closing Status of the Company. Upon consummation of the
transactions contemplated by this Agreement, the Company shall not own any
assets other than the shares of Spalding and EAC Holdings Corporation, EAC
Acquisition Corporation, Etonic Worldwide Corporation and EWW Lisco, Inc. and
shall not have any liabilities other than the liabilities related to the
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Parent that, at all times from
and after the date hereof until the Closing and, in the case of Section 5.03,
thereafter, Purchaser will comply with all covenants and provisions of this
Article V, except to the extent Parent may otherwise consent in writing.
5.01 Regulatory and Other Approvals. Purchaser will (a) take all
commercially reasonable steps necessary or desirable to obtain all consents,
approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other Person required of Purchaser
to consummate the transactions contemplated hereby, including
-32-
without limitation those described in Schedules 3.03 and 3.04 hereto, (b)
provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as such Governmental or Regulatory
Authorities or other Persons may reasonably request in connection therewith and
(c) provide reasonable cooperation to Parent, the Company and the Subsidiaries
in connection with the performance of their obligations under Sections 4.01 and
4.02. Purchaser will provide prompt notification to Parent when any such
consent, approval, action, filing or notice referred to in clause (a) above is
obtained, taken, made or given, as applicable, and will advise Parent of any
communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement.
5.02 HSR Filings. In addition to and without limiting Purchaser's
covenants contained in Section 5.01, Purchaser will (i) promptly take all
actions necessary to make the filings required of Purchaser or its Affiliates
under the HSR Act, (ii) comply at the earliest practicable date with any request
for additional information received by Purchaser or its Affiliates from the
Federal Trade Commission or the Antitrust Division of the Department of Justice
pursuant to the HSR Act and (iii) cooperate with Parent in connection with
Parent's filing under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by this
Agreement commenced by either the Federal Trade Commission or the Antitrust
Division of the Department of Justice or state attorneys general.
5.03 Indemnification of Directors and Officers. (a) Until the tenth
anniversary of the Closing Date, Purchaser will not, nor will it permit any of
its subsidiaries (including the Company and the Subsidiaries) to, take any
action to amend any provision of the certificate of incorporation or by-laws (or
other comparable corporate documents) of the Company and the Subsidiaries
relating to the elimination of the personal liability of directors or to reduce
or limit the rights of indemnity afforded to the present and former directors,
officers, employees and agents of the Company and the Subsidiaries, or the
ability of the Company and the Subsidiaries to indemnify them, nor to hinder,
delay or make more difficult the exercise of such rights of indemnity or the
ability to indemnify; provided, however, that, in the event any claim or claims
are asserted or made within such ten-year period, all rights to indemnification
in respect of any such claim or claims shall continue until the final
disposition of such claim or claims. Any determination required to be made
against such Person with respect to whether the conduct of any such director,
officer or employee complies with the standards set forth in the certificate of
incorporation or by-laws (or other comparable corporate documents) of the
Company and the Subsidiaries or under any indemnification
-33-
agreements or otherwise shall be made by independent counsel reasonably selected
by counsel to the Company and counsel to such director, officer or employee.
(b) The Company shall maintain in effect, for not less than six
years from the Closing Date, the directors' and officers' liability insurance
and the fiduciary liability insurance in respect of the present and former
directors and officers of the Company and the Subsidiaries at current levels,
provided, that such coverage remains available on commercially reasonable terms
and, provided, further, that if such coverage is not available on commercially
reasonable terms, the Company shall purchase such amount of coverage as is
available on commercially reasonable terms.
(c) In the event that the Company or any of the Subsidiaries effects
a merger, consolidation, sale of all or substantially all the assets,
liquidation or dissolution of any such corporation, then in each such case,
proper provision shall be made so that the Company, the Subsidiaries or their
respective successors and assigns, as the case may be, shall assume the
obligations set forth in this Section 5.03.
5.04 Disclosure. Purchaser shall promptly notify Parent of, and
furnish Parent any information Parent may reasonably request with respect to the
occurrence, to the knowledge of Purchaser, of any event or condition or the
existence of any fact that would cause any of the conditions to Parent's
obligations to consummate the purchase and sale of the Shares not to be
fulfilled.
5.05 Fulfillment of Conditions. Purchaser will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each condition to the obligations of Parent contained in this
Agreement and will not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
5.06 Financing. (a) The Purchaser hereby agrees to use its
commercially reasonable efforts, subject to normal conditions, to arrange the
Financing including, subject to normal conditions, using its commercially
reasonable efforts (i) to assist the Company in the negotiation of definitive
agreements with respect thereto and (ii) to satisfy all conditions applicable to
Purchaser in such definitive agreements. Purchaser will keep the Company
informed of the status of its efforts to arrange the Financing, including making
reports with respect to significant developments. Purchaser will be under no
obligation under any circumstances to be capitalized with equity of more than
$200 million.
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ARTICLE VI
CONDITIONS TO OBLIGATION OF PURCHASER
The obligation of Purchaser hereunder to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which may be waived
in whole or in part by Purchaser in its sole discretion):
6.01 Representations and Warranties. The representations and
warranties made by Parent in this Agreement shall be true and correct, in all
material respects, on and as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date.
6.02 Performance. Parent shall have performed and complied with, in
all material respects, the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Parent at or before the
Closing.
6.03 Officer's Certificates. Parent shall have delivered to
Purchaser a certificate, dated the Closing Date and executed in the name of and
on behalf of Parent by a Managing Director of Parent, and a certificate, dated
the Closing Date and executed by the Secretary or any Assistant Secretary of
Parent, certifying that the conditions set forth in Sections 6.01 and 6.02 have
been satisfied.
6.04 Orders and Laws. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
6.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Purchaser and Parent to perform their obligations under this
Agreement and to consummate the transactions contemplated hereby shall have been
duly obtained, made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement, including under the HSR Act, shall have
occurred.
6.06 Indebtedness. The obligations of the Company and the
Subsidiaries under the Credit Agreements, the Etonic Notes, and the other
Indebtedness to be paid at Closing as set forth on Section 1.02 of the
Disclosure Schedule shall have been paid in full and written releases of the
Guaranties and Liens on the
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Assets and Properties of the Company and the Subsidiaries under the Credit
Agreements, the Etonic Notes, the Guaranties and the documents relating to the
other Indebtedness shall have been obtained.
6.07 Pueblo Shares. The shares of Pueblo held by the
Company shall have been disposed of and no longer be an asset or
liability of the Company or any of the Subsidiaries.
6.08 Opinion of Counsel. Purchaser shall have received the opinion
of Milbank, Tweed, Xxxxxx & XxXxxx, New York counsel to Parent and the Company,
dated the Closing Date, in form and substance reasonably satisfactory to
Purchaser and concerning matters reasonably requested by Purchaser.
6.09 Environmental Diligence. Purchaser shall have received an
environmental assessment report in form and substance reasonably satisfactory to
Purchaser with respect to the representations and warranties of Parent herein as
to the environmental hazards, conditions, liabilities or potential liabilities
to which the Company, the Subsidiaries, and the properties currently or formerly
owned, leased or operated by the Company or its Subsidiaries may be subject.
6.10 Financing. The Company shall have received the proceeds of the
Financing on terms reasonably satisfactory to Purchaser in an amount sufficient
to (i) consummate the transactions contemplated hereby, (ii) pay any fees and
expenses in connection with such transactions and (iii) provide for the working
capital needs of the Company and the Subsidiaries.
6.11 Pending Litigation. There shall not be pending or threatened by
any Governmental or Regulatory Authority or any other person any suit, action or
proceeding challenging or seeking to restrain or prohibit the consummation of
the transactions contemplated by this Agreement or seeking to obtain from
Parent, Purchaser or any of their affiliates any damages that are material to
any such party, or which could reasonably have a material adverse effect on the
Business or Condition of the Company.
6.12 Share Repurchases. The Management Shares, and any other shares
of Spalding not owned by the Company, shall have been repurchased by the Company
pursuant to the Management Share Repurchase Agreement.
6.13 Trademarks. The execution of appropriate instruments of
assignment in favor of the Company or its designee of all trademarks, other
intellectual property and trademark rights owned by Sahara and relating to the
Company or the subsidiaries shall have been completed.
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6.14 Shareholders Agreement. The Shareholders Agreement shall have
been executed by Parent, the Company and Purchaser.
6.15 Resignation of Directors. All directors of the Company and any
Subsidiary whose resignations shall have been requested by Purchaser not less
than five Business Days prior to the Closing Date shall have submitted their
resignations or been removed from office effective as of the Closing Date.
6.16 Letter of Credit; Escrow. The Letter of Credit shall have been
issued and/or escrow funds deposited in accordance with the provisions of
Section 11.05.
ARTICLE VII
CONDITIONS TO OBLIGATION OF PARENT
The obligation of Parent hereunder to consummate the transactions
contemplated by this Agreement to be consummated by it is subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Parent in its sole
discretion):
7.01 Representations and Warranties. The representations and
warranties made by Purchaser in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date.
7.02 Performance. Purchaser shall have performed and complied with,
in all material respects, the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Purchaser at or before the
Closing.
7.03 Officer's Certificates. Purchaser shall have delivered to
Parent a certificate, dated the Closing Date and executed in the name of and on
behalf of Purchaser by the General Partner of Purchaser, certifying that the
conditions set forth in Sections 7.01 and 7.02 have been satisfied.
7.04 Orders and Laws. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
7.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Parent and Purchaser to perform their obligations under this
Agreement
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and to consummate the transactions contemplated hereby shall have been
duly obtained, made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement, including under the HSR Act, shall have
occurred.
7.06 Stockholders Agreement. The Stockholders Agreement shall have
been executed by Purchaser.
ARTICLE VIII
TAX MATTERS
8.01. Indemnity for Taxes. (a) From and after the Closing Date,
Parent agrees to indemnify and hold harmless Purchaser, the Company and the
Subsidiaries against the following Taxes and, against any loss, damage,
liability or expense, including, but not limited to, reasonable fees for
attorneys and other outside consultants, incurred in contesting or otherwise in
connection with any such Taxes: (i) Taxes imposed on the Company or a Subsidiary
with respect to taxable years or periods ending on or before September 30, 1996;
(ii) Taxes imposed on any member of any affiliated group (other than the Company
or a Subsidiary) with which the Company or any Subsidiary files or has filed a
Tax Return on a consolidated, combined or unitary basis for a taxable year or
period ending on or before the Closing Date; (iii) Taxes with respect to
transactions or activities outside the ordinary course of business occurring
between September 30, 1996 and the Closing Date, including without limitation,
withholding taxes, Taxes arising under Section 311 of the Code and real estate
recording and transfer taxes arising out of the redemption of shares and
distribution of property pursuant to Section 1.03 hereof after taking into
account any carryforwards to the extent allowable and Taxes relating to any
gains associated with the EAC preferred stock after taking into account any
carryforwards to the extent allowable; (iv) Taxes or additional Taxes imposed on
Purchaser, the Company or any Subsidiary as a result of a breach of the
representations and warranties set forth in Section 2.10 of this Agreement or of
the covenants contained in this Article VIII; or (v) Taxes or other payments
required to be made after the date hereof by the Company or any Subsidiary to
any party (other than the Company or any Subsidiary) under any Tax sharing,
indemnity or allocation agreement in existence on or prior to the Closing Date
(whether or not written) other than Tax indemnities contained in equipment
leases; provided, however, that Parent shall have no obligation to indemnify
against, or pay or cause to be paid, any Taxes imposed on the Company or the
Subsidiaries for the taxable periods ending on or before September 30, 1995
hereunder until such time as, and to the extent that, the amount of such Taxes
exceeds the amount that has been reserved for by the Company and the
Subsidiaries as a long term liability on
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their financial statements as of June 30, 1996 (which is approximately $2.4
million), less payments made to taxing authorities subsequent to such date with
respect to tax audits and examinations for periods ending on or before September
30, 1995 (the "Tax Reserve") and provided further, that Parent shall be entitled
to any refunds with respect to the taxable year ending on September 30, 1996.
(b) Except as provided in Section 8.01(a)(iii) from and after the
Closing Date, Purchaser, the Company and the Subsidiaries shall indemnify and
hold harmless Parent from and against any Taxes imposed on the Company or any
Subsidiary in respect of any taxable year or period that begins after September
30, 1996, the Taxes of the Company or any Subsidiary which are not allocable to
Parent pursuant to Section 8.02 below and any Taxes of the Purchaser for any tax
period. Purchaser, the Company and the Subsidiaries shall also indemnify and
hold harmless Parent, except as otherwise provided in Section 8.03 hereof,
against any loss, damage, liability or expense, including, without limitation,
reasonable fees for attorneys and other outside consultants, incurred in
contesting or otherwise in connection with any such Taxes.
8.02. Apportionment of Taxes. (a) In order to apportion
appropriately any Taxes relating to any taxable year or period that begins prior
to and ends after September 30, 1996, the parties hereto shall, to the extent
permitted under applicable law, elect with the relevant Taxing authority to
treat for all purposes, September 30, 1996 as the last day of the taxable year
or period of the Company and the Subsidiaries, and such period shall be treated
as a short taxable year for purposes of this Article VIII.
(b) In any case where applicable law does not permit the Company or
any Subsidiary to treat September 30, 1996 as the last day of the taxable year
or period of the Company or the Subsidiary, as the case may be, with respect to
Taxes that are payable with respect to such period, the portion of any such Tax
that is allocable to the portion of such period ending on September 30, 1996
shall be:
(i) in the case of Taxes that are either (x) based upon or related
to income or receipts, or (y) imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or
intangible) (other than conveyances pursuant to this Agreement, as
provided under Section 8.06), deemed equal to the amount which would be
payable if the taxable year or period ended on September 30, 1996 (except
that, solely for purposes of determining the marginal tax rate applicable
to income or receipts during such period in a jurisdiction in which such
tax rate depends upon the level of income or receipts, annualized
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income or receipts may be taken into account, if appropriate, for an
equitable sharing of such Taxes); and
(ii) in the case of Taxes not described in subparagraph (i) above
that are imposed on a periodic basis and measured by the level of any
item, deemed to be the amount of such Taxes for the entire period (or, in
the case of such Taxes determined on an arrears basis, the amount of such
Taxes for the immediately preceding period) multiplied by a fraction the
numerator of which is the number of calendar days in the relevant period
ending on September 30, 1996 and the denominator of which is the number of
calendar days in the entire relevant period.
8.03. Contests. (a) After the Closing Date, Purchaser shall, and
prior to the Closing Date, Parent shall, promptly notify the other party in
writing of any written notice of a proposed assessment or claim in an audit or
administrative or judicial proceeding involving the other party or any of the
Company and the Subsidiaries which, if determined adversely to the taxpayer,
would be grounds for indemnification under this Article VIII; provided, however,
that a failure to give such notice will not affect Purchaser's or Parent's
right, as the case may be, to indemnification hereunder, except to the extent,
if any, that, but for such failure, the other party could have avoided or
contested the Tax liability in question.
(b) In the case of an audit or administrative or judicial proceeding
that relates to any period ended on or before September 30, 1996 or to a tax
described in clause (iii) of Section 8.01(a), provided that within 30 days after
Parent receives the written notice from Purchaser required under Section 8.03(a)
above, and prior to taking any action with respect to such audit or
administrative or judicial proceeding, Parent acknowledges in writing its
liability under Section 8.01(a) of this Agreement to hold Purchaser, the Company
and the Subsidiaries harmless against the full amount of any adjustment which
may be made as a result of such audit or proceeding that relates to such period
(to the extent such amount exceeds the Tax Reserve after giving effect to all
prior and concurrent payments made pursuant to Section 8.01(a) of this Agreement
to the Purchaser, the Company and any Subsidiary), except to the extent provided
otherwise in Section 8.03(c) below, Parent shall have the right at its own
expense to control the conduct of such audit or proceeding. Purchaser also may
participate in any such audit or proceeding at its own expense and, if Parent
does not assume the defense of any such audit or proceeding, Purchaser may,
without any effect to its, the Company's or any Subsidiary's right to
indemnification under this Article VIII, defend the same in such manner as it
may deem appropriate, including, but not limited to, settling such audit or
proceeding after giving five days' prior written notice to Parent setting forth
the terms and conditions of such settlement.
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(c) With respect to a proposed adjustment for which both Parent (as
evidenced by its acknowledgement under this Section 8.03) and Purchaser, or the
Company or any Subsidiary could be liable, or which involves an adjustment to a
period ended on or before September 30, 1996 or a change of accounting method or
other issue that recurs for any post September 30, 1996 period (whether or not
the subject of an audit or proceeding at such time), (i) each party may
participate in the audit or proceeding, and (ii) the audit or proceeding shall
be controlled by that party which would bear the burden of the greater portion
of the sum of the adjustment and any corresponding adjustments that may
reasonably be anticipated for future Tax periods. The principle set forth in the
preceding sentence shall govern also for purposes of deciding any issue that
must be decided jointly (in particular, choice of judicial forum) in situations
in which separate issues are otherwise controlled hereunder by Purchaser and
Parent.
(d) Purchaser and Parent agree to cooperate and to act in good
faith, and Purchaser agrees to cause the Company and the Subsidiaries to
cooperate and to act in good faith, in conducting, and in the defense against or
compromise of any claim in, any audit or proceeding.
8.04. Time of Payment. Payment of any amounts due under this Article
VIII in respect of Taxes shall be made (i) by Parent at least three Business
Days before the due date of the applicable estimated or final Tax Return filed
by the Company on which is required to be reported income for which Parent is
responsible under Sections 8.01(a) and 8.02 of this Agreement, and (ii) by
Parent or Purchaser, as applicable, within three Business Days following an
agreement between Parent and Purchaser that an indemnity amount is payable under
this Article VIII, an assessment of a Tax by a taxing authority, or a
"determination" as defined in Section 1313(a) of the Code. If liability under
this Article VIII is in respect of costs or expenses other than Taxes, payment
by Parent or Purchaser, as the case may be, of any amounts due under this
Article VIII shall be made within five Business Days after the date that Parent
has been notified by Purchaser that Parent, or Purchaser has been notified by
Parent that Purchaser, as the case may be, has a liability for a determinable
amount under this Article VIII and is provided with calculations or other
materials supporting such liability. Any payment by Parent pursuant to this
Article VIII shall be made to the Company.
8.05. Cooperation and Exchange of Information. Parent and Purchaser
shall provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax Return, amended Tax Return
or claim for refund, determining a liability for Taxes or a right to a refund of
Taxes, participating in or conducting any audit or other proceeding in respect
of Taxes or making representations to or
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furnishing information to parties subsequently desiring to purchase the Company
or any Subsidiary from Purchaser. Such cooperation and information shall include
providing copies of relevant Tax Returns or portions thereof, together with
accompanying schedules, related work papers and documents relating to rulings or
other determinations by any taxing authorities. Parent and Purchaser shall make
their respective employees available on a basis mutually convenient to both
parties to provide explanations of any documents or information provided
hereunder. Parent and Purchaser shall retain all Tax Returns, schedules and work
papers, records and other documents in their respective possession relating to
Tax matters of the Company and the Subsidiaries for each taxable period first
ending after September 30, 1996 and for all prior taxable years or periods until
the later of (i) the expiration of the statute of limitations of the taxable
periods to which such Tax Returns and other documents relate, without regard to
extensions except to the extent notified by the other party in writing of such
extensions for the respective Tax years or periods, or (ii) six (6) years
following the due date (without extension) for such Tax Returns. Any information
obtained under this Section 8.05 shall be kept confidential except as may be
otherwise necessary in connection with the filing of Tax Returns or claims for
refund or in conducting an audit or other proceeding.
8.06. Conveyance Taxes. Parent shall be liable for and shall hold
Purchaser, the Company and the Subsidiaries harmless against any real property
transfer or gains, sales, use, transfer, value added, stock transfer, and stamp
taxes, any transfer, recording, registration, and other fees, and any similar
Taxes which become payable in connection with the transactions contemplated
hereby (other than such Taxes in excess of those that would have been payable
had the transactions contemplated by this Agreement not been structured as a
stock purchase coupled with a distribution of the property listed in clauses (A)
and (B) of Section 1.03(iv) and not as a recapitalization), and shall file such
applications and documents as shall permit any such Tax to be assessed and paid
on or prior to the Closing Date in accordance with any available pre-sale filing
procedure. Purchaser shall execute and deliver all instruments and certificates
necessary to enable Parent to comply with the foregoing.
8.07. Miscellaneous. (a) The Tax treatment of all payments made by
either party to or for the benefit of the other party (including any payments to
the Company or a Subsidiary) under this Article VIII, or under the other
indemnity provisions of this Agreement, shall be determined in accordance with
Section 11.03 of this Agreement.
(b) Notwithstanding any provision herein to the contrary, the
obligations of Parent to indemnify and hold harmless Purchaser, the Company and
the Subsidiaries, and the
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obligation of Purchaser and the Company to indemnify and hold harmless Parent
pursuant to this Article VIII shall terminate at the close of business on the
120th day following the expiration of the application statute of limitations
with respect to the Tax liabilities in question (giving effect to any waiver,
mitigation or extension thereof).
(c) From and after the date hereof, Parent shall not, without the
prior written consent of Purchaser, (which may not unreasonably withhold such
consent) make or revoke, or cause or permit to be made or revoked, any Tax
election, or adopt or change any method of accounting, that would adversely
affect the Company or a Subsidiary.
(d) For purposes of this Article VIII, "Purchaser" and "Parent,"
respectively, shall include each member of the affiliated group of corporations
of which it is or becomes a member (other than the Company or the Subsidiaries,
except to the extent expressly referenced).
ARTICLE IX
EMPLOYEE BENEFITS MATTERS
9.01 Benefit Plan Maintenance. Through the second anniversary of the
Closing, Purchaser shall, with respect to all employees of the Company and the
Subsidiaries who are not covered by a collective bargaining agreement (the
"Non-Union Employees"), provide for their coverage under employee pension and
welfare benefit plans, programs and arrangements providing benefits not
substantially less favorable in the aggregate to the Non-Union Employees than
the pension and welfare Benefit Plans covering such Non-Union Employees as in
effect immediately prior to the Closing, including without limitation group
health plans which do not exclude or limit the coverage of such Non-Union
Employees on account of waiting periods or pre-existing conditions, and which
have in all material respects identical or superior coverage in terms of
employee participation. Purchaser shall also be responsible for perpetuating the
group health plan continuation coverages pursuant to Section 4980B of the Code
and Sections 601 through 609 of ERISA for all Non-Union Employees and their
eligible dependents. Purchaser shall indemnify and hold Parent and its
Affiliates harmless for any liability Parent or any Affiliate of Parent incurs
at any time after the Closing under the provisions of Section 4980B of the Code
or Sections 601 through 609 of ERISA with respect to any individual who was an
employee of the Company or any Subsidiary prior to the Closing, or a dependent
or spouse of any such employee, and who had or has a "qualifying event" (within
the meaning of Section 4980B(f)(3) of the Code) before, on or after the Closing.
For purposes of any length of service requirements, waiting periods, vesting
periods or differential benefits based on length of service under
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any employee pension or welfare benefit plan for which a NonUnion Employee may
be eligible after the Closing, Purchaser shall ensure that (i) service by such
Non-Union Employee with the Company or any Subsidiary shall be treated in the
same manner as service with Purchaser, and (ii) expenses incurred prior to the
Closing by the Non-Union Employees and their covered dependents shall be taken
into account to satisfy applicable deductible, co-insurance and maximum
out-of-pocket provisions of any plans.
9.02 Shareholder Approval. Prior to the Closing Date, Parent shall
take all necessary steps, including obtaining shareholder approval in compliance
with the regulations under Section 280G of the Code with respect to the
Company's severance arrangements, in order to prevent any loss of deduction to
the Company as a result of the application of Sections 280G and 4999 of the Code
with respect to any payments to be made to Company employees by the Company as a
result of the transaction contemplated by this Agreement or otherwise.
ARTICLE X
SURVIVAL; NO OTHER REPRESENTATIONS
10.01 Survival of Representations, Warranties, Covenants and
Agreements. Except for the representations and warranties contained in (i)
Sections 2.01, 2.02, 2.03, 2.04, 2.05, 2.06, 2.26, 3.01, 3.02, 3.03, 3.06, 3.07
and 3.09 which such representations and warranties shall survive the Closing
indefinitely and (ii) the representations and warranties of Parent in Section
2.10, which such representations and warranties shall survive until the
expiration of all applicable statutes of limitation (including all periods of
extension, whether automatic or permissive), the representations and warranties
of Parent and Purchaser contained in this Agreement shall survive for a period
of eighteen (18) months following the Closing Date. The covenants and agreements
of Parent and Purchaser contained in this Agreement shall survive the Closing in
accordance with their terms. Notwithstanding anything to the contrary contained
in the first sentence of this Section 10.01, any representation or warranty that
would otherwise terminate in accordance with the first sentence of this Section
10.01 will continue to survive if a Claim Notice or Indemnity Notice (as
applicable) shall have been timely given in good faith based on facts reasonably
expected to establish a valid claim under Article XI on or prior to such
termination date, until the related claim for indemnification has been satisfied
or otherwise resolved as provided in Article XI.
10.02 No Other Representations. Notwithstanding anything to the
contrary contained in this Agreement, it is the explicit intent and
understanding of each party hereto that Parent is making no representation or
warranty whatsoever,
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express or implied, except those representations and warranties contained in
Article II and in any certificate delivered pursuant to Section 6.03. In
particular, Parent makes no representation or warranty to Purchaser with respect
to (i) the information set forth in the Confidential Information Memorandum or
(ii) any financial projection or forecast relating to the business, financial
conditions, results of operations or prospects of the Company, Spalding, Evenflo
or any other Subsidiary. With respect to any projection or forecast delivered by
or on behalf of Parent to Purchaser, Purchaser acknowledges that (i) there are
uncertainties inherent in attempting to make such projections and forecasts,
(ii) it is familiar with such uncertainties, (iii) it is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
such projections and forecasts furnished to it and (iv) it shall have no claim
against Parent with respect thereto, absent fraud or bad faith or intentional or
willful misconduct.
ARTICLE XI
INDEMNIFICATION
11.01 Indemnification.
(a) Except with respect to any indemnification for Taxes (which
shall be governed solely by Article VIII of this Agreement) and subject to
paragraph (c) of this Section and the other Sections of this Article XI, Parent
shall indemnify the Purchaser Indemnified Parties in respect of, and hold each
of them harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to (i) any breach or inaccuracy of a
representation or warranty of Parent contained in this Agreement, (ii) any
nonfulfillment of or failure to perform any covenant or agreement on the part of
Parent contained in this Agreement or (iii) any liability or obligation arising
from the ownership of the Pueblo Shares.
(b) Except with respect to any indemnification for Taxes (which
shall be governed solely by Article VIII of this Agreement) and subject to
paragraph (c) of this Section and the other Sections of this Article XI,
Purchaser, the Company and the Subsidiaries shall indemnify the Parent
Indemnified Parties in respect of, and hold each of them harmless from and
against, any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject, resulting from, arising out of or relating to
(i) any breach of representation or warranty of Purchaser contained in this
Agreement or (ii) any nonfulfillment of or failure to perform any covenant or
agreement on the part of Purchaser contained in this Agreement.
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(c) Notwithstanding anything to the contrary contained in this
Agreement, no amounts shall be payable as a result of any claim in respect of a
Loss arising under paragraph (a)(i) or (b)(i) of this Section 11.01:
(i) (A) in the case of a claim by a Purchaser Indemnified
Party, unless such claim involves Losses referred to in paragraph
(a)(i) of this Section 11.01 in excess of $100,000; provided, that a
series of related claims shall be deemed a "claim" for purposes of
this Section 11.01.
(B) in the case of a claim by a Purchaser Indemnified
Party, unless, until and then only to the extent that the Purchaser
Indemnified Parties have suffered, incurred, sustained or become
subject to Losses referred to in paragraph (a) (i) of this Section
11.01 in excess of $5,000,000 in the aggregate (including all such
Losses and amounts whether or not any individual Loss or amount
reaches the $100,000 threshold set forth in clause (A) above);
(C) in the case of a claim by a Purchaser
Indemnified Party, to the extent that the Purchaser
Indemnified Parties have received (or would, but for the limitation
set forth in this clause (C), receive) payments for any Losses
referred to in paragraph (a) (i) of this Section 11.01 in excess of
$80 million in the aggregate; and
(D) unless the Indemnified Party has given the
Indemnifying Party a Claim Notice or Indemnity Notice, as
applicable, with respect to such claim, setting forth in reasonable
detail the specific facts and circumstances pertaining thereto, (1)
as soon as practicable following the time at which the Indemnified
Party discovered or reasonably should have discovered such claim
(except to the extent the Indemnifying Party is not materially
prejudiced by any delay in the delivery of such notice) and (2) in
any event prior to the applicable Cut-off Date;
(ii) the limitations set forth in clause (i) above with
respect to claims made by Purchaser Indemnified Parties shall apply
to claims made pursuant to Section 11.01(b)(i) by Parent Indemnified
Parties.
provided that the limitations contained in clauses (i)(A), (B) and (C) shall not
apply to Losses arising from a breach of the representation and warranty
contained in Sections 2.26 and 3.07.
(d) Each party and their Affiliates shall be obligated in connection
with any claim for indemnification under this
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Article XI to use all reasonable best efforts to obtain any insurance proceeds
available to such indemnitee with regard to the applicable claims. The amount
which the Indemnifying Party is or may be required to pay to any Indemnified
Party pursuant to this Article XI shall be reduced (retroactively, if necessary)
by any insurance proceeds or other amounts actually recovered by or on behalf of
such Indemnified Party in reduction of the related Losses. If an Indemnified
Party shall have received the payment required by this Agreement from an
Indemnifying Party in respect of Losses and shall subsequently receive insurance
proceeds or other amounts in respect of such Losses, then such Indemnified Party
shall promptly repay to the Indemnifying Party a sum equal to the amount of such
insurance proceeds or other amounts actually received.
(e) Each Indemnified Party shall be obligated in connection with any
claim for indemnification under this Article XI to use all commercially
reasonable efforts to mitigate Losses upon and after becoming aware of any event
which could reasonably be expected to give rise to such Losses.
11.02 Method of Asserting Claims. All claims for
indemnification by any Indemnified Party under Section 11.01 will
be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 11.01 is asserted against
or sought to be collected from such Indemnified Party by a Person other than
Parent or Purchaser or any Affiliate of Parent or Purchaser (a "Third Party
Claim"), the Indemnified Party shall deliver a Claim Notice as soon as
practicable to the Indemnifying Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party under Section
11.01 and whether the Indemnifying Party desires, at its sole cost and expense,
to defend the Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified Party within
the Dispute Period that the Indemnifying Party does not dispute its
liability to the Indemnified Party with respect to such Third Party Claim
and that it desires to defend the Indemnified Party with respect to the
Third Party Claim pursuant to this Section 11.02(a), then the Indemnifying
Party will have the right to defend, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings,
which proceedings will be vigorously and diligently prosecuted by the
Indemnifying Party to a final conclusion by counsel reasonably
satisfactory to the Indemnified Party or such Third Party Claim will be
settled at the discretion of the Indemnifying Party; provided, however,
without the prior
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written consent of the Indemnified Party, the Indemnifying Party shall not
enter into any settlement of any Third Party Claim unless such settlement
includes an unconditional release of the Indemnified Party for any
liability arising out of such Claim and does not otherwise restrict the
future activities of the Company or any Subsidiary. If a firm offer is
made to settle a Third Party Claim which includes an unconditional release
of the Indemnified Party for such Claim and does not otherwise restrict
the future activities of the Company or any Subsidiary and the
Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party shall give written notice to the Indemnified Party to
that effect. If the Indemnified Party fails to consent to such firm offer
within 10 calendar days after its receipt of such notice, the Indemnified
Party may continue to contest or defend such Third Party Claim and, in
such event, the maximum liability of the Indemnifying Party as to such
Third Party Claim shall not exceed the amount of such settlement offer
plus costs and expenses paid or incurred by the Indemnified Party through
the end of such ten-day period. The Indemnifying Party will have full
control of the defense and proceedings referred to in this clause (i),
including (except as provided above) any settlement thereof. If reasonably
requested by the Indemnifying Party, the Indemnified Party will, at the
sole cost and expense of the Indemnifying Party, cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest, or, if appropriate and
related to the Third Party Claim in question, in making any counterclaim
against the Person asserting the Third Party Claim, or any cross-complaint
against any Person (other than the Indemnified Party or any of its
Affiliates). The Indemnified Party may retain separate counsel to
represent it in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to this clause
(i), and the Indemnified Party will bear its own costs and expenses with
respect to such separate counsel except as provided in the preceding
sentence and except that the Indemnifying Party will pay the costs and
expenses of such separate counsel if (x) in the Indemnified Party's good
faith judgment, it is advisable, based on advice of counsel, for the
Indemnified Party to be represented by separate counsel because a conflict
or potential conflict exists between the Indemnifying Party and the
Indemnified Party which makes representation of both parties inappropriate
under applicable standards of professional conduct or (y) the named
parties to such Third Party Claim include both the Indemnifying Party and
the Indemnified Party and the Indemnified Party determines in good faith,
based on advice of counsel, that defenses are available to it that are
unavailable to the Indemnifying Party. Notwithstanding the foregoing, the
Indemnified Party may retain or assume control of the defense or
settlement of
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any Third Party Claim the defense of which the Indemnifying Party has
elected to control if the Indemnified Party irrevocably waives its right
to indemnity under Section 11.01 with respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend
the Third Party Claim pursuant to Section 11.02(a), then the Indemnified
Party will have the right to defend, at the sole cost and expense of the
Indemnifying Party (subject to any applicable limitations set forth in
Section 11.01(c)), the Third Party Claim by all appropriate proceedings,
which proceedings will be vigorously and diligently prosecuted by the
Indemnified Party to a final conclusion or will be settled at the
discretion of the Indemnified Party with the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld. The Indemnified
Party will have full control of the defense and proceedings referred to in
this clause (ii), including (except as provided above) any settlement
thereof. If reasonably requested by the Indemnified Party, the
Indemnifying Party will, at the sole cost and expense of the Indemnifying
Party (subject to any applicable limitations set forth in Section
11.01(c)), cooperate with the Indemnified Party and its counsel in
contesting any Third Party Claim which the Indemnified Party is
contesting, or, if appropriate and related to the Third Party Claim in
question, in making any counterclaim against the Person asserting the
Third Party Claim, or any cross-complaint against any Person (other than
the Indemnifying Party or any of its Affiliates). Notwithstanding the
foregoing provisions of this clause (ii), if the Indemnifying Party has
notified the Indemnified Party within the Dispute Period that the
Indemnifying Party disputes its liability hereunder to the Indemnified
Party with respect to such Third Party Claim and if such dispute is
resolved in favor of the Indemnifying Party in the manner provided in
clause (iii) below, the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party's defense pursuant to this
clause (ii) or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party will reimburse the
Indemnifying Party in full for all reasonable costs and expenses incurred
by the Indemnifying Party in connection with such litigation. The
Indemnifying Party may retain separate counsel to represent it in, but not
control, any defense or settlement controlled by the Indemnified Party
pursuant to this clause (ii), and the Indemnifying Party will bear its own
costs and expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party that
it does not dispute its liability to the Indemnified Party with respect to
the Third Party Claim
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under Section 11.01 or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes its liability to
the Indemnified Party with respect to such Third Party Claim, the Loss
arising from such Third Party Claim will be conclusively deemed a
liability of the Indemnifying Party under Section 11.01 and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following its final determination (subject to any
applicable limitations set forth in Section 11.01(c)). If the Indemnifying
Party has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute shall be resolved
by litigation in a court of competent jurisdiction.
(b) In the event any Indemnified Party should have a claim under
Section 11.01 against any Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver an Indemnity Notice as soon as
practicable to the Indemnifying Party. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such Indemnity
Notice, the Loss arising from the claim specified in such Indemnity Notice will
be conclusively deemed a liability of the Indemnifying Party under Section 11.01
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following its final determination (subject to any applicable
limitations set forth in Section 11.01(c)). If the Indemnifying Party has timely
disputed its liability with respect to such claim, the Indemnifying Party and
the Indemnified Party will proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through negotiations within the Resolution
Period, such dispute shall be resolved by litigation in a court of competent
jurisdiction.
(c) In the event of any Loss resulting from misrepresentation,
breach of warranty or nonfulfillment or failure of performance of any covenant
or agreement contained in this Agreement as to which an Indemnified Party would
be entitled to claim indemnity under Section 11.01 but for the provisions of
clause (B) of paragraph (c)(i) thereof, such Indemnified Party may nevertheless
deliver a written notice to the Indemnifying Party containing the information
that would be required in a Claim Notice or an Indemnity Notice, as applicable,
with respect to such Loss. In the case of a Claim Notice that involves a claim
in excess of 100% of the amount of the remaining basket referenced in Section
11.01(c)(i)(B), the provisions of clause (i) of paragraph (a) of this Section
11.02 will be applicable. If the Indemnifying Party notifies the Indemnified
Party that it does not dispute the claim described therein or fails to notify
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the Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes the claim described in such Claim Notice or Indemnity Notice, as the
case may be, the Loss specified in the notice will be conclusively deemed to
have been incurred by the Indemnified Party for purposes of making the
determination set forth in clause (B) of paragraph (c) (i) of Section 11.01. If
the Indemnifying Party has timely disputed the claim described in such Claim
Notice or Indemnity Notice, as the case may be, the Indemnifying Party and the
Indemnified Party will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within the Resolution Period,
such dispute shall be resolved by litigation in a court of competent
jurisdiction.
(d) In the event of any claim for indemnity under Section 11.01(a),
Purchaser agrees to give Parent and its Representatives reasonable access to the
Books and Records and employees of the Company and the Subsidiaries in
connection with the matters for which indemnification is sought to the extent
Parent reasonably deems necessary in connection with its rights and obligations
under this Article XI.
11.03 Tax Treatment of Indemnity Payments. (a) Purchaser and Parent
agree to treat and report for all Tax reporting purposes the payment and receipt
of any indemnity pursuant to Article VIII or this Article XI as an adjustment to
the Purchase Price for the Acquired Shares. The final liability of an
Indemnifying Party computed otherwise in accordance with Article VIII or this
Article XI shall be limited to the after-tax consequence to the Indemnified
Party of any Loss suffered or incurred by the Indemnified Party. The full amount
of a Loss shall be paid in accordance with Article VIII or this Article XI.
Thereafter, the Indemnified Party shall remit to the Indemnifying Party the tax
savings (the "Tax Benefit Amount") attributable to the tax deduction, if any,
arising by reason of the Indemnified Party's payment of such Loss (the "Loss
Deduction"), determined without regard to indemnification under Article VIII or
this Article XI. For purposes of this Section 11.03, the Tax Benefit Amount
shall be equal to, for each year that the Loss Deduction (or portion thereof) is
used to actually reduce the tax liability of the Indemnified Party for such
year. The Tax Benefit Amount shall be so remitted only when and to the extent
that the Loss Deduction is used to actually reduce the tax liability of the
Indemnified Party. The Indemnified Party shall use the Loss Deduction at the
earliest opportunity (but not before the time when its income tax return for the
year in which the Loss is sustained (the "Loss Year") shall be due (the "Loss
Year Return"), after extension or otherwise; provided, however, that the Loss
Deduction shall not be considered to reduce the tax liability of an Indemnified
Party if, and to the extent that, the Indemnified Party has a net operating loss
carryforward or carryback (other than, or to the extent that, the net operating
loss carryforward or carryback is attributable to a Loss
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Deduction) available to offset or reduce the taxable income of the Indemnified
Party on the applicable Loss Year Return. To the extent the Loss Deduction
cannot be so utilized on the Loss Year Return and therefore gives rise to a net
operating loss carryforward, the use of any net operating loss carryforward in
any subsequent year shall be deemed to be, for purposes of this Section 11.03,
use of the Loss Deduction only when, and to the extent that, the Indemnified
Party actually uses such net operating loss carryforward to actually reduce its
tax liability on a Loss Year Return.
(b) The Indemnifying Party shall reimburse and remit to the
Indemnified Party any Tax Benefit Amount previously paid by the Indemnified
Party to the Indemnifying Party hereunder if, and to the extent that, the Loss
Deduction giving rise to such Tax Benefit Amount is disallowed or reduced by any
taxing authority pursuant to an audit or other applicable proceeding.
(c) If the payment and receipt of any indemnity pursuant to Article
VIII or this Article XI is not treated as an adjustment to the Purchase Price by
any relevant taxing authority, the amount of such indemnity payment shall be
increased to take into account and reimburse the Indemnified Party for the
amount of any Taxes imposed on the Indemnified Party as a result of the
Indemnified Party's receipt or accrual of such indemnity payment and the Tax
Benefit Amount shall be increased to reflect any tax savings attributable to the
deduction of the amount paid over.
11.04 Exclusivity. After the Closing, to the extent permitted by
Law, the indemnities set forth in Article VIII or this Article XI shall be the
exclusive remedies of Purchaser and Parent and their respective officers,
directors, employees, agents and Affiliates for any misrepresentation, breach of
warranty or nonfulfillment or failure to be performed of any covenant or
agreement contained in this Agreement, and the parties shall not be entitled to
a rescission of this Agreement or to any further indemnification rights or
claims of any nature whatsoever in respect thereof, all of which the parties
hereto hereby waive.
11.05 Letter of Credit; Escrow. (a) At the Closing, Parent shall
arrange for the delivery to Purchaser of an irrevocable letter of credit issued
by a United States domestic bank in a form reasonably satisfactory to Purchaser
(the "Letter of Credit"), naming the Purchaser Indemnified Parties as
beneficiaries, to secure Parent's indemnification obligations under this
Agreement in amounts and for the duration set forth in Schedule 11.05 (the
duration of such required security, the "Security Period").
(b) In lieu of the Letter of Credit, at the Closing or at any time,
and from time to time, during the period that the
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Letter of Credit is outstanding, Parent may deposit cash in an escrow account
(the "Escrow Account") in a United States domestic bank for the benefit of the
Purchaser Indemnified Parties, pursuant to the terms of an escrow agreement in a
form reasonably satisfactory to Purchaser, and the amount of the Letter of
Credit shall be reduced by the amount of such funds deposited in the Escrow
Account and may thereafter increase the amount of the Letter of Credit and
reduce the Escrow Account on a dollar-for-dollar basis.
11.06 Minimum Net Asset Requirement.
(a) Parent shall maintain a minimum fair market value of net assets
equal to $30 million (the "Minimum Net Assets Level") for the duration of the
Security Period. Purchaser and Parent acknowledge and agree that the shares of
Common Stock retained by the Parent shall be deemed to have a fair market value
of the greater of $29 million or the market price of such shares in the event
there should be a public trading market for the Common Stock. In the event that
any of the shares of Common Stock shall be transferred by Parent, the cash value
of such shares calculated at the value set forth in Schedule 1.01, or at the
market price of such shares on the date of such transfer in the event there
should be a public trading market for the Common Stock, shall be deposited with
the Parent to replace the value of the transferred Shares.
(b) At March 31, June 30, September 30 and December 31 of each year,
Parent shall deliver a statement of the fair market value of the net assets of
Parent ("Net Asset Statement") and Purchaser shall have the right to confirm the
accuracy of the Net Asset Statement. In the event that the fair market value of
Net Assets set forth in a Net Asset Statement shall be less than the Minimum Net
Asset Level (the "Deficiency"), then Parent shall have 20 days to increase the
Letter of Credit or the amount of funds held in the Escrow Account in the amount
of such Deficiency. At the Closing and during the Security Period, the shares of
Common Stock or other property to be agreed upon held by Parent and $1 million
shall be deposited in an agency account pursuant to an agency agreement in a
form reasonably acceptable to Purchaser.
11.07 Other Arrangements. If requested by Parent, Purchaser agrees
to negotiate in good faith with respect to any arrangements proposed by Parent
in lieu of those provided for in Sections 11.05 and 11.06 that provide a fair
and reasonable substitute for the security intended to be provided by Sections
11.05 and 11.06 to Purchaser.
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ARTICLE XII
TERMINATION
12.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Parent and Purchaser;
(b) at any time before the Closing, by Parent or Purchaser, in the
event that any Order or Law becomes effective restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement, upon notification of the
non-terminating party by the terminating party;
(c) at any time after December 1, 1996 by Parent or Purchaser upon
notification of the non-terminating party by the terminating party if the
Closing shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the terminating party;
or
(d) by any party, at any time, if litigation is brought or
threatened to be brought by any Governmental or Regulatory Authority for the
purpose of restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.
12.02 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 12.01, this Agreement will forthwith become null and void,
and there will be no liability or obligation on the part of Parent or Purchaser
(or any of their respective officers, directors, employees, agents or other
representatives or Affiliates), except as provided in the next succeeding
sentence and except that the provisions with respect to expenses in Section
14.03 and confidentiality in Section 14.05 will continue to apply following any
such termination. Notwithstanding any other provision in this Agreement to the
contrary, upon termination of this Agreement pursuant to Section 12.01(b), (c)
or (d) Parent will remain liable to Purchaser for any willful breach of Section
4.13 of this Agreement by Parent existing at the time of such termination, and
Purchaser will remain liable to Parent for any willful breach of Section 5.05 of
this Agreement by Purchaser existing at the time of such termination, and Parent
or Purchaser may seek such remedies, including damages and fees of attorneys,
against the other with respect to any such breach as are provided in this
Agreement or as are otherwise available at Law or in equity.
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ARTICLE XIII
DEFINITIONS
13.01 Definitions. (a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"Acquired Shares" has the meaning ascribed to it in the forepart of
this Agreement.
"Acquisition Proposal" has the meaning ascribed to it in Section
4.09.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"Affiliate" means any Person that directly, or indirectly through
one of more intermediaries, controls or is controlled by or is under common
control with the Person specified. For purposes of this definition, control of a
Person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such Person whether by Contract or otherwise and,
in any event and without limitation of the previous sentence, any Person owning
ten percent (10%) or more of the voting securities of another Person shall be
deemed to control that Person.
"Agreement" means this Stock Purchase Agreement and the Exhibits,
the Disclosure Schedule and the Schedules hereto and the certificates delivered
in accordance with Sections 6.03 and 7.03, as the same shall be amended from
time to time.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person.
"Benefit Plan" means any Plan established by the Company or any
ERISA Affiliate, or any predecessor or Affiliate of any of the foregoing,
existing at the Closing Date or at any time within the five (5) year period
prior thereto, to which the Company or any ERISA Affiliate contributes or has
contributed, or under which any employee, former employee or director of the
Company or any ERISA Affiliate or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
"Books and Records" means all files, documents, instruments, papers,
books and records relating to the Business or Condition of the Company,
including without limitation financial statements, Tax Returns and related work
papers and
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letters from accountants, budgets, pricing guidelines, ledgers, journals, deeds,
title policies, minute books, stock certificates and books, stock transfer
ledgers, Contracts, Licenses, customer lists, computer files and programs,
retrieval programs, operating data and plans and environmental studies and
plans.
"Xxxxxxxx" means Xxxxxxxx Corporation, a British Virgin Islands
corporation.
"Xxxxxxxx Notes" means the note payable by Xxxxxxxx to Spalding in
the outstanding principal amount of $9,953,188.63 as of the date hereof, the
note payable by Xxxxxxxx to Xxxxxxxx (substituted for the preferred stock of
Pueblo) in the outstanding principal amount of $49,394,470 on the date hereof
and the Pack-A-Snack Note.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.
"Business or Condition of the Company" means the business, prospects
financial condition or results of operations of the Company and the Subsidiaries
taken as a whole.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules and
regulations promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response and
Liability Information System, as provided by 40 C.F.R. ss.300.5.
"Claim Notice" means written notification pursuant to Section
11.02(a) of a Third Party Claim as to which indemnity under Section 11.01 is
sought by an Indemnified Party, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim against the Indemnifying Party under Section 11.01,
together with the amount or, if not then reasonably determinable, the estimated
amount, determined in good faith, of the Loss arising from such Third Party
Claim.
"Closing" means the consummation of the transactions
contemplated by Section 1.03.
"Closing Date" means (a) September 30, 1996 or (b) such later date
as Purchaser and Parent mutually agree in writing; provided, that such date
shall not be later than 5 Business Days after the satisfaction or waiver of the
conditions set forth in Article VI and VII.
"Closing Date Working Capital" has the meaning ascribed to it in
Section 4.04(b).
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"Closing Date Working Capital Calculation" has the meaning ascribed
to it in Section 4.04(b).
"COBRA" has the meaning ascribed to it in Section 2.13(b).
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Commitment Letter" has the meaning ascribed to it in Section 3.08.
"Common Stock" means the common stock, par value $1.00 per share, of
the Company.
"Company" has the meaning ascribed to it in the forepart of this
Agreement.
"Confidential Information Memorandum" means the Spalding & Evenflo
Companies, Inc. Confidential Information Memorandum.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract.
"Cut-off Date" means, with respect to any representation, warranty,
covenant or agreement contained in this Agreement, the date on which such
representation, warranty, covenant or agreement ceases to survive as provided in
Section 10.01.
"Credit Agreements" means the U.S. $40,000,000 Interim Loan
Agreement dated as of April 17, 1996 among Spalding, as Borrower, the Lenders
named therein, Citibank, N.A., as Administrative Agent, and Nationsbank, N.A.
(South), as Documentation Agent, as the same may be amended or supplemented from
time to time (the "Interim Credit Agreement"), and the U.S. $450,000,000 Credit
Agreement dated as of October 13, 1994 among Spalding, as Borrower, the Lenders
named therein, Citibank, N.A., as Administrative Agent and Nationsbank of
Florida, N.A., as Documentation Agent, as the same may be amended or
supplemented from time to time (the "1994 Credit Agreement").
"Disclosure Schedule" means the record delivered to Purchaser by
Parent herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Parent pursuant to this Agreement, as supplemented by the
Etonic Acquisition Disclosure Schedules.
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"Dispute Period" means the period ending thirty (30) days following
receipt by an Indemnifying Party of either a Claim Notice or an Indemnity
Notice.
"EAC Preferred" has the meaning ascribed to it in Section 2.04.
"Environmental Claim" has the meaning ascribed to it in Section
2.22(i)(i).
"Environmental Law" has the meaning ascribed to it in Section
2.22(c)(i).
"Environmental Permits" has the meaning ascribed to it in Section
2.22(a).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" has the meaning set forth in Section 2.13(d).
"E&S Realco" means E&S Realco, Inc., a Delaware corporation.
"E&S Realco Advance" means the advances made by Spalding to E&S
Realco in the aggregate outstanding principal amount of $8,010,142 on the date
hereof.
"Escrow Account" has the meaning ascribed to it in Section 11.05.
"Etonic Notes" means the promissory notes issued on July 25, 1996 by
EAC Acquisition Corporation to DLJ Investment Funding, Inc. in the principal
amount of $4,798,000, to Etonic, Inc. in the principal amount of $29,043,000 and
to DLJ Investment Partners, L.P. in the principal amount of $20,202,000.
"Evenflo" means Evenflo Company, Inc., a Delaware Corporation.
"Etonic Purchase Agreement Disclosure Schedules" has the meaning
ascribed to it in the forepart of Article II.
"Exon Xxxxxx Amendment" means Section 721 of the Defense Production
Act of 1950, as amended, and any successor thereto and the regulations issued
pursuant thereto.
"Financing" has the meaning ascribed to it in Section 1.02.
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"GAAP" means generally accepted accounting principles in effect in
the United States, consistently applied throughout the specified periods.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States or any foreign government or any state, county, city or other
political subdivision thereof.
"Guaranties" means, collectively, the Guaranty dated October 13,
1994 by the Company, and the guaranties by the "Material Domestic Subsidiaries"
(as defined in the 1994 Credit Agreement) dated October 13, 1994, in each case,
in favor of Citibank, N.A. as Administrative Agent, Nations Bank of Florida N.A.
as Documentation Agent and certain Lenders and Fronting Banks described therein
in respect of the 1994 Credit Agreement, as the same may be amended or
supplemented from time to time.
"Hazardous Material" has the meaning ascribed to it in Section
2.22(i)(iii).
"HSR Act" means Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"Indebtedness" of any Person means all obligations of such Person
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" means any Person claiming indemnification under
any provision of Article XI, including without limitation a Person asserting a
claim pursuant to paragraph (c) of Section 11.02.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article XI, including
without limitation a Person against whom a claim is asserted pursuant to
paragraph (c) of Section 11.02.
"Indemnity Notice" means written notification pursuant to Section
11.02(b) of a claim for indemnity under Article XI by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably determinable, the estimated amount, determined in good
faith, of the Loss arising from such claim.
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"Intellectual Property" means all intellectual property of the
Company and each of its Subsidiaries, including without limitation, all rights,
privileges and priorities under U.S., Foreign or State Law, relating to patents,
trademarks, corporate names, logos, trade dress, trade names, service marks,
service names, brand names, together with the goodwill associated therewith,
inventions, technology and know-how, copyrights, trade secrets and confidential
information, including all pending applications and registrations therefor, and
all common-law rights and other rights related thereto.
"Investment Assets" means all debentures, notes and other evidences
of Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company or
any Subsidiary and issued by any Person other than the Company or any Subsidiary
(other than trade receivables generated in the ordinary course of business of
the Company and the Subsidiaries) and short term cash investments.
"IRS" means the United States Internal Revenue Service.
"Knowledge of Parent" means the actual knowledge of a Responsible
Director or Officer of Parent, the Company or the Subsidiaries.
"Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States or any state,
county, city or other political subdivision or of any Governmental or Regulatory
Authority.
"Letter of Credit" has the meaning ascribed to it in Section 11.05.
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"Loss" means any and all damages, fines, penalties, deficiencies,
losses and expenses (including without limitation interest, court costs,
reasonable fees of attorneys, accountants and other experts or other reasonable
expenses of litigation or other proceedings or of any claim, default or
assessment).
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"Loss Deduction" has the meaning ascribed to it in Section 11.03.
"Loss Year" has the meaning ascribed to it in Section 11.03.
"Loss Year Return" has the meaning ascribed to it in Section 11.03.
"Management Share Repurchase Agreement" has the meaning ascribed to
it in Section 1.02(a).
"Management Shares" has the meaning ascribed to it in the forepart
of this Agreement.
"Minimum Net Asset Level" has the meaning ascribed to it in Section
11.06.
"NPL" means the National Priorities List under CERCLA.
"Net Asset Statement" has the meaning ascribed to it in Section
11.06.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of such Person or
(ii) receive or exercise any benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock of such Person, including
any rights to participate in the equity or income of such Person or to
participate in or direct the election of any directors or officers of such
Person or the manner in which any shares of capital stock of such Person are
voted.
"Order" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Pack-A-Snack" means Pack-A-Snack N.V., a Netherlands Antilles
corporation.
"Pack-A-Snack Note" means the note payable by Pack-A-Snack to
Spalding in the outstanding principal amount of $11,046,811.37 on the date
hereof.
"Parent" has the meaning ascribed to it in the forepart of this
Agreement.
"Parent Indemnified Parties" means Parent and its officers,
directors, employees, agents and Affiliates.
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"PBGC" means the Pension Benefit Guaranty Corporation and its
successors in interest.
"Pension Benefit Plan" means each Benefit Plan which is a pension
benefit plan within the meaning of Section 3(2) of ERISA.
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens could not reasonably be expected to materially
adversely affect any material Asset or Properties.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workmen's compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement of any kind, whether written or oral, including, but not limited to,
any "employee benefit plan" within the meaning of Section 3(3) of ERISA.
"Preferred Stock" has the meaning ascribed to it in Section 2.04.
"Process Agent" has the meaning ascribed to it in Section 14.12.
"Product Liability Claims" has the meaning ascribed to it in Section
2.23.
"Pueblo" means PXC&M Holdings, Inc., a Delaware Corporation.
"Purchase Price" has the meaning ascribed to it in Section 1.02.
"Purchaser" has the meaning ascribed to it in the forepart of this
Agreement.
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"Purchaser Indemnified Parties" means Purchaser the Company and the
Subsidiaries and their partners, officers, directors, employees, agents and
Affiliates.
"Qualified Plan" means each Benefit Plan which is intended to
qualify under Section 401 of the Code.
"Recapitalization Amount" has the meaning ascribed to it in Section
1.02(a).
"Recapitalization Shares" has the meaning ascribed to it in the
forepart of this Agreement.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal or leaching into the indoor
or outdoor environment.
"Representatives" has the meaning ascribed to it in Section 4.03.
"Resolution Period" means the period ending sixty (60) days
following receipt by an Indemnified Party of a written notice from an
Indemnifying Party stating that it disputes all or any portion of a claim set
forth in a Claim Notice or an Indemnity Notice.
"Responsible Director or Officer" means any director or officer of
the Parent or the Company or any of the officers of the Subsidiaries.
"SEC" has the meaning ascribed to it in Section 4.12.
"Securities Act" means the Securities Act of 1933, as amended, and
rules and regulations thereunder.
"Security Period" has the meaning ascribed to it in Section 11.05.
"Spalding" has the meaning ascribed to it in the forepart of this
Agreement.
"Shareholders Agreement" has the meaning ascribed to it in Section
1.03.
"Subject Defined Benefit Plan" means each Benefit Plan which is
subject to Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of
ERISA.
"Subsidiary" means any Person in which the Company, directly or
indirectly through Subsidiaries or otherwise, beneficially owns more than fifty
percent (50%) of either the equity interests in, or the voting control of, such
Person.
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"Tax Benefit Amount" has the meaning ascribed to it in Section
11.03.
"Tax Return" means a report, return or other information (including
any amendments) required to be supplied to a governmental entity with respect to
Taxes including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Company or any Subsidiary.
"Taxes" means any federal, state, county, local or foreign taxes,
charges, fees, levies, other assessments, or withholding taxes or charges
imposed by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any such taxes and any expenses incurred
in connection with the determination, settlement or litigation of any Tax
liability.
"Third Party Claim" has the meaning ascribed to it in Section
11.02(a).
"Third Party Liens" has the meaning ascribed to it in Section 2.14.
(b) Construction of Certain Terms and Phrases. Unless the context of
this Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the plural
or singular number, respectively; (iii) the terms "hereof," "herein," "hereby"
and derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the phrase "ordinary course of business" refers to the
business of the Company or a Subsidiary. Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless Business Days
are specified. All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP. Any representation or warranty
contained herein as to the enforceability of a Contract shall be subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium or other
similar law affecting the enforcement of creditors' rights generally and to
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at Law).
ARTICLE XIV
MISCELLANEOUS
14.01 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile
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transmission or mailed (first class postage prepaid) to the parties at the
following addresses or facsimile numbers:
If to Purchaser, to:
Strata Holdings L.P.
x/x Xxxxxxxx Xxxxxx Xxxxxxx & Co.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx Xxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx
If to Parent, to:
Abarco N.V.
c/o ABN Trustcompany
(Curacao N.V.)
X.X. Xxx 000
00 Xxxxxxxxxx
Xxxxxxx, Xxxxxxxxxxx Antilles
with a copy to:
Spalding & Evenflo Companies, Inc.
000 Xxxxx Xxxxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
President
and
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxxxxx X. X'Xxxx, Xx.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
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Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
14.02 Entire Agreement. This Agreement and, subject to the last
sentence of Section 14.05, the Confidentiality Agreement between Parent and
Purchaser (the "Confidentiality Agreement"), supersede all prior discussions and
agreements between the parties with respect to the subject matter hereof and
thereof and contain the sole and entire agreement between the parties hereto
with respect to the subject matter hereof and thereof.
14.03 Expenses. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in Section 2.26 and 12.02),
whether or not the transactions contemplated hereby are consummated, Purchaser
and Parent will pay their own costs and expenses (except that Spalding will pay
the costs and expenses of its officers, employees and accountants) incurred in
connection with the transactions contemplated by this Agreement.
14.04 Public Announcements. At all times at or before the Closing,
Parent and Purchaser will not issue or make any reports, statements or releases
to the public or generally to the employees, customers, suppliers or other
Persons to whom the Company and the Subsidiaries sell goods or provide services
or with whom the Company and the Subsidiaries otherwise have significant
business relationships with respect to this Agreement or the transactions
contemplated hereby without the consent of the other, which consent shall not be
unreasonably withheld. If either party is unable to obtain the approval of its
public report, statement or release from the other party and such report,
statement or release is, in the opinion of legal counsel to such party, required
by Law in order to discharge such party's disclosure obligations, then such
party may make or issue the legally required report, statement or release and
promptly furnish the other party with a copy thereof. Parent and Purchaser will
also obtain the other party's prior approval of any press release to be issued
immediately following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
14.05 Confidentiality. Purchaser acknowledges (i) that it has
entered the Confidentiality Agreement, (ii) Purchaser's due diligence
investigation will be conducted in accordance with the Confidentiality
Agreement, (iii) any "Evaluation Material" (as defined in the Confidentiality
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Agreement) received in connection with such due diligence investigation will be
accorded confidential treatment as and to the extent provided in the
Confidentiality Agreement and (iv) Purchaser will provide such Evaluation
Material only to those employees and Representatives of Purchaser as is
reasonably necessary to analyze the purchase and sale transaction contemplated
hereby. Except with respect to matters relating to non-Subsidiary Affiliates of
the Company, from and after the Closing, the Confidentiality Agreement shall
terminate and no longer have any force and effect.
14.06 Further Assurances; Post-Closing Cooperation. (a) Subject to
the terms and conditions of this Agreement, at any time or from time to time
after the Closing, each of the parties hereto shall execute and deliver such
other documents and instruments, provide such materials and information and take
such other actions as may reasonably be necessary, proper or advisable, to the
extent permitted by Law, to fulfill its obligations under this Agreement.
(b) Following the Closing, each party will afford the other party,
its counsel and its accountants, during normal business hours, reasonable access
to the books, records and other data relating to the Company or the Subsidiaries
in its possession with respect to periods prior to the Closing and the right to
make copies and extracts therefrom, to the extent that such access may be
reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns, (ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the requirements of any
Governmental or Regulatory Authority, (iv) the determination or enforcement of
the rights and obligations of any Indemnified Party or (v) in connection with
any actual or threatened Action or Proceeding. Further, each party agrees for a
period extending six (6) years after the Closing Date(unless another period is
specified herein) not to destroy or otherwise dispose of any such books, records
and other data unless such party shall first offer in writing to surrender such
books, records and other data to the other party and such other party shall not
agree in writing to take possession thereof during the ten (10) day period after
such offer is made; provided, however, that either party may maintain such
books, records and other data in microfiche, magnetic or other readily
reproducible form in lieu of retaining the originals thereof.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental
or Regulatory Authorities or its financial statements or to fulfill its
obligations hereunder, it is necessary that a party be furnished with additional
information, documents or records relating to the Company or the Subsidiaries
not referred to in paragraph (b) above, and such information, documents or
records are in the possession or control of the other party, such other
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party agrees to use its best efforts to furnish or make available such
information, documents or records (or copies thereof) at the recipient's
request, cost and expense.
(d) Notwithstanding anything to the contrary contained in this
Section 14.06, if the parties are in an adversarial relationship in litigation
or arbitration, the furnishing of information, documents or records in
accordance with any provision of this Section shall be subject to applicable
rules relating to discovery.
14.07 Waiver. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.
14.08 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of Purchaser
and Parent.
14.09 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person who is the beneficiary of the covenants and agreements of
Purchaser or the Company set forth in Section 5.03, Article IX and any Person
entitled to indemnity under Article XI.
14.10 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except that Purchaser may assign any or all of its rights,
interests and obligations hereunder to any affiliate, provided that any such
affiliate agrees in writing to be bound by all of the terms, conditions and
provisions contained herein and Purchaser may collaterally assign its rights
hereunder to one or more Persons providing financing to Purchaser in connection
with the transactions contemplated hereby, but no such assignment referred to in
clause (b) shall relieve Purchaser of its obligations hereunder. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties hereto and their respective successors and
assigns.
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14.11 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
14.12 Submission to Jurisdiction; Waivers. Each of Purchaser and
Parent irrevocably agrees that any Action or Proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect thereof
brought by the other party hereto or its successors or assigns, may be brought
and determined in the Supreme Court of the State of New York in New York County
or in the United States District Court for the Southern District of New York,
and each of Purchaser and Parent hereby irrevocably submits with regard to any
such Action or Proceeding for itself and in respect to its Assets and
Properties, generally and unconditionally, to the nonexclusive jurisdiction of
the aforesaid courts provided, however, that such consent to jurisdiction is
solely for the purpose referred to in this Section and shall not be deemed to be
a general submission to the jurisdiction of said courts or in the State of New
York other than for such purpose. Each of Purchaser and Parent hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise in any Action or Proceeding with respect to this
Agreement, any claim that it is not personally subject to the jurisdiction of
the above-named courts for any reason other than the failure to serve process in
accordance with this Section 14.12, that it or its Assets and Properties are
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts, and to the fullest extent permitted by applicable Law,
that the Action or Proceeding in any such court is brought in an inconvenient
forum, that the venue of such Action or Proceeding is improper, or that this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts. Each of Purchaser and Parent hereby irrevocably designates CT
Corporation System (in such capacity, the "Process Agent"), with an office at
0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as their respective designee, appointee
and agent to receive, for and on their behalf service of process in such
jurisdiction in any Action or Proceeding with respect to this Agreement, but for
no other purpose, and such service shall be deemed complete upon delivery
thereof to the Process Agent. Each of Purchaser and Parent further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such Action or Proceeding by the mailing of copies thereof by registered
mail, postage prepaid, to such party at its address set forth in this Agreement,
such service of process to be effective upon acknowledgement of receipt of such
registered mail. Nothing herein shall affect the right of either party to serve
process in any other manner permitted by Law or to commence any Action or
Proceeding or otherwise proceed against the other party in any other
jurisdiction in which the other party may be subject to suit.
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14.13 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof and (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.
14.14 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York applicable to a
Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
14.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
STRATA HOLDINGS L.P.
By:________________________________
Name:
Title:
ABARCO N.V.
By:________________________________
Name:
Title:
E&S HOLDINGS CORPORATION
By:________________________________
Name:
Title:
