STOCK SUBSCRIPTION AGREEMENT
BY AND BETWEEN
CM/J ACQUISITION, LLC
AND
CORE-XXXX INTERNATIONAL, INC.
DATED: JUNE 17, 1996
TABLE OF CONTENTS
Page
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Sale of Shares; Purchase Price. . . . . . . . . . . . . . . . . . . . . 8
3. Representations and Warranties of the Company . . . . . . . . . . . . . 9
(a) Organization and Good Standing . . . . . . . . . . . . . . . . . . 9
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Scheduled Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 10
(d) Execution of Agreement . . . . . . . . . . . . . . . . . . . . . . 11
(e) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 12
(f) No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . 12
(g) No Material Adverse Change; No Dividends . . . . . . . . . . . . . 13
(h) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Patents, Trademarks and Copyrights . . . . . . . . . . . . . . . . 16
(j) Real Property; Leases of Real Property . . . . . . . . . . . . . . 17
(k) Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . 18
(l) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(m) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . 19
(n) Title to Properties; Absence of Encumbrances . . . . . . . . . . . 21
(o) No Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(p) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(q) Governmental Consents. . . . . . . . . . . . . . . . . . . . . . . 22
(r) Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 22
(s) Collective Bargaining Agreements and Labor . . . . . . . . . . . . 23
(t) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(u) Absence of Changes or Events . . . . . . . . . . . . . . . . . . . 27
(v) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 27
(w) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 28
4. Representations and Warranties of Purchaser . . . . . . . . . . . . . . 28
(a) Organization and Good Standing . . . . . . . . . . . . . . . . . . 28
(b) Execution and Effect of Agreement. . . . . . . . . . . . . . . . . 28
(c) No Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) Governmental Consents. . . . . . . . . . . . . . . . . . . . . . . 29
(f) Investment Representation. . . . . . . . . . . . . . . . . . . . . 29
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(g) Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(h) Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5. Covenants of the Company. . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Access to Documents; Opportunity to Ask Questions. . . . . . . . . 31
(b) Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(d) Consents; Conditions Precedent . . . . . . . . . . . . . . . . . . 34
(e) Xxxx-Xxxxx-Xxxxxx Filings. . . . . . . . . . . . . . . . . . . . . 34
(f) Company/LLC Purchase Agreement . . . . . . . . . . . . . . . . . . 35
(g) Delivery of Financial Statements . . . . . . . . . . . . . . . . . 35
(h) Notification of Certain Matters. . . . . . . . . . . . . . . . . . 35
(i) No Inconsistent Activities . . . . . . . . . . . . . . . . . . . . 36
6. Covenants of Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . 36
(b) Consents; Conditions Precedent . . . . . . . . . . . . . . . . . . 37
(c) Xxxx-Xxxxx-Xxxxxx Filings. . . . . . . . . . . . . . . . . . . . . 37
7. Conditions Precedent to the Company's and the Purchaser's Obligations . 37
8. Conditions Precedent to Purchaser's Obligation. . . . . . . . . . . . . 39
9. Conditions Precedent to the Company's Obligation. . . . . . . . . . . . 40
10. Closing Date; Closing . . . . . . . . . . . . . . . . . . . . . . . . . 41
11. No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12. Survival of Representations and Warranties. . . . . . . . . . . . . . . 44
13. Indemnification and Limitation of Liability . . . . . . . . . . . . . . 44
14. Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . 49
15. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
16. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
17. Confidentiality; Press Releases . . . . . . . . . . . . . . . . . . . . 50
ii
18. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
19. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
20. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
21. Section Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
22. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
23. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
24. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
25. No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . 55
iii
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
3(b) Management Employees
3(c) Subsidiaries
3(h) Tax Matters
3(i) Patents, Trademarks and Copyrights
3(j) Material Leases
3(l) Insurance Policies
3(m) Material Contracts
3(n) Encumbrances
3(o) Restrictions
3(p) Litigation
3(q) Governmental Consents
3(r) Environmental Matters
3(s) Collective Bargaining Agreements and Labor
3(t) ERISA
3(u) Certain Changes
3(w) Affiliate Transactions
7(c) Escrow Agreement Term Sheet
7(d) Term Sheet for Certain Employee/Shareholder Arrangements
iv
EXHIBITS
A Company/LLC Purchase Agreement
v
STOCK SUBSCRIPTION AGREEMENT
AGREEMENT, made this 17th day of June, 1996, by and among CM/J
Acquisition, LLC, a Delaware limited liability company ("Purchaser"), and Core-
Xxxx International, Inc., a Delaware corporation (hereinafter referred to as the
"Company").
W I T N E S S E T H :
WHEREAS, the Company is an independent wholesaler to the convenience
retail industry in the western United States and western Canada and distributes,
as part of its wholesale business, among other things, candy and snack products,
other food products, non-food products, health and beauty care products and
cigarettes and other tobacco products; and
WHEREAS, Core-Xxxx L.L.C., a Delaware limited liability company
("LLC"), currently owns 100 shares of common stock, par value $0.01 per share,
of the Company (the "LLC Shares"), which, as of the date hereof, represents all
of the issued and outstanding capital stock of the Company; and
WHEREAS, the Company desires to issue and sell to Purchaser, and
Purchaser desires to purchase from the Company, 38.70968 shares of the common
stock, par value $.01 per share, of the Company (the "Purchaser Shares"), which
Purchaser Shares will represent, upon consummation of the transactions
contemplated by this Agreement and the Company/LLC Purchase Agreement (as
hereinafter defined), 75% of the issued and outstanding capital stock
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of the Company, for the purchase price and upon the terms and conditions
hereinafter set forth; and
WHEREAS, immediately following the sale and purchase of the Purchaser
Shares provided for herein, the Company, pursuant to the terms of the Stock
Purchase Agreement, dated the date hereof, between LLC and the Company, a copy
of which is attached as Exhibit A hereto (the "Company/LLC Purchase Agreement"),
will purchase from LLC 87.09677 of the LLC Shares, and the 12.90323 shares not
purchased from the LLC will represent, upon consummation of the transactions
contemplated by this Agreement, 25% of the issued and outstanding capital stock
of the Company and such retained shares will be immediately distributed by LLC
and CMI Partnership to the individuals and in the amounts set forth in Schedule
3(b) hereto;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the indicated meanings, which meanings shall be applicable, except to
the extent otherwise indicated in a definition of a particular term, both to the
singular and plural forms of such terms. Any agreement referred to below shall
mean such agreement as amended, supplemented and modified from time to time to
the extent permitted by the applicable provisions thereof and by this Agreement.
"ADDITIONAL CONSIDERATION" has the meaning specified in Section 2(d)
hereof.
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"AFFILIATED GROUP" means any group of corporations with respect to
which a Consolidated Tax Return has been filed.
"BALANCE SHEET" shall mean the audited Consolidated Balance Sheet of
the Company and its Subsidiaries as at December 31, 1995.
"BALANCE SHEET DATE" shall mean December 31, 1995.
"BEST EFFORTS" shall mean reasonable good faith efforts but shall in
no event require the commencement of litigation against any third party or the
payment of any fees (other than nominal fees) to any third party.
"BUSINESS DAY" shall mean any weekday on which commercial banks in New
York City are open. Any action, notice or right which is to be exercised or
lapses on or by a given date which is not a Business Day may be taken, given or
exercised, and shall not lapse, until the end of the next Business Day.
"CLOSING" has the meaning specified in Section 10(a) of this
Agreement.
"CLOSING DATE" has the meaning specified in Section 10(a) of this
Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY/LLC PURCHASE AGREEMENT" has the meaning specified in the
recitals of this Agreement.
"COMPANY PLAN" has the meaning specified in Section 3(t)(i) of this
Agreement.
"COMPANY'S KNOWLEDGE" or "KNOWLEDGE OF THE COMPANY" shall mean the
knowledge of a Management Employee.
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"CONFIDENTIALITY AGREEMENT" shall mean that certain letter agreement,
heretofore executed, between the Company and Purchaser with respect to, among
other things, the treatment of confidential information regarding the Company.
"CONSOLIDATED TAX RETURN" means any Tax Return that has been filed on
a consolidated, combined or unitary basis.
"ENCUMBRANCES" shall mean any lien, security interest, mortgage,
pledge, hypothecation, easement, conditional sale or other title retention
agreement, right of first refusal other similar encumbrances; provided, however,
that Encumbrances shall not include any Permitted Encumbrance.
"ENVIRONMENTAL LAWS" shall mean any federal, state, or local law,
ordinance, regulation, order or permit pertaining to the environment, natural
resources or health or safety.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGREEMENT" has the meaning set forth in Section 7(c) of this
Agreement.
"FINANCIAL STATEMENTS" shall mean (1) the audited Consolidated Balance
Sheets of the Company and its Subsidiaries as at December 31, 1994 and 1995 and
the audited Consolidated Statements of Income and Cash Flows of the Company and
its Subsidiaries for the years ended December 31, 1995, 1994 and 1993, certified
by KPMG Peat Marwick LLP, and (ii) the unaudited Consolidated Balance Sheet of
the Company and its Subsidiaries as at
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April 30, 1996 and the related unaudited Consolidated Statement of Income of the
Company and its Subsidiaries for the four-month period then ended.
"XXXX-XXXXX-XXXXXX ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"HAZARDOUS MATERIALS" shall mean hazardous wastes as presently defined
by the Resource Conservation and Recovery Act of 1976, 42 U.S.C. SECTION 609 ET.
SEQ., as amended, and regulations promulgated thereunder and hazardous
substances as presently defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. SECTION 9601 ET. SEQ., as
amended ("CERCLA" or "Superfund") and regulations promulgated thereunder, and
any other substance or waste regulated under or defined by Environmental Laws.
"LLC SHARES" has the meaning specified in the recitals of this
Agreement.
"MANAGEMENT EMPLOYEES" has the meaning specified in Section 3(b) of
this Agreement.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, operations, assets or financial condition of the Company and its
Subsidiaries taken as a whole.
"MATERIAL LEASE" OR "MATERIAL LEASES" has the meaning specified in
Section 3(j) of this Agreement.
"MULTIEMPLOYER PLAN" has the meaning specified in Section 3(t)(i) of
this Agreement.
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"PERMITTED ENCUMBRANCE" shall mean, (a) encumbrances imposed by any
governmental authority for Taxes, assessments or charges not yet due and payable
or which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
Company or its Subsidiaries in accordance with generally accepted accounting
principles; (b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like encumbrances arising in the ordinary course of
business which are not overdue for a period of more than 30 days or which are
being contested in good faith and by appropriate proceedings, if adequate
reserves with respect thereto are maintained on the books of the Company or its
Subsidiaries in accordance with generally accepted accounting principles; (c)
pledges or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation; (d) deposits to secure the
performance of any or all of the following: bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business; (e) easements, rights-of-way, restrictions and
other similar encumbrances on real property incurred in the ordinary course of
business and encroachments (whether or not in the ordinary course of business)
which, in the aggregate, are not substantial in amount, and which do not in any
case materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business thereon; and (f) all the
exceptions to title reflected in Schedule 3(n).
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"PERSON" shall mean any individual, corporation, partnership, limited
liability company, association, trust or other entity.
"PURCHASER" has the meaning specified in the first paragraph of this
Agreement.
"PURCHASER SHARES" has the meaning specified in the recitals of this
Agreement.
"STOCKHOLDERS AGREEMENT" has the meaning specified in Section 7(e) of
this Agreement.
"SUBSIDIARY" shall mean each corporation, partnership, limited
liability company or other entity, fifty percent (50%) or more of the
outstanding voting shares of which or other voting interests or equity interests
in the case of a partnership are owned or controlled directly or indirectly by
the Company.
"TAX" OR "TAXES" means all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added, transfer,
transfer gains, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
real or personal property, and estimated taxes, water, rent and sewer service
charges, customs duties, fees, assessments and charges of any kind whatsoever,
together with any interest and any penalties, fines, additions to tax or
additional amounts thereon, imposed by any taxing authority (federal, state,
local or foreign) and shall include any transferee liability in respect of
Taxes.
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"TAX RETURN" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
2. SALE OF SHARES; PURCHASE PRICE. (a) On the terms and subject to
the conditions set forth in this Agreement, the Company hereby agrees to issue,
sell and deliver to Purchaser, and Purchaser hereby agrees to purchase from the
Company, at the Closing, the Purchaser Shares.
(b) The per share purchase price to be paid by Purchaser for the
Purchaser Shares shall be $1,550,000, for a total purchase price of $60,000,000,
which shall be payable in U.S. dollars in immediately available funds as
hereinafter provided.
(c) The Company hereby directs Purchaser to pay, on the Closing Date,
by wire transfer in U.S. dollars in immediately available federal funds
$60,000,000 to an account specified on or prior to the Closing Date by the
Company.
Immediately following the sale and purchase of the Purchaser Shares,
the Company will transfer to an account designated by LLC $125,000,000, payable
in U.S. dollars in immediately available funds, in payment of the purchase price
for the 87.09677 LLC shares to be purchased by the Company pursuant to the
Company/LLC Purchase Agreement.
(d) On the Closing Date, the Company shall pay, by wire transfer in
U.S. dollars in immediately available federal funds, $10,000,000 (the
"Additional Consideration") to an account specified on or prior to the Closing
Date to the escrow agent mutually selected by the Company and Purchaser to be
held in accordance with the Escrow Agreement.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Purchaser as follows:
(a) ORGANIZATION AND GOOD STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to own its
properties and carry on its business as it is now being conducted. The Company
is duly qualified to transact business as a foreign corporation under the laws
of (i) each jurisdiction in which it owns real property and (ii) each other
jurisdiction in which the conduct of its business or the ownership of its assets
requires such qualification, other than for failures to be so qualified that in
the aggregate have no reasonable likelihood of having a Material Adverse Effect.
The copies of the Company's Certificate of Incorporation and By-Laws (together
with all amendments thereto) that have been previously delivered or made
available to Purchaser are correct and complete and the transfer books are and
the minute books of the Company will be on the Closing Date true and complete in
all material respects.
(b) CAPITALIZATION. The authorized capital stock of the Company
consists of 3,000 shares of common stock, par value $.01 per share, of which 100
shares are issued and outstanding as of the date hereof. All of the issued and
outstanding shares of the Company are owned, beneficially and of record, by LLC
and have been validly issued and are fully paid and non-assessable and free of
preemptive rights. Other than this Agreement, there is no existing option,
warrant, call, commitment or other right or agreement of any kind which
obligates the
9
Company to issue, transfer or sell, and there are no convertible securities of
the Company outstanding which upon conversion would require, the issuance,
transfer or sale, of any additional shares of capital stock of the Company or
other securities convertible, exchangeable or exercisable into shares of capital
stock or any debt or equity security of the Company of any kind. Upon the
consummation of the transactions contemplated by this Agreement and the
Company/LLC Purchase Agreement, including the liquidation of LLC and CMI
Partnership, Purchaser and the management employees of the Company identified
on Schedule 3(b) hereto (the "Management Employees") shall be the owners of 75%
and 25%, respectively, of the total issued and outstanding capital stock of the
Company and such stock shall be owned as among the Management Employees in the
amounts set forth on Schedule 3(b).
(c) SCHEDULED SUBSIDIARIES. The Company does not have any active
Subsidiaries, except as listed on Schedule 3(c) hereto (the "Scheduled
Subsidiaries"). The authorized and outstanding capital stock or equity
interests of each Scheduled Subsidiary and record and beneficial owners thereof
are as set forth on Schedule 3(c) hereto and, except as set forth on Schedule
3(c) hereto, there are no shares of capital stock or other equity securities of
any Subsidiary outstanding. All of such outstanding capital stock or equity
interests have been validly issued and are fully paid, non-assessable and free
of preemptive rights and, except as set forth on Schedule 3(c), owned by the
Company as indicated thereon, free and clear of any and all Encumbrances. There
is no existing option, warrant, call, commitment or other agreement of any kind
which obligates the Company or any Subsidiary to issue, transfer or
10
sell, and there are no convertible securities of any Subsidiary outstanding
which upon conversion would require, the issuance, transfer or sale of any
additional shares of capital stock or equity interests of any Subsidiary or
other securities convertible into shares of capital stock or any other debt or
equity security of any kind of any Subsidiary. Each Scheduled Subsidiary is
duly incorporated or organized and validly existing in good standing under the
laws of its state of incorporation or organization. Each Scheduled Subsidiary
is duly qualified to transact business as a foreign corporation under the laws
of (i) each jurisdiction in which it owns real property and (ii) each other
jurisdiction in which the conduct of its business or the ownership of its assets
requires such qualification, other than for failures to be so qualified that in
the aggregate have no reasonable likelihood of having a Material Adverse Effect.
Each Scheduled Subsidiary has all requisite corporate or partnership power and
authority to own its properties and carry on its business as presently
conducted. There have been delivered or made available to Purchaser complete
and correct copies of the Certificate of Incorporation and By-Laws (together
with all amendments thereto) or other organizational documents of non-corporate
persons of each Scheduled Subsidiary and the transfer books and minute books
thereof are true and complete in all material respects. Neither the Company nor
any of the Subsidiaries is a member of or participant in any partnership, joint
venture or similar person.
(d) EXECUTION OF AGREEMENT. The Company has all requisite corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby, including,
without limitation, to issue, sell
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and deliver the Purchaser Shares as provided herein, and such issuance, sale and
delivery will convey to Purchaser good and valid title to the Purchaser Shares,
free and clear of any and all Encumbrances. The execution and delivery of this
Agreement and the consummation of the sale of the Purchaser Shares to Purchaser
and purchase from LLC of 87.09677 of the LLC shares contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of Company, enforceable
against it in accordance with its terms.
(e) FINANCIAL STATEMENTS. The Company has delivered to Purchaser
copies of the Financial Statements. Each of the Financial Statements is in
accordance with the books and records of the Company and its Subsidiaries as of
the dates and for the periods therein indicated, has been prepared in conformity
with generally accepted accounting principles consistently applied (except as
heretofore otherwise disclosed in writing to Purchaser) and presents fairly the
financial position, results of operations and (with respect to the audited
statements only) cash flows of the Company and its Subsidiaries as at the dates
and for the periods indicated, subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments, the absence of
footnotes and their not having been prepared on a full "Last-In-First-Out"
basis.
(f) NO UNDISCLOSED LIABILITIES. As at the Balance Sheet Date,
neither the Company nor any Subsidiary had any indebtedness or liabilities
(whether accrued, absolute,
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contingent or otherwise, and whether due or to become due) required to be shown
on a consolidated balance sheet of the Company and the Subsidiaries prepared in
accordance with generally accepted accounting principles that are not shown on
the Balance Sheet or disclosed herein or in a schedule hereto or in any document
referred to in a schedule hereto or in the Financial Statements (including the
footnotes thereto), other than those which in the aggregate have no reasonable
likelihood of having a Material Adverse Effect. Since the Balance Sheet Date,
neither the Company nor any Subsidiary has incurred any indebtedness or
liability required to be shown on a consolidated balance sheet of the Company
and the Subsidiaries prepared in accordance with generally accepted accounting
principles, other than those incurred in the ordinary course of business and not
in violation of this Agreement or disclosed herein or in a schedule hereto or in
any document referred to in a schedule hereto or in the Financial Statements
(including the footnotes thereto), and those that in the aggregate have no
reasonable likelihood of having a Material Adverse Effect.
(g) NO MATERIAL ADVERSE CHANGE; NO DIVIDENDS. Since the Balance
Sheet Date there has been no material adverse change in the business,
operations, assets or financial condition of the Company and its Subsidiaries
taken as a whole. No dividends or distributions have been declared or paid on
or made with respect to the shares of capital stock or other equity interests of
the Company nor have any such shares been repurchased or redeemed during the 12
months preceding the date hereof.
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(h) TAXES. (i) Except as set forth on Schedule 3(h) hereto, (A) all
material Tax Returns required to be filed by or on behalf of the Company or the
Subsidiaries or any Affiliated Group of which the Company or the Subsidiaries is
or was a member have been filed with the appropriate taxing authorities in all
jurisdictions in which such Tax Returns are required to be filed and are true,
correct and complete in all material respects, (B) all amounts shown on such Tax
Returns as due from the Company or the Subsidiaries either directly, as part of
a Consolidated Tax Return, or otherwise, have been fully and timely paid and (C)
no waivers of statutes of limitation or extension of time within which to file
any franchise, income or other material Tax Return which has not yet been filed
have been given or requested with respect to the Company or the Subsidiaries in
connection with any such income, franchise or other material tax returns
covering the Company or the Subsidiaries.
(ii) Except as set forth on Schedule 3(h) hereto, all
deficiencies asserted or assessments made as a result of examination by the
Internal Revenue Service or any other taxing authority of the income Tax Returns
of or covering the Company or any of the Subsidiaries have been fully paid, and
there are no unpaid deficiencies asserted or assessments made in excess of
$100,000 in the aggregate by any such taxing authority against the Company or
any of the Subsidiaries.
(iii) Except as set forth on Schedule 3(h) hereto, neither the
Company nor any of the Subsidiaries, and no other person on their behalf, has
filed a consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any
14
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by the Company or any of the Subsidiaries.
(iv) Except as set forth on Schedule 3(h) hereto, no property
owned by the Company or any of the Subsidiaries (A) is property required to be
treated as being owned by another person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986, (B)
constitutes "tax-exempt use property" within the meaning of Section 168(h)(1) of
the Code or (C) is tax-exempt bond financed property within the meaning of
Section 168(g) of the Code.
(v) Schedule 3(h) sets forth the status of all actual, pending,
or to the knowledge of the Tax Director of the Company, threatened Federal,
state, local and foreign Tax audits of the Tax Returns of the Company and the
Subsidiaries other than those involving less than $100,000 in the aggregate,
including the amounts of any deficiencies and additions to Tax (other than
interest and penalties) indicated on any notice from any taxing authority, and
the amounts of any payments made with respect thereto. No other audits or
investigations are under way, pending or to the knowledge of the Tax Director of
the Company or the Company threatened with respect to the Company's or any of
the Subsidiaries' Tax Returns or Taxes not shown on a Tax Return.
(vi) Except as set forth on Schedule 3(h), since 1984, neither
the Company nor any of its Subsidiaries has been a member of or was acquired
from any group of affiliated corporations that file consolidated returns for
Federal income tax purposes other than
15
in (a) a transaction in which the common parent of such affiliated group was
acquired or (b) the affiliated group in which the Company was the common parent.
(vii) Except as set forth on Schedule 3(h), neither the Company
nor any Subsidiary has agreed to or is required to make any adjustment under
section 481(a) of the Code by reason of a change in accounting method or
otherwise.
(viii) Schedule 3(h) sets forth all material Federal, state, local
and foreign Tax elections under the Code and other applicable provisions of law
that are in effect with respect to the Company and the Subsidiaries for calendar
year ended December 31, 1995.
(ix) Neither the Company nor any of the Subsidiaries will have
any liability on or after the Closing Date under any Tax sharing agreement to
which they have been a party, and all such Tax sharing agreements in effect
before the Closing Date shall terminate and be of no further force and effect as
of the Closing Date.
(x) There are no tax rulings or requests for rulings relating
to the Company or any of the Subsidiaries which could affect its liability for
Taxes for any period after the Closing.
(xi) Except as set forth on Schedule 3(h), no power of attorney
has been granted by the Company or any of the Subsidiaries with respect to any
matter relating to Taxes which is currently in force.
(i) PATENTS, TRADEMARKS AND COPYRIGHTS. Schedule 3(i) hereto
contains a complete and correct list of each material patent, trademark, trade
name, service xxxx and copyright owned or used by the Company or a Subsidiary
and all pending applications
16
therefor, and each license or other agreement relating thereto (the
"Intellectual Property"). Except as set forth on Schedule 3(i) or 3(m) hereto,
the Intellectual Property is owned by the party shown on such Schedule as owning
the same, free and clear of all licenses and other Encumbrances. With respect
to registered trademarks, Schedule 3(i) hereto sets forth a list of all
jurisdictions in which such trademarks are registered or applied for and all
registrations and application numbers. There have been no claims asserted in
writing, which are still pending, with respect to the ownership, validity,
enforceability, effectiveness or use of any Intellectual Property. The
Intellectual Property does not infringe on the intellectual property rights of
any person and, to the knowledge of the Company, no third party is infringing
upon or otherwise violating the intellectual property rights of the Company or
any Subsidiary. The Company and the Subsidiaries have taken all necessary
action to maintain and protect each item of Intellectual Property owned or used
by the Company and any Subsidiary, except where failure to take such action in
the aggregate would have no reasonable likelihood of having a Material Adverse
Effect.
(j) REAL PROPERTY; LEASES OF REAL PROPERTY. Neither the Company nor
any of its Subsidiaries owns any real property. Schedule 3(j) hereto contains a
complete and correct list in all material respects of all leases, subleases,
license agreements or other rights of possession or occupancy of real property
to which the Company or any Subsidiary is a party (as tenant, occupier or
possessor) (each such lease or agreement, a "Material Lease" and, collectively,
the "Material Leases"). All of the Material Leases are in full force and
effect.
17
Complete and correct copies of each Material Lease have been furnished or made
available to Purchaser. Except as set forth in Schedule 3(j) hereto, neither
the Company nor any of its Subsidiaries is in default beyond any applicable
notice or grace period or has received written notice of default still
outstanding on the date hereof under any such Material Lease, and to the
Company's knowledge, on the date hereof, there exists no uncured default
thereunder by any third party, other than, in either case, those which in the
aggregate have no reasonable likelihood of having a Material Adverse Effect.
Except as disclosed on Schedule 3(j) hereto, no consent is required of any
landlord or other third party to any Material Lease to consummate the
transactions contemplated hereby, and upon consummation of the transactions
contemplated hereby, each Material Lease will continue to entitle the Company or
its Subsidiary, as the case may be, to the use and possession of the real
property specified in such Material Lease and for the purposes for which such
real property is now being used by the Company or its Subsidiary, respectively.
(k) GOVERNMENTAL PERMITS. The Company and its Subsidiaries have all
necessary permits, licenses and governmental authorizations required for the
ownership or occupancy of their respective properties and assets and the
carrying on of their respective businesses (collectively, "Permits"), except for
those which in the aggregate have no reasonable likelihood of having a Material
Adverse Effect.
(l) INSURANCE. Schedule 3(1) hereto contains a complete and correct
list in all material respects of all policies of insurance of any kind or nature
covering the Company or
18
its Subsidiaries, including, without limitation, policies of life, fire, theft,
employee fidelity and other casualty and liability insurance, and such policies
are in full force and effect. Complete and correct copies of each such policy
have been furnished or made available to Purchaser.
(m) MATERIAL CONTRACTS. Except as listed in Schedule 3(m) hereto or
any other Schedule hereto, neither the Company nor any Subsidiary is a party to
any (i) material contract not made in the ordinary course of business or, to the
knowledge of the Company, any other contract not made in the ordinary course of
business; (ii) contract for the employment of any officer or employee; (iii)
contract for the future purchase of materials, supplies, services, merchandise
or equipment not capable of being fully performed or not terminable within a
period of one year from the date hereof or, except for purchase orders executed
in the ordinary course of business, involving annual payments in excess of $1
million (in the case of merchandise contracts) and $250,000 (in the case of all
other such contracts) or in excess of normal operating requirements; (iv)
agreement for the sale or lease of any of its assets other than in the ordinary
course of business; (v) contract or commitment for capital expenditures in
excess of $250,000; (vi) mortgage, pledge, conditional sales contract, security
agreement, factoring agreement or other similar agreement with respect to any of
its real or personal property; (vii) lease of machinery or equipment involving
annual payments in excess of $1,000,000; (viii) loan agreement, promissory note
issued by it, guarantee, subordination or similar type of agreement; (ix) stock
option, retirement, severance, pension, bonus, profit sharing, group insurance,
medical or other fringe benefit plan or program providing employee
19
benefits; or (x) municipal or other governmental franchise agreements; (xi)
agreement or contract with any shareholder, officer, director, employee, member,
consultant or agent of LLC, the Company or any Subsidiary (other than employment
agreements covered by clause (ii) above); (xii) lease or similar agreement under
which the Company or any Subsidiary is a lessor or sublessor of, or makes
available for use by any third party, any real property leased by the Company or
any Subsidiary or any portion of premises otherwise occupied by the Company or
any Subsidiary; or (xiii) any tax sharing agreement. Complete and correct
copies of each agreement set forth in Schedule 3(m) hereto have been furnished
or made available to Purchaser. Except as set forth in Schedule 3(m) hereto,
the Company and the Subsidiaries have performed all of the obligations required
to be performed by them to date and are not in default under any of the
agreements, leases, contracts or other documents to which they are a party
listed on Schedule 3(m) hereto, other than for those failures to perform and
defaults which in the aggregate have no reasonable likelihood of having a
Material Adverse Effect. Except as set forth in Schedule 3(m) hereto, to the
Company's knowledge, no party with whom the Company or any of the Subsidiaries
has such a scheduled agreement is in default thereunder, other than those
defaults which in the aggregate have no reasonable likelihood of having a
Material Adverse Effect. Except as disclosed herein or in Schedule 3(m) hereto,
neither the Company nor any of the Subsidiaries is a party to any non-compete or
similar agreement. Except as disclosed on Schedule 3(m) hereto, no consent is
required of any party with whom the Company or any of its Subsidiaries has an
agreement required to be listed on a
20
schedule hereto to consummate the transactions contemplated hereby and, upon
consummation of the transactions contemplated hereby, each scheduled agreement
will continue to entitle the Company and the Subsidiaries to the rights and
benefits specified in such agreements.
(n) TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. The Company and
the Subsidiaries have good and valid title to all of their respective assets
shown as owned on the Balance Sheet (except for assets disposed of in the
ordinary course of business since the Balance Sheet Date or as set forth in
Schedule 3(n) hereto), free and clear of any and all Encumbrances, except as set
forth in Schedule 3(n) hereto.
(o) NO RESTRICTION. Except as set forth in Schedules 3(j), 3(m)
or 3(o) hereto, neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated hereby, will conflict with or
result in a breach of, or give rise to a right of termination of, or
accelerate the performance required by, any terms of any agreement to which
the Company or any of the Subsidiaries is a party, or constitute a default
thereunder, or result in the creation of any Encumbrance upon any of their
respective assets, except for such conflicts, breaches, rights of termination
or acceleration, defaults and Encumbrances that in the aggregate have no
reasonable likelihood of having a Material Adverse Effect, nor will it
violate any of the provisions of their respective Certificates of
Incorporation or By-Laws or, as to non-corporate Subsidiaries, organizational
documents, or violate any judgment, order or decree by which any of them are
bound or, except for violations that in the aggregate have no
21
reasonable likelihood of having a Material Adverse Effect, any statute, law,
rule or regulation applicable to any of them.
(p) LITIGATION. Except as disclosed in Schedule 3(p) hereto, there
is no action, suit or proceeding pending or, to the Company's knowledge,
threatened against the Company or any of the Subsidiaries which seeks to
restrain or prohibit or otherwise challenges the consummation, legality or
validity of the transactions contemplated hereby. Except as disclosed in
Schedule 3(p) hereto, there is no action, suit or proceeding pending or, to the
Company's knowledge, threatened against the Company or any of the Subsidiaries
other than those which in the aggregate have no reasonable likelihood of having
a Material Adverse Effect.
(q) GOVERNMENTAL CONSENTS. Except with respect to local governmental
permits or licenses and the applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Act, no consent, approval or authorization of, or filing with, any governmental
authority on the part of the Company or any Subsidiary is required in connection
with the execution and delivery of this Agreement or the consummation of any of
the transactions contemplated hereby.
(r) ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 3(r)
hereto, (i) the operations of the Company and the Subsidiaries are in compliance
with applicable Environmental Laws, except for such noncompliances that in the
aggregate have no reasonable likelihood of having a Material Adverse Effect,
(ii) neither the Company nor any of the Subsidiaries is subject to any judicial
or administrative proceeding alleging the violation of any
22
Environmental Law, (iii) neither the Company nor any of the Subsidiaries has
received any written notice from any governmental authority that it is a
potentially responsible party at any State or Federal Superfund site and
(iv) neither the Company nor any of the Subsidiaries has disposed of or released
Hazardous Materials, or generated or transported Hazardous Materials which are
or have been disposed of or released, on, in or at any real property in any
quantity which hereafter will require investigation or remediation pursuant to
Environmental Laws for which the Company or any of the Subsidiaries will be
liable having any reasonable likelihood of having a Material Adverse Effect.
(s) COLLECTIVE BARGAINING AGREEMENTS AND LABOR.(i) Except as set
forth in Schedule 3(s) hereto, none of the Company or any of the Subsidiaries is
a party to any labor or collective bargaining agreement and there are no labor
or collective bargaining agreements which pertain to employees of the Company or
the Subsidiary.
(ii) Except as set forth in Schedule 3(s) hereto, there are no
pending or, to the Company's knowledge, threatened strikes, work stoppages,
slowdowns, lockouts or other material labor disputes against the Company or any
of the Subsidiaries which in the aggregate have any reasonable likelihood of
having a Material Adverse Effect.
(iii) Except as set forth in Schedule 3(s) hereto, the Company and
the Subsidiaries are in compliance with all laws, regulations and orders
relating to the employment of labor, including all such laws, regulations and
orders relating to wages, hours, collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the
23
collection and payment of employee withholding and/or social security Taxes and
any similar Tax, except for such non-compliance as in the aggregate have no
reasonable likelihood of having a Material Adverse Effect.
(iv) There is no unfair labor practice charge or complaint against
the Company or any Subsidiary pending, or to the knowledge of the Company,
threatened before the National Labor Relations Board, the Equal Employment
Opportunity Commission or any similar state or local governmental agency, and
there are no pending or, to the knowledge of the Company, threatened, union
grievances against the Company or any Subsidiary except for all such cases those
which in the aggregate have no reasonable likelihood of having a Material
Adverse Effect.
(t) ERISA. (i) Schedule 3(t) hereto sets forth all "employee benefit
plans", as defined in Section 3(3) of ERISA, and all other material plans
maintained by the Company, any of the Subsidiaries or any Commonly Controlled
Entity (within the meaning of Sections 414(b), (c), (m) and (o) of the Code) or
to which the Company, any of the Subsidiaries or any Commonly Controlled Entity
contributes or is obligated to contribute for current or former employees of the
Company, such Subsidiary or such Commonly Controlled Entity (the "Company
Plans"). Schedule 3(t) hereto separately identifies each Company Plan which is
a multiemployer plan, as defined in Section 3(37) of ERISA ("Multiemployer
Plan").
(ii) True, correct and complete copies of the following documents
(where applicable), with respect to each of the Company Plans (other than the
Multiemployer Plans),
24
have been made available or delivered to Purchaser by the Company or the
Subsidiaries: (a) plans and related trust documents, including amendments
thereto; (b) summary plan descriptions; (c) the most recent annual reports, Form
5500s; (d) the most recent annual and periodic accounting of plan assets; (e)
the most recent determination letter received from the Internal Revenue Service;
and (f) the most recent actuarial valuation.
(iii) With respect to each Company Plan other than the
Multiemployer Plan: (a) if intended to qualify under Code section 401(a) or
403(a), such Company Plan so qualifies, and its related trust is exempt from
taxation under Code section 501(a); (b) such Company Plan has been administered
in accordance with its terms and applicable law in all material respects; (c) no
event has occurred and there exists no circumstance under which the Company
could directly, or indirectly through a Commonly Controlled Entity, incur any
material liability under ERISA, the Code or otherwise (other than routine claims
for benefits); and (d) there are no material actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge of the Company,
threatened with respect to any Company Plan or against the assets of any Company
Plan.
(iv) With respect to each Company Plan other than a Multiemployer
Plan, no "prohibited transaction" (as defined in ERISA section 406 or in Code
section 4975) nor "reportable event" (as defined in ERISA section 4043) has
occurred which has any reasonable likelihood of causing any material liability
to the Company.
25
(v) With respect to each Company Plan, all contributions and
premiums have been made on a timely basis and all required contributions that
have not been made have been properly recorded on the books of the Company or a
Commonly Controlled Entity in accordance with GAAP.
(vi) Except as set forth in Schedule 3(t) hereto, with respect to
each Company Plan (other than a Multiemployer Plan) that is subject to Title IV
of ERISA: (a) as of the most recent actuarial valuation, the present value of
all benefit liabilities (as defined in ERISA section 4001(a)(16)) will not
exceed the then current fair market value of the assets of such plan (determined
by using the actuarial assumptions used for the most recent actuarial valuation)
and (b) the Company has not incurred or is expected to incur directly, or
indirectly through a Commonly Controlled Entity, any liability arising from a
plan termination or a plan withdrawal.
(vii) Except as set forth in Schedule 3(t) hereto, with respect to
each Company Plan that is a "welfare plan" (as defined in ERISA section 3(1)):
(a) no such plan provides medical or death benefits (whether or not insured)
with respect to current or former employees beyond their termination of
employment (other than coverage mandated by law) and (b) the Company and each
Commonly Controlled entity are in good faith compliance with the requirements of
Code section 4980B.
(viii) The consummation of the transactions contemplated by this
Agreement will not entitle any individual to severance pay, or accelerate the
time of payment, vesting or
26
increase the amount of compensation due to any individual, or result in the
payment of an amount subject to the requirements of Section 280G of the Code.
(ix) To the knowledge of the Company, there would be no
withdrawal liability under Section 4219 of ERISA as a result of a complete or
partial withdrawal from any of the Multiemployer Plans listed in Schedule 3(t)
hereto.
(u) ABSENCE OF CHANGES OR EVENTS. Since the Balance Sheet Date,
there has not been (i) any payment of or commitment to pay by or on behalf of
the Company or any of the Subsidiaries any severance or termination payment to
any officer, director, employee, consultant, agent or other representative of
the Company or any of the Subsidiaries other than in the ordinary course of
business or (ii) except as described on Schedule 3(u) hereto, a grant or any
agreement to make a grant of any general increase in the compensation of its
officers or employees or any increase in the compensation payable or to become
payable to any Management Employee and, except in the ordinary course of
business, any other employee. Since the Balance Sheet Date, the Company and the
Subsidiaries have conducted their respective businesses only in the ordinary
course.
(v) COMPLIANCE WITH LAWS. The Company and the Subsidiaries are in
compliance with all applicable statutes, laws, ordinances, rules, orders and
regulations of any governmental entity (whether domestic or foreign) and all
Permits, except for such noncompliances which in the aggregate have no
reasonable likelihood of having a Material Adverse Effect.
27
(w) TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule
3(w) hereto or any other Schedule to this Agreement, there are no agreements,
contracts or other arrangements between the Company or any Subsidiary, on the
one hand, and LLC or any of its affiliates (including, without limitation, any
member of LLC) on the other hand, and neither the Company nor any Subsidiary
will have any liability under any of such items after the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to the Company as follows:
(a) ORGANIZATION AND GOOD STANDING. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the state of Delaware, and has the requisite power and authority to own its
properties and carry on its business as it is now being conducted.
(b) EXECUTION AND EFFECT OF AGREEMENT. Purchaser has all requisite
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby, and the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Purchaser.
This Agreement has been duly executed and delivered by Purchaser and constitutes
the legal, valid and binding obligation of Purchaser, enforceable against it in
accordance with its terms.
28
(c) NO RESTRICTION. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not conflict with
or result in a breach of any terms of any agreement to which Purchaser is a
party, except for such conflicts and breaches that in the aggregate have no
reasonable likelihood of having a material adverse effect on Purchaser's ability
to consummate the transactions contemplated by this Agreement or a Material
Adverse Effect, nor will it violate any of the provisions of Purchaser's
organizational documents.
(d) LITIGATION. There is no action, suit, proceeding or formal
governmental inquiry or investigation pending or, to Purchaser's knowledge,
threatened against Purchaser or any of its affiliates which seeks to restrain or
prohibit or otherwise challenges the consummation, legality or validity of the
transactions contemplated hereby.
(e) GOVERNMENTAL CONSENTS. Except in connection with the applicable
requirements under the Xxxx-Xxxxx-Xxxxxx Act, no consent, approval or
authorization of, or filing with, any governmental authority on the part of
Purchaser is required in connection with the execution and delivery of this
Agreement or the consummation of the transaction contemplated hereby.
(f) INVESTMENT REPRESENTATION. Purchaser possesses such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment in the Purchaser Shares.
Purchaser is acquiring the Purchaser Shares for its own account, for investment
purposes only and not with a view to the distribution thereof in
29
violation of the Securities Act of 1933, as amended (the "Securities Act").
Purchaser is an "accredited investor" as defined in Regulation D under the
Securities Act. Purchaser acknowledges that the Purchaser Shares are not
registered under the Securities Act, any applicable state securities laws or any
applicable foreign securities laws, and that the Purchaser Shares may not be
transferred or sold except pursuant to the registration provisions of or
applicable exemptions from such laws.
(g) ACCESS. Purchaser acknowledges and agrees that Purchaser and its
representatives have had access to such of the records and documents and
properties of the Company and its Subsidiaries as Purchaser and its
representatives shall have requested to see and/or review; that Purchaser and
its representatives have had an opportunity to meet with appropriate management
and employees of the Company to discuss the business and assets of the Company,
it being understood that nothing in this Section 4(g) is intended to diminish or
otherwise impair the ability of Purchaser to rely on and enforce its rights with
respect to the breach by the Company of any of the representations, warranties
or covenants made by it herein.
(h) FINANCING. Purchaser has, or has access to, sufficient funds and
financing to consummate the transactions contemplated hereby (subject to the
conditions specified in the Commitment Letter referred to below). Purchaser has
delivered to the Company a true and complete copy of a Commitment Letter
executed by Chemical Bank and
30
Chase Securities, Inc. relating to, among other matters, the financing of such
transactions (the "Commitment Letter").
5. COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees that:
(a) ACCESS TO DOCUMENTS; OPPORTUNITY TO ASK QUESTIONS. From and
after the date hereof and until the Closing Date, the Company and its
Subsidiaries shall make available for inspection by Purchaser, the financial
institution referred to in Section 4(h) hereof, and their representatives, upon
reasonable advance notice and during normal business hours, the Company's and
its Subsidiaries' corporate or comparable records, books of account, contracts
and all other documents reasonably requested by Purchaser, as well as physical
access to the properties owned, leased or operated by the Company and its
Subsidiaries, including access for the purposes of taking soil, air,
surfacewater and groundwater samples, in order to permit Purchaser, such
financial institution and such representatives to make reasonable inspection and
examination of the business and affairs of the Company and the Subsidiaries.
Company shall make available upon reasonable advance notice managerial
employees, counsel and regular independent certified public accountants of the
Company and its Subsidiaries to answer questions of Purchaser, such financial
institution and their respective representatives concerning the business and
affairs of the Company and its Subsidiaries and shall further cause them to make
available all relevant books and records in connection with such inspection and
examination.
31
(b) CONDUCT OF BUSINESS. From and after the date hereof and until
the Closing Date, the Company and its Subsidiaries shall conduct their business
only in the ordinary course, consistent with the present conduct of their
business and shall make all reasonable efforts consistent with past practices to
preserve their relationships with customers, suppliers, employees and others
with whom the Company or any Subsidiary deals. During such period of time,
except upon the prior written consent of Purchaser, the Company shall not permit
the Company or its Subsidiaries to (a) amend its Certificate of Incorporation or
By-Laws or comparable organizational documents, (b) issue any additional shares
of capital stock or issue, sell or grant any option or right to acquire or
otherwise dispose of or commit to dispose of any of its authorized but unissued
capital stock or other corporate securities, (c) declare or pay any dividends or
declare or make any other distribution in cash or property on its capital stock
or other equity interests, (d) repurchase or redeem any shares of its stock or
other equity interests (except on the Closing Date pursuant to the terms of the
Company/LLC Purchase Agreement), (e) voluntarily incur any obligation or
liability, except current obligations and except liabilities incurred in the
ordinary course of business, (f) enter into any employment agreement or become
liable for any bonus, profit-sharing or incentive payment to any of its officers
or directors, except pursuant to presently existing plans, arrangements or
agreements disclosed herein or in a schedule hereto or in the ordinary course of
business, (g) mortgage, pledge, or otherwise encumber any part of its assets,
tangible or intangible, except for Permitted Encumbrances, (h) sell, transfer or
acquire any properties or assets, tangible or
32
intangible, other than in the ordinary course of business and, except as set
forth in Schedule 3(n) hereto, (i) make any material changes in its customary
method of operations, including marketing and pricing policies, collection of
receivables, purchasing or payment of payables and maintenance of business
premises, fixtures, furniture and equipment, (j) modify, amend or cancel any of
its existing Material Leases or enter into any contracts, agreements, leases or
understandings, other than in the ordinary course of business, (k) enter into
any collective bargaining agreement, (l) merge or consolidate with any
corporation or other person, acquire control or (except in the ordinary course
of business or for transactions involving the acquisition of assets from another
distributor for not more than $3,000,000 in the aggregate), acquire the assets
of, or acquire any capital stock or other securities of, any other corporation
or business entity, (m) modify the Company/LLC Purchase Agreement, (n) take any
other action that would cause any of the representations and warranties made by
the Company in this Agreement not to be true and correct in all material
respects on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date, (o)
make or incur capital expenditures not currently budgeted which in the aggregate
are in excess of $300,000, (p) enter into any lease of real property or any
renewals of existing leases, except with respect to the renewal of the lease of
the Company's corporate headquarters on terms previously disclosed to Purchaser,
(q) make any material federal, state, local or foreign Tax elections under the
Code or other applicable provision of law that are in effect with respect to the
Company and the Subsidiaries, except to the extent
33
consistent with past practices, or (r) agree, whether in writing or otherwise,
to do any of the foregoing.
(c) TAXES. From and after the date hereof and until the Closing
Date, all Tax Returns required to be filed by or with respect to the Company or
any of the Subsidiaries shall be prepared in a manner consistent with prior
years, timely filed and shall be true, correct and complete in all material
respects and the Company or any of the Subsidiaries, as the case may be, shall
use its reasonable efforts to deliver drafts of any Federal income or material
franchise tax returns to the Purchaser for its review no later than 10 business
days prior to the date, including extensions, on which such federal income and
franchise tax returns are required to be filed and shall make any changes to
such federal income and franchise tax returns as Purchaser may reasonably
request.
(d) CONSENTS; CONDITIONS PRECEDENT. From and after the date hereof
and until the Closing Date, the Company shall use its Best Efforts to obtain the
consents of those parties indicated on Schedules 3(j), 3(m) and 3(o) in
connection with the transactions contemplated hereby and to cause the conditions
precedent to the consummation of the transactions contemplated hereby to be
satisfied.
(e) XXXX-XXXXX-XXXXXX FILINGS. The Company shall make all required
filings as promptly as possible with the Federal Trade Commission and the U.S.
Department of Justice-Antitrust Division pursuant to the Xxxx-Xxxxx-Xxxxxx Act,
and shall cooperate with Purchaser in connection with such filings.
34
(f) COMPANY/LLC PURCHASE AGREEMENT. The Company shall cause the
transactions contemplated by the Company/LLC Purchase Agreement to be
consummated immediately following the Closing hereunder.
(g) DELIVERY OF FINANCIAL STATEMENTS. From the date hereof and until
the Closing Date, the Company shall deliver to Purchaser copies of the monthly
unaudited consolidated financial statements of the Company and the Subsidiaries,
which monthly statements shall be prepared on the same basis as the unaudited
statements included in the Financial Statements, promptly following the time
that such monthly statements become available.
(h) NOTIFICATION OF CERTAIN MATTERS. From the date hereof and until
the Closing Date, the Company shall give prompt notice to Purchaser of (i) any
notice of, or other communication relating to, a default or event which, with
notice or lapse of time or both, would become a default, received by the Company
or any of the Subsidiaries after the date of this Agreement under any agreement
that is required to be listed in a Schedule to this Agreement; (ii) any notice
or other communication from any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement; (iii) any notice or other communication from any
governmental entity or any customer material to the business of the Company or
any Subsidiary in connection with the transactions contemplated by this
Agreement; (iv) any event or circumstance that becomes known to the Company
after the date hereof that has a
35
reasonable likelihood of having a Material Adverse Effect; and (v) any claim,
action, proceeding or investigation commenced or, to the Company's knowledge,
threatened, involving or affecting the Company or any of its Subsidiaries or any
of their property or assets which, if pending on the date of this Agreement,
would have been required to have been disclosed to Purchaser.
(i) NO INCONSISTENT ACTIVITIES. From the date hereof and until the
Closing Date, (i) the Company will not, and will direct its officers, directors
and other representatives not to, directly or indirectly, solicit, encourage, or
participate in any way in discussions or negotiations with, or provide any
information or assistance to any third party concerning the acquisition of
shares of capital stock of the Company or a substantial portion of the total
assets of the Company and the Subsidiaries on a consolidated basis (whether by
merger, purchase of assets or otherwise), (ii) the Company will promptly
communicate to Purchaser the terms of any proposal or contact it may receive in
respect of any such transaction and (iii) the Company shall not release any
third party from any confidentiality or standstill agreement to which the
Company is a party without Purchaser's consent.
6. COVENANTS OF PURCHASER. Purchaser hereby covenants and agrees
that:
(a) REPRESENTATIONS AND WARRANTIES. From and after the date hereof
and until the Closing Date, Purchaser will not take any action that would cause
any of the representations and warranties made by it in this Agreement not to be
true and correct in all
36
material respects on and as of the Closing Date with the same force and effect
as if such representations and warranties had been made on and as of the Closing
Date.
(b) CONSENTS; CONDITIONS PRECEDENT. From and after the date hereof
and until the Closing Date, Purchaser shall use its Best Efforts to obtain any
consents required in connection with the transactions contemplated hereby and to
cause the conditions precedent to the consummation of the transactions
contemplated hereby to be satisfied.
(c) XXXX-XXXXX-XXXXXX FILINGS. Purchaser shall make all required
filings as promptly as possible with the Federal Trade Commission and the U.S.
Department of Justice-Antitrust Division pursuant to the Xxxx-Xxxxx-Xxxxxx Act,
and it shall cooperate with the Company in connection with such filings.
7. CONDITIONS PRECEDENT TO THE COMPANY'S AND THE PURCHASER'S
OBLIGATIONS. The respective obligations of the Company and the Purchaser to
consummate the sale and purchase of the Purchaser Shares on the Closing Date is,
at the respective option of the Company or the Purchaser, subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) The waiting periods under the Xxxx-Xxxxx-Xxxxxx Act shall have
expired or been terminated.
(b) There shall not be in effect an order of a governmental body of
competent jurisdiction enjoining, restraining or otherwise prohibiting the
consummation of the transactions contemplated hereby or by the Company/LLC
Purchase Agreement.
37
(c) The Company, Purchaser and an escrow agent mutually chosen by the
Company and Purchaser shall have executed and delivered an escrow agreement
having customary terms and such other terms set forth on Schedule 7(c) hereto
(the "Escrow Agreement").
(d) Each Management Employee shall have executed and delivered an
agreement with the Company with respect to severance arrangements and non-
competition in form reasonably acceptable to Purchaser having the principal
terms set forth on Schedule 7(d) hereto.
(e) The Management Employees, the Company and Purchaser shall have
executed and delivered a stockholders agreement having the principal terms set
forth on Schedule 7(d) hereto (the "Stockholders Agreement").
(f) The Board of Directors of the Company shall have been
reconstituted to consist of the people listed on Schedule 7(d) hereto.
(g) The Company shall have adopted a stock option plan for the benefit
of certain employees of the Company reasonably acceptable to Purchaser and
having the principal terms set forth in Schedule 7(d) hereto.
8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION. The obligation
of Purchaser to consummate the purchase of the Purchaser Shares on the Closing
Date is, at the option of Purchaser, also subject to the satisfaction of the
following conditions:
38
(a) Each of the representations and warranties of the Company
contained in Section 3 hereof that does not have a materiality qualification
shall be true and correct in all material respects as of the Closing Date and
each of the other representations and warranties of the Company contained in
Section 3 hereof shall be true and correct as of the Closing Date, in each case
with the same force and effect as though the same had been made on and as of the
Closing Date.
(b) The Company shall have performed and complied in all material
respects with the covenants and provisions in this Agreement required herein to
be performed or complied with by the Company between the date hereof and the
Closing Date.
(c) Purchaser shall have received an opinion of Weil, Gotshal & Xxxxxx
LLP, counsel for the Company, dated the Closing Date and in form and substance
reasonably satisfactory to Purchaser and its counsel covering such matters as
are customary for transactions of the type contemplated by this Agreement.
Such opinion also shall be addressed to the Purchaser's financing source.
(d) Purchaser shall have received certificates to the effect set forth
in subsections (a) and (b) above, dated the Closing Date, signed by a duly
authorized officer of the Company.
(e) The consents of all persons who are parties to the agreements with
the Company, or its Subsidiaries identified on Schedules 3(j), 3(m) or 3(o) with
an asterisk (*) shall have been obtained, and signed copies thereof shall have
been delivered to Purchaser.
39
(f) All employment and severance agreements in effect on the date
hereof between the Management Employees and the Company shall have been
terminated.
(g) The $635,000 loan by the Company to CMI Partnership shall have
been paid in full.
(h) All conditions to the availability of the financing contemplated
by the Commitment Letter shall have been met and such financing shall be
available; PROVIDED that Purchaser may rely on this condition only if it has
used all reasonable and diligent efforts to obtain such financing upon the terms
set forth in the Commitment Letter.
(i) There shall not have occurred any material adverse change in the
prospects of the Company since the date hereof.
9. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION. The obligation
of the Company to consummate the issuance, sale and assignment to Purchaser of
the Purchaser Shares is, at the option of the Company, also subject to the
satisfaction of the following conditions:
(a) Each of the representations and warranties of Purchaser contained
in Section 4 hereof shall be true and correct as of the Closing Date with the
same force and effect as though the same had been made on and as of the Closing
Date.
(b) Purchaser shall have performed and complied in all material
respects with the covenants and provisions in this Agreement required herein to
be performed or complied with by Purchaser between the date hereof and the
Closing Date.
40
(c) The Company shall have received an opinion of Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx, counsel for Purchaser, dated the Closing Date, in
form and substance reasonably satisfactory to the Company and its counsel
covering such matters as are customary for transactions of the type contemplated
by this Agreement.
(d) The Company shall have received certificates to the effect set
forth in subsections (a) and (b) above, dated the Closing Date, signed by a duly
authorized officer of Purchaser.
10. CLOSING DATE; CLOSING. (a) The closing hereunder (herein called
the "Closing") shall take place at the offices of Weil, Gotshal & Xxxxxx LLP,
000 Xxxxx Xxxxxx, Xxx Xxxx, X.X. 00000 at 10:00 A.M. on the date that is three
(3) Business Days after each of the conditions precedent to the Closing shall
have been satisfied or waived, but not later than August 15, 1996, unless
otherwise mutually agreed to in writing by Purchaser and the Company. The date
of the Closing is referred to in this Agreement as the "Closing Date".
(b) All proceedings to be taken and all documents to be executed and
delivered by the Company in connection with the consummation of the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
Purchaser and its counsel. All proceedings to be taken and all documents to be
executed and delivered by Purchaser in connection with the consummation of the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to the Company and its counsel. All proceedings to be taken and all
documents to be executed and delivered by all parties at the Closing shall be
41
deemed to have been taken and executed simultaneously and no proceedings shall
be deemed taken nor any documents executed or delivered until all have been
taken, executed and delivered.
(c) At the Closing, the Company shall deliver, or shall cause to be
delivered, to Purchaser the following:
(i) Certificates representing the Purchaser Shares duly
registered on the books of the Company in the name of Purchaser.
(ii) An opinion of counsel for the Company, dated the Closing
Date, as required by Section 8(c) hereof.
(iii) The certificate signed by the Company as referred to in
Section 8(d) hereof.
(iv) An incumbency certificate setting forth the names of
officers of the Company who are authorized to execute this Agreement and all
documents executed by the Company pursuant hereto, together with their
respective signatures, signed by a duly authorized officer of the Company.
(v) An executed counterpart to each of the Escrow Agreement,
each of the agreements and the Stockholders Agreement referred to in Sections
7(c), 7(d) and 7(e) hereof, respectively.
(vi) Director resignations as required to comply with Section
7(f) hereof.
42
(d) At the Closing, Purchaser shall deliver to the Company the
following:
(i) The wire transfers of funds provided in Section 2 hereof.
(ii) An opinion of counsel for Purchaser, dated the Closing
Date, setting forth the matters required pursuant to Section 9(c) hereof.
(iii) The certificate signed by a duly authorized officer of
Purchaser referred to in Section 9(d) hereof.
(iv) An incumbency certificate setting forth the names of
officers of Purchaser who are authorized to execute this Agreement and all
documents executed by Purchaser pursuant hereto, together with their respective
signatures, signed by a duly authorized officer of Purchaser.
(v) An executed counterpart to each of the Escrow Agreement and
the Stockholders Agreement referred to in Sections 7(c) and 7(e), respectively.
11. NO BROKERS. The Company represents to Purchaser, and Purchaser
represents to the Company, that they respectively have had no dealings with any
broker or finder in connection with the transactions contemplated by this
Agreement, other than, with respect to the Company, Lazard Freres & Co. LLC. As
set forth in the Company/LLC Purchase Agreement, LLC will indemnify and hold
Purchaser harmless from and against any and all liability to which Purchaser may
be subjected by reason of any broker's, finder's or similar fee with respect to
the transactions contemplated by this Agreement to the extent such fee is
attributable to any action undertaken by or on behalf of LLC or the Company.
43
Purchaser agrees to indemnify and hold the Company and LLC harmless from and
against any and all liability to which the Company and LLC may be subjected by
reason of any broker's, finder's or similar fee with respect to the transactions
contemplated by this Agreement to the extent such fee is attributable to any
action undertaken by or on behalf of Purchaser.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties hereto
agree that the representations and warranties set forth in this Agreement shall
survive for a period ending three years after the filing of the Company's
federal income tax return for fiscal 1995 and thereafter shall expire. The sole
remedy for any breach of any representation or warranty set forth in this
Agreement shall be as set forth in Section 13 hereof.
13. INDEMNIFICATION AND LIMITATION OF LIABILITY.
(a) The Company agrees to indemnify and hold Purchaser, its affiliates
and each of their respective officers, directors, employees, stockholders,
partners, agents and representatives in their capacities as such (collectively,
"Purchaser Indemnitees") harmless from and against any and all liabilities,
obligations, damages, deficiencies and expenses (including, without limitation,
expenses associated with contesting any proposed adjustment relating to Taxes,
and fees and disbursements of counsel incurred by any Purchaser Indemnitee in
any action or proceeding between the Company and such Purchaser Indemnitee in
which such Purchaser Indemnitee prevails pursuant to a final non-appealable
judgment or between such Purchaser Indemnitee and any third party or otherwise)
directly incurred by any of the Purchaser Indemnitees (including, without
limitation, by reason of a diminishment of value of
44
the Purchaser's interest in the Company; for example, and without giving effect
to Section 13(d), if the Company suffered a $100,000 loss, the Purchaser would
be entitled to an indemnification payment of $75,000) resulting from (i) any
misrepresentation or breach of warranty set forth in this Agreement on the part
of the Company, it being agreed by the Company that for purposes of this Section
13 only, the materiality exceptions set forth in the Company's representations
and warranties shall be given no effect and (ii) any liability for Taxes
incurred by Purchaser or its affiliates pursuant to Treasury Regulation SECTION
1.1502-6(a) or comparable provision of State, local or foreign law.
(b) Purchaser agrees to indemnify and hold the Company, its affiliates
and each of their respective officers, directors, employees, stockholders,
partners, agents and representatives in their capacities as such (collectively,
the "Company Indemnitees") harmless from and against any and all liabilities,
obligations, damages, deficiencies and expenses (including, without limitation,
fees and disbursements of counsel incurred by a Company Indemnitee in any action
or proceeding between Purchaser and such Company Indemnitee in which such
Company Indemnitee prevails pursuant to a final non-appealable judgment or
between such Company Indemnitee and any third party or otherwise) directly
incurred by the Company Indemnitees resulting from any misrepresentation or
breach of warranty set forth in this Agreement on the part of Purchaser, it
being agreed by Purchaser that for purposes of this Section 13 only, the
materiality exceptions set forth in Purchaser's representations and warranties
shall be given no effect.
45
(c) The indemnification by the Company set forth in subsection (a)
above and any and all liabilities and obligations of and causes of action
against the Company, and any recovery in respect thereof, arising out of or
relating to this Agreement and the transactions contemplated hereby (i) shall be
effective only if, and to the extent that, the aggregate of such losses,
liabilities, damages, deficiencies or expenses (including reasonable attorneys'
fees) indemnified against shall exceed $350,000, in which event such
indemnification shall be effective with respect to all such losses, liabilities
or damages in excess of such amount, and shall be limited to an aggregate
payment of no more than $10,000,000 as provided in subsection (g) below.
(d) If any legal proceedings shall be instituted or any claim or
demand shall be asserted by any person in respect of which payment may be sought
by an indemnified party from an indemnifying party pursuant to the provisions of
this Section 13, regardless in the case of the Company of the $350,000 minimum
referred to in subsection (c) above, the indemnified party promptly shall cause
written notice of the assertion of any claim of which it has knowledge which is
covered by this indemnity to be forwarded to the indemnifying party, and the
indemnifying party shall have the right, at its option and at its own expense,
to be represented by counsel of its choice (which counsel shall be reasonably
acceptable to the indemnified parties) and to defend against, negotiate, settle
or otherwise deal with any third-party proceeding, claim or demand which relates
to any loss, liability, damage or deficiency indemnified against hereunder. The
parties hereto agree to cooperate fully with each other in
46
connection with the defense, negotiation or settlement of any such legal
proceeding, claim or demand, and an indemnified party may elect to participate
in the defense, negotiation or settlement thereof with counsel of its choice at
its expense. An indemnifying party shall not settle any proceeding, claim or
demand for which indemnification is available hereunder without the indemnified
party's prior written consent; PROVIDED, HOWEVER, if such consent is withheld
with respect to a settlement which involves (i) only the payment of cash, (ii)
provides a complete release to all indemnified parties and (iii) does not exceed
the amount in the escrow held pursuant to the Escrow Agreement, then the
indemnifying party shall not be required to indemnify the indemnified party
hereunder for any expense or costs to settle the matter in excess of cost of the
settlement rejected by the indemnified party. Purchaser hereby acknowledges and
agrees that the defense or settlement of any third party claim for which
Purchaser seeks indemnification from the Company hereunder pursuant to the terms
of this Section 13(d) shall be exclusively controlled on behalf of the Company
by the Management Employees.
Notwithstanding anything contained herein to the contrary, the
indemnities provided for in this Section 13 shall exist with respect to any
loss, liability, damage or deficiency whether or not the actual amount thereof
shall have been ascertained prior to the conclusion of the three-year period
referred to in Section 12 hereof, as long as written notice of the matter as to
which indemnification has been asserted shall have been given to the
47
Company by Purchaser, or to Purchaser by the Company, as the case may be, prior
to the conclusion of such three-year period.
(e) Any indemnity payments otherwise due and payable hereunder shall
be decreased to the extent of any reduction of tax liability that is actually
realized by the indemnified party upon payment of an indemnifiable loss net of
all insurance proceeds and other recoveries actually received by the indemnified
party in respect of the indemnified matter.
(f) Any payments under this Section 13 shall be treated by the parties
hereto for federal, state, local and foreign income tax purposes either as a
non-taxable reimbursement or capital contribution or as a purchase price
adjustment, as the case may be, except to the extent that another treatment is
required by law.
(g) Each of the parties agree that any amounts payable by the Company
to Purchaser pursuant to this Section 13 shall be paid solely from the funds
held in escrow pursuant to the Escrow Agreement and that Purchaser shall not
have any recourse for any such amounts against the Company, its directors,
officers, employees, direct or indirect stockholders or control persons.
14. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
irreparable damage would result if this Agreement is not specifically enforced.
Therefore, the parties hereto agree that the rights and obligations of the
parties under this Agreement, including, without limitation, their respective
rights and obligations to issue and to purchase the Purchaser
48
Shares, shall be enforceable by a decree of specific performance issued by any
court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. Such remedies shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
15. TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated:
(a) At any time on or prior to the Closing Date, by the mutual
consent in writing of Purchaser and the Company; or
(b) By either Purchaser or the Company if the Closing shall not
have occurred on or before August 15, 1996 (or such later date as may be agreed
upon in writing by the parties hereto).
(c) By either the Company or Purchaser if there shall be in
effect a final nonappealable order of a governmental body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby or by the Company/LLC Purchase Agreement;
it being agreed that the parties hereto shall promptly appeal any adverse
determination which is not nonappealable (and pursue such appeal with reasonable
diligence).
In the event that this Agreement shall be terminated pursuant to this
Section 15, all further obligations of the parties under this Agreement (other
than Sections 17 and 23) shall
49
terminate without further liability of either party to the other, provided that
nothing herein shall relieve any party from liability for its breach of this
Agreement.
16. FURTHER ASSURANCES. The parties hereto each agree to execute
such other documents or agreements as may be necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
17. CONFIDENTIALITY; PRESS RELEASES. (a) As more specifically set
forth in the Confidentiality Agreement, prior to the Closing, Purchaser agrees
to keep proprietary information regarding the Company and its Subsidiaries
confidential and agrees that it will only use such information in connection
with the transactions contemplated by this Agreement and not disclose any of
such information other than (i) to Purchaser's directors, officers, employees,
representatives, advisors, and agents (including financing sources) who are or
may be involved with the transactions contemplated by this Agreement,(ii) to the
extent such information presently is or hereafter becomes available, on a non-
confidential basis, from a source other than the Company or Purchaser, and
(iii) the extent disclosure is required by law, regulation or judicial order by
any governmental authority.
(b) The Company agrees to keep proprietary information regarding
Purchaser confidential and agrees that it will only use such information in
connection with the transactions contemplated by this Agreement and not disclose
any of such information other than (i) to the Company's directors, officers,
employees, representatives and agents who are involved with the transactions
contemplated by this Agreement, (ii) to the extent such
50
information presently is or hereafter becomes available, on a non-confidential
basis, from a source other than the Company or Purchaser, and (iii) to the
extent disclosure is required by law, regulation or judicial order by any
governmental authority.
(c) Prior to any disclosure required by law, regulation or judicial
order, Purchaser or the Company, as the case may be, shall advise the other of
such requirement so that it may seek a protective order.
(d) Prior to Closing or thereafter, neither Purchaser nor the Company
shall make any press release or public announcement in connection with the
transactions contemplated hereby without the prior written consent of the other
party or, if required by law, without prior consultation with the other party.
18. NOTICES. Any notice or other communication hereunder may be
given to a party at its address set forth below or to such other address as such
party shall have given notice of pursuant hereto. Any notice shall be in
writing and or sent by registered or certified mail, postage prepaid, return
receipt requested, by facsimile, by personal delivery or reputable overnight
courier. Notices shall be deemed to have been given (i) in case of personal
delivery, when receipt has been confirmed, (ii) in the case of delivery to a
reputable overnight courier, on the next day, (iii) in the case of mail, on the
third Business Day following deposit in the mails and (iv) in the case of
facsimile, when telecopied with confirmation of transmission.
51
In the case of Purchaser:
c/o Jupiter Partners L.P.
00 Xxxxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopy: 000-000-0000
With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: 000-000-0000
In the case of the Company:
Core-Xxxx International, Inc.
000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx
Telecopy: 000-000-0000
With copies to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: 000-000-0000
19. ENTIRE AGREEMENT. This Agreement and the Confidentiality
Agreement represent the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed
52
by the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought.
20. SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement and all rights and obligations
hereunder may not be assigned or transferred without the prior written consent
of the other party hereto.
21. SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
22. APPLICABLE LAW. This Agreement shall be governed by, construed
and enforced in accordance with the law of the State of New York.
23. EXPENSES. Whether or not the transactions contemplated hereby
are consummated, and except as otherwise specifically provided in this
agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses. Notwithstanding the foregoing, (i) all transaction-related
fees and expenses incurred by the Company and/or LLC, including, without
limitation, the fees and expenses for services by Weil, Gotshal & Xxxxxx LLP,
Xxxxxx, Xxxxx & Xxxxx, Xxxxxx Freres & Co. and the Company's accountants, and
any other advisor of LLC or the Company shall be borne by LLC and not by the
Company or the Purchaser and, simultaneously with the Closing, LLC will
reimburse the Company for any of
53
such fees and expenses paid by the Company and (ii) if the Closing does not
occur notwithstanding that Purchaser has used all reasonable and diligent
efforts to consummate the transactions contemplated by this Agreement and is not
in breach of its obligations in this Agreement, all transaction-related fees and
expenses incurred by Purchaser (including, without limitation, all commitment
and other fees payable in connection with the financing of the purchase price
hereunder, all legal fees and expenses, and all fees and expenses payable to
Jupiter Advisor Inc.) up to a maximum amount of $1,000,000 shall be reimbursed
to Purchaser by the Company.
24. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
25. NO THIRD PARTY BENEFICIARIES. Except as expressly provided in
Section 13 hereof, no provision of this Agreement is for the benefit of or shall
confer any rights upon any person who is not a party to this Agreement.
54
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
CM/J ACQUISITION, LLC
By:
/s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Authorized Signatory
CORE-XXXX INTERNATIONAL, INC.
By:
/s/ Xxxx X. Xxxxx
------------------------------
Name: Xxxx X. Xxxxx
Title: Chairman And Chief Executive Officer
55
GUARANTY
The undersigned, Jupiter Partners, L.P., hereby unconditionally
guarantees the due and punctual payment and performance of all obligations of
CM/J Acquisition, LLC under the foregoing Agreement. The liabilities of Jupiter
Partners, L.P. under this Guaranty shall in no event exceed $60,000,000.
JUPITER PARTNERS, L.P.
By: Ganymede, L.P., its General
Partner
By: Europa, L.P., its General Partner
By:
/s/ Xxxx X. Xxxxxxx
-------------------------------------
General Partner
56
AMENDMENT NO. 1, dated as of August 6, 1996, between CM/J Acquisition,
LLC, a Delaware limited liability company ("Purchaser"), and Core-Xxxx
International, Inc., a Delaware corporation (the "Company").
The Purchaser and the Company are parties to the Stock Subscription
Agreement dated June 17, 1996 (the "Agreement"). The Purchaser and the Company
wish to amend the Agreement in certain respects and, accordingly, the parties
hereto hereby agree as follows:
1. DEFINITIONS. Except as otherwise defined in this Amendment
No. 1, terms defined in the Agreement are used herein as defined therein.
2. AMENDMENTS. Effective as of the date hereof, the Agreement is
hereby amended as follows:
(a) The third and fourth "WHEREAS" clauses in the recitals to
the Agreement are hereby amended to read, in their entirety, as follows:
"WHEREAS, the Company desires to issue and sell to Purchaser, and
Purchaser desires to purchase from the Company, (i) 26.61290 shares of the
common stock, par value $.01 per share, of the Company (the "Purchaser
Shares"), which Purchaser Shares will represent, upon consummation of the
transactions contemplated by this Agreement and the Company/LLC Purchase
Agreement (as hereinafter defined), 75% of the issued and outstanding
capital stock of the Company, and (ii) a Subordinated Note (as hereinafter
defined), each for the purchase price and upon the terms and conditions
hereinafter set forth; and
"WHEREAS, immediately following the sale and purchase of the
Purchaser Shares provided for herein, the Company, pursuant to the terms of
the Stock Purchase Agreement, dated June 17, 1996, between LLC (or assigns)
and the Company, as amended on the date hereof, a copy of which agreement,
as amended, is attached as Exhibit A hereto (the "Company/LLC Purchase
Agreement"), will purchase from LLC or its assigns 91.12903 of the LLC
Shares, and the 8.87097 shares not so purchased will represent, upon
2
consummation of the transactions contemplated by this Agreement, 25% of the
issued and outstanding capital stock of the Company and such retained
shares will, as a consequence of the liquidation of LLC and CMI
Partnership, be issued to the individuals and in the amounts set forth in
Schedule 3(b) hereto;"
(b) Section 1 of the Agreement is hereby amended by adding the
following definitions:
"'SUBORDINATED DEBT' shall mean indebtedness of the Company
having the principal terms set forth on Schedule 1."
"'SUBORDINATED NOTE' shall mean a promissory note of the
Company evidencing Subordinated Debt."
(c) Section 2 of the Agreement is hereby amended to read, in its
entirety, as follows:
"2. SALE OF SHARES AND NOTE; PURCHASE PRICE. (a) On the terms and
subject to the conditions set forth in this Agreement, the Company hereby
agrees to issue, sell and deliver to Purchaser, and Purchaser hereby agrees
to purchase from the Company, at the Closing, (i) the Purchaser Shares and
(ii) a Subordinated Note with an original issue price of $18,750,000.
(b) The per share purchase price to be paid by Purchaser for the
Purchaser Shares shall be $1,550,000, for a total purchase price of
$41,250,000, which shall be payable in U.S. dollars in immediately
available funds as hereinafter provided.
(c) The purchase price for the Subordinated Note shall be
$18,750,000, which shall be payable in U.S. dollars in immediately
available funds as provided herein.
(d) The Company hereby directs Purchaser to pay, on the Closing
Date, by wire transfer in U.S. dollars in immediately available federal
funds $60,000,000 to an account specified on or prior to the Closing Date
by the Company.
Immediately following the sale and purchase of the Purchaser
Shares, the Company will transfer to an account designated by LLC
$125,000,000, payable in U.S. dollars in immediately available funds, and
will issue and deliver Subordinated Notes to LLC (or assigns) with an
aggregate
3
original issue price of $6,250,000, and such Notes as a consequence of the
liquidation of LLC and CMI Partnership will be issued to the individuals
and in the amounts specified in Schedule 3(b), in payment of the purchase
price for the 91.12903 LLC shares to be purchased by the Company pursuant
to the Company/LLC Purchase Agreement.
(e) On the Closing Date, the Company shall pay, by wire transfer
in U.S. dollars in immediately available federal funds, $10,000,000 (the
"Additional Consideration") to an account specified on or prior to the
Closing Date to the escrow agent mutually selected by the Company and
Purchaser to be held in accordance with the Escrow Agreement."
(d) Schedule 3(b) to the Agreement is hereby deleted and
replaced with Schedule 3(b) hereto.
(e) Section 3(d) of the Agreement is hereby amended by changing,
in the second sentence thereof, "87.09677" to "91.12903."
(f) Section 4(f) of the Agreement is hereby amended by adding,
after the words "Purchaser Shares," as such words appear once in the first and
second sentences thereof and twice in the fourth sentence thereof, the words
"and the Subordinated Notes acquired hereunder."
(g) Section 10(c)(i) of the Agreement is hereby amended to read,
in its entirety, as follows:
"(i)(x) Certificates representing the Purchaser Shares duly
registered on the books of the Company in the name of Purchaser, and (y) a
Subordinated Note payable to the order of Purchaser with an original issue
price of $18,750,000."
(h) The Company/LLC Purchase Agreement set forth as Exhibit A of
the Agreement shall be amended as follows:
4
(1) The second "WHEREAS" clause in the recitals to the
Company/LLC Purchase Agreement shall be amended to read, in its entirety,
as follows:
"WHEREAS, immediately following the issuance and sale by
Purchaser to CM/J Acquisition, LLC, a Delaware limited liability company
(hereinafter referred to as "CAC"), of 26.61290 shares of its Common Stock
and a Subordinated Note (as defined in the CAC Subscription Agreement) with
an original issue price of $18,750,000, pursuant to the terms of the Stock
Subscription Agreement, dated the date hereof, between Purchaser and CAC
(the "CAC Subscription Agreement"), Seller (or assigns) will sell to
Purchaser, and Purchaser will purchase from Seller (or assigns), 91.12903
shares of Common Stock (the "Seller Shares"), for the purchase price and
upon the terms and conditions hereinafter set forth;
(2) Section 1 of the Company/LLC Purchase Agreement shall
be amended to read, in its entirety, as follows:
"1. PURCHASE AND SALE OF SHARES; PURCHASE PRICE. (a) On the
terms and subject to the conditions set forth in this Agreement, Seller
hereby agrees to sell to Purchaser, and Purchaser hereby agrees to purchase
from Seller, at the Closing (as hereinafter defined), the Seller Shares.
(b) The total purchase price to be paid by Purchaser for the
Seller Shares (the "Purchase Price") shall be $131,250,000 plus the
Additional Consideration (as hereinafter defined), which Purchase Price
shall be payable (i) $125,000,000 in U.S. dollars in immediately available
funds, and (ii) the remainder by delivery of Subordinated Notes with an
original issue price of $6,250,000.
(c) Any funds held pursuant to the Escrow Agreement (as
defined in the CAC Subscription Agreement) at the termination thereof
following the distribution to CAC of all payments therefrom to which it is
entitled shall be distributed by the escrow agent in the manner to be
determined by the members of Seller, which distribution of the remaining
funds held pursuant to the Escrow Agreement shall constitute additional
consideration for the Seller Shares (the "Additional Consideration")."
(3) Section 5(c) of the Company/LLC Purchase Agreement
shall be amended to read, in its entirety, as follows:
5
"(c) At the Closing, Purchaser shall (i) cause the wire transfer
of $125,000,000 in U.S. dollars in immediately available funds to be made
to an account specified by Seller and shall issue and deliver Subordinated
Notes with an aggregate original issue price of $6,250,000 as specified on
Schedule 3(b) to the CAC Subscription Agreement."
3. EFFECTIVENESS. This Amendment No. 1 shall become effective upon
the amendment of the Company/LLC Agreement as provided herein, which the Company
represents has occurred concurrently with the execution of this Amendment No. 1.
4. MISCELLANEOUS. Except as provided herein, the Agreement shall
remain unchanged and in full force and effect. This Amendment No. 1 shall be
governed by, and construed and enforced in accordance with, the law of the State
of New York.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment No. 1 as of the day and year first above written.
CM/J ACQUISITION, LLC
By
/s/ Xxxx X. Xxxxx
------------------------------
CORE-XXXX INTERNATIONAL, INC.
By
/s/ Xxx X. Xxxxxx
------------------------------
Schedule 3(b)
Management Employees
Shares Subordinated Note
------ -----------------
Xxxx X. Xxxxx 2.21775 $1,562,505
Xxxxxx X. Xxxxx 1.81855 1,281,251
Xxx X. Xxxxxx 1.37500 968,750
J. Xxxxxxx Xxxxx 1.37500 968,750
Xxxxx X. Xxxxxx 1.06451 749,995
Xxx Xxxxxxxx 1,02016 718,749
------- ----------
8.87097 $6,250,000
Schedule 1
CORE-XXXX INTERNATIONAL, INC.
SUBORDINATED DEBT TERM SHEET
Ownership Pro-rata by common shareholders according to
their common interests
Principal Amount To be computed at closing on the basis of a
deemed annual interest rate of 6.73%,
compounded semi-annually, for the period
commencing on the closing and ending on July 1,
2001
Original Issue Price $25 million
Interest Rate 0% through July 1, 2001 (deemed annual interest
to be added to original issue price to
determine principal amount); 6.73% per annum
thereafter on the then outstanding principal
amount, payable semi-annually
Maturity Date July 31, 2004; single payment maturity
Optional Redemption Callable at any time at original issue price
plus accrued OID.
Ranking Subordinated to all present and future
indebtedness for borrowed money and like debt
Restrictive Covenants None
