SHARE PURCHASE AGREEMENT
This Share Purchase Agreement is made and entered into on September 18,
2001, as amended and restated on the date set forth on the signature page hereto
(as amended, this "AGREEMENT"), among Seneca Investments LLC, a Delaware limited
liability company ("PARENT"), E-Services Investments Organic Sub LLC, a Delaware
limited liability company and a wholly owned subsidiary of Parent ("PURCHASER"),
Organic Holdings LLC, a Delaware limited liability company ("SELLER"), and
Xxxxxxxx Xxxxxx, the holder of a majority of the membership interests in Seller
(the "MAJORITY MEMBER").
RECITALS
A. As of June 14, 2001, (1) Organic Holdings, Inc., a California
corporation ("HOLDINGS"), transferred certain assets to Cinagro, Inc., a newly
formed Delaware corporation and wholly owned subsidiary of Holdings ("CINAGRO"),
specifically (a) all of the shares of common stock (the "COMPANY SHARES") of
Organic, Inc., a Delaware corporation (the "COMPANY"), beneficially owned by
Holdings and (b) the promissory notes, dated January 31, 2000, issued by the
Majority Member and payable to Holdings in the original aggregate principal
amount of $10,756,374.75, plus accrued but unpaid interest (the "PROMISSORY
NOTES"), in return for all of the shares of capital stock in Cinagro, and (2)
Holdings further entered into an Operating Agreement for Seller, pursuant to
which Holdings was issued membership units (the "UNITS") representing all of the
economic interest of Seller;
B. Thereafter but prior to September 18, 2001, (1) Holdings contributed all
of its assets, including the shares of capital stock of Cinagro, and its
liabilities to Seller and (2) Holdings distributed the Units to the shareholders
of Holdings and Holdings was dissolved;
C. As a result of the Reorganization, as of the Closing Date, Seller owns
all the outstanding shares of capital stock of Cinagro and the Promissory Notes
and Cinagro owns the Company Shares;
D. Prior to the Closing, Cinagro shall have (1) dividended to Seller the
Promissory Notes or redeemed a portion of the shares of capital stock of Cinagro
from Seller in exchange for the distribution to Seller of the Promissory Notes,
(2) furnished to Parent such evidence as it shall have requested pertaining to
the foregoing, and (3) dividended to Seller any cash paid upon the exercise of
the Cinagro Warrant (such transactions described in Recitals A, B and D,
collectively, the "REORGANIZATION");
E. Seller desires to sell to Purchaser, and Purchaser desires to purchase
and accept from Seller, all of the shares of capital stock of Cinagro other than
the shares, if any, redeemed by Cinagro in the Reorganization (the shares to be
so purchased and sold, the "CINAGRO SHARES") on the terms and subject to the
conditions of this Agreement; and
F. Each of Parent, Purchaser, Seller and the Majority Member desire that
the foregoing transactions be completed on such terms and subject to such
conditions and wish to make certain representations, warranties and covenants in
connection therewith.
NOW, THEREFORE, the parties hereto agree as follows:
I. PURCHASE AND SALE OF THE CINAGRO SHARES
1.1. Purchase and Sale. On the terms and subject to the conditions of
this Agreement, at the Closing, Seller will sell, assign, transfer and deliver
to Purchaser, and Purchaser will purchase and accept from Seller, the Cinagro
Shares. All certificates representing the Cinagro Shares being sold by Seller
will be duly endorsed, with all necessary transfer tax stamps affixed.
1.2. Purchase Price. Parent will cause Purchaser to pay to Seller in
accordance with the payment provisions (the "PAYMENT PROVISIONS") set forth on
Schedule 1.2 the purchase price (the "PURCHASE PRICE") for the Cinagro Shares to
be purchased and sold at the Closing, calculated and paid as follows:
(a) Closing Payment. On or before the first business day after the
Closing Date, an amount equal to $8,500,303 ("IP-1").
(b) Second Payment. Within ten calendar days after the Annual
Determination for calendar year 2002 and any adjustments thereto have become
binding on the parties as herein provided, if the 2002 PBT is greater than $10.0
million, a second payment of $2.5 million ("IP-2").
(c) Third Payment. Within ten calendar days after the Annual
Determination for calendar year 2003 and any adjustments thereto have become
binding on the parties as herein provided, if the 2003 PBT is greater than $15.0
million and the 2003 PBT Margin is greater than 10%, a third payment of $5.0
million ("IP-3").
(d) Fourth Payment. Within ten calendar days after the Annual
Determination for the calendar year 2004 and any adjustments thereto have become
binding on the parties as herein provided, a fourth payment ("IP-4") (but only
if the amount is a positive number), calculated as follows:
IP-4 = IP-4 MULTIPLE X 2002 PBT + 2003 PBT + 2004 PBT X 0.60 X O MULTIPLE
------------------------------
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MINUS (IP-1 + IP-2 + IP-3)
(e) Fifth Payment. Within ten calendar days after the Annual
Determination for the calendar year 2005 and any adjustments thereto have become
binding on the parties as herein provided, a fifth payment ("IP-5") (but only if
the amount is a positive number), calculated as follows:
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IP-5 = IP-5 MULTIPLE X 2003 PBT + 2004 PBT + 2005 PBT X 0.60 X O MULTIPLE
------------------------------
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MINUS (IP-1 + IP-2 + IP-3 + IP-4)
(f) Final Payment. Within ten calendar days after the Annual
Determination for the calendar year 2006 and any adjustments thereto have become
binding on the parties as herein provided, a final payment ("FP") (but only if
the amount is a positive number), calculated as follows:
FP = FP MULTIPLE X CAPBT X O MULTIPLE MINUS (IP-1 + IP-2 + IP-3 + IP-4 + IP-5)
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(g) Non-refundability of Payments. Any payments made to Seller pursuant
to Sections 1.2(a), (b), (c), (d), (e) or (f) will be nonrefundable and, to the
extent IP-4, IP-5 or FP are negative numbers, no amounts are required to be paid
by any party under this Agreement with respect thereto.
1.3. Certain Definitions. For purposes of this Agreement, the following
terms will have the meanings indicated below:
(a) The term "NET INCOME" means the Company's consolidated net income
(loss) for the relevant period determined in accordance with United States
generally accepted accounting principles consistently applied ("GAAP").
(b) The term "PBT" means Net Income of the Company before provision for
federal, state and local income taxes for such period, determined in accordance
with GAAP; provided that the following specific rules and adjustments will apply
whether or not those rules are consistent with GAAP (except as specifically
stated below) for purposes of calculating PBT, Revenue, PBT Margin or any other
amount contemplated hereby to be determined by reference to a financial
statement:
(i) neither the proceeds from nor any dividends or refunds with
respect to, nor any increases or decreases in the cash surrender value
of, any life insurance policy under which Purchaser or any subsidiary
thereof is the named beneficiary or otherwise entitled to recovery or
any return of any deposit or prepayment will be included as income or
revenue, or expense or loss, as the case may be;
(ii) extraordinary or unusual gains or losses and net gains from the
sale of any capital assets will be excluded, but net losses from the
sale of any capital assets will be included (after giving effect to the
exclusion of restructuring charges recorded or reserves or accruals
established by the Company prior to the Closing or the date of
completion of a Transaction (the "TRANSACTION CLOSING") to the extent
set forth in Section 1.3(b)(iii));
(iii) notwithstanding Section 1.3(b)(ii), any write-downs or
reserves against assets or liabilities of the Company or any of its
subsidiaries in
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accordance with GAAP, including without limitation accounts receivable
reserves or write-offs, will be treated as an expense except to the
extent of Purchase Accounting Accruals specifically related thereto and
except that restructuring charges recorded and agreed to by Parent prior
to the Closing or the Transaction Closing will be excluded to the extent
of Purchase Accounting Accruals specifically related thereto;
(iv) the utilization of reserves or accruals established by the
Company prior to the Closing or the Transaction Closing and to which
Parent has consented (such consent not to be unreasonably withheld as to
reserves required by GAAP as determined by the Accountants) and Purchase
Accounting Accruals, in each case to the extent consistent with GAAP and
specifically relating to an event or circumstance for which they were
established, will be permitted and, notwithstanding Section 1.3(b)(xii),
the reversal or release of any reserve specifically described in
Schedule 1.3(b)(iv) by reason of an event occurring after September 18,
2001 and requiring such reversal under GAAP will be taken into account
in determining PBT for the Measuring Period in which such event occurs;
provided, however, that (x) the calculation of the amount by which such
reversed or released reserve may be taken into account for any month
within a relevant fiscal period will equal the total amount so reversed
or released divided by the total number of months remaining under the
lease to which the reserve related as in effect on September 18, 2001,
with that quotient further divided by (1) 5.5 with respect to 2004 PBT
used to calculate IP-4, (2) 5.5 with respect to 2004 and 2005 PBT used
to calculate IP-5, and (3) the FP Multiple with respect to 2004, 2005
and 2006 PBT used to calculate FP, and (y) the reserves listed on
Schedule 1.3(b)(iv) may be utilized, reversed or released, as the case
may be, only in respect of the related lease specified on such Schedule;
(v) interest income and expense will be included; provided, however,
that (A) following the Closing, whether or not the Company declares or
pays dividends or other distributions to its stockholders (and
regardless of the amount of any such distribution), in all events any
interest income or expense will be calculated as if the Company
distributed to its stockholders on January 1st of each year 90% of its
Net Income for the immediately preceding year, (B) except as aforesaid,
all other investment income will be excluded (other than investment
income from any cash management program in which the Company
participates), and (C) dividends paid or accrued on preferred stock
issued by the Company or any of its subsidiaries will be treated as an
expense for purposes of calculating PBT;
(vi) costs or expenses incurred in preparing or contesting any
Annual Determination will not be treated as an expense; provided,
however, that such costs and expenses will only be excluded to the
extent they are not part of the Company's normal audit expense;
(vii) the revenue, income, expenses, assets and liabilities of any
subsidiary of the Company whose results of operations are required to be
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consolidated with those of the Company under GAAP will be included only
in proportion to the Company's direct or indirect ownership in such
subsidiary;
(viii) intercompany management fees, if any, charged by and
dividends paid to Parent, Purchaser or any one of their respective
successors, owners or Affiliates (each, a "PARENT COMPANY") or to the
Company and its subsidiaries will not be treated as expenses;
(ix) charges for services rendered or provided to the Company or any
subsidiary thereof by any Parent Company and agreed to by Parent and
Seller (other than services covered by Section 1.3(b)(viii)), or for
expenses incurred for insurance and other items purchased on a group
basis, in any such case on substantially the same basis as all other
Parent Companies that are covered thereby (as to which Parent will
disclose to the Company as promptly as reasonably practicable in
connection with the preparation of Parent's budget and in connection
with any material modifications thereto), will be treated as expenses;
(x) goodwill recorded by Parent or Purchaser, including the related
amortization or impairment thereof, including any amounts that are
pushed down to the Company or any of its subsidiaries arising out of the
transactions contemplated hereby or the Transaction, will be excluded;
(xi) Indemnifiable Losses of a Purchaser Indemnified Party which
give rise to an indemnity payment pursuant to Section 5.3 and which are
assumed by Seller or the Majority Member or as to which the Purchaser
Indemnified Parties have been reimbursed (by offset or otherwise) will
not be treated as an expense, and any amount received by any Purchaser
Indemnified Party pursuant thereto will be excluded from the calculation
of PBT;
(xii) the following expenditures will be excluded for the purposes
of calculating PBT for the Measuring Period in which the expenditures
are made or, if earlier, accrued under GAAP: (A) restructuring reserves
recorded by the Company through the six-month period ended June 30, 2001
and reflected in the Company's financial statements as of and for the
six months ended June 30, 2001 that were delivered to Parent prior to
September 18, 2001 and that have been acknowledged and agreed to in
writing by Parent and (B) other items, if any, identified by Parent and
within the specific reserves set forth in Schedule 1.3(b)(xii);
provided, however, that, notwithstanding Section 1.3(b)(iv), in any such
case (A) the reversal or release of any portion thereof or of any
Purchase Accounting Accruals will be disregarded for all purposes of
this Agreement and (B) only expenditures of the specific type for which
a particular restructuring reserve or Purchase Accounting Accrual was
established may be excluded for such purposes; and
(xiii) dividends, if any, the payment of which is contingent on or
determined by reference to achievement of a specific level of PBT will
be treated
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as an expense for the year in which Net Income was measured, but only to
the extent such dividends are paid on the Class A Common Stock of the
Company.
(c) "MEASURING PERIOD" means the applicable periods specified in Section
1.2 for the calculation of PBT, Revenues and PBT Margin, as the case may be.
(d) "REVENUES" during each relevant period means revenues reflected on
the consolidated income statement of the Company for that Measuring Period
prepared in accordance with GAAP, as adjusted in accordance with the applicable
rules of Section 1.3(b) and finally determined pursuant to Section 1.4.
(e) "PBT MARGIN" for a Measuring Period will equal the percentage
equivalent of the quotient determined by dividing the total PBT for such
Measuring Period by the total Revenues for such Measuring Period. For this
purpose, the PBT Margin for 2003 is determined by dividing the sum of PBT for
2003 by the total Revenues for 2003 and the PBT Margin for 2006 is determined by
dividing the sum of PBT for 2004, 2005 and 2006 by the total Revenues for 2004,
2005 and 2006. For purposes of this Agreement, the PBT Margin will be rounded up
or down, as the case may be, to the nearest one-tenth of one percent.
(f) "IP-4 MULTIPLE" means 5.5.
(g) "IP-5 MULTIPLE" means 5.5.
(h) "FP MULTIPLE" means 5.5, (i) increased by 0.5 if the average of the
2004, 2005 and 2006 Revenue Growth Rates is at least 20% and by 0.5 if PBT
Margin for 2006 is greater than 12% and (ii) decreased by 0.5 if the average of
the 2004, 2005 and 2006 Revenue Growth Rates is less than 12% and by 0.5 if PBT
Margin for 2006 is less than 8%.
(i) "O MULTIPLE" means 53.4% (the "BASE O MULTIPLE)"; provided that
following the Closing, if the Company has outstanding any voting capital stock
("VOTING STOCK") that was not outstanding effective as of the Closing
("ADDITIONAL VOTING STOCK"), and/or subsequently redeems any such Additional
Voting Stock, in each case other than Class A Common Stock (as defined in the
Incentive Plan) (which will not be treated as "Additional Voting Stock"
hereunder), the O Multiple will be equitably adjusted for the time during the
applicable Measuring Period in which the Company had Additional Voting Stock
outstanding by multiplying the O Multiple in effect immediately prior to such
issuance or redemption by a fraction (the "O MULTIPLE ADJUSTMENT FACTOR"), the
numerator of which is the aggregate number of shares of Voting Stock (including
Additional Voting Stock) outstanding immediately prior to such issuance or
redemption plus the total number of authorized shares of Class A Common Stock
(the "CLASS A NUMBER") and the denominator of which is the aggregate number of
shares of Voting Stock outstanding immediately following such issuance or
redemption plus the Class A Number.
(j) "CAPBT" is the sum of (A) aggregate PBT for the calendar years 2004,
2005 and 2006 (whether PBT for such years is positive or negative) minus (B) (i)
negative
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PBT, if any, for the period beginning on the first day of the calendar month in
which the Closing Date occurs and ending on and including December 31, 2002 plus
(ii) two times the amount of negative PBT, if any, for calendar year 2003.
Notwithstanding any other provision hereof,
(i) If PBT is negative in 2002, 2003 PBT will be reduced by the
amount of such negative PBT for purposes of calculating IP-3 and PBT for
2004; and
(ii) If PBT is negative in 2003, such negative 2003 PBT will be
multiplied by 2 for purposes of calculating IP-4 and IP-5 and 2004 PBT
will be reduced by the amount of such negative 2003 PBT multiplied by 2.
(k) "TRANSACTION" means (i) any merger, consolidation or other form of
business acquisition or combination transaction pursuant to which the Company
becomes a direct or indirect wholly owned subsidiary of Parent or any of its
direct or indirect stockholders (any such transaction, a "MERGER") or (ii) a
tender offer in which Parent, any of Parent's direct or indirect stockholders or
Purchaser purchases more than 90% of the outstanding voting stock of the
Company, so long as in either case, (A) Parent determines that each Company
Stock Right has been or will be extinguished in a Merger at a per share price no
greater than the positive difference, if any, between the per share price paid
to all stockholders of the Company (other than Parent and its Affiliates) in
such transaction and the exercise price thereof, and (B) Parent and Purchaser
are not prohibited from completing a Merger by any then-applicable law or court
order.
(l) "PURCHASE ACCOUNTING ACCRUALS" means accruals established by Parent
or Purchaser in accordance with GAAP in connection with the Transaction or the
transactions contemplated hereby.
(m) "REVENUE GROWTH RATE" for a given year will equal the percentage
equivalent of the quotient determined by dividing (A) total Revenues for such
year minus total Revenues for the immediately prior year by (B) total Revenues
for such immediately prior year. For this purpose, the Revenue Growth Rate for
2004 is determined by subtracting 2003 Revenues from 2004 Revenues and dividing
such amount by 2003 Revenues; the Revenue Growth Rate for 2005 is determined by
subtracting 2004 Revenues from 2005 Revenues and dividing such amount by 2004
Revenues; and the Revenue Growth Rate for 2006 is determined by subtracting 2005
Revenues from 2006 Revenues and dividing such amount by 2005 Revenues. For
purposes of this Agreement, the Average Revenue Growth Rate will be rounded up
or down, as the case may be, to the nearest one-tenth of one percent.
1.4. Accounting Procedures. (a) The parties will use their respective
reasonable best efforts to cause Xxxxxx Xxxxxxxx LLP, another nationally
recognized independent accounting firm then retained by Parent as its
independent accountants (the "ACCOUNTANTS"), as soon as practicable after the
end of each of 2002 through 2006, but in any event not later than April 30th of
the following year, to prepare in accordance with this Agreement a report
containing an audited consolidated balance
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sheet of the Company as of the close of business on December 31st of each such
fiscal year, and a related audited consolidated statement of income of the
Company for the 12 months then ended, in each case together with a statement of
the Accountants that states that such report was prepared in accordance with
this Agreement and sets forth the PBT, PBT Margin and Revenues for the period
under examination and all adjustments required to be made to such audited
financial statements in order to make the calculations required under Sections
1.2 and 1.3 (the "ANNUAL DETERMINATION"). All such determinations will be in
accordance with the applicable provisions of this Agreement. No adjustment or
accrual required by GAAP to any of the items to be calculated pursuant to this
Section 1.4 will be disregarded based on materiality considerations.
(b) If Purchaser or Seller does not agree that an Annual Determination
correctly states the applicable PBT, PBT Margin or Revenues, the disputing party
will promptly (but not later than 45 calendar days after the delivery of such
Annual Determination) give written notice to the other of its exceptions thereto
(in reasonable detail describing the nature of the disagreement asserted). If
Purchaser and Seller reconcile their differences in writing, the Annual
Determination will be adjusted accordingly and will thereupon become binding,
final and conclusive on all of the parties hereto. If Purchaser and Seller are
unable to reconcile their differences, the items in dispute will be submitted to
a mutually acceptable nationally recognized accounting firm (the "INDEPENDENT
AUDITORS") in the United States other than the Accountants for final
determination and the Annual Determination will be deemed adjusted in accordance
with the determination of the Independent Auditors and will become binding,
final and conclusive on all of the parties hereto. The Independent Auditors may
consider only the items in dispute, may reach a determination on such items only
within the range specified by Purchaser and Seller for resolving each item in
dispute and will be instructed by Purchaser and Seller to act within 90 calendar
days (or such longer period as Purchaser and Seller may agree) to resolve all
items in dispute. If Purchaser and Seller do not give notice of any exception
within 45 calendar days after the delivery of an Annual Determination or if
Purchaser and Seller give written notification of their acceptance of an Annual
Determination, such Annual Determination will thereupon become binding, final
and conclusive on all the parties hereto.
(c) In the event the Independent Auditors are for any reason unable or
unwilling to perform the services required of them under this Section 1.4, then
Purchaser and Seller will select another nationally recognized accounting firm
in the United States other than such firm or the Accountants to perform the
services to be performed under this Section 1.4 by the Independent Auditors. If
Purchaser and Seller fail to select the Independent Auditors as so required or
fail to select another accounting firm after it is determined that the
Independent Auditors will not perform the services required, or if the
Accountants are unable or unwilling to perform the Annual Determination, either
of Purchaser or Seller may request the American Arbitration Association in New
York, New York (the "AAA") to appoint an independent firm of certified public
accountants to perform the services required under this Section 1.4 by the
Independent Auditors or, if applicable, the Accountants. Any arbitration herein
contemplated will be conducted in
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New York City. For purposes of this Section 1.4, the term "INDEPENDENT AUDITORS"
includes such other accounting firm chosen in accordance with the foregoing
provisions.
(d) One-half of the fees and expenses of the Independent Auditors and
the AAA will be paid by Purchaser and one-half of such fees and expenses will be
paid by Seller.
1.5. Examination of Books and Records. The parties will use their
respective reasonable best efforts to make available to all parties during
normal business hours upon reasonable advance notice all books and records,
including accountants' work papers, relevant to the calculations required under
Section 1.3.
1.6. Payment of the Purchase Price. Payment of each component of the
Purchase Price will be made by Purchaser by wire transfer of immediately
available funds in accordance with Section 1.2. Each of the Purchase Price
payments set forth in Sections 1.2(b), (c), (d), (e) and (f) will be deemed to
include imputed interest, to the extent required by the Internal Revenue Code of
1986, as amended (the "CODE").
II. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Seller. Seller hereby represents
and warrants to Parent and Purchaser as follows:
2.1.1 Organization, Execution and Effect of Agreement. (a) Seller is a
limited liability company that (A) is duly organized, validly existing and in
good standing under the Laws of its jurisdiction of formation, (B) is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
the nature of its business makes such qualification necessary, except for such
of the foregoing in which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to prevent
or materially delay the consummation of the transactions contemplated by this
Agreement or Seller's performance of its obligations under this Agreement or any
Transaction Document to which it is or will be a party (a "SELLER MATERIAL
ADVERSE EFFECT"), (C) has the requisite power and authority to execute and
deliver this Agreement and the other documents to be delivered at the Closing
hereunder (the "TRANSACTION DOCUMENTS") to which Seller is a party and to
perform the transactions contemplated hereby and thereby to be performed by it,
and (D) has duly taken all necessary action required to be taken under
applicable Law for the due authorization of the execution and delivery by Seller
of this Agreement and the Transaction Documents to which it is a party and the
performance by it of the transactions contemplated hereby or thereby. Cinagro
has engaged in no business activities other than to facilitate the transactions
contemplated hereby, has no liabilities or obligations other than as set forth
in, and pursuant to, this Agreement or as set forth in Schedule 2.1.6, and has
no assets other than the Company Shares, the Promissory Notes and any proceeds
from the exercise of the Cinagro Warrant.
(b) This Agreement has been, and the Transaction Documents to which
Seller is a party will be, duly and validly executed and delivered by Seller
and, assuming the due
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execution and delivery of this Agreement by the Majority Member, Purchaser and
Parent, and assuming the due execution and delivery of the Transaction Documents
by the other parties thereto, constitute legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms.
(c) Without limiting the generality or effect of any other provision
hereof, the Reorganization described in Recital A has been approved by the
Boards of Directors of Holdings and Cinagro and the Reorganization described in
Recital B has been approved by holders of the requisite number of equity
securities of Holdings. As of the Closing Date, the Reorganization has been
effected in accordance with the description thereof set forth in Recitals A, B
and D, in each case in accordance with the constituent documents of the parties
thereto and all applicable legal requirements.
2.1.2 Ownership. (a) Cinagro has no outstanding shares of capital stock
other than 1,738,674 shares of common stock issued to Seller, which as of the
Closing will constitute all of the outstanding shares of capital stock of
Cinagro. Any Shares so redeemed will be retired and no longer be outstanding.
Seller is the true and lawful owner of record, and has the sole voting power and
sole dispositive power over, the Cinagro Shares. The delivery of the
certificates representing the Cinagro Shares being sold by Seller will transfer
to Purchaser good and valid title to the Cinagro Shares, free of any liens,
security interests or other encumbrances, claims or voting or other restrictions
(collectively, "LIENS") of any kind adverse to Parent or Purchaser. Cinagro is
the true and lawful owner of record of, free of any Liens, and has the sole
voting power and sole dispositive power over, the Company Shares.
(b) As of the Closing Date, (x) not more than 8,300,200 Company Stock
Rights will be issued and outstanding, (y) the aggregate value of all
"in-the-money" Company Stock Rights outstanding as of November 14, 2001 (based
on the positive difference between $0.33 per Company Share and the exercise
price of each Company Stock Right) is not greater than $276,000, and (z) the
Company Shares comprise 51,954,975 shares of Company common stock and constitute
(i) 58.7% of the issued and outstanding shares of capital stock of the Company
and (ii) 52.2% of the shares of capital stock of the Company assuming the
exercise of all Company Stock Rights issued and outstanding as of November 14,
2001. To the knowledge of Seller after due inquiry of the officers of the
Company, since September 6, 2001, there have been no issuances of Company common
stock (other than in connection with the exercise of Company Stock Rights set
forth on Schedule 2.1.7).
2.1.3 No Cinagro Options. Except for the Warrant, dated June 14, 2001,
in favor of Xxxx Hromdako to purchase shares of common stock of Cinagro (the
"CINAGRO WARRANT"), there are no outstanding subscriptions, options, rights
(including phantom stock rights), warrants, calls, commitments, understandings,
arrangements, plans or other rights to acquire shares of capital stock of
Cinagro.
2.1.4 No Restrictions. (a) There is no suit, action, claim,
investigation or inquiry by any court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the United States, any foreign
country or any domestic or foreign
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state, county, city or other political subdivision ("GOVERNMENTAL AUTHORITY"),
and no legal, administrative or arbitration proceeding pending or, to the
Knowledge of Seller, threatened against Seller, Cinagro, Holdings, the Company
or any of the Cinagro Shares or the Company Shares, with respect to the
execution, delivery and performance of this Agreement or any Transaction
Document, the Reorganization or the transactions contemplated hereby or thereby
or any other agreement entered into by Seller in connection with the
transactions contemplated hereby or thereby.
(b) Except as set forth on Schedule 2.1.4(b), the execution and delivery
by Seller of this Agreement and the Transaction Documents to which it is a party
and the Reorganization do not and will not, and the performance by Seller of the
transactions contemplated hereby and thereby to be performed by it will not,
conflict with, or result in any material violation of, or constitute a material
default (with or without notice or lapse of time, or both) under, or require the
Company to obtain any consent, approval or action of, make any filing with or
give any notice to, or result in or give to any Person any right of payment,
reimbursement or other material benefit, or give rise to a right of termination,
cancellation, modification or acceleration of any material obligation or the
loss of a material benefit or the incurrence of a material liability, or result
in the creation or imposition of any Lien upon the Company Shares or the Cinagro
Shares, under, (i) any provision of the certificate of incorporation or bylaws
or comparable governing documents of Seller, Cinagro or the Company or (ii) to
the Knowledge of Seller, any permit or approval ("PERMIT"), if any, issued to
Seller, Cinagro, Holdings or the Company under any statute, law, rule,
regulation or ordinance (collectively, "LAWS") or any judgment, decree, order,
writ, permit or license (collectively, "ORDERS") relating to Seller, Cinagro,
Holdings or the Company, except in the case of any of the foregoing in clause
(ii) that relate to the Company that could not reasonably be expected to have a
Company Material Adverse Effect; provided that, no representation or warranty is
made by Seller in this Section 2.1.4 with respect to the Transaction.
(c) Except as set forth in Schedule 2.1.4(c), the execution, delivery
and performance by Seller of its obligations under this Agreement and the
Transaction Documents to which it is a party and the Reorganization do not and
will not, and the consummation of the transactions contemplated hereby and
thereby will not, (i) result in the violation by Seller, Cinagro or the Company
of any Law or Order applicable only to it or any of the Cinagro Shares or the
Company Shares or (ii) conflict with, result in any violation or breach of,
constitute (with or without notice or lapse of time or both) a default under, or
require Seller, Cinagro or the Company to obtain any consent, approval or action
of, make any filing with or give any notice to, or result in or give to any
Person any right of payment, reimbursement or other material benefit or result
in the termination, cancellation, loss, modification or acceleration of any
material benefit or obligation or the incurrence of a material liability, or
result in the creation or imposition of any Lien upon the Cinagro Shares or the
Company Shares, under any of the terms, conditions or provisions of any
agreement, commitment, lease, license, evidence of indebtedness, mortgage,
indenture, security agreement, instrument, note, bond, franchise, permit,
concession or other instrument, obligation or agreement of any kind
(collectively, "CONTRACTS") to which Seller, Cinagro, Holdings or the Company is
a party or by which Seller, Cinagro or the Company or any of their respective
assets or
11
properties are bound, except in the case of any of the foregoing in clause (i)
or (ii) that relate to the Company that could not reasonably be expected to have
a Company Material Adverse Effect. Except as disclosed in the Company's proxy
statement filed with the SEC on June 20, 2000, the consummation of the Merger
(alone or together with the occurrence of any additional acts or events) will
not result in any severance or "parachute" payment or the acceleration of any
material benefit payable to any current or former director or officer of the
Company, or to the Knowledge of Seller after due inquiry of the officers of the
Company, any current or former employee of the Company. For purposes of this
Agreement, "COMPANY MATERIAL ADVERSE EFFECT" means any change, effect, event,
condition or exception that, individually or when taken together with all such
changes, effects, events, conditions or exceptions, has had or could reasonably
be expected to have or result in a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
2.1.5 Approvals and Consents. Except for the possible filing of a
pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR ACT") or as set forth on Schedule 2.1.5, no material consent, approval
or action of, filing with or notice to any Person, including without limitation
any Governmental Authority, is necessary or required under any of the terms,
conditions or provisions of any Law or Order or any Contract to which Seller,
Cinagro, Holdings or the Company is a party or the Cinagro Shares or the Company
Shares are bound that has not already been obtained in connection with the
Reorganization, the execution and delivery of this Agreement and any Transaction
Documents by Seller, the performance by Seller of its obligations hereunder or
thereunder or the consummation by Seller of the transactions contemplated hereby
or thereby. Giving effect to the Reorganization, the approval of a majority of
the management board of Seller is the only action required to be taken by Seller
or its equity owners to approve the execution and delivery of this Agreement and
any Transaction Documents by Seller, the performance by Seller of its
obligations hereunder or thereunder or the consummation by Seller of the
transactions contemplated hereby or thereby.
2.1.6 No Contracts or Other Liabilities. Except as set forth in Schedule
2.1.6, none of Seller, Holdings or any director, officer, employee or
"affiliate" or any "associates" or members of the "immediate family" (as such
terms are defined in the Exchange Act) of any of the foregoing is a party to any
Contract with, or has any claim or right against, Cinagro or the Company or any
of their respective subsidiaries, other than rights to payment of salary and
welfare benefits in the ordinary course of business; provided that no
representation or warranty is made in this Section 2.1.6 with respect to the
Majority Member. Neither Seller, Holdings nor Cinagro nor any of their
respective subsidiaries is a party to any Contract with the Company or any of
its subsidiaries in respect of this Agreement or the transactions contemplated
hereby.
2.1.7 Options; Etc. Schedule 2.1.7 sets forth a complete and accurate
list as of November 14, 2001 of each issued and outstanding warrant, option,
conversion right or other right to acquire shares of capital stock of the
Company (the "COMPANY STOCK
12
RIGHTS"), including the holder of such Company Stock Right, the date of grant,
the number of Company Shares issuable upon the exercise of such Company Stock
Right, the exercise price thereof and the number of Company Stock Rights vested.
Except as set forth in Schedule 2.1.7, as of the Closing Date, there are no
outstanding subscriptions, options, rights (including phantom stock rights),
warrants, calls, commitments, understandings, arrangements, plans or other
Company Stock Rights of any kind to acquire the Company Shares.
2.1.8 Financial Statements and No Material Adverse Changes. The
following financial statements (the "HISTORICAL FINANCIAL STATEMENTS") are
contained in the Company Filed SEC Documents or have been provided to Parent
prior to the Closing Date: (i) the audited consolidated balance sheet of the
Company and its subsidiaries as of December 31, 2000 and the related audited
consolidated statement of income, stockholders' equity and cash flows for the
fiscal year then ended, as reported on by PricewaterhouseCoopers LLP, (ii) the
unaudited consolidated balance sheet and the related unaudited consolidated
statement of income, stockholders' equity and cash flows for the nine months
ended September 30, 2001, and (iii) the unaudited consolidated balance sheet and
the related unaudited consolidated statement of income, stockholders' equity and
cash flows for the quarter ended September 30, 2001. The Historical Financial
Statements have been prepared in accordance with GAAP, applied on a consistent
basis throughout the periods indicated. Each of the consolidated balance sheets
and statements of stockholders' equity included in the Historical Financial
Statements fairly presents, in all material respects, the financial condition of
the Company and its subsidiaries at the respective date thereof, and reflects
all claims against and all debts and liabilities of the Company and its
subsidiaries, fixed or contingent, as at the respective date thereof, required
to be shown thereon under GAAP, and the related statements of income and cash
flows fairly present, in all material respects, the results of operations and
cash flows for the respective periods indicated (subject, in the case of
unaudited financial statements, to normal recurring year-end audit adjustments
and the absence of footnotes). Except as described in the Company Filed SEC
Documents, as publicly disclosed by the Company prior to the Closing Date or as
set forth on Schedule 2.1.8, since September 30, 2001 there has been no change
that could reasonably be expected to have or result in a Company Material
Adverse Effect.
2.1.9 Reports. The Company has filed all reports or other filings with
the SEC that are required to be filed prior to the Closing Date (all such
reports and filings filed prior to the Closing Date, the "COMPANY FILED SEC
DOCUMENTS"). As of their respective dates, the Company Filed SEC Documents
complied in all material respects with the requirements of the Securities Act of
1933, as amended, (the "SECURITIES ACT"), or the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to such Company Filed
SEC Documents, and none of the Company Filed SEC Documents when filed contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; the financial statements of the Company included in the Company
Filed SEC Documents comply as to form, as of their respective dates of filing
with the SEC, in
13
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position and stockholders'
equity of the Company and its consolidated subsidiaries as of the dates thereof
and the consolidated statement of earnings and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal recurring
year-end audit adjustments).
2.1.10 Certain Litigation Matters. To the Knowledge of Seller, after due
inquiry of the existing or former officers of the Company listed on Schedule
2.1.10, neither the Majority Member nor any of such officers engaged in the
conduct described in Paragraphs 27, 28, 29, 31, 67, 68, 70, 71 and 72 of the
Complaint in Xxxxx v. Organic Inc., et al., Civ. No. 01-4778 (S.D.N.Y.).
2.2. Representations and Warranties of the Majority Member. The Majority
Member hereby represents and warrants to Parent and Purchaser as follows:
2.2.1 Execution and Effect of Document. (a) The Majority Member is an
individual who has the full legal right and capacity to execute and deliver this
Agreement and the Transaction Documents to which he is a party and to perform
the transactions contemplated hereby and thereby by him.
(b) This Agreement has been, and the Transaction Documents to which the
Majority Member is a party will be, duly and validly executed and delivered by
the Majority Member and, assuming the due execution and delivery of this
Agreement by Seller, Purchaser and Parent, and assuming the due execution and
delivery of the Transaction Documents by the other parties thereto, constitute
legal, valid and binding obligations of the Majority Member, enforceable against
the Majority Member in accordance with their respective terms.
2.2.2 Ownership of Seller. The Majority Member owns a majority of the
voting power and dispositive power over Seller.
2.2.3 No Restrictions. (a) Except as set forth in Schedule 2.2.3(a),
there is no suit, action, claim, investigation or inquiry by any Governmental
Authority, and no legal, administrative or arbitration proceeding pending or, to
the Knowledge of the Majority Member, threatened against the Majority Member
with respect to the execution, delivery and performance of this Agreement or any
Transaction Document, the Reorganization or the transactions contemplated hereby
or thereby or any other agreement entered into by the Majority Member in
connection with the transactions contemplated hereby or thereby.
(b) The execution, delivery and performance by the Majority Member of
his obligations under this Agreement and the Transaction Documents to which he
is a party and the consummation of the transactions contemplated hereby and
thereby will not (i)
14
result in the violation of any Law or Order applicable to the Majority Member or
(ii) conflict with, result in any violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, or require the
Majority Member to obtain any consent, approval or action of, make any filing
with or give any notice to, or result in or give to any Person any right of
payment, reimbursement or other material benefit, or result in the termination,
cancellation, loss, modification or acceleration of any material benefit or
obligation or the incurrence of a material liability, or result in the creation
or imposition of any Lien upon the Company Shares, Seller or the Cinagro Shares,
under any of the terms, conditions or provisions of any Contract to which the
Majority Member is a party or by which the Majority Member or any of its assets
or properties are bound.
2.2.4 Contracts. Except as described on Schedule 2.2.4 or in any report
or other filing made by the Company with the Securities and Exchange Commission
(the "SEC") prior to the Closing Date, the Majority Member is not party to any
Contract with, or has any claim or right against Cinagro or the Company or any
of their respective subsidiaries, other than rights to payment of salary and
welfare benefits from the Company in the ordinary course of business.
2.3. Representations and Warranties of Purchaser and Parent. Each of
Purchaser and Parent hereby represents and warrants to Seller and the Majority
Member as follows:
2.3.1 Organization, Authorization and Effect of Agreement. (a) Each of
Parent and Purchaser is a limited liability company duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
formation and is duly qualified or licensed to do business and is in good
standing as a foreign limited liability company in each jurisdiction in which
the character of the properties owned or leased by it or the nature of its
business makes such qualification necessary, except for such of the foregoing in
which the failure to be so qualified or in good standing would not, individually
or in the aggregate, reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement or Parent's or
Purchaser's performance of their respective obligations under this Agreement or
any Transaction Document to which it is or will be a party (a "PARENT MATERIAL
ADVERSE EFFECT").
(b) Each of Parent and Purchaser has the requisite power and authority
to execute and deliver this Agreement and the Transaction Documents to which it
is a party and to perform the transactions contemplated hereby and thereby to be
performed by it. All necessary action required to be taken under applicable Laws
has been duly taken for the due authorization of the execution and delivery by
Parent and Purchaser of this Agreement and the Transaction Documents to which
each of them is a party and the performance by Parent and Purchaser of the
transactions contemplated hereby or thereby. This Agreement has been, and each
of the Transaction Documents to which the Parent or Purchaser is a party will
be, duly and validly executed and delivered by each of Parent and Purchaser and,
assuming the due execution and delivery of this Agreement by each of Seller and
the Majority Member, and the due execution and delivery of the Transaction
Documents by the other parties thereto, constitutes a valid
15
and binding obligation of each of Parent and Purchaser, enforceable against each
of them in accordance with its terms.
2.3.2 No Restrictions. The execution and delivery of this Agreement and
the Transaction Documents by each of Parent and Purchaser does not, and the
performance by Parent and Purchaser of the transactions contemplated hereby or
thereby to be performed by each of them will not, conflict with or result in any
material violation of, or constitute a material default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or the loss of a
material benefit or incurrence of a material liability under, any provision of
any operating agreement, certificate of incorporation or bylaws or comparable
governing documents of Parent and Purchaser, or any Contract or Permit
applicable to Parent or Purchaser.
2.3.3 Approvals and Consents. Except for the possible filing of a
pre-merger notification report by Purchaser under the HSR Act and filings that
may be required under the Exchange Act, no consent, approval or action of,
filing with or notice to any Person, including without limitation any
Governmental Authority, is necessary or required under any of the terms,
conditions or provisions of any Law or Order or any Contract to which Parent or
Purchaser is a party for the execution and delivery of this Agreement and any
Transaction Documents by Parent or Purchaser, the performance by Parent or
Purchaser of its obligations hereunder or thereunder or the consummation by
Parent or Purchaser of the transactions contemplated hereby and thereby, except,
in the case of Contracts to which Purchaser or Parent is a party, for such
consents or approvals that, if not obtained, could not reasonably be expected to
have a Parent Material Adverse Effect.
2.3.4 Ownership of Company Shares; Parent SEC Filings. As of the Closing
Date, Parent is the beneficial owner of 19,648,101 shares of common stock of the
Company. The Schedule 13D filed by Parent with the SEC on May 14, 2001, as
amended on August 6, 2001, was true and correct in all material respects when
filed; provided, however, that neither Parent nor Purchaser makes any
representation or warranty as to the number of outstanding shares of common
stock of the Company or the number of shares of common stock of the Company
issuable upon exercise of Company Stock Rights or any percentage derived
therefrom.
2.3.5 Status of Parent. (a) Purchaser is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D of the Securities Act.
(b) Without limiting the scope or effect of any of the representations
and warranties set forth in Sections 2.1 or 2.2, Purchaser, by reason of its
business and financial experience, has such knowledge, sophistication and
experience in financial and business matters and in making investment decisions
of this type that it is capable of (i) evaluating the merits and risks of an
investment in the Cinagro Shares and making an informed investment decision,
(ii) protecting its own interest, and (iii) bearing the economic risk of such
investment for an indefinite period of time.
16
2.3.6 Investment Intent; Certain Restrictions. (a) Purchaser is
acquiring the Cinagro Shares for investment and not with the view to, or any
intention of, a resale or distribution of the Cinagro Shares, in whole or in
part, or the grant of any participation therein in violation of federal or state
securities laws. Purchaser understands that neither the Cinagro Shares nor the
Company Shares have been registered under the Securities Act or state securities
laws by reason of specific exemptions from the registration provisions of the
Securities Act and applicable state securities laws that depend upon, among
other things, the bona fide nature of Purchaser's investment intent and the
accuracy of Purchaser's representations as set forth in Section 2.3.5. Purchaser
further understands that Seller will have no obligation to register the Cinagro
Shares or the Company Shares under the Securities Act or any state securities
laws or to take any action that would make available any exemption from the
registration requirements of such laws. Purchaser hereby acknowledges that,
because of the restrictions on transfer and assignment of the Cinagro Shares and
the Company Shares, Purchaser may have to bear the economic risk of the
investment in the Cinagro Shares and the Company Shares for an indefinite period
of time.
(b) Purchaser understands that there is no established trading market
for the Cinagro Shares, and that no public market for the Cinagro Shares may
develop in the future. Purchaser understands that the Cinagro Shares must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration requirement is available.
(c) Purchaser will observe and comply with the Securities Act and the
rules and regulations promulgated thereunder, as now in effect and as from time
to time amended, in connection with any offer, sale, pledge, transfer or other
disposition of the Cinagro Shares and the Company Shares. In furtherance of the
foregoing, and in addition to the other restrictions contained in this Section
2.3, Purchaser will not offer to sell, exchange, transfer, pledge or otherwise
dispose of any of the Cinagro Shares or the Company Shares, except pursuant to a
valid registration statement under the Securities Act or a valid exemption
therefrom.
2.3.7 Restrictive Legend. All certificates representing the Cinagro
Shares deliverable to Purchaser pursuant to this Agreement, and any certificates
subsequently issued with respect thereto or in substitution therefor, will bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES, THE SALE
IS MADE IN ACCORDANCE WITH RULE 144 OR ITS SUCCESSOR RULE UNDER THE ACT
OR AN EXEMPTION FROM REGISTRATION APPLIES."
2.3.8 Restricted Securities. Purchaser understands that the Cinagro
Shares and the Company Shares are characterized as "restricted securities" under
the federal
17
securities laws inasmuch as they are being acquired from Seller, directly or
indirectly, in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, Purchaser represents that it is familiar with Rule 144, as
presently in effect, and understands the resale limitations imposed hereby and
by the Securities Act.
III. COVENANTS
3.1. Press Releases. The parties will endeavor to consult with each
other in good faith, to the extent reasonably practicable, with respect to any
press release or similar public announcement with respect to this Agreement or
any Transaction Document or the transactions contemplated hereby or thereby;
provided, however, that nothing herein will prohibit any party from issuing or
causing publication of any such press release or public announcement to the
extent that such party determines such action to be required by Law or the rules
of the Nasdaq or any national stock exchange applicable to it or its Affiliates.
3.2. Regulatory Filings. (a) The parties will cooperate to determine if
a filing under the HSR Act is required in connection with the transactions
contemplated by this Agreement and, if required, will file or cause to be filed
as promptly as practicable with the United States Federal Trade Commission and
the United States Department of Justice all filings and any supplemental
information that may be requested pursuant to the HSR Act; provided that, at the
election of Parent and subject to the consent of Seller (which consent will not
be unreasonably withheld or delayed), Parent, Purchaser and Seller may defer the
filing of any pre-merger notification report under the HSR Act until promptly
after the execution by Parent and the Company of a definitive agreement in
respect of the Transaction contemplated by the Public Letter (as defined in
Section 3.11). If applicable to the consummation of the transactions
contemplated by this Agreement, Purchaser and Parent will each make such filings
and use their respective reasonable best efforts to obtain all Permits required
by Law. Each of Seller and the Majority Member will, and will cause the Company
to, make such filings and use its reasonable best efforts to obtain the
governmental approvals referred to in Section 2.1.5. Purchaser and Parent will
each make such filings and use their respective reasonable best efforts to
obtain the governmental approvals referred to in Section 2.3.3. All filings
referred to in this Section 3.2(a) will comply in all material respects with the
requirements of the respective Laws pursuant to which they are made.
(b) Without limiting the generality or effect of Section 3.2(a), each of
the parties will (i) use their respective reasonable best efforts to comply as
expeditiously as possible with all lawful requests of Governmental Authorities
for additional information and documents pursuant to the HSR Act, if applicable,
(ii) not (A) extend any waiting period under the HSR Act, if applicable, or (B)
enter into any agreement with any Governmental Authority not to consummate the
transactions contemplated by this Agreement or any Transaction Document, except
with the prior consent of Seller, in the case of Parent and Purchaser, or
Parent, in the case of Seller or the Majority Member, and (iii) cooperate with
each other and use their respective reasonable best efforts to
18
cause the lifting or removal of any temporary restraining order, preliminary
injunction or other judicial or administrative order which may be entered into
in connection with the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, in no
event will Parent or Purchaser or any of their Affiliates be required to divest,
hold separate or otherwise limit, or enter into any agreement to divest, hold
separate or otherwise limit, any of their respective assets or businesses or any
portion of the business of the Company.
3.3. Injunctions. Without limiting the generality or effect of any
provision of Section 3.2 or Article IV, if any Governmental Authority having
jurisdiction over any party issues or otherwise promulgates any injunction,
decree or similar order prior to the Closing that prohibits the consummation of
the transactions contemplated hereby, the parties will use their respective
reasonable best efforts to have such injunction dissolved or otherwise
eliminated as promptly as possible and, prior to or after the Closing, to pursue
the underlying litigation diligently and in good faith.
3.4. Satisfaction of Conditions. Without limiting the generality or
effect of any provision of Article IV, but subject to Section 3.2(b), prior to
the Closing, each of the parties hereto will use his or its reasonable best
efforts with due diligence and in good faith to satisfy promptly all conditions
required hereby to be satisfied by such party in order to expedite the
consummation of the transactions contemplated hereby.
3.5. Certain Covenants. Until the second anniversary of the Closing,
without further action, the Majority Member and Seller will comply with the
non-solicitation, confidentiality and other covenants or obligations contained
in Section 10 of the Incentive Plan as if they were Grantees thereunder.
3.6. Appointment of Seller's Representative. (a) Seller hereby
designates, appoints and authorizes any two members of Seller's management board
("SELLER'S REPRESENTATIVE") to serve as Seller's exclusive representative and
attorney-in-fact to make any and all decisions, grant or withhold any and all
consents and waivers, give or accept any and all instructions and notices, and
take any and all other actions as are contemplated to be taken by or on behalf
of Seller by the terms of this Agreement or any Transaction Document.
(b) Any decision or act of Seller's Representative will constitute a
decision or act of Seller, and will be final, binding and conclusive upon
Seller. Parent and Purchaser may conclusively rely upon any decision or act of
Seller's Representative as being the decision or act of Seller and Seller will
not have the right to object, dissent, protest or otherwise contest the same.
3.7. Restricted Activities. (a) If the Closing occurs, until the earlier
of the expiration of the Measuring Period and payment to Seller of the entire
amounts payable under Section 1.2 (the "COVENANT PERIOD"), except (1) as
expressly contemplated by this Agreement, (2) for transactions in which the
Company or its successors become a wholly owned subsidiary (disregarding the
Class A Common Stock (as defined in the Incentive Plan) for this purpose) of
another Person in a transaction pursuant to which
19
the Person assumes the covenants in this Section 3.7, (3) as approved by Seller
in writing, (4) for such of the following as do not reduce Revenues, Margin or
PBT in or for any Measuring Period (the parties acknowledging that Parent will
have the burden of proof as to any such matter by clear and convincing
evidence), and (5) as provided in Section 3.7(b), none of Parent, Purchaser or
any of their respective Affiliates (collectively, "PURCHASER ENTITIES") will,
and each of them will cause any entity that becomes an assignee of the Cinagro
Shares or the Company Shares as permitted hereby not to, cause the Company to
take any of the following actions if doing so would constitute a breach of the
fiduciary duty of loyalty by Purchaser or Parent under Delaware law, or result
in or involve any director of the Company breaching such duty, assuming for this
purpose that Seller continued to be a stockholder of the Company at the time in
question:
(i) except (A) for transactions covered by Purchase Accounting
Accruals or restructuring reserves contemplated by Section 1.3(b)(xii),
(B) in connection with the closure, consolidation or relocation of one
or more offices of the Company, (C) for sales or other dispositions
involving a gross sales price valued in accordance with GAAP at under
$5.0 million, or (D) as a result of or following the consummation of
reorganization or bankruptcy proceedings, voluntarily sell or otherwise
dispose of any material portion of the assets of the Company through a
transaction or series of related transactions outside the normal course
of business;
(ii) enter into any line of business that is not in the good faith
business judgment of a majority of the Company's Board of Directors
reasonably related to the business then being conducted by the Company
and its subsidiaries;
(iii) acquire the stock, assets or business of another Person in
which any Purchaser Entity has a Substantial Equity Interest (other than
Cinagro);
(iv) change its name;
(v) change any accounting policy, other than to the extent required
by law, rule, regulation or GAAP, if the effect thereof reduces
Revenues, Margin or PBT in or for any Measuring Period;
(vi) amend its certificate of incorporation, bylaws or other
comparable organizational documents if the effect thereof reduces
Revenues, Margin or PBT in or for any Measuring Period;
(vii) except for any transaction on arm's length terms (as
determined by a majority of the Company's Board of Directors in good
faith) or which Purchaser believes in good faith at the time thereof is
not reasonably likely to have an adverse effect on PBT, engage in any
material transaction with a Purchaser Entity; or
(viii) effect any transaction (or series of transactions) that would
result in a Change in Control other than a Transaction.
20
For purposes of this Agreement, a (1) "CHANGE OF CONTROL" means (A) any
consolidation or merger of the Company with or into any other corporation or
corporations in which the holders of the Company's outstanding shares
immediately before such consolidation or merger do not, immediately after such
consolidation or merger, retain stock representing a majority of the voting
power of the surviving corporation of such consolidation or merger or stock
representing a majority of the voting power of a corporation that wholly owns,
directly or indirectly, the surviving corporation of such consolidation or
merger or (B) the sale, transfer or assignment of securities of the Company
representing a majority of the voting power of all the Company's outstanding
voting securities by the holders thereof to an acquiring party other than any
transaction in (A) or (B) in which one or more of the beneficial owners of stock
of Parent (or a subsidiary of such owner) are the acquiring or purchasing party
in a single transaction or series of related transactions and (2) "SUBSTANTIAL
EQUITY INTEREST" means beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of more than 20% of the equity, measured by either voting stock or
aggregate equity interest, of a corporation or other legal entity.
(b) Notwithstanding the foregoing, the Company may complete any
transaction or take any action of a type otherwise prohibited by Section 3.7(a)
if Parent provides Seller written notice thereof not less than ten business days
prior to completing the transaction or taking the action and, in such written
notice, offers to pay Seller Fair Value within five business days after the
determination thereof as hereafter provided (a "FAIR VALUE OFFER" and such
transaction, a "FAIR VALUE TRANSACTION"). Seller may, within five business days
after receiving a Fair Value Offer from Parent, either (i) accept the Fair Value
Offer, in which case Fair Value will be determined in accordance with this
Section 3.7(b), or (ii) reject the Fair Value Offer, in which case Section 1.2
will remain in effect; provided, however, that if the Seller rejects the Fair
Value Offer and a transaction or action otherwise prohibited by Section 3.7(a)
is closed or completed by the Company, (A) if the transaction involves a merger,
consolidation or other business acquisition or combination transaction in which
Company Shares or Cinagro common stock is converted into common stock or voting
preferred stock of another person and the Company merges or consolidates with or
becomes a subsidiary of another entity, then (1) the O Multiple will, without
any further action, automatically be adjusted to the product of the O Multiple
immediately prior to such transaction and a fraction, the numerator of which is
the number of common shares (on an as-converted basis) of the acquiring,
surviving or resulting entity (such entity, the "ACQUIRING PERSON" and such
shares, the "ACQUIRING PERSON SHARES") received in the transaction by all
holders of Company Shares or Cinagro common shares (as applicable) and the
denominator of which is the total number of Acquiring Person Shares (on an
as-converted basis) outstanding immediately after the transaction and (2) "PBT,"
"Revenues" and "Net Income" from and after the closing of such transaction will
be calculated for all purposes of this Agreement on the basis of the
consolidated PBT, Revenues and Net Income of the surviving, resulting or
combined entity in such transaction and (B) as to any other transaction, the
definitions of "O Multiple," "PBT," "Revenues" and "Net Income" will be amended
in such manner as agreed to by Parent and Seller or, absent such agreement, as
Parent shall determine in good faith based on the effect such transaction would
have
21
thereon so as not to result in any material change in the amount payable
pursuant to Section 1.2 giving effect to such transaction. Parent will inform
Seller in writing (a "CHANGE NOTICE") of any changes referred to in clause (B)
of the immediate preceding sentence within 30 calendar days after the closing of
such transaction. Seller will promptly (and in any event within 30 calendar days
following delivery of a Change Notice) give written notice to Parent of any
objection to the Change Notice. If Parent and Seller reconcile their differences
in writing or Seller fails to give Parent written notice of its objections to
the Change Notice within such 30-day period, this Agreement will be amended
accordingly without any further action and will thereupon become binding, final
and conclusive on all of the parties hereto. If Parent and Seller are unable to
reconcile their differences in writing within 30 calendar days after delivery to
Parent of Seller's objection to the Change Notice (the "FIRST NEGOTIATION
PERIOD"), the Fair Value Transaction may nonetheless be completed, in which
event Parent and Seller will determine Fair Value as provided in the definition
thereof as promptly as practicable after expiration of the First Negotiation
Period (the "SECOND NEGOTIATION PERIOD") and, if Parent and Seller are unable to
reach agreement on the determination of Fair Value during the Second Negotiation
Period, the dispute between Seller and Parent relating to Fair Value will be
determined in accordance with the dispute resolution procedures set forth below
in this Section 3.7(b). For purposes of this Agreement, "FAIR VALUE" means the
difference, if positive, between (x) the "fair value" (using such valuation
techniques that are appropriate for valuing the Company as a "going concern" and
assuming that Section 262(h) of the General Corporation Law of the State of
Delaware applies and Seller is entitled to exercise appraisal rights in respect
of the Relevant Shares in connection with the transaction or action at issue)
that would be payable in respect of a number of common shares of the Company
equal to the product of the O Multiple immediately prior to the completion of
the transaction times the number of all such outstanding shares at such time
(the "RELEVANT SHARES"), as jointly determined by agreement of Parent and Seller
and determined at the time of a Fair Value Offer less (y) the sum of (1) all
amounts previously paid to Seller under Article I hereof and (2) all dividends
or distributions of cash or other property paid in respect of the Relevant
Shares, or, absent such agreement, such amount calculated by either Parent or
Seller in good faith and submitted in writing to the other prior to the
expiration of the Second Negotiation Period. For all purposes of this Agreement,
"FAIR VALUE" will be calculated exclusive of any element of value arising from
the transaction or action at issue. If Parent and Seller are unable to reach
agreement as to Fair Value during the Second Negotiation Period, Fair Value will
be determined by an investment banking firm or group of national reputation
jointly selected by Parent and Seller (or, if they cannot agree upon such
financial advisor within ten calendar days after expiration of the Second
Negotiation Period, as selected by lot by the Chairman of the Board of the
Company from a group including three such firms or groups submitted by each of
Parent and Seller together with a certification that the submitting Person has
not paid over $100,000 in fees or other compensation to any such firm within the
preceding 24 months) (the "FINANCIAL ADVISOR"). In making the determination
herein contemplated, the Financial Advisor may consider only the items in
dispute, may only select the estimate submitted to either Parent or Seller by
the other and will be instructed by Parent and Seller to act within 90 calendar
days (or such longer period as Parent and
22
Seller may agree) to resolve all items in dispute. Any determination herein
contemplated to be made by the Financial Advisor will be conclusive and binding
on the parties hereto. One-half of the fees and expenses of the Financial
Advisor will be paid by Parent and one-half of such fees and expenses will be
paid by Seller. The parties will use their respective reasonable best efforts to
make available to all parties during normal business hours upon reasonable
advance notice all books and records, including accountants' work papers,
relevant to the calculations contemplated by this Section 3.7(b). Payment of
Fair Value as determined herein will be made, without interest, by wire transfer
of immediately available funds in accordance with Section 1.2 within five
business days of the determination thereof as provided herein, whereupon
Purchaser and Parent will have no further rights or obligations under Section
1.2 or this Section 3.7.
(c) During the Covenant Period, Purchaser and Parent will, and each of
them will cause Cinagro and any other entity that becomes an assignee of the
Company Shares as permitted hereby to, vote their shares of common stock (and
cause their Affiliates to vote their shares of common stock) of the Company in
favor of the election to the Board of Directors of the Company of a designee of
Seller; provided, however, that unless such designee is the Majority Member,
this covenant will not apply to any designee as to whom Parent objects in good
faith (whereupon Seller may submit an alternative designee until Parent does not
so object) or to any designee who has a direct or indirect economic interest in
any Person whose primary business is competitive with any business of the
Company.
(d) Notwithstanding any other provisions hereof or of any otherwise
applicable legal or equitable doctrine or principle, (1) the sole remedy of
Seller for a breach of this Section 3.7 will be a suit for money damages, Seller
hereby expressly acknowledging and agreeing that injunctive or other equitable
remedies may not be sought or awarded, and (2) the calculations required by
Article I of this Agreement will not be affected by any breach or alleged breach
of this Section 3.7.
3.8. Operation of the Business. Subject to applicable fiduciary duties
of the parties, if any, except (a) for matters publicly disclosed by the Company
on or prior to September 18, 2001, (b) as expressly contemplated by this
Agreement, or (c) as otherwise consented to by Parent (on behalf of itself and
Purchaser) in writing, prior to the Closing, neither Seller nor the Majority
Member will vote in favor of or take any affirmative action that would result in
the Company or its subsidiaries:
(i) not keeping their respective businesses intact;
(ii) taking or permitting to be taken or doing or suffering to be
done anything other than in the ordinary course of their respective
businesses as presently conducted;
(iii) not carrying on their respective businesses in compliance with
all applicable Laws;
23
(iv) not keeping intact their respective business organizations;
(v) not preserving and maintaining the goodwill associated with
their respective businesses or their relationships with their respective
officers, employees, clients, suppliers, licensors and others with whom
they have a material relationship;
(vi) issuing any of its equity securities or options or other rights
in respect of or measured by its equity securities to officers,
directors or employees of the Company, other than pursuant to Company
Stock Rights outstanding on September 18, 2001; or
(vii) making any payment or being obligated to make any payment or
have any future liability in respect of Company Stock Rights after the
consummation of a Merger, other than the obligation to pay the positive
difference, if any, between the per share price paid to all stockholders
of the Company (other than Parent and its Affiliates) in the Merger and
the exercise price thereof.
Nothing in this Section 3.8 will restrict the Company from taking any action
specified in clauses (i) through (vii) of this Section 3.8.
3.9. Equity Incentive Plan. (a) Prior to the Transaction Closing, each
of Parent and Purchaser will, and each of them will cause Cinagro and any other
entity that becomes an assignee of the Company Shares as permitted hereby, to
vote shares of common stock (and cause their Affiliates to vote their shares of
common stock) of the Company owned by any of them in favor of adopting the
equity incentive plan attached hereto as Exhibit A (together with the stock
award agreements thereunder, each with such changes thereto as Parent and Seller
may approve, the "INCENTIVE PLAN") if approved by the Board of Directors of the
Company and submitted to a vote of the stockholders of the Company. After the
Transaction Closing, if not previously adopted, each of Parent and Purchaser
will, and each of them will cause Cinagro and any other entity that becomes an
assignee of the Company Shares as permitted hereby to, cause the Company to duly
adopt the Incentive Plan.
(b) Attached as Annex B to the Incentive Plan is a list of initial stock
awards (expressed as a percentage ownership interest in the Company) presently
expected to be granted under the Incentive Plan. The grant of stock awards under
the Incentive Plan will, in each case, be subject to the terms and conditions
set forth in the Incentive Plan and any required stockholder approvals.
3.10. No Other Representations or Warranties. (a) Each of Parent and
Purchaser acknowledges and agrees that, except for the representations and
warranties (including the Schedules with respect thereto) made by Seller and
expressly set forth in Section 2.1 of this Agreement, neither Seller nor any
representative of Seller has made and will not be construed as having made to
Parent or Purchaser or to any of their respective representatives, and none of
Parent, Purchaser or any of their
24
respective representatives have relied upon, any representation or warranty of
any kind. Without limiting the generality of the foregoing, and notwithstanding
any express representation and warranty made by Seller in Section 2.1 hereof,
each of Parent and Purchaser agrees that neither Seller nor any representative
of Seller makes or has made any representation or warranty to the Parent or
Purchaser or to any of their respective representatives with respect to any
estimates, projections and other forecasts relating to the Cinagro Shares or the
Company Shares, and plan and budget information with respect thereto or, except
to the extent and as expressly covered by a representation and warranty of
Seller contained in Section 2.1 hereof, with respect to any other statements,
documents or other information heretofore or hereafter delivered to or made
available to Parent or Purchaser or to any of their respective representatives
and that neither Parent nor Purchaser will assert any claim against Seller or
any of its directors, officers, employees, agents, stockholders, or
representatives, or hold Seller or any such persons liable with respect thereto.
(b) Each of Parent and Purchaser acknowledges and agrees that, except
for the representations and warranties (including the Schedules with respect
thereto) made by the Majority Member and expressly set forth in Section 2.2 of
this Agreement, neither the Majority Member nor any of his representatives has
made and will not be construed as having made to Parent or Purchaser or to any
of their respective representatives, and none of Parent, Purchaser or any of
their respective representatives have relied upon, any representation or
warranty of any kind. Without limiting the generality of the foregoing, and
notwithstanding any express representation and warranty made by the Majority
Member in Section 2.2 hereof, each of Parent and Purchaser agrees that neither
the Majority Member nor any of his representatives makes or has made any
representation or warranty to the Parent or Purchaser or to any of their
respective representatives with respect to any estimates, projections and other
forecasts relating to the Company Shares, and plan and budget information with
respect thereto or, except to the extent and as expressly covered by a
representation and warranty of the Majority Member contained in Section 2.2
hereof, with respect to any other statements, documents or other information
heretofore or hereafter delivered to or made available to Parent or Purchaser or
to any of their respective representatives and that neither Parent nor Purchaser
will assert any claim against the Majority Member or any of his agents or
representatives, or hold the Majority Member or any such persons liable with
respect thereto.
3.11. Possible Transaction with the Company. On September 18, 2001,
Parent submitted a proposal to the Company to acquire the Company Shares not
owned or under contract to purchase by Purchaser (the "PUBLIC LETTER"). As of
the Closing Date, Parent has not modified or withdrawn the Public Letter;
provided, however, that any subsequent modification or withdrawal of the Public
Letter or the failure of Parent to pursue or consummate the Transaction
contemplated by the Public Letter or any similar Transaction will not be deemed
a breach of this Agreement. If Parent or Purchaser acquires at least 90% of the
outstanding voting stock of the Company in a Transaction, Parent will endeavor
in good faith to effect or to cause Purchaser to effect a Merger within 45 days
after the closing of such acquisition.
25
3.12. Maintenance of Existence and Cash. (a) Until all of the payments
to be made to Seller pursuant to Section 1.2 have been finally determined and
paid, Seller will maintain its existence as a Delaware limited liability company
and, except as set forth in Section 3.12(b), will not liquidate, dissolve or
distribute all or substantially all of its assets.
(b) Notwithstanding any other provision hereof, until the later of (i)
April 1, 2003 and (ii) the payment of all liabilities and obligations of Seller
under Section 5.3(a) for claims asserted hereunder on or prior to April 1, 2003,
Seller will not (A) distribute any cash or other assets to any of its equity
holders, (B) lend any cash or other assets to any Person, or (C) purchase or
redeem any of its capital stock unless in any such case it obtains a written
undertaking in form and substance reasonably satisfactory to Parent and duly
executed by such equity holder or Person wherein such equity holder or Person
agrees, for the direct benefit of Parent and Purchase, to severally guarantee
Seller's performance of its obligations under Section 5.3 in substantially the
form of Schedule 3.12(b); provided, however, that this Section 3.12 will not
apply with respect to the distribution by Seller of IP-1 (x) to its equity
holders directly or as part of a purchase or redemption of equity or similar
transaction or (y) in respect of fees and expenses payable by Seller.
3.13. Actions in Respect of Pledged Securities. Seller will take such
action in respect of the shares of Holdings (and any Units issued in respect
thereof) that are held beneficially or of record by Xxxxxxx Xxxxx and pledged to
Omnicom Finance Inc. ("OFI", and such securities, the "PLEDGED SECURITIES") as
OFI may request in exercising all rights of ownership in respect of the Pledged
Securities, including without limitation (i) delivering all dividends,
distributions or other payments in respect of any purchase, exchange, redemption
or other acquisition or retirement of any of the Pledged Securities and (ii)
registering the Pledged Securities in the name of OFI; provided that OFI
indemnifies Seller for any Indemnifiable Loss in respect of any action requested
to be taken by Seller pursuant to this Section 3.13 (it being understood and
agreed that the parties will follow the procedures set forth in Section 5.5 of
this Agreement in respect of any claim by Seller for indemnity pursuant to this
Section 3.13).
3.14. Disclosure Schedules. Seller has supplemented or amended the
Schedules referred to in Section 2.1 with respect to any matter arising between
September 18, 2001 and the Closing Date about which Seller has Knowledge which,
if existing or occurring at or prior to September 18, 2001, would have been
required to be set forth or described in such Schedules.
IV. THE CLOSING
4.1. Conditions Precedent to Obligations of Purchaser, Parent, Seller
and the Majority Member. The obligations of each of Purchaser, Parent, Seller
and the Majority Member under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to the
Closing, of the following conditions:
26
4.1.1 Restraining Action. There shall not have been entered a
preliminary or permanent injunction, temporary restraining order or other
judicial or administrative order or decree in any jurisdiction, the effect of
which prohibits the Closing; and
4.1.2 HSR. The waiting period under the HSR Act, if applicable, shall
have expired or been terminated.
4.2. Additional Conditions Precedent to Obligations of Purchaser and
Parent. The obligations of Purchaser and Parent under this Agreement to
consummate the transactions contemplated hereby will be subject to the
satisfaction, at or prior to the Closing, of all of the following conditions,
any one or more of which may be waived at the option of Parent:
4.2.1 No Material Misrepresentation or Breach. (a) There shall have been
no material breach by Seller or the Majority Member in the performance of any of
the covenants herein to be performed by it or him in whole or in part prior to
the Closing, (b) the representations and warranties of Seller or the Majority
Member contained in this Agreement (i) that are not qualified as to materiality
or material adverse effect shall be true and correct in all material respects
and (ii) that are so qualified by materiality or material adverse effect shall
be true and correct, in each case on the Closing Date, except in each case for
representations or warranties made as of a specified date, which shall be so
true and correct as of the specified date, and (c) Seller and the Majority
Member shall have delivered to Purchaser and Parent a certificate certifying
each of the foregoing, dated as of the Closing Date and signed by each of Seller
and the Majority Member, as the case may be;
4.2.2 Surrender and Issuance of Certificates. Seller shall have
delivered to Purchaser certificates representing the Cinagro Shares, together
with such other documents and instruments, if any, as may be necessary to permit
Purchaser to acquire the Cinagro Shares, free and clear of any and all Liens;
4.2.3 Litigation. No action, suit or proceeding shall be pending against
Parent, Purchaser, Seller, Cinagro, Holdings, the Majority Member or the Company
or any of their respective Affiliates by or before any Governmental Authority
which Parent determines after consultation with counsel presents a substantive
risk of personal liability or expense to Parent, Purchaser, Cinagro or the
Company based upon this Agreement or the transactions contemplated hereby;
4.2.4 Promissory Notes. The Promissory Notes shall have been dividended
by Cinagro to Seller or sold to Seller in redemption of a portion of the Cinagro
Shares, in each case pursuant to documentation reasonably satisfactory to
Purchaser;
4.2.5 Cinagro Warrant. Seller shall have satisfied all of its
obligations, if any, in respect of the Cinagro Warrant pursuant to the letter
agreement attached hereto as Schedule 4.2.5 and the Cinagro Warrant shall have
expired in accordance with its terms, without further action, as of the Closing;
27
4.2.6 Legal Opinion. Xxxxxxxx & Xxxxxxxx LLP, counsel to Seller, shall
have delivered to Parent and Purchaser a legal opinion in substantially the form
of Schedule 4.2.6;
4.2.7 Stock Rights, Etc. After June 30, 2001, the Company shall not have
(x) issued any equity securities (other than upon exercise or settlement of
Company Stock Rights listed on Schedule 2.1.7) or (y) granted, sold or otherwise
issued any Company Stock Rights (other than as listed on Schedule 2.1.7);
4.2.8 Lease Amendment. The "Closing" under the lease amendment attached
as Schedule 4.2.8 shall have occurred and such amendment shall be in effect, in
each case without any change in such amendment or waiver of any term thereof by
the Company;
4.2.9 No Defaults. No event shall have occurred which, with or without
notice or lapse of time or both, constitutes a default or event of default under
any Material Contract. For purposes of this Agreement, the term "MATERIAL
CONTRACT" means any (i) Contract to which the Company or any of its Subsidiaries
is a party that has been, or is required to be, filed by the Company with the
SEC, (ii) material real estate or material equipment lease to which the Company
or any of its Subsidiaries is a party, (iii) Contract evidencing debt for
borrowed money of the Company or any of its Subsidiaries, or any such obligation
of any other Person for which the Company or any of its Subsidiaries has
guaranteed or may otherwise be held liable (other than, in any such case, any
such Contract, as in effect on the Closing Date, with Omnicom Group Inc. or any
of its Affiliates), or (iv) Contract the consequences of a breach of which has
had or is reasonably likely to have a Company Material Adverse Effect
(Notwithstanding the foregoing, any default under the Company's Boston real
estate lease arising out of withholding of rent for December 2001 or any
subsequent period will not be deemed to be a "Material Default" hereunder or to
cause or result in a "Company Material Adverse Effect" so long as it results
from a strategy to renegotiate that lease which the Company's management is
pursuing in good faith);
4.2.10 No MAE. No event shall have occurred or be threatened to have
occurred, including without limitation any development relating to a material
client, which Parent determines in good faith has had or is reasonably likely to
have a Company Material Adverse Effect; and
4.2.11 Consents. All consents, approvals and waivers required to be
obtained, and all notices required to be given, in each case under any of the
Contracts specified in items 2 through 12 of Schedule 2.1.4(c) shall have been
received or given, respectively.
4.3. Additional Conditions Precedent to Obligations of Seller and the
Majority Member. The obligations of Seller and the Majority Member under this
Agreement to consummate the transactions contemplated hereby will be subject to
the satisfaction, at or prior to the Closing, of all the following conditions,
any one or more of which may be waived by Seller at its option:
28
4.3.1 No Material Misrepresentation or Breach. (a) There shall have been
no material breach by either Purchaser or Parent in the performance of any of
the covenants herein to be performed by either of them in whole or in part prior
to the Closing, (b) the representations and warranties of Parent and Purchaser
contained in this Agreement (i) that are not qualified as to materiality or
material adverse effect shall be true and correct in all material respects and
(ii) that are so qualified by materiality or material adverse effect (if any)
shall be true and correct, in each case on the Closing Date, except in each case
for representations or warranties made as of a specified date, which shall be so
true and correct as of the specified date, and (c) an officer of each of
Purchaser and Parent shall have delivered to Seller and the Majority Member a
certificate certifying each of the foregoing, dated as of the Closing Date and
signed by one of its officers;
4.3.2 Closing Payment. Purchaser shall have delivered to Seller IP-1 in
the manner specified in Section 1.6; and
4.3.3 Litigation. No action, suit or proceeding shall be pending against
the Majority Member, Seller, Cinagro or Holdings by or before any Governmental
Authority on behalf of any third party (other than any current or former equity
owner of Seller or Holdings) which Seller determines after consultation with
counsel presents a substantive risk of personal liability or expense to Seller,
the Majority Member of Holdings based upon this Agreement or the transactions
contemplated hereby and as to which Parent has not, after initiation of such
action, suit or proceeding, expressly undertaken in writing fully to indemnify
Seller and the Majority Member and their respective Affiliates for all
Indemnifiable Losses resulting therefrom (excluding, however, Indemnifiable
Losses to the extent resulting from the Reorganization or from any Knowing
violation of Law or gross negligence of any such Person).
4.4. The Closing. Subject to the fulfillment or waiver of the conditions
precedent specified in Sections 4.1, 4.2 and 4.3, the consummation of the
purchase of the Cinagro Shares (the "CLOSING") will take place on December 3,
2001 (the "CLOSING DATE"). The Closing will take place at 10:00 a.m., Eastern
time, at the offices of Xxxxx, Day, Xxxxxx & Xxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, or by the exchange of documents and instruments by mail,
courier, telecopy and wire transfer to the extent mutually acceptable to the
parties hereto.
4.5. Termination. (a) (a) Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated at any time prior to
the Closing:
(i) By the mutual written consent of Parent and Seller;
(ii) By either Parent or Seller, if the Closing shall not have
occurred on or before February 28, 2002 (the "TERMINATION DATE");
provided, however, that the right to terminate this Agreement pursuant
to this Section 4.5(a)(ii) will not be available to any party whose
breach of any provision of this Agreement results in the failure of the
Closing to occur by such time;
29
(iii) By either Parent or Seller if at any time after December 31,
2001 the Public Letter shall have been withdrawn by Parent and Parent
shall not have made another proposal in good faith to acquire all of the
Company's common stock in a Transaction;
(iv) By either Parent or Seller if there shall have been entered a
final, nonappealable order or injunction of any Governmental Authority
restraining or prohibiting the consummation of the transactions
contemplated hereby or any material part thereof;
(v) By Parent if Seller or the Majority Member shall have (i) failed
to perform any obligation or to comply with any agreement or covenant of
Seller or the Majority Member under this Agreement or (ii) breached any
of its representations or warranties, in each case such that the
condition in Section 4.2.1 would not be satisfied, which failure has not
been cured within ten calendar days of written notice from Parent; or
(vi) By Seller if Parent or Purchaser shall have (i) failed to
perform any obligation or comply with any agreement or covenant of
Parent or Purchaser under this Agreement or (ii) breached any of its
representations or warranties, in each case such that the condition in
Section 4.3.1 would not be satisfied, which failure has not been cured
within ten calendar days of written notice from Seller.
(b) In the event of the termination of this Agreement under this Section
4.5, each party hereto will pay all of its own fees and expenses. There will be
no further liability hereunder on the part of any party hereto if this Agreement
is so terminated, except by reason of a prior breach of any representation,
warranty or covenant contained in this Agreement.
V. SURVIVAL AND INDEMNIFICATION
5.1. Survival of Representations, Warranties and Covenants. (a) Except
for any Knowing breach of representations or warranties (a "KNOWING BREACH") (as
to which the limitations of survivability in this Section 5.1 will not apply),
each of the representations and warranties contained in Article II, other than
the representations and warranties contained in Sections 2.1.1, 2.1.2, 2.1.3,
2.2.1, 2.2.2, 2.3.1, 2.3.4, 2.3.5, 2.3.6, 2.3.7 and 2.3.8 (collectively the
"SURVIVING REPS"), will terminate immediately after the Closing. The Surviving
Reps and liability for any Knowing Breach will survive the Closing and remain in
full force and effect for the period of the applicable statute of limitations.
Any claim for indemnification with respect to any of such matters that is not
asserted by a written notice given as herein provided specifically identifying
the particular breach underlying such claim and the facts and Indemnifiable Loss
relating thereto within such specified period of survival (where applicable) may
not be pursued and is hereby irrevocably waived.
30
(b) All covenants contained in this Agreement will survive the Closing
and remain in effect indefinitely unless a specified period is otherwise set
forth in this Agreement (in which event such specified period will control).
5.2. Definitions; Limitations on Liability. (a) For purposes of this
Agreement, (i) "INDEMNITY PAYMENT" means any amount of Indemnifiable Losses
required to be paid pursuant to this Agreement, (ii) "INDEMNITEE" means any
Seller Indemnified Party or Purchaser Indemnified Party, (iii) "INDEMNIFYING
PARTY" means any Person required to provide indemnification under this
Agreement, (iv) "INDEMNIFIABLE LOSSES" means any and all claims, demands,
actions, suits or proceedings (by any Person, including without limitation any
Governmental Authority), settlements and compromises relating thereto and
reasonable attorneys' fees and expenses in connection therewith, losses,
liabilities, damages, costs and expenses (other than indirect and punitive
damages and other than consequential damages to the extent relating to decreases
in value of the business of the Company and lost profits), and (v) "THIRD PARTY
CLAIM" means any claim, demand, action, suit or proceeding made or brought by
any Person that is not a party to this Agreement or an Affiliate of a party to
this Agreement.
(b) Notwithstanding any other provision hereof, no claim or claims for
indemnification pursuant to Section 5.3(a)(vi) may be asserted against Seller
unless the amount of the Indemnifiable Losses for which Seller (determined on a
combined basis) would otherwise be required to indemnify a Purchaser Indemnified
Party exceeds $250,000 in the aggregate.
(c) Notwithstanding any other provision of this Agreement, if the
Closing occurs, (i) the aggregate indemnification obligations of Seller under
Section 5.3(a)(i) and Section 5.3(a)(vi) and the Majority Member under Section
5.3(b)(i) will not exceed 100% of the aggregate Purchase Price paid or payable
at any time (the "MAXIMUM INDEMNITY AMOUNT"), and (ii) the aggregate
indemnification obligations of any equity holder of Seller will not exceed the
lesser of (x) the aggregate amount paid or payable at any time to, or for the
benefit of, such equity holder by or on behalf of Seller in respect of the
Purchase Price and (y) the product of the aggregate Indemnifiable Losses for
which Seller is required to indemnify a Purchaser Indemnified Party under
Section 5.3(a) of this Agreement that remain unpaid by Seller and the percentage
of outstanding equity interests of Seller owned by such equity holder on the
Closing Date. For the avoidance of doubt, the Maximum Indemnity Amount or the
aggregate Purchase Price paid or payable to or for the benefit of any equity
holder of Seller will not be limited by the amounts paid as of any particular
time, but will include all amounts that have been paid or are actually paid in
the future in respect of the Purchase Price.
(d) None of the limitations set forth in this Section 5.2 will apply to
any Indemnifiable Losses incurred by (i) a Purchaser Indemnified Party that
relate, directly or indirectly, to (A) any fraudulent acts committed by any
Seller Indemnified Party and (B) the obligations of Seller and the Majority
Member to pay certain expenses pursuant to Section 1.4 or 6.2 or (ii) a Seller
Indemnified Party that relate, directly or indirectly, to any fraudulent acts
committed by any Purchaser Indemnified Party and (B) the
31
obligations of Parent and Purchaser to pay certain expenses pursuant to Section
1.4 or 6.2.
5.3. Indemnification. (a) Subject to Sections 5.1, 5.2, 5.4 and 5.5,
Seller will indemnify, defend and hold harmless Parent, Purchaser and their
respective Affiliates (including, after the Closing, Cinagro) and their
respective directors, officers, partners, members, managers, employees, agents
and representatives (including without limitation any predecessor or successor
to any of the foregoing) (collectively, the "PURCHASER INDEMNIFIED PARTIES")
from and against any and all Indemnifiable Losses relating to, resulting from or
arising out of:
(i) Any Knowing Breach or breach by Seller of any Surviving Rep;
(ii) Any breach by Seller of any covenant of Seller in this
Agreement;
(iii) Any taxes imposed on or asserted against Seller, Cinagro,
Holdings or any of their respective Affiliates (other than the Company)
for which Seller, Cinagro, Holdings or any such Affiliate may be liable
in respect of the properties, income or operations of Seller, Cinagro,
Holdings or any such Affiliate for, with respect to Cinagro, any tax
period (or portion thereof) ending on or before the Closing Date or,
with respect to Seller or Holdings, for any tax period (or portion
thereof) whatsoever;
(iv) Any liability or obligation of Seller, Holdings or any of their
respective predecessors (including, without limitation, any liability
under any Contract listed or required to be listed on Schedule 2.1.6 or
the Cinagro Warrant);
(v) Any claim by any current or former equity owner of Seller,
Holdings or Cinagro relating to, resulting from or arising out of the
Reorganization or the transactions contemplated by this Agreement or any
of the Transaction Documents; provided, however, that Seller will have
no obligation under this Section 5.3(a)(v) to indemnify any Purchaser
Indemnified Party for any Indemnifiable Loss for which a Seller
Indemnified Party is entitled to indemnity under Section 5.3(c);
(vi) Any claim (x) of any current or former holder of any Company
Stock Right in respect of any Company Stock Rights granted under the
Company's 1999 Long-Term Stock Incentive Plan, as amended, other than
(A) a claim for salary for services actually rendered or under an
employee welfare benefit plan (as that term is defined in Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended), (B)
a claim for the positive difference, if any, between the amount payable
to all other stockholders of the Company (other than Parent and its
Affiliates) in a Transaction and the exercise price thereof multiplied
by the number of Company Shares subject to such option, warrant or
Company Stock Right that have then vested, or (C) a claim in respect of
any other right to which such holder is entitled to under any agreement
in respect of a
32
Transaction, (y) of the obligor of any loan made by the Company to any
stockholder or employee for amounts withheld by Parent, Purchaser or the
Company from the proceeds payable with respect to any shares of common
stock of the Company in a Merger which shares are, by the terms of such
loan, required to secure such loan, and (z) of any Person asserting
ownership of or any interest in any Cinagro Share; or
(vii) any liability of Cinagro arising or accruing prior to the
Closing Date.
(b) Subject to Sections 5.1, 5.2, 5.4 and 5.5, the Majority Member will
indemnify, defend and hold harmless the Purchaser Indemnified Parties from and
against any and all Indemnifiable Losses relating to, resulting from or arising
out of:
(i) Any Knowing Breach or breach by the Majority Member of any
Surviving Rep;
(ii) Any breach by the Majority Member of any covenant of the
Majority Member in this Agreement; and
(iii) Any liability or obligation of Seller under Section 5.3(a)
that has not been satisfied by Seller more than 30 calendar days after
such liability is determined; provided, however, that the aggregate
indemnification liabilities of the Majority Member pursuant to this
Section 5.3(b)(iii) will not exceed the lesser of (x) the aggregate
amount paid or payable at any time to, or for the benefit of, the
Majority Member by or on behalf of Seller in respect of the Purchase
Price and (y) the product of the aggregate Indemnifiable Losses for
which Seller is required to indemnify a Purchaser Indemnified Party
under Section 5.3(a) of this Agreement that remain unpaid by Seller and
the percentage of outstanding equity interests of Seller owned by the
Majority Member on the Closing Date.
(c) Subject to Sections 5.1, 5.2, 5.4 and 5.5, each of Purchaser and
Parent will jointly and severally indemnify, defend and hold harmless Seller and
the Majority Member and their respective Affiliates and their respective
directors, officers, partners, members, managers, employees, agents and
representatives (including without limitation any predecessor or successor to
any of the foregoing) (collectively, the "SELLER INDEMNIFIED PARTIES") from and
against any and all Indemnifiable Losses relating to, resulting from or arising
out of:
(i) Any Knowing Breach or breach by Purchaser or Parent of any
Surviving Rep; and
(ii) Any breach by Purchaser or Parent of any covenant of Purchaser
or Parent in this Agreement.
5.4. Offset. Parent and Purchaser may at their option offset against any
amount they or either of them is otherwise required to pay hereunder to Seller
or Seller's beneficial owners (i) the amount of any Indemnifiable Loss for which
any Purchaser Indemnified Party is entitled to indemnity hereunder or (ii)
pending the final resolution of
33
such amount, the actual amount demanded in any Third Party Claim plus Parent's
good faith estimate of the costs related thereto; provided however, that Parent
and Purchaser may not offset any Indemnifiable Loss described in clause (i) or
(ii) against the payment of IP-1. Upon such offset such Indemnifying Party's
obligation under Section 5.3(a) or 5.3(b), as the case may be, will be deemed
satisfied to the extent of the offset. In the event the amount offset by Parent
or Purchaser under clause (ii) of the first sentence of this Section 5.4 exceeds
the aggregate amount of Indemnifiable Losses that are actually suffered or
incurred by such Purchaser Indemnified Parties in respect of such Third Party
Claims (such excess amount, the "EXCESS OFFSET AMOUNT"), then Parent will
promptly pay to the appropriate Indemnifying Party the Excess Offset Amount,
together with interest thereon from the date such offset amount would have
otherwise been payable to the Indemnifying Party to the date the Excess Offset
Amount is paid at an annual rate equal to the prime rate announced from time to
time by Citibank, N.A. The offset right provided hereunder will not be affected
by limitations on indemnity under any Reimbursement Agreement or this Agreement,
other than the limitations set forth in Sections 5.1(a), 5.2(b) and 5.2(c), in
each case to the extent applicable.
5.5. Defense of Claims. (a) If any Indemnitee receives notice of the
assertion or commencement of any Third Party Claim against such Indemnitee with
respect to which an Indemnifying Party is obligated to provide indemnification
under this Agreement, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than 30
calendar days after receipt of such notice of such Third Party Claim. Such
notice by the Indemnitee will describe the Third Party Claim in reasonable
detail thereof and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. In addition, the Indemnitee will furnish copies of, or provide
access to, all material written evidence pertaining to such Third-Party Claims
as promptly as reasonably practicable. The Indemnifying Party will have the
right to participate in or, by giving written notice to the Indemnitee, to
assume, the defense of any Third Party Claim at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (reasonably satisfactory to
the Indemnitee), and the Indemnitee will cooperate in good faith in such
defense.
(b) If, within 20 calendar days after giving notice of a Third Party
Claim to an Indemnifying Party pursuant to Section 5.5(a), an Indemnitee
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 5.5(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within ten calendar days after receiving written notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense, and the Indemnifying Party will be
liable for all reasonable costs or expenses paid or incurred in connection
therewith. Without the prior written consent of the Indemnitee, the Indemnifying
Party will not enter into any settlement of any Third Party Claim that would
lead to liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not
34
entitled to indemnification hereunder. If a firm offer is made to settle a Third
Party Claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder and the Indemnifying Party desires to
accept and agree to such offer, the Indemnifying Party will give written notice
to the Indemnitee to that effect. If the Indemnitee fails to consent to such
firm offer within ten calendar days after its receipt of such notice, the
Indemnitee may continue to contest or defend such Third Party Claim and, in such
event, the maximum liability of the Indemnifying Party as to such Third Party
Claim will not exceed the amount of such settlement offer.
(c) Any claim by an Indemnitee on account of an Indemnifiable Loss which
does not result from a Third Party Claim (a "DIRECT CLAIM") will be asserted by
giving the Indemnifying Party reasonably prompt written notice thereof, but in
any event not later than 30 calendar days after the Indemnitee becomes aware of
such Direct Claim. Such notice by the Indemnitee will describe the Direct Claim
in reasonable detail and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have a period of 30 calendar days within
which to respond in writing to such Direct Claim. If the Indemnifying Party does
not so respond within such 30 calendar day period, the Indemnifying Party will
be deemed to have rejected such claim, in which event the Indemnitee will be
free to pursue such remedies as may be available to the Indemnitee on the terms
and subject to the provisions of this Agreement.
(d) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 5.5(a), 5.5(b) or 5.5(c) will
not affect the rights or obligations of any party hereunder except and only to
the extent that, as a result of such failure, any party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise materially prejudiced as a result
of such failure.
(e) If the amount of any Indemnifiable Loss, at any time subsequent to
the making of an Indemnity Payment, is reduced by recovery, settlement or
otherwise under or pursuant to any insurance coverage, or pursuant to any claim,
recovery, settlement, rebate or other payment by or against any other Person,
the amount of such reduction, less any costs, expenses, premiums or taxes
incurred in connection therewith, will promptly be repaid by the Indemnitee to
the Indemnifying Party. Upon making any Indemnity Payment the Indemnifying Party
will, to the extent of such Indemnity Payment, be subrogated to all rights of
the Indemnitee against any third Person in respect of the Indemnifiable Loss to
which the Indemnity Payment relates; provided, however, that (i) the
Indemnifying Party shall then be in compliance with its obligations under this
Agreement in respect of such Indemnifiable Loss and (ii) until the Indemnitee
recovers full payment of its Indemnifiable Loss, any and all claims of the
Indemnifying Party against any such third Person on account of said Indemnity
Payment will be subrogated and subordinated in right of payment to the
Indemnitee's rights against such third Person. Without limiting the generality
or effect of any other provision hereof, each such Indemnitee and Indemnifying
Party will duly execute upon request all instruments
35
reasonably necessary to evidence and perfect the above-described subrogation and
subordination rights.
VI. MISCELLANEOUS PROVISIONS
6.1. Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) (if so delivered or dispatched prior to 5:00 p.m.,
local time, on a Business Day in the place of receipt; otherwise such notice
will be deemed delivered or dispatched on the next Business Day) or one Business
Day after having been dispatched by a nationally recognized overnight courier
service to the appropriate party at the address specified below or to such other
address or addresses as any such party may from time to time designate as to
itself by like notice:
If to Parent or Purchaser, to:
Seneca Investments LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxx X. Bark
If to Seller, to:
Organic Holdings LLC
000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxx Xxxxxx
36
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: Xxxxx X. Mac Cormac
If to Majority Member, to:
Xxxxxxxx Xxxxxx
00 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxxxx Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx
6.2. Expenses. Except as otherwise expressly provided herein, each of
the parties hereto will pay his or its own expenses relating to the transactions
contemplated by this Agreement and the Transaction Documents, including without
limitation the fees and expenses of his or its respective counsel, financial
advisors and accountants.
6.3. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors (and
their respective executors, heirs and legal representatives) and permitted
assigns, but will not be assignable or delegable by any party without the prior
written consent of Parent and Seller; provided that Parent and Purchaser may
assign their rights and obligations under this Agreement to any other subsidiary
of Parent provided that no such assignment will relieve Parent or Purchaser of
any of its respective obligations under this Agreement.
6.4. Waiver. Either Parent (on behalf of itself and Purchaser) or Seller
(on behalf of itself and the Majority Member), by written notice to the other,
may (a) extend the time for performance of any of the obligations or other
actions of the other under this Agreement, (b) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement, (c)
waive compliance with any of the conditions or covenants of the other contained
in this Agreement, or (d) waive or modify performance of any of the obligations
of the other under this Agreement. Except as provided in the immediately
preceding sentence, no action taken pursuant to this Agreement will be deemed to
constitute a waiver of compliance with any representations, warranties or
covenants contained in this Agreement. Any waiver of any term or condition will
not be construed as a subsequent waiver of the same term or condition, or a
waiver of any
37
other term or condition of this Agreement. No failure or delay of any party in
asserting any of its rights hereunder will constitute a waiver of any such
rights.
6.5. Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the Transaction Documents supersede any other agreement,
whether written or oral, that may have been made or entered into by any party or
any of their respective Affiliates (or by any director, officer or
representative thereof) prior to the Closing Date relating to the matters
contemplated hereby. This Agreement (together with the Schedules and Exhibits
hereto) and the Transaction Documents constitute the entire agreement by and
among the parties hereto and there are no agreements or commitments by or among
such parties or their Affiliates except as expressly set forth herein and
therein.
6.6. Amendments, Supplements, Etc. This Agreement (including any Exhibit
or Schedule hereto) may be amended or supplemented at any time by additional
written agreements as may mutually be determined by Parent (without the joinder
of Purchaser) and Seller (on behalf of itself and the Majority Member) to be
necessary, desirable or expedient to further the purposes of this Agreement or
to clarify the intention of the parties hereto.
6.7. Rights of the Parties. Except as provided in Article V or in
Section 6.3, nothing expressed or implied in this Agreement is intended or will
be construed to confer upon or give any Person other than the parties hereto and
their respective Affiliates any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby. Nothing express or implied in
this Agreement is intended or will be construed to result in any liability to
the Company.
6.8. Governing Law; Jurisdiction; Consent to Service of Process. (a)
This Agreement and the legal relations among the parties hereto will be governed
by and construed in accordance with the substantive Laws of the State of New
York, without giving effect to the principles of conflict of laws thereof.
(b) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the New York state
court located in the Borough of Manhattan, City of New York or the United States
District for the Southern District of New York (each, a "NEW YORK COURT"), and
any appellate court from any such court, in any suit, action or proceeding
arising out of or relating to this Agreement or any Transaction Document, or for
recognition or enforcement of any judgment resulting from any such suit, action
or proceeding, and each party hereby irrevocably and unconditionally agrees that
all claims in respect of any such suit, action or proceeding may be heard and
determined in the New York Court.
(c) It will be a condition precedent to each party's right to bring any
such suit, action or proceeding that such suit, action or proceeding, in the
first instance, be brought in the New York Court (unless such suit, action or
proceeding is brought solely to obtain discovery or to enforce a judgment), and
if each such court refuses to accept
38
jurisdiction with respect thereto, such suit, action or proceeding may be
brought in any other court with jurisdiction.
(d) No party may move to (i) transfer any such suit, action or
proceeding from the New York Court to another jurisdiction, (ii) consolidate any
such suit, action or proceeding brought in the New York Court with a suit,
action or proceeding in another jurisdiction unless such motion seeks solely and
exclusively to consolidate such suit, action or proceeding in the New York
Court, or (iii) dismiss any such suit, action or proceeding brought in the New
York Court for the purpose of bringing or defending the same in another
jurisdiction.
(e) Each party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, (i) any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in the New York Court,
(ii) the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in the New York Court, and (iii) the right to object, with
respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party. Each party irrevocably consents to service of
process in any manner permitted by law. Notwithstanding the foregoing, this
Section 6.8 will not apply to any suit, action or proceeding by a party seeking
indemnification or contribution pursuant to this Agreement or otherwise in
respect of a suit, action or proceeding against such party by a third party if
such suit, action or proceeding by such party seeking indemnification or
contribution is brought in the same court as the suit, action or proceeding
against such party.
6.9. Titles and Headings. Titles and headings to Articles and Sections
herein are inserted for convenience of reference only, and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
6.10. Certain Interpretive Matters and Definitions. (a) Unless the
context otherwise requires, (i) all references to Articles, Sections, Schedules
or Exhibits are to Articles, Sections, Schedules or Exhibits of or to this
Agreement, (ii) each term defined in this Agreement has the meaning assigned to
it, (iii) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with GAAP, (iv) "OR" is disjunctive but not
necessarily exclusive, (v) words in the singular include the plural and vice
versa, (vi) the term "AFFILIATE" has the meaning given to that term in Rule
12b-2 of Regulation 12B under the Exchange Act, (vii) all references to "$" or
dollar amounts will be to lawful currency of the United States of America,
(viii) "KNOWING" or "TO THE KNOWLEDGE" of any Person means, when referring to an
individual, the actual knowledge of such individual, and when referring to any
other Person, means the actual knowledge of such Person's directors and
officers, in each case without undertaking any specific investigation for
purposes of making any representation or warranty in this Agreement except as
otherwise herein provided, (ix) "PERSON" means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity, and (x) the use in this Agreement
of the masculine pronoun in reference to a party hereto shall be deemed to
include the feminine or neuter, and vice versa, as the context may require.
39
(b) No provision of this Agreement will be interpreted in favor of, or
against, any of the parties hereto by reason of the extent to which any such
party or its counsel participated in the drafting thereof or by reason of the
extent to which any such provision is inconsistent with any prior draft hereof.
(c) The disclaimer set forth on the bottom of certain pages of the
Schedules to this Agreement relating to the Company will have no effect for
purposes of this Agreement, including without limitation, the provisions of
Section 4.2.1, Section 4.3.1, Section 4.5 or Article V.
6.11. No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by Seller, Majority Member, Parent and
Purchaser to express their mutual intent, and no rule of strict construction
will be applied against any party hereto.
6.12. Counterparts. This document may be executed in one or more
separate counterparts, each of which, when so executed, will be deemed to be an
original. Such counterparts will together constitute one and the same
instrument. This Agreement may be executed by facsimile signatures.
6.13. Remedies; Severability. It is specifically understood and agreed
that any breach of the provisions of this Agreement by any Person subject hereto
will result in irreparable injury to the other parties hereto, that the remedy
at law alone will be an inadequate remedy for such breach and that, in addition
to any other remedies which they may have, such other parties may enforce their
respective rights by actions for specific performance (to the extent permitted
by law); provided, however, that this Section 6.13 will not apply to Section 3.7
hereof. Whenever possible, each provision of this Agreement will be interpreted
in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is deemed prohibited or invalid under such
applicable law, such provision will be ineffective to the extent of such
prohibition or invalidity, and such prohibition or invalidity will not
invalidate the remainder of such provision or the other provisions of this
Agreement.
6.14. Extinguishment of Cinagro Obligations. Effective as of the Closing
Date, without any further action of Cinagro, Seller or any other Person, all
financial obligations of Cinagro to Seller or its Affiliates, whether arising
before, on or after the Closing Date, payable under any Contract or other
obligation of Cinagro entered into or in effect on or prior to the Closing Date
shall be extinguished and be deemed satisfied in full, and Cinagro shall have no
further obligation in respect thereof.
40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written, but as amended and
restated on December 3, 2001.
SENECA INVESTMENTS LLC
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
E-SERVICES INVESTMENTS ORGANIC SUB LLC
By: Communicade LLC,
its member
By: SENECA INVESTMENTS LLC,
its member
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
ORGANIC HOLDINGS LLC
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxx
Director
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx
Director
/s/ Xxxxxxxx Xxxxxx
---------------------------------------
Xxxxxxxx Xxxxxx
41
INDEX OF DEFINED TERMS
TERM PAGE
---- ----
AAA..........................................................................................9
ACCOUNTANTS..................................................................................8
ACQUIRING PERSON............................................................................22
ACQUIRING PERSON SHARES.....................................................................22
ADDITIONAL VOTING STOCK....................................................................6,7
AFFILIATE...................................................................................40
AGREEMENT....................................................................................1
ANNUAL DETERMINATION.........................................................................8
BASE O MULTIPLE..............................................................................6
CAPBT........................................................................................7
CHANGE NOTICE...............................................................................22
CHANGE OF CONTROL...........................................................................21
CINAGRO......................................................................................1
CINAGRO SHARES...............................................................................2
CINAGRO WARRANT.............................................................................11
CLASS A NUMBER...............................................................................7
CLOSING.....................................................................................30
CLOSING DATE................................................................................30
CODE.........................................................................................9
COMPANY......................................................................................1
COMPANY FILED SEC DOCUMENTS.................................................................14
COMPANY MATERIAL ADVERSE EFFECT.............................................................12
COMPANY SHARES...............................................................................1
COMPANY STOCK RIGHTS........................................................................13
CONTRACTS...................................................................................12
COVENANT PERIOD.............................................................................20
DIRECT CLAIM................................................................................36
EXCESS OFFSET AMOUNT........................................................................35
FAIR VALUE..................................................................................23
FAIR VALUE OFFER............................................................................22
FAIR VALUE TRANSACTION......................................................................22
FINANCIAL ADVISOR...........................................................................23
FIRST NEGOTIATION PERIOD....................................................................23
FP ..........................................................................................3
FP MULTIPLE..................................................................................6
GAAP.........................................................................................3
GOVERNMENTAL AUTHORITY......................................................................11
HISTORICAL FINANCIAL STATEMENTS.............................................................13
HOLDINGS.....................................................................................1
HSR ACT.....................................................................................12
INCENTIVE PLAN..............................................................................25
INDEMNIFIABLE LOSSES........................................................................32
INDEX OF DEFINED TERMS
(continued)
PAGE
----
INDEMNIFYING PARTY..........................................................................32
INDEMNITEE..................................................................................32
INDEMNITY PAYMENT...........................................................................32
INDEPENDENT AUDITORS.......................................................................8,9
IP-1.........................................................................................2
IP-2.........................................................................................2
IP-3.........................................................................................2
IP-4.........................................................................................2
IP-4 MULTIPLE................................................................................6
IP-5.........................................................................................3
IP-5 MULTIPLE................................................................................6
KNOWING.....................................................................................40
LAWS........................................................................................12
LIENS.......................................................................................10
MAJORITY MEMBER..............................................................................1
MATERIAL CONTRACT...........................................................................29
MAXIMUM INDEMNITY AMOUNT....................................................................32
MEASURING PERIOD.............................................................................6
MERGER.......................................................................................7
NET INCOME...................................................................................3
NEW YORK COURT..............................................................................39
O MULTIPLE...................................................................................6
OFI.........................................................................................27
ORDERS......................................................................................12
PARENT.......................................................................................1
PARENT COMPANY...............................................................................5
PARENT MATERIAL ADVERSE EFFECT..............................................................16
PAYMENT PROVISIONS...........................................................................2
PBT..........................................................................................3
PBT MARGIN...................................................................................6
PERMIT......................................................................................12
PERSON......................................................................................41
PLEDGED SECURITIES..........................................................................27
PROMISSORY NOTES.............................................................................1
PUBLIC LETTER...............................................................................26
PURCHASE ACCOUNTING ACCRUALS.................................................................7
PURCHASE PRICE...............................................................................2
PURCHASER....................................................................................1
PURCHASER ENTITIES..........................................................................20
PURCHASER INDEMNIFIED PARTIES...............................................................33
RELEVANT SHARES.............................................................................23
REORGANIZATION...............................................................................1
REVENUE GROWTH RATE..........................................................................8
REVENUES.....................................................................................6
SEC.........................................................................................15
-2-
INDEX OF DEFINED TERMS
(continued)
PAGE
----
SECOND NEGOTIATION PERIOD...................................................................23
SECURITIES ACT..............................................................................14
SELLER.......................................................................................1
SELLER INDEMNIFIED PARTIES..................................................................35
SELLER MATERIAL ADVERSE EFFECT..............................................................10
SELLER'S REPRESENTATIVE.....................................................................20
SUBSTANTIAL EQUITY INTEREST.................................................................22
SURVIVING REPS..............................................................................31
TERMINATION DATE............................................................................31
THIRD PARTY CLAIM...........................................................................32
TO THE KNOWLEDGE............................................................................41
TRANSACTION..................................................................................7
TRANSACTION CLOSING..........................................................................4
TRANSACTION DOCUMENTS.......................................................................10
UNITS........................................................................................1
VOTING STOCK.................................................................................6
-3-
