EXHIBIT 2.1
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EXECUTION COPY
INVESTMENT AGREEMENT
by and between
XXXXXXXX'X INC.
and
XXXXXXX DISTRESSED INVESTMENT MASTER FUND, LTD.
Dated as of September 21, 2005
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions......................................................1
Section 1.2 Other Definitions................................................9
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Issuance, Sale and Exchange.....................................10
Section 2.2 Purchase Price..................................................10
ARTICLE III
THE CLOSING
Section 3.1 The Closing.....................................................10
Section 3.2 Deliveries......................................................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization, Subsidiaries......................................11
Section 4.2 Due Authorization...............................................12
Section 4.3 Capitalization..................................................12
Section 4.4 Consents and Approvals..........................................13
Section 4.5 No Violations...................................................13
Section 4.6 No Material Adverse Effect......................................14
Section 4.7 Taxes...........................................................15
Section 4.8 Compliance with Laws: Permits...................................15
Section 4.9 Environmental Matters...........................................16
Section 4.10 Contracts.......................................................17
Section 4.11 Intellectual Property...........................................17
Section 4.12 Property Matters................................................18
Section 4.13 Employee Benefit Plans..........................................18
Section 4.14 Employee Relations..............................................19
Section 4.15 Insurance.......................................................19
Section 4.16 Financial Advisory Fees.........................................19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PLAN INVESTOR
Section 5.1 Organization....................................................20
Section 5.2 Due Authorization...............................................20
Section 5.3 Consents and Approvals..........................................20
Section 5.4 No Violations...................................................20
Section 5.5 Professional Fees...............................................21
Section 5.6 Financing.......................................................21
Section 5.7 Ownership of Shares and Prepetition Claims......................21
Section 5.8 Investment Representations......................................21
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business Pending the Closing.........................22
Section 6.2 No Solicitation of Alternative Proposals........................23
Section 6.3 Cooperation; Access to Information..............................25
Section 6.4 HSR Act.........................................................26
Section 6.5 Further Actions; Reasonable Efforts.............................26
Section 6.6 Use of Proceeds.................................................27
Section 6.7 Notification of Certain Matters.................................27
Section 6.8 Bankruptcy Covenants............................................27
Section 6.9 Information.....................................................28
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to the Obligations of the Plan Investor..............28
Section 7.2 Conditions to the Obligations of the Company....................31
ARTICLE VIII
TERMINATION
Section 8.1 Termination.....................................................32
Section 8.2 Break-up Fee; Fees and Expenses.................................33
ARTICLE IX
MISCELLANEOUS
Section 9.1 Governing Law...................................................34
Section 9.2 Jurisdiction; Forum; Service of Process; Waiver of Jury Trial...34
Section 9.3 Successors and Assigns..........................................34
Section 9.4 Entire Agreement; Amendment.....................................34
Section 9.5 Notices.........................................................35
Section 9.6 Delays or Omissions.............................................36
Section 9.7 Counterparts....................................................36
Section 9.8 Severability....................................................36
Section 9.9 Headings........................................................36
Section 9.10 No Public Announcement..........................................36
Exhibits
Exhibit A - Plan of Reorganization
Exhibit B - Exit Financing Facility Commitment Letter
Schedules
Company Disclosure Schedule
Plan Investor's Disclosure Schedule
Annexes
Annex 1 - Revised Plan of Reorganization
Annex 2 - Budget
INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (as it may be amended, restated, supplemented
or otherwise modified from time to time, this "Agreement") is made as of
September 21, 2005, by and between Xxxxxxxx'x Inc., a Delaware corporation, in
its capacity as debtor and debtor-in-possession (the "Company"), and Xxxxxxx
Distressed Investment Master Fund, Ltd., a Cayman Islands exempt company (the
"Plan Investor").
RECITALS
WHEREAS, on January 14, 2005 (the "Petition Date"), the Company and
certain of its subsidiaries (collectively, the "Debtors") filed voluntary
petitions for reorganization relief (the "Bankruptcy Cases") under chapter 11 of
Title 11 of the United States Code, 11 U.S.C. xx.xx. 101 et seq., as amended
(the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern
District of Georgia, Savannah Division (the "Bankruptcy Court");
WHEREAS, the Company desires to undertake the Restructuring (as
hereinafter defined);
WHEREAS, in connection with the Restructuring, the Plan Investor
desires to convert certain claims it holds against the Company and to make a
significant new investment in Reorganized Xxxxxxxx'x in exchange for the newly
issued equity of Reorganized Xxxxxxxx'x (as hereinafter defined); and
WHEREAS, to implement such conversion and investment, the Plan Investor
desires to acquire from the Reorganized Xxxxxxxx'x, and the Company desires to
issue to the Plan Investor, upon the terms and subject to the conditions set
forth herein, the New Plan Investor Shares (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For the purposes of this Agreement, the
following terms shall have the following meanings:
"Affiliate" shall have the meaning ascribed thereto in Rule 12b-2
promulgated under the Exchange Act.
"Allowed Lender Claim" shall have the meaning ascribed thereto in the
Plan.
"Allowed Participating Program Vendor Claims" shall have the meaning
ascribed thereto in the Plan.
"Amended and Restated Certificate of Incorporation" shall mean the
amended and restated certificate of incorporation of Reorganized Xxxxxxxx'x in a
customary form to be reasonably agreed to by the Company and the Plan Investor.
"Assumed Contracts" shall mean all of the executory contracts and
unexpired leases of the Company which are assumed by Reorganized Xxxxxxxx'x as
contemplated by Section 6.8(d) hereof.
"Assumption and Assignment Orders" shall mean the order or orders
entered by the Bankruptcy Court (which may include the Confirmation Order)
approving the assumption and assignment of the Assumed Contracts, in form and
substance reasonably satisfactory to the Plan Investor.
"Board of Directors" shall mean the Board of Directors of the Company
(or Reorganized Xxxxxxxx'x, as the case may be).
"Budget" shall mean the 13 week cash flow budget forecast for the
period ending on or about December 17, 2005 attached hereto as Annex 2, as the
same may be amended or modified from time to time by the Company with the
consent of the Plan Investor, such consent not to be unreasonably withheld.
"Business Day" shall mean any day excluding Saturday, Sunday, or any
other day on which banking institutions located in New York, New York are
required or authorized to be closed.
"Business Plan" shall mean that 2005-2008 business plan of the Company,
in the form filed with the Bankruptcy Court on August 4, 2005.
"Bylaws" shall mean the bylaws of Reorganized Xxxxxxxx'x in a customary
form to be reasonably agreed to by the Company and the Plan Investor.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment Letter" shall mean the proposal letter for the Exit
Financing Facility as filed as an exhibit to the Plan and attached hereto as
Exhibit B, in each case without giving effect to any amendments or supplements
thereto.
"Confirmation Order" shall mean an order, which shall include orders of
the Bankruptcy Court that have the effect, except as contemplated by the Plan,
of vesting all licenses, permits, authorizations, registrations and other
governmental or regulatory requirements to conduct the business of the Debtors
in the Reorganized Debtors without any further action, filing, notice,
declaration or registration by them which order shall find that the Plan
Investor has acted in good faith in connection with the Bankruptcy Cases and the
Plan and which shall, otherwise be in form and substance reasonably acceptable
to the Plan Investor entered by the Bankruptcy Court in the Bankruptcy Cases
confirming the Plan pursuant to Section 1129 of the Bankruptcy Code.
"Copyrights" shall mean any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
"Copyright Licenses" shall mean any written agreement naming the
Company or any of its Subsidiaries as licensor or licensee granting any right
under any Copyright, including the grant of rights to copy, publicly perform,
created derivative works, manufacture, distribute, exploit and sell materials
derived from any Copyright.
"Crescent Jewelers" shall mean Crescent Jewelers, a California
corporation, and its Affiliates (other than the Debtors).
"Cure Claims" means those amounts required to be paid under Section 365
of the Bankruptcy Code upon assumption and assignment of the Assumed Contracts
under the Assumption and Assignment Orders or otherwise.
"DIP Financing Facility" shall mean the debtor-in-possession secured
financing facility provided to the Debtors by certain lenders, as authorized by
the Bankruptcy Court, pursuant to that certain Amended and Restated Secured
Super-Priority Debtor In Possession Revolving Credit Agreement, dated as of May
27, 2005, by and among the Company, as Borrower, and certain of the subsidiaries
of the Company party thereto, as Subsidiary Guarantors, and the Lenders and
Issuers Party thereto, and Citicorp USA, Inc. as Administrative Agent.
"DIP Facility Term Claim" shall have the meaning ascribed thereto in
the Plan.
"Disclosed Matter" shall mean the existence or occurrence of a matter
which has been disclosed by the Company as of September 21, 2005 (i) on a
schedule or exhibit hereto, (ii) in any publicly available SEC Report filed by
the Company from July, 2004 through the date hereof, (iii) to the Bankruptcy
Court in any of the publicly available filings made up through to the date
hereof or (iv) to the Plan Investor, under the DIP Financing Facility, in its
capacity as Term Lender (as defined therein).
"Disclosure Statement" shall mean the disclosure statement filed in
connection with the Plan in the Bankruptcy Cases on August 4, 2005, as amended.
"Effective Date" shall have the meaning ascribed thereto in the Plan.
"Encumbrance" shall mean any lien, encumbrance, security interest,
option, pledge, mortgage, deed of trust, hypothecation, conditional sale or
restriction on transfer of title or voting, whether imposed by agreement,
understanding, law, equity or otherwise, except for any restrictions on transfer
generally arising under any applicable federal or state securities laws.
"Environment" shall mean navigable waters, waters of the contiguous
zone, ocean waters, natural resources, surface waters, ground water, drinking
water supply, land surface, subsurface strata, ambient air, both inside and
outside of buildings and structures, man-made buildings and structures, and
plant and animal life on earth.
"Environmental Laws" shall mean all Laws and orders relating to
pollution, protection of the Environment, public or worker health and safety, or
the emission, discharge, release or threatened release of Hazardous Substances
into the Environment or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances including the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the Toxic Substances
Control Act, 15 U.S.C. ss. 2601 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq.,
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss. 121 et
seq., the Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq., the
Asbestos Hazard Emergency Response Act, 15 U.S.C. ss. 2601 et seq., the Safe
Drinking Water Act, 42 U.S.C. ss. 300f et seq., the Oil Pollution Act of 1990,
33 U.S.C. ss. 2701 et seq., and analogous state acts.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) under common control or treated as a single employer with the
Company or any of its Subsidiaries, within the meaning of Section 414(b), (c),
(m) or (o) of the Code.
"ERISA Event" shall mean (a) a reportable event described in Section
4043(b) or 4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a
Title IV Plan or a Multiemployer Plan; (b) the withdrawal of the Company, any of
its Subsidiaries, or any ERISA Affiliate from a Title IV Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal
of the Company, any of its Subsidiaries or any ERISA Affiliate from any
Multiemployer Plan; (d) notice of reorganization or insolvency of a
Multiemployer Plan; (e) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA; (f) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (g) the failure to make any required
contribution to a Title IV Plan or Multiemployer Plan; (h) the imposition of a
lien under Section 412 of the Code or Section 302 of ERISA on the Company or any
of its Subsidiaries or any ERISA Affiliate; or (i) any other event or condition
that might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or the imposition of any liability under
Title IV of ERISA other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include reference to the comparable
section, if any, of such successor federal statute.
"Exit Financing Facility" shall mean the exit financing facility
obtained by the Reorganized Debtors having a committed amount of at least
one-hundred million dollars ($100,000,000), or such lesser amount as may be
requested by the Reorganized Debtors upon the consent of the Plan Investor,
which consent shall not be unreasonably withheld, which shall either be on terms
and conditions consistent in all material respects with those set forth on the
Commitment Letter, or to the extent inconsistent therewith, on terms and
conditions reasonably acceptable to the Plan Investor.
"GAAP" shall mean generally accepted accounting principles in the
United States, as in effect from time to time, consistently applied.
"Governmental Entity" shall mean any supranational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"Hazardous Substance" shall mean any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance or waste, petroleum or petroleum-derived substance
or waste, radioactive substance or waste, or any constituent of any such
substance or waste regulated under or defined by any Environmental Law.
"Intellectual Property" shall mean collectively, all rights, priorities
and privileges of the Company or any of its Subsidiaries relating to
intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks, Trademark Licenses and Trade Secrets and all rights
to xxx at law or in equity or any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.
"IRS" shall mean the Internal Revenue Service of the United States or
any successor thereto.
"Knowledge" of a party hereto shall mean the Knowledge, after due
inquiry, of any of the Persons identified on Section 1.1 of the Company
Disclosure Schedule, such Persons to be mutually agreed to by the parties
hereto.
"KECP" shall mean the Key Employee Compensation Program as such term is
defined in the order entered by the Bankruptcy Court on April 4, 2005 (docket
no. 450).
"Law" shall mean any law, statute, ordinance, rule, regulation, order,
judgment, decree or body of law of any Governmental Entity.
"Material Adverse Effect" shall mean, when used in connection with the
Debtors, the Company or Reorganized Xxxxxxxx'x, any change, effect, event,
condition, circumstance, occurrence or development that is, or is reasonably
likely to be, materially adverse to the business, property, assets, liabilities,
operations, results of operations or condition, financial or otherwise, of the
Debtors, taken as a whole, other than a change, effect, event, condition,
circumstance, occurrence or development relating to or arising out of (i) the
economy or securities markets in general or the Company's industry generally
that does not disproportionately affect the Company and its Subsidiaries, taken
as a whole, relative to the effects on others within the Company's industry,
(ii) the Company's financial condition as of the date of this Agreement, or
(iii) any Disclosed Matter.
"Management Incentive Plan" shall mean a stock option or other like
management incentive plan for the senior management of Reorganized Xxxxxxxx'x as
contemplated by the Plan and otherwise acceptable to the Plan Investor in all
respects, including the KECP which is acceptable to the Plan Investor.
"Material Contract" means any of the foregoing to the extent in effect
on September 21, 2005, other than in connection with the purchase of inventory
in the ordinary course of business; (i) any (x) lease for real property, or (y)
lease for personal property, in each case, which requires aggregate payments by
the Debtors of $200,000 or more in any calendar year; (ii) any contract for the
purchase of materials, supplies, goods, services, equipment or other assets that
has a term of at least one year following the Closing and which requires
aggregate payments by the Debtors of $750,000 or more in any calendar year;
(iii) any contract that requires annual aggregate payments by the Debtors after
Closing of $500,000 or more; (iv) any sales, distribution or other similar
contracts not entered into in the Ordinary Course of Business providing for the
sale by the Debtors of materials, supplies, goods, services, equipment or other
assets that requires annual aggregate payments after Closing of $250,000 or
more; (v) any partnership, joint venture or other similar contract to which any
of the Debtors is a party; or (vi) any other contract, the loss of which would
be reasonably likely to result in a Material Adverse Effect.
"Material Intellectual Property" shall mean Intellectual Property owned
by or licensed by the Company or any of its Subsidiaries and material to the
conduct of any of the business of the Company or any of its Subsidiaries.
"Multiemployer Plan" shall mean a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company, any of its Subsidiaries, or
any ERISA Affiliate has any obligation or liability, contingent or otherwise.
"New Plan Investor Shares" shall mean New Common Shares to be issued by
Reorganized Xxxxxxxx'x to the Plan Investor under the Plan and as provided in
Article II hereto.
"Office of the Attorney General" shall mean of the office of any
attorney general of any state, federal or local government.
"Ordinary Course of Business" shall mean the ordinary course of
business of the Debtors consistent with past custom and practice since July,
2004 (including with respect to frequency and amount).
"Patents" shall mean any foreign or United States patents and patent
applications including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
"Patent License" shall mean all agreements, whether written or oral,
providing for the grant by or to the Company or any of its Subsidiaries of any
right to manufacture, use, import, sell or offer for sale any invention covered
in whole or in part by a Patent.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Encumbrances" shall mean any Encumbrance (i) permitted under
the DIP Financing Facility; and (ii) other liens or Encumbrances arising in the
Ordinary Course of Business that are not incurred in connection with the
borrowing of money and that would not materially interfere with the conduct of
the business of the Company or any of its Subsidiaries.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Plan" shall mean the amended plan of reorganization to be filed by the
Company with the Bankruptcy Court on or about the date of this Agreement, in
substantially the form attached hereto as Annex 1 and with such further changes
as may be reasonably acceptable to the Debtors and the Plan Investor, together
with all schedules and exhibits thereto.
"Reorganized Xxxxxxxx'x" shall mean the Reorganized Debtor whose New
Common Shares will be issued pursuant to the Plan.
"Reorganized Debtors" shall mean the entities, which may include one or
more new holding companies and operating companies to be formed pursuant to the
Plan, that will carry out the business of the Company and its Subsidiaries upon
emergence from bankruptcy under chapter 11 of the Bankruptcy Code.
"Restructuring" shall mean the consummation of the financial
restructuring of the Company and its Subsidiaries contemplated under the Plan to
occur on the Effective Date.
"SEC" shall mean the United States Securities and Exchange Commission
and any successor Governmental Entity.
"SEC Reports" shall mean any and all proxy statements, annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
other documents required to be filed by the Company under the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"Store Closing" shall mean the closing of one or more of the Company's
stores to the extent contemplated by the Business Plan and permitted under the
DIP Financing Facility and such additional store closings as are set forth on
Section 1.1 of the Company Disclosure Schedule (which Schedule shall be
delivered within 30 days of the date hereof and shall be reasonably acceptable
to the Plan Investor) or as may be reasonably agreed to by the Plan Investor,
and the store closing sales with respect thereto, including any actions required
or necessary therefor or in connection therewith, including, but not limited to
any reduction in force, sales of assets and rejection of unexpired leases and
executory contracts related thereto, pursuant to the Plan or an order of the
Bankruptcy Court approving such matters.
"Subsidiary" of any Person means, on any date, any Person (i) the
accounts of which would be consolidated with and into those of the applicable
Person in such Person's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date or (ii) of
which securities or other ownership interests representing more than fifty
percent of the equity or more than fifty percent of the ordinary voting power
or, in the case of a partnership, more than fifty percent of the general
partnership interests or more than fifty percent of the profits or losses of
which are, as of such date, owned, controlled or held by the applicable Person
or one or more subsidiaries of such Person. Without limiting the generality of
the foregoing, Crescent Jewelers shall not be deemed to be a Subsidiary of any
of the Debtors.
"Tax Affiliate" shall mean, with respect to any Person, (a) any
Subsidiary of such Person, and (b) any Affiliate of such Person with which such
Person files or is eligible to file consolidated, combined or unitary tax
returns.
"Taxes" shall mean all taxes of any kind, charges, fees, customs,
duties, imposts, levies or other assessments, including, without limitation, all
net income, gross receipts, ad valorem, value added, transfer, gains, franchise,
profits, inventory, net worth, capital stock, asset, sales, use, license,
estimated withholding, payroll, transaction, capital, employment, social
security, workers compensation, unemployment, excise, any interest and any
penalties, additions to tax or additional amounts, imposed by any taxing
authority (domestic or foreign) and shall include any transferee liability in
respect of Taxes.
"Tax Return" shall mean all returns, declarations, reports, forms,
estimates, information returns and statements required to be filed in respect of
any Taxes or to be supplied to a taxing authority in connection with any Taxes.
"Title IV Plan" shall mean a pension plan, other than a Multiemployer
Plan covered by Title IV of ERISA and to which the Company or any of its
Subsidiaries, or any ERISA Affiliate has any obligation or liability or
otherwise.
"Trademarks" shall mean any foreign or United States trademarks,
service marks, trade dress, trade names, brand names, designs and logos,
corporate names, product or service identifiers, whether registered or
unregistered, and all registrations and applications for registration thereof.
"Trademark Licenses" shall mean any agreement, whether written or oral,
providing for the grant by or to the Company or any of its Subsidiaries of any
right to use any Trademark.
"Trade Secrets" shall mean any trade secrets, research records,
processes, procedures, manufacturing formulae, technical know-how, technology,
blue prints, designs, plans, inventions (whether patentable and whether reduced
to practice), invention disclosures and improvements thereto.
"Transaction Documents" shall mean this Agreement and all other
contracts, agreements, schedules, certificates, orders and other documents being
executed and delivered by the parties hereto pursuant to or in connection with
this Agreement.
Section 1.2 Other Definitions. The following terms shall have the
meanings defined in the Section indicated:
Action...............................................Section 8.1
Agreement............................................Preamble
Alternative Proposal.................................Section 6.2
Bankruptcy Cases.....................................Recitals
Bankruptcy Code......................................Recitals
Bankruptcy Court.....................................Recitals
Benefit Plans........................................Section 4.13(a)
Break-up Fee.........................................Section 8.2
Closing..............................................Section 3.1
Closing Date.........................................Section 3.1
Company..............................................Preamble
Company Confidential Information.....................Section 6.3(f)
Company Disclosure Schedule..........................Article IV
Contracts............................................Section 4.5
Debtors..............................................Recitals
Designated Contracts.................................Section 6.8(d)
Governmental Requirements............................Section 4.4
HSR Act..............................................Section 4.4
Investment...........................................Section 2.2
Material Permits.....................................Section 4.8(b)
New Common Shares....................................Section 4.3(b)
Petition Date........................................Recitals
Plan Investor........................................Preamble
Plan Investor's Disclosure Schedule..................Article V
Proceeding...........................................Section 9.2
Purchase Price.......................................Section 2.2
Real Property........................................Section 4.9(c)
Representatives......................................Section 6.2
Required Consent.....................................Section 4.5
Restraint............................................Section 7.1(b)
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Issuance, Sale and Exchange. Upon the terms and subject
to the conditions set forth herein, including that the Effective Date of the
Plan will occur on and as of the Closing Date, and in reliance upon the
representations and warranties hereinafter set forth, at the Closing,
Reorganized Xxxxxxxx'x will issue, sell and deliver to the Plan Investor and the
Plan Investor will acquire from Reorganized Xxxxxxxx'x one hundred percent
(100%) of the New Common Shares (subject only to dilution with respect to the
Management Incentive Plan) to be authorized, issued and outstanding by the
Reorganized Xxxxxxxx'x on the Closing Date in exchange for the payment of the
Purchase Price (as hereinafter defined) and in full satisfaction and discharge
of (1) the Allowed Lender Claim; (2) the Allowed Participating Program Vendor
Claims; and (3) the DIP Facility Claim.
Section 2.2 Purchase Price. At the Closing, in partial consideration
of the issuance of the New Plan Investor Shares to the Plan Investor pursuant to
Section 2.1, the Plan Investor shall pay to Reorganized Xxxxxxxx'x twenty-five
million dollars ($25,000,000) (the "Purchase Price") by wire transfer of
immediately available funds to an account designated in writing by the Debtors
at least three (3) Business Days prior to the Closing Date. The Purchase Price
shall be used by the Debtors or Reorganized Xxxxxxxx'x to consummate the Plan in
accordance with Section 6.6 hereof and for other general corporate purposes. The
payment of the consideration set forth in this Article II, in whole or in part,
shall sometimes be referred to herein as the "Investment."
ARTICLE III
THE CLOSING
Section 3.1 The Closing. The closing of the purchase and sale of the
New Plan Investor Shares hereunder and the other transactions contemplated
hereby (the "Closing") shall take place at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, located at Four Times Square, New York, New York, at a date
(the "Closing Date") and time to be mutually agreed upon by the Company and the
Plan Investor, which shall be on at least three (3) Business Days but no more
than ten (10) Business Days after the date following the satisfaction (or waiver
by the Plan Investor or the Company, as appropriate) of all of the conditions
set forth in Article VII (other than those conditions that by their nature are
to be satisfied at the Closing, but subject to the satisfaction or waiver of
those conditions); provided, however, that in the event the Company and the Plan
Investor are not able mutually to agree on a Closing Date in accordance with the
immediately preceding clause, the parties agree that the Closing Date shall be
on the tenth Business Day following the satisfaction or waiver of all the
conditions set forth in Article VII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions); and provided, further, that the Closing Date shall
be the same date as the Effective Date of the Plan.
Section 3.2 Deliveries.
(a) At the Closing and subject to the terms and conditions hereof,
the conversion of the debt and acquisition of equity contemplated by Article II
hereof and the Plan shall be deemed to have occurred, and Reorganized Xxxxxxxx'x
shall deliver certificates to the Plan Investor, evidencing the aggregate number
of New Plan Investor Shares being issued to the Plan Investor herewith and
registered in the name of the Plan Investor or, to the extent designated by the
Plan Investor to the Debtors at least three (3) Business Days prior to the
Closing Date, to an Affiliate thereof, as its nominee or designee (with the
individual certificates in such amounts as the Plan Investor shall specify to
Debtors at least three (3) Business Days prior to the Closing Date).
(b) At the Closing, the Company shall deliver to the Plan Investor
the officers' certificates required under Sections 7.1(c) and 7.1(d).
(c) At the Closing, the Plan Investor shall deliver to the Company
the officers' certificates required under Sections 7.2(d) and 7.2(e).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the disclosure schedule prepared
and signed by the Company (the "Company Disclosure Schedule") and delivered to
the Plan Investor simultaneously with the execution and delivery hereof, the
Company represents and warrants to the Plan Investor that all of the statements
contained in this Article IV are true and correct as of the date of this
Agreement (or, if made as of a specified date, as of such date) and shall be
true and correct as of the Closing Date (or, if made as of a specified date, as
of such date).
Section 4.1 Organization, Subsidiaries. The Company and each of its
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and (in the jurisdictions recognizing the concept) in good standing
under the laws of the jurisdiction in which it is organized and has the
requisite corporate or other power and authority to own, lease and operate its
properties and to conduct its business as it is now being conducted. The Company
and each of its Subsidiaries is duly qualified in each jurisdiction where it is
required to be so qualified, except for failures to be so qualified that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect.
Section 4.2 Due Authorization. Subject to the approval of the
Bankruptcy Court, the Company has all corporate right, power and authority to
enter into this Agreement and each of the other Transaction Documents to which
it is a party, to consummate the transactions contemplated hereby and thereby
and to comply with the terms, conditions and provisions hereof and thereof. The
execution and delivery by the Company of this Agreement and of each other
Transaction Document to which it is a party is, and the issuance, sale and
delivery of the New Common Shares by Reorganized Xxxxxxxx'x and the compliance
by the Company (or the Reorganized Debtors, as the case may be) with each of the
provisions of this Agreement and of each other Transaction Document to which it
(or the Reorganized Debtors, as the case may be) is a party will, upon the
approval of the Bankruptcy Court, be (i) within the corporate power and
authority of the Company (or the Reorganized Debtors, as the case may be) and
(ii) have been duly authorized by all requisite corporate action of the Company
(or the Reorganized Debtors, as the case may be). This Agreement has been, and
each of the other Transaction Documents to which the Company (or the Reorganized
Debtors, as the case may be) is a party when executed and delivered by the
Company (or the Reorganized Debtors, as the case may be) will be, duly and
validly executed and delivered by the Company (or the Reorganized Debtors, as
the case may be), and this Agreement constitutes, and each of such other
Transaction Documents when executed and delivered by the Company (or the
Reorganized Debtors, as the case may be) will constitute, upon approval of the
Bankruptcy Court, a valid and binding agreement of the Company (or the
Reorganized Debtors, as the case may be), enforceable against the Company (or
the Reorganized Debtors, as the case may be) in accordance with its terms,
except as such enforcement is limited by bankruptcy, reorganization, insolvency
and other similar laws affecting the enforcement of creditors' rights generally
and limitations imposed by general principles of equity.
Section 4.3 Capitalization.
(a) As of the Closing Date all issued and outstanding capital
stock or other ownership interests of each Subsidiary will be owned by the
Company or a wholly-owned Subsidiary free and clear of any Encumbrance other
than Permitted Encumbrances. No other class of capital stock or other ownership
interests of the Subsidiaries will be authorized or outstanding. At the Closing,
all of the outstanding shares of New Common Shares (as defined below) and all of
the outstanding shares of capital stock each of the Subsidiaries will be duly
authorized and validly issued, fully paid and non-assessable. After giving
effect to the Plan and the Confirmation Order, and except for the transactions
contemplated by this Agreement and as contemplated by the Management Incentive
Plan, there are no outstanding subscription rights, commitments, options,
warrants, convertible or exchangeable securities or other rights of any
character whatsoever to which any of the Debtors or Reorganized Xxxxxxxx'x is a
party relating to the issued or unissued capital stock of the Debtors or
Reorganized Xxxxxxxx'x and that will continue to be in effect immediately
following the Closing. Except as contemplated by this Agreement, there are no
voting trusts, stockholders agreements, proxies or other like understandings in
effect to which the Company or any of its Subsidiaries is a party with respect
to the voting or transfer of any equity securities of the Company or any of its
Subsidiaries including the New Common Shares, that will be outstanding or
effective immediately following the Closing.
(b) As of the Closing, after giving effect to the Investment and
the Restructuring contemplated hereby, (i) the authorized capital stock of the
Reorganized Xxxxxxxx'x shall be that number of shares of common stock designated
by the Plan Investor ("New Common Shares"), (ii) New Common Shares outstanding
shall consist solely of the New Plan Investor Shares and any New Common Shares
to be issued pursuant to the Management Incentive Plan and (iii) New Common
Shares subject to issuance pursuant to outstanding options shall consist solely
of any New Common Shares reserved for issuance pursuant to the Management
Incentive Plan. The New Common Shares to be issued to the Plan Investor, when
issued in compliance with the provisions of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable.
Section 4.4 Consents and Approvals. To the Knowledge of the Company,
no consent, approval, authorization of, declaration, filing, or registration
with, any Governmental Entity is required to be made or obtained by either the
Company or any of its Subsidiaries in connection with the execution, delivery,
and performance of this Agreement or any of the other Transaction Documents
contemplated hereby, except for (i) the filing of a new or amended and restated
certificate of incorporation, or other applicable organizational filings, for
one or more of the Reorganized Debtors with the Secretary of State (or similar
state authority) of such Reorganized Debtor's state of incorporation or
organization, (ii) any required filings (and expiration of applicable waiting
periods) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as
amended (the "HSR Act"), and (iii) the Confirmation Order. The items referred to
in clauses (i) through (iii) of this Section 4.4 are hereinafter referred to as
the "Governmental Requirements."
Section 4.5 No Violations.
(a) Except as set forth on Section 4.5 of the Company Disclosure
Schedule (which Schedule shall be delivered within 20 days of the date hereof
and shall be reasonably acceptable to the Plan Investor), assuming that the
Governmental Requirements and Required Consents will be satisfied, made or
obtained and will remain in full force and effect and the conditions set forth
in Article VII will be satisfied, except as contemplated by the Plan and the
Restructuring (including any consents expressly required thereunder), neither
the execution, delivery or performance by the Company of this Agreement or any
of the other Transaction Documents to which the Company (or the Reorganized
Debtors, as the case may be) is a party nor the consummation of the transactions
contemplated hereby or thereby will (after giving effect to the transactions
contemplated hereby and under the Plan): (i) conflict with, or result in a
breach or a violation of, any provision of the certificate of incorporation or
bylaws or other organizational documents of the Company or any of its
Subsidiaries (or the Reorganized Debtors, as the case may be), including the
Amended and Restated Articles of Incorporation and Bylaws, or (ii) as of the
Closing, constitute, with or without notice or the passage of time or both, a
breach, violation or default, create an Encumbrance, give rise to any right of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation, default or acceleration, under any Law or any provision of any
agreement, note, bond, mortgage, indenture, contract, agreement, commitment,
lease, license, permit, franchise or other instrument or obligation
(collectively, "Contracts") to which the Company or any of its Subsidiaries is a
party or pursuant to which the Company or any of its Subsidiaries or any of
their respective assets or properties is subject, except for breaches,
violations, defaults, Encumbrances (other than Permitted Encumbrances), or
rights of termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration which, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect.
(b) Section 4.5 of the Company Disclosure Schedule (which Schedule
shall be delivered within 20 days of the date hereof) identifies each Contract
to which the Company or any Subsidiary is a party or by which any of them or
their assets or properties is or may be bound or affected in respect of which a
Required Consent must be obtained. For purposes hereof, a "Required Consent"
means any consent under an Assumed Contract required so that the execution,
delivery and/or performance by the Company of this Agreement, the consummation
of the transactions contemplated by this Agreement, and the assumption and/or
continued enforcement thereof by the Company or a Subsidiary or any of the
Reorganized Debtors will not result in any breach of or constitute a default (or
an event which with or without notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, such Assumed Contract, or result in the
creation of a Encumbrance, other than a Permitted Encumbrance, on any property
or asset of the Company or any Subsidiary except where the failure to obtain any
such consent or consents would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. For all purposes of this
Agreement, the Company or any Subsidiary shall be deemed to have obtained a
Required Consent if, and to the extent that, pursuant to the Plan, the
Confirmation Order and/or the Assumption Order the Company (or the applicable
Subsidiary) is authorized to assume the Assumed Contracts pursuant to section
365 of the Bankruptcy Code.
(c) Section 4.5 of the Company Disclosure Schedule (which Schedule
shall be delivered within 20 days of the date hereof) identifies each of the
Debtors' stores that have closed since the Petition Date.
Section 4.6 No Material Adverse Effect. Since September 21, 2005,
there has been no change, event or occurrence which, individually or in the
aggregate, has had or would reasonably expected to have a Material Adverse
Effect, and to the Knowledge of the Company, no such change, event or occurrence
is threatened, nor has there been any damage, destruction or loss which would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, whether or not covered by insurance.
Section 4.7 Taxes. Except as set forth in Section 4.7 of the Company
Disclosure Schedule (which Schedule shall be delivered within 30 days of the
date hereof and shall be reasonably acceptable to the Plan Investor):
(a) All federal, state, local and foreign income and franchise and
other material tax returns, reports and statements (collectively, the "Tax
Returns") required to be filed by the Company or any of its Tax Affiliates have
been filed with the appropriate Governmental Entity in all jurisdictions in
which such Tax Returns are required to be filed, all such Tax Returns are true
and correct in all material respects, and all material taxes, charges and other
impositions reflected there in or otherwise due and payable (except in the case,
those which arose prior to the Petition Date to the extent subject to the
automatic stay) have been paid prior to the date on which any fine, penalty
interest, late charge, or loss may be added thereto for non-payment thereof
except where contested in good faith and by appropriate proceedings if adequate
reserves therefor have been established on the books of the Company of such Tax
Affiliate in conformity with GAAP. As of the Effective Date, no Tax Return is
under audit or examination by any Governmental Entity and no claim or assertion
has been made that insufficient Taxes have been withheld by the Company or any
of its Tax Affiliates from their respective employees for any periods in
material compliance with the tax, social security and unemployment withholding
provisions of any applicable Laws and such withholdings have been timely paid to
the respective Governmental Entity. The Company and each of its Subsidiaries has
complied in all material respects with all Laws relating to the withholding of
Taxes. Neither the Company nor any Subsidiary has any Knowledge of any fact or
condition that, if known to any taxing authority would likely result in the
issuance of a notice of proposed deficiency or similar notice of intention to
assess Taxes against the Company or any Subsidiary.
(b) None of the Company or any of its Tax Affiliates has (i)
executed or filed with the IRS or any other Governmental Entity any agreement or
other document extending, or having the effect of extending, the period for the
filing of any Tax Return or the assessment or collection of any charges (other
than an extension in the State of Louisiana for state income taxes); (ii)
incurred any obligation under any tax sharing agreement or arrangement with any
third-party; (iii) been a member of an affiliated, combined or unitary group
other than the group of which the Company (or its Tax Affiliate) is the common
parent; or (iv) any current or potential contractual obligation to indemnify any
other person with respect to Taxes or to make distributions in respect of Taxes.
Section 4.8 Compliance with Laws: Permits.
(a) Except for any Disclosed Matter or as set forth on Section 4.8
of the Company Disclosure Schedule (which Schedule shall be delivered within 30
days of the date hereof and shall be reasonably acceptable to the Plan
Investor), the Company and its Subsidiaries are in compliance in all material
respects with all Laws, and neither the Company nor any of its Subsidiaries has
received any notice of any such alleged material violation of Law, in each case,
except where such failures to comply or violations would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Company and its Subsidiaries hold all licenses,
franchises, permits, consents, registrations, certificates, and other material
governmental or regulatory permits, authorizations or approvals necessary or
required for the operation of the business as presently conducted and for the
ownership, lease or operation of the assets of the Company and its Subsidiaries
("Material Licenses and Permits"), except for failures to hold or have such
Material Licenses and Permits would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. To the Knowledge of
the Company, no action by the Company, any Subsidiary or the Plan Investor is
necessary or required in order that all Material Licenses and Permits will
remain in full force and effect immediately following the Closing Date.
Section 4.9 Environmental Matters.
(a) The Company and the Subsidiaries are in compliance with all
applicable Environmental Laws, which compliance includes the possession of
permits and governmental authorizations required under applicable Environmental
Laws and compliance with the terms and conditions thereof, except where such
non-compliance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) There are no actions or claims pursuant to any Environmental
Law pending or, to the Knowledge of the Company, threatened against the Company
or any Subsidiary that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(c) Except for stores located in areas affected by Hurricane
Xxxxxxx and as a result thereof, the real properties currently or, to the
Knowledge of the Company, formerly owned, leased or operated by the Company or
any Subsidiary (including groundwater under such real properties) (the "Real
Properties") do not contain any Hazardous Substances which would result in
liability of the Company or any of the Subsidiaries pursuant to any applicable
Environmental Law which would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(d) Except for stores located in areas affected by Hurricane
Xxxxxxx and as a result thereof, no Hazardous Substance has been disposed of or
transported from any of the Real Properties during the time any such real
property was owned, leased or operated by the Company or any of the
Subsidiaries, except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(e) The Company and the Subsidiaries have not become obligated,
whether by operation of law or through contractual agreement, to indemnify any
other Person or otherwise to assume liability for any claim or action brought
pursuant to any Environmental Law which would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 4.10 Contracts.
(a) Section 4.10 of the Company Disclosure Schedule (which
schedule shall be delivered within 30 days of the date hereof and shall be
reasonably acceptable to the Plan Investor) sets forth all of the Material
Contracts to which the Company or any of the Subsidiaries is a party or by or to
which any of them or any of their properties is bound or subject.
(b) There have been delivered or otherwise made available to the
Plan Investor true and complete copies of all such Material Contracts, and such
Material Contracts are valid and binding upon the Company or the Subsidiary
party thereto and, to the Knowledge of the Company, the other party or parties
thereto, in each case, in accordance with their terms, and each such Material
Contract is subject to assumption pursuant to Section 365 of the Bankruptcy
Code. Neither the Company nor any of the Subsidiaries is in default under any of
such Material Contracts, nor to the Knowledge of the Company does any condition
exist that with notice or lapse of time or both would constitute such a default
thereunder, in each case, other than defaults that have been rendered
unenforceable as a result of the Bankruptcy Cases or defaults which,
individually or in the aggregate, would not be reasonably expected to have a
Material Adverse Effect.
Section 4.11 Intellectual Property.
(a) Set forth on Section 4.11 of the Company Disclosure Schedule
(which Schedule shall be delivered within 30 days of the date hereof) is all
Material Intellectual Property owned or licensed by the Company and its
Subsidiaries as of the date hereof, with said Schedule separately identifying
that which is owned by the Company or its Subsidiaries and that which is
licensed to the Company and its Subsidiaries. The Intellectual Property to be
set forth in Section 4.11 of the Company Disclosure Schedule constitutes all of
the Material Intellectual Property rights necessary or required to conduct its
business.
(b) All Material Intellectual Property is valid, subsisting,
unexpired and enforceable, has not been adjudged invalid and has not been
abandoned and the use thereof in business of the Company or its Subsidiaries
does not infringe the intellectual property rights of any other Person, except
where the foregoing to be true would not have a Material Adverse Effect.
(c) Except as set forth in Section 4.11 of the Company Disclosure
Schedule (which Schedule shall be delivered within 30 days of the date hereof),
none of the Intellectual Property owned by the Company or its Subsidiaries is
the subject of any material licensing or franchise agreement pursuant to which
the Company or its Subsidiaries is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Entity which would limit, cancel or question the validity of, or
the Company or its Subsidiaries' rights in, any Material Intellectual Property,
except where the foregoing to be true would not have a Material Adverse Effect.
(e) No action or proceeding seeking to limit, cancel or question
the validity of any Material Intellectual Property owned by the Company or its
Subsidiaries ownership interest therein is on the Effective Date pending or, to
the Knowledge of the Company, threatened, except where the foregoing to be true
would not have a Material Adverse Effect.
Section 4.12 Property Matters.
(a) Except for the stores located in areas affected by Hurricane
Xxxxxxx, the facilities, machinery, equipment, furniture, buildings and other
improvements, fixtures, vehicles, structures, any related capitalized items and
other tangible property used in the business of the Company or any of the
Subsidiaries taken as a whole, are generally in good operating condition and
repair, subject to continued repair and replacement in accordance with past
practice, and are suitable for their intended use.
(b) The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and valid leasehold
interests in all leased real property leased by them, except where the failure
to have such good title or valid leasehold interests would not have or
reasonably be expected to have a Material Adverse Effect. None of the properties
and assets of the Company and its Subsidiaries is subject to any material
Encumbrances, other than Permitted Encumbrances.
Section 4.13 Employee Benefit Plans.
(a) Section 4.13 of the Company Disclosure Schedule (which
Schedule shall be delivered within 30 days of the date hereof and shall be
reasonably acceptable to the Plan Investor) separately identifies as of the
Effective Date all Title IV Plans, all Multiemployer Plans and all of other
employee benefit plans within the meaning of Section 3(3) of ERISA to which the
Company or any of its Subsidiaries has any obligation or liability, contingent
or otherwise (collectively, "Benefit Plans").
(b) Each Benefit Plan of the Company or any of its Subsidiaries
intended to qualify under Section 401 of the Code does so qualify, and any trust
created thereunder is exempt from tax under the provisions of Section 501 of the
Code.
(c) Each Benefit Plan is in compliance in all material respects
with applicable provisions of ERISA, the Code and all other Laws applicable to
it except for non-compliance that, in the aggregate, would not have a Material
Adverse Effect.
(d) Other than the Bankruptcy Cases, no ERISA Event has occurred
or is reasonably expected to occur, other than any ERISA Events that, in the
aggregate, would not have a Material Adverse Effect.
(e) Except to the extent set forth in Section 4.13 of the Company
Disclosure Schedule (which Schedule shall be delivered within 20 days of the
date hereof and shall be reasonably acceptable to the Plan Investor), none of
the Company or any of its Subsidiaries, or any ERISA Affiliate has any material
unfunded liability thereunder or Withdrawal Liability as a result of a complete
withdrawal as of the date hereof from any Multiemployer Plan.
Section 4.14 Employee Relations. None of the employees of the Company
or any of its Subsidiaries is represented by a union, and to the Knowledge of
the Company, no union organizing efforts are now being conducted. Neither the
Company nor any of the Subsidiaries has at any time since July 2004 had, nor, to
the Knowledge of any of the Company, is there now threatened, a strike, picket,
work stoppage, work slowdown or other material labor dispute. Except as set
forth in Section 4.14 of the Company Disclosure Schedule (which Schedule shall
be delivered within 20 days of the date hereof and shall be reasonably
acceptable to the Plan Investor) and the KECP, neither the Company nor any
Subsidiary is a party to any employment agreement, retention arrangement or
collective bargaining agreement or has any material obligations or liabilities
with respect to severance benefits or retiree benefits, other than health
benefits for terminated employees to the extent mandated by COBRA.
Section 4.15 Insurance. The Company has heretofore made available for
inspection to the Plan Investor true and correct copies of all policies or
binders of fire, liability, product liability, worker's compensation, directors
and officers liability, vehicular and other insurance held by or on behalf of
the Company or any of the Subsidiaries and which are presently in effect. Such
policies and binders are valid and binding in accordance with their terms, and
are in full force and effect. The Company has advised the Plan Investor of the
amounts of the deductible or self-insured retention under the Company's worker's
compensation programs, and such amounts will be accurately reflected in all
material respects in Section 4.15 of the Company Disclosure Schedule (which
Schedule shall be delivered within 30 days of the date hereof and shall be
reasonably acceptable to the Plan Investor).
Section 4.16 Financial Advisory Fees. Except as set forth on Section
4.16 of the Company Disclosure Schedule (which Schedule shall be delivered
within 20 days of the date hereof and shall be reasonably acceptable to the Plan
Investor), no agent, broker, investment bank or other financial advisor is or
will be entitled to any fee, commission, expense or other amount from the
Company or any of its Subsidiaries in connection with any of the transactions
contemplated by this Agreement or the other Transaction Documents.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PLAN INVESTOR
Except as specifically set forth in the disclosure schedule prepared
and signed by the Plan Investor (the "Plan Investor's Disclosure Schedule") and
delivered to the Company simultaneously with the execution and delivery hereof,
the Plan Investor hereby represents and warrants to the Company that all of the
statements contained in this Article V are true and correct as of the date of
this Agreement (or, if made as of a specified date, as of such date) and shall
be true and correct as of the Closing Date (or, if made as of a specified date,
as of such date).
Section 5.1 Organization. The Plan Investor is a corporation or other
legal entity duly organized, validly existing and (in the jurisdictions
recognizing the concept) in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate or other power and
authority to own, lease and operate its properties and to conduct its business
as it is now being conducted.
Section 5.2 Due Authorization.
(a) The Plan Investor has all right, power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party, to consummate the transactions contemplated hereby and thereby
and to comply with the terms, conditions and provisions hereof and thereof
applicable to the Plan Investor.
(b) The execution, delivery and performance by the Plan Investor
of this Agreement and each of the other Transaction Documents to which it is a
party, the compliance by the Plan Investor with each of the provisions of this
Agreement and each of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, are within the power and authority
of the Plan Investor, have been duly authorized and approved by the requisite
actions of the Plan Investor and do not require any further authorization or
consent of the Plan Investor or its beneficial owners. This Agreement is the
legal, valid and binding agreement of the Plan Investor, enforceable against the
Plan Investor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws from time to time affecting the enforcement of creditors'
rights generally.
Section 5.3 Consents and Approvals. To the Knowledge of the Plan
Investor, no consent, approval, authorization of, declaration, filing, or
registration with, any Governmental Entity is required to be made or obtained by
it in connection with the execution, delivery, and performance of this Agreement
or any of the other Transaction Documents contemplated hereby, except for the
Governmental Requirements.
Section 5.4 No Violations. Assuming that the Governmental
Requirements and Required Consents will be satisfied, made or obtained and will
remain in full force and effect and the conditions set forth in Article VII will
be satisfied, neither the execution, delivery or performance by the Plan
Investor of this Agreement or any of the other Transaction Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby, will: (i) conflict with, or result in a breach or a violation of, any
provision of the certificate of incorporation or bylaws or other organizational
documents of the Plan Investor or (ii) constitute, with or without notice or the
passage of time or both, a breach, violation or default, create an Encumbrance
(other than any Permitted Encumbrance) or give rise to any right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration, under any Law or any provision of any agreement or other
instrument to which the Plan Investor is a party or pursuant to which the Plan
Investor or any of its respective assets or properties is subject, except for
breaches, violations, defaults, Encumbrances (other than Permitted
Encumbrances), or rights of termination, modification, cancellation, prepayment,
suspension, limitation, revocation or acceleration which, individually or in the
aggregate, are not material and would not materially adversely affect the
ability of the Plan Investor to perform its obligations under this Agreement or
any of the Transaction Documents.
Section 5.5 Professional Fees. Except as set forth on Section 5.5 of
the Plan Investor's Disclosure Schedule (which Schedule shall be delivered
within 30 days of the date hereof), no professional, including any lawyer,
agent, broker, investment bank or other financial advisor is or will be entitled
to any fee, commission, expense or other amount from the Plan Investor in
connection with any of the transactions contemplated by this Agreement or the
other Transaction Documents.
Section 5.6 Financing. The Plan Investor has, and at the Closing will
have, available to it funds in amounts sufficient to pay the Purchase Price.
Section 5.7 Ownership of Shares and Prepetition Claims. Section 5.7
of the Plan Investor's Disclosure Schedule (which Schedule shall be delivered
within 30 days of the date hereof) sets forth as of the date hereof (i) the
number of shares of common stock of the Company currently held by the Plan
Investors and its Affiliates, (ii) the amount of (w) the Allowed Lender Claim,
(x) Allowed Participating Program Vendor Claims and (y) the DIP Facility Term
Claim and (z) any other claims against the Company held or beneficially owned by
the Plan Investor or any of its Affiliates.
Section 5.8 Investment Representations.
(a) The Plan Investor understands that the New Plan Investor
Shares have not been registered under the Securities Act.
(b) The Plan Investor has substantial experience in evaluating and
investing in private placement transactions of securities so that it is capable
of evaluating the merits and risks of its investment in Reorganized Xxxxxxxx'x
and has the capacity to protect its own interests, and can afford the loss of
its investment in the New Plan Investor Shares.
(c) The Plan Investor is acquiring its portion of the New Plan
Investor Shares for its own account for investment only, and not with a view
towards their distribution. The Plan Investors agrees that New Plan Investor
Shares may not be sold or transferred unless such New Investor Shares have
subsequently been registered under the Securities Act or an exemption from
registration is available and such shares are sold or otherwise transferred in
accordance therewith.
(d) The Plan Investor represents that it is an accredited investor
within the meaning of Regulation D under the Securities Act.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business Pending the Closing. Except as
otherwise expressly contemplated by this Agreement and the Plan or any of the
other Transaction Documents or as consented to by the Plan Investor in writing
or as required by the Bankruptcy Code, during the period from the date of this
Agreement through and including the Closing Date, the Company shall, and shall
cause each of its Subsidiaries to, (a) conduct its operations and business in
the Ordinary Course of Business, including, without limitation, paying its
vendors, trade creditors and other creditors, in a manner consistent with the
Budget and the Business Plan; (b) use commercially reasonable efforts to
preserve intact its business relationships with third parties; and (c) confer
with the Plan Investor on operational matters of a material nature. The Company
shall give the Plan Investor prompt notice of any event, condition or
circumstance occurring from the date hereof through the Closing Date that would
constitute a violation or breach of (i) any representation or warranty, whether
made as of the date hereof or as of the Closing Date or any covenant of the
Company in either case contained in this Agreement. Without limiting the
generality of the foregoing, unless otherwise agreed to by the Plan Investor,
the Company shall not, and shall not permit any of its Subsidiaries to:
(a) amend its charter, bylaws or other comparable organizational
documents other than in accordance with this Agreement or as contemplated by the
Plan;
(b) acquire any "business", as defined in Rule 3-05(a)(2) of
Regulation S-X (whether by merger, consolidation, purchase of assets or
otherwise) or acquire any, or increase any existing, equity interest in any
Person not a Subsidiary (whether through a purchase of stock, establishment of a
joint venture or otherwise);
(c) assume or reject any Material Contract or Assumed Contract;
(d) establish, modify or increase, in any material respect, the
benefits under, or promise to establish, modify or increase in any material
respect the benefits under, any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan or employment, consulting or severance agreement, or
otherwise increase, in any material respect, the compensation payable to any
directors, or officers, or employees, as a whole, of the Company, or establish,
adopt or enter into any employment agreement, retention arrangement or
collective bargaining agreement;
(e) other than the items set forth in Section 6.1(e) of the
Company Disclosure Schedule (which Schedule shall be delivered within 30 days of
the date hereof and shall be reasonably acceptable to the Plan Investor) and
other than in connection with any Store Closing, (i) sell, exchange, license or
otherwise dispose of any of its real properties or other material assets, except
for sales of inventory and consignment goods in the Ordinary Course of Business,
(ii) enter into any new joint ventures or similar projects, (iii) mortgage any
of its real property or other assets except for Permitted Encumbrances or (iv)
close any other stores of the Company or any of its Subsidiaries;
(f) (i) incur any additional indebtedness (including capital
leases), indemnification obligations or other material liabilities, except as
permitted by the DIP Financing Facility, (ii) make any loans, advances,
restricted payments or capital contributions to, or investments in, any Person
(excluding any Subsidiary), except as permitted by the DIP Financing Facility;
(iii) pay any pre-Petition Date liabilities except as may be permitted to be
paid by a Bankruptcy Court order entered (or pursuant to a motion made, so long
as the amount provided for in any pending motion is not materially in excess of
the amounts reflected in the Budget) prior to the date of this Agreement; or
(iv) pay any post-Petition Date costs or expenses, other than those incurred in
the Ordinary Course of Business or permitted to be paid pursuant to a Bankruptcy
Court order, in each case so long as such amounts are not materially in excess
of the amounts reflected in the Budget;
(g) enter in any agreement or settlement with (i) the IRS or any
other Governmental Entity, including the SEC or any Office of the Attorney
General or (ii) Crescent Jewelers or on behalf of Crescent Jewelers or with
respect to the Debtors' claims and/or interests in Crescent Jewelers, in each
case, without the consent of the Plan Investor, which shall not be unreasonably
withheld;
(h) enter into any new agreement or amend any existing agreement
containing a non-competition, geographical restriction or similar covenant, in
each case in a manner materially adverse to the Plan Investor or Reorganized
Xxxxxxxx'x;
(i) agree to take any of the foregoing actions; or
(j) Intentionally and willfully take any action to cause any of
the Company's representations and warranties contained in this Agreement to be
breached.
Section 6.2 No Solicitation of Alternative Proposals.
(a) Except as permitted by Section 6.1(g) hereof, from and after
the date of this Agreement until the earlier of (x) the Closing Date and (y) the
termination of this Agreement in accordance with section 8.1, subject to the
following sentence, the Company shall not authorize, and shall not permit any of
its Subsidiaries or any of the Company's or the Subsidiaries' directors,
officers, employees, representatives, agents and advisors (including any
investment banker, financial advisor, attorney, accountant or other
representative retained by any of them or acting on their behalf) (all such
Persons, "Representatives"), directly or indirectly, to (i) solicit, initiate,
or take any other action designed to solicit a proposal or offer for a
restructuring transaction or a plan of reorganization, merger, consolidation,
transfer or exchange of shares, issuance of equity securities (or securities
convertible into equity securities), a sale of a material portion of the assets
of the Debtors (except with respect to the items described in Section 6.1(e) of
the Company Disclosure Schedule or in connection with any Store Closing) or
similar transaction involving the Debtors, (collectively, an "Alternative
Proposal"), (ii) participate in any discussions or negotiations regarding any
Alternative Proposal, (iii) enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Alternative Proposal or (iv) furnish any nonpublic information. Notwithstanding
anything to the contrary that may be set forth in the foregoing sentence, to the
extent that the Board of Directors determines in good faith that it is required
to authorize such actions to comply with its fiduciary duties under any
applicable Law, including the Bankruptcy Code, the Company or any of its
Representatives may take any of the actions referred to in clauses (ii) and (iv)
of the preceding sentence with respect to any Person that has after the date
hereof notified the Company in an unsolicited writing that it is considering
making, or has made in writing an unsolicited bona fide Alternative Proposal so
long as the Company and its Representatives are not in violation of this Section
6.2. In addition, so long as the Company and its Representatives are not in
violation of this Section 6.2, none of the Company or any of its Representatives
will be precluded from executing an agreement providing for an Alternative
Proposal or recommending any such Alternative Proposal to the creditors of the
Company, if in the good faith opinion of the Board of Directors (in consultation
with its financial advisors and outside legal counsel) such Alternative Proposal
provides a higher transaction value or is otherwise more favorable to the
Company and its creditors than the transactions contemplated by this Agreement
and that the Board of Directors reasonably believes in good faith (after
consultation with outside legal counsel) that the failure to authorize such
actions would be inconsistent with its fiduciary duties under any applicable
Law, including the Bankruptcy Code; provided that no such action shall be
authorized unless (i) the Company shall have delivered the notice with respect
to such Alternative Proposal to the Plan Investor pursuant to Section 6.2(b);
(ii) the Plan Investor does not, within ten (10) Business Days of receipt of
such notice, make an offer to revise the transactions contemplated by this
Agreement, such that in the good faith opinion of the Board of Directors (in
consultation with its financial advisors and outside legal counsel) such revised
transaction provides an equal or higher transaction value or is otherwise more
favorable to the Company and its creditors than the Alternative Proposal; (iii)
such Alternative Proposal comports in all respects with the Company's
obligations under Schedule 2.19 of the DIP Financing Facility and (iv) the
Company pays the fees and expenses of the Plan Investors as provided in Section
8.2. No Person considering making an Alternative Proposal shall be provided
non-public information by the Company unless such Person has executed a
customary confidentiality agreement; provided that such confidentiality
agreement shall not prohibit the Company from delivering any notice required by
Section 6.2(b).
(b) The Company shall notify the Plan Investor promptly (and in no
event later than forty-eight (48) hours) after receipt by the Company of (A) any
written communication from any Person that informs the Company that such Person
is considering making an Alternative Proposal or (B) any Alternative Proposal,
and shall provide the Plan Investor two (2) days prior notice before delivering
any non-public information in connection with an Alternative Proposal or the
granting of access by the Company to the properties, books or records of the
Company to any Person that informs the Company that it is considering making, or
has made an Alternative Proposal.
Section 6.3 Cooperation; Access to Information.
(a) From the date hereof through the earlier of termination hereof
and the Closing Date, the Company shall, and shall cause each of its
Subsidiaries and, to the extent any other Person is controlled directly or
indirectly by the Company, each such other Person to, give the Plan Investor and
its agents, attorneys, accountants, and representatives, reasonable,
non-exclusive access, during normal business hours upon reasonable notice, to
the books, contracts, records and other documents, and personnel of the Company,
its Subsidiaries and such other Persons; provided, however, that none of the
foregoing shall unreasonably interfere with the conduct of business of the
Debtors, their Subsidiaries, or such other Persons.
(b) The Company and the Plan Investor agree to cooperate fully in
facilitating the access provided for under this Agreement in accordance with
mutually acceptable procedures, which procedures shall require, among other
things, that all requests for such access: (i) be made to the President and
Chief Executive Officer of the Company or such other person as the Company may
designate in writing to the Plan Investor, and (ii) specify the representatives
of the Plan Investor to whom such access is to be provided and the scope and
nature of the access requested. Further, the Company shall be permitted to have
any of its representatives present during any requested meetings or discussions.
(c) The preceding subsections of this Section 6.3 shall not
require the disclosure of any information if, in the Company's reasonable
determination (after consultation with counsel), such information is reasonably
believed to be (i) subject to an attorney-client or work product privileges and
disclosure would result in the loss of such privileges or (ii) subject to a
binding confidentiality agreement entered into as of the date hereof and
disclosure would cause a breach of such confidentiality agreement. The Company
will use its commercially reasonable efforts, including commercially reasonable
efforts to obtain appropriate consents or waivers under any confidentiality
agreement, to disclose all such information requested by the Plan Investor and
to provide a privilege log for any information not so provided. In the case that
attorney-client or work product privileges apply, the parties shall use their
commercially reasonable efforts to make appropriate substitute disclosure
arrangements.
(d) Any information acquired by the Plan Investor pursuant to the
preceding subsections of this Sections 6.3 shall not diminish or obviate any of
the representations, warranties, covenants or agreements of the Company
contained in this Agreement.
(e) The Plan Investor shall, and shall cause each of its agents,
attorneys, accountants, and representatives to keep strictly confidential all
nonpublic, confidential and/or proprietary information provided, or caused to be
provided, by the Company pursuant to this Section 6.3 ("Company Confidential
Information"); provided, however, that the Plan Investor shall not be required
to keep confidential any information that (i) (A) was at the time of its
disclosure, or thereafter became, generally available to the public other than
as a result of a disclosure by the Plan Investor or any of its respective
agents, attorneys, accountants, and representatives, (B) was available to the
Plan Investor on a non-confidential basis from a source other than the Company
or its Representatives, provided that such source was not in breach of any
obligation of confidentiality to the Company or (C) has been independently
acquired or developed by the Plan Investor without the use of, and is not
derived from, any Company Confidential Information or (ii) is required to be
disclosed pursuant to applicable Law. In the event that the Plan Investor or any
of its agents, attorneys, accountants, and representatives is requested pursuant
to, or required by, Law to disclose any such Company Confidential Information,
the Plan Investor will provide the Company with prompt prior written notice of
such request or requirement in order to enable the Company without delay to (x)
seek an appropriate protective order or other appropriate remedy (and if the
Company seeks such order, the Plan Investor will provide, at the Company's sole
expense, such cooperation as the Company shall reasonably request) or (y) in its
sole discretion, waive compliance with the terms of this Section 6.3; provided
that, nothing herein shall preclude the Plan Investor from complying with any
applicable Laws or court order.
Section 6.4 HSR Act. No later than thirty (30) days after the date
of the execution hereof, at the Company's expense, the Plan Investor and the
Company will each make any filings required under the HSR Act in connection with
the transactions contemplated hereby. Each party hereto will cooperate with the
other party hereto in accomplishing such filings and will keep the other party
apprised of the status of any inquires made by any Governmental Entity with
respect to this Agreement or the transactions contemplated hereby. Unless
otherwise agreed by the Plan Investor, the Closing of the transactions
contemplated hereby is expressly conditioned upon the waiting period relating to
any such filings having duly expired or been duly terminated by the appropriate
Governmental Entities without the commencement of any action by any such
Governmental Entities to restrain or postpone the transactions contemplated
hereby.
Section 6.5 Further Actions; Reasonable Efforts. Without waiving any
right to terminate this Agreement under Section 8.1, upon the terms and subject
to the conditions hereof, the Company agrees to use its commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with other parties-in-interest in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by hereby,
including without limitation (w) obtaining of all Governmental Requirements, (x)
obtaining of all Required Consents, (y) defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity or
any restraint vacated or reversed, and (z) executing and delivering any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, the Transaction Documents. In addition,
the Company shall (i) as promptly as practicable, seek approval of the
Bankruptcy Court of the Break-up Fee and expense reimbursement provisions of
Section 8.2 hereof, (ii) as promptly as practical, make appropriate amendments
or modifications to the Plan and related Disclosure Statement to the extent
necessary to reflect the agreements contemplated herein which amendments and
modifications shall be in form and substance reasonably acceptable to the Plan
Investor, (iii) as promptly as practicable, seek to obtain approval of the
Disclosure Statement and (iv) as promptly as practicable seek to obtain approval
of the Confirmation Order with respect to the Plan by December 31, 2005, which
Confirmation Order shall provide, among other things, that the issue and sale of
the New Common Shares pursuant to this Agreement shall at the time of their
issuance be duly authorized and validly issued and outstanding, fully paid and
nonassessable, exempt from registration and free and clear of any Encumbrances
of any kind.
Section 6.6 Use of Proceeds. The proceeds received by Reorganized
Xxxxxxxx'x in respect of the Investment shall be used by the Reorganized Debtors
in accordance with the Plan to fund certain cash payments contemplated to be
made on or about the Closing Date to reduce amounts outstanding under the DIP
Financing Facility, and for general corporate purposes.
Section 6.7 Notification of Certain Matters. From the date hereof
through the earlier of termination and the Closing Date, each party hereto shall
give prompt notice to the other party hereto of the occurrence, or failure to
occur, of any event that has caused any of such party's representations or
warranties contained in this Agreement to be untrue or inaccurate in any
material respect or of any material failure to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that no such notification shall be deemed for any
purpose under this Agreement to permit such party to alter or amend such party's
representations and warranties contained herein.
Section 6.8 Bankruptcy Covenants.
(a) Required Consents. The Company shall use commercially
reasonable efforts, prior to the Closing, to obtain all Required Consents and
undertake all actions required pursuant to the Required Consents. The Plan
Investor shall not incur or be liable for any expenses, costs or obligations in
connection therewith.
(b) Cure of Defaults. The Company and such Subsidiaries shall, on
or prior to the Closing, consult with the Plan Investor regarding the payment of
all Cure Claims or other actions proposed to be taken to cure any and all other
defaults and breaches under any Assumed Contracts so that such Assumed Contracts
may be assumed by the Company or such Subsidiaries in accordance with the
provisions of section 365 of the Bankruptcy Code and this Agreement.
(c) Assumption of Certain Liabilities. At, and effective as of,
the Effective Date, the Company and any applicable Subsidiary shall accept,
assume and comply with all liabilities and obligations of the Company and such
Subsidiary under the Assumed Contracts (which shall include, among other things,
all agreements and other documents related to the transactions contemplated
hereby), and shall not as of the Effective Date assume or be liable for any
other indebtedness, liabilities, debts or obligations other than those reflected
in the Budget or Business Plan, arising under the Exit Financing Facility,
contemplated by the Plan or as otherwise consented to by the Plan Investor,
which consent shall not be unreasonably withheld.
(d) Assumption of Executory Contracts and Unexpired Leases. The
Plan Investor will have until three (3) Business Days before the Confirmation
Date (or such later date as shall be permitted by the Bankruptcy Court or under
the Plan) to designate in writing which executory contracts and unexpired leases
they wish the Company and any applicable Subsidiary to assume or reject (the
"Designated Contracts"), and the Company agrees to use its reasonable best
efforts to have identified for the Plan Investor the executory contracts and
unexpired leases that they believe should be assumed or rejected within 20 days
following the date on which the Disclosure Statement has been approved. The
Company agrees, and shall cause its Subsidiaries, to assume all executory
contracts and unexpired leases designated by the Plan Investor as a Designated
Contract as provided hereunder; provided, however, that the Plan Investor agrees
that the inability of the Debtors to assume any such executory contract or
unexpired lease shall not be deemed by the Plan Investor to result in a Material
Adverse Effect unless such contracts or leases individually or in the aggregate
are material to the Company and its Subsidiaries taken as a whole.
(e) Exclusive Period. The Company and the Subsidiaries shall use
their best efforts to maintain their exclusive periods to file a Plan and
solicit acceptances thereof under Section 1121 of the Bankruptcy Code.
Section 6.9 Information.
(a) Between the date hereof and the earlier of the termination and
the Closing Date, the Plan Investor shall comply with reasonable requests from
the Company for information concerning the Plan Investor to the extent necessary
in preparation of the Plan or the Disclosure Statement.
(b) The Company shall promptly provide the Plan Investor with
copies of proposed final drafts (which shall be full, complete and accurate) of
all documents, motions, orders, filings or pleadings that the Company proposes
to file with the Bankruptcy Court which relates to the consummation or approval
of the Disclosure Statement, the Plan or any provision therein or the
transactions contemplated hereby or thereby and will provide the Plan Investor
with reasonable opportunity to review such filings before made.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to the Obligations of the Plan Investor. The
obligation of the Plan Investor to consummate the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing of each
of the following conditions; provided, however, that the Plan Investor may, in
its sole and absolute discretion, waive any or all of the following conditions
(other than (a), (b) and (g)).
(a) HSR Approval. All filings necessary under HSR Act shall have
been made and the applicable waiting period (and any extension thereof) under
the HSR Act, relating to the transactions contemplated by the Transaction
Documents shall have been terminated or shall have expired without any material
limitation or obligation.
(b) No Injunction. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction (each, a "Restraint") preventing consummation of any of the
transactions contemplated hereby shall be in effect.
(c) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct,
in all material respects, taken as a whole, in light of the transactions
contemplated by the Agreement, as of the Closing Date as though made on the
Closing Date (or, if made as of a specified date, as of such date), and the Plan
Investor shall have received a certificate to such effect signed on the Closing
Date on behalf of the Company by its respective Chief Executive Officer and
Chief Administrative Officer in their corporate (not personal) capacities as
such, in form and substance reasonably satisfactory to the Plan Investor, to the
foregoing effect. Said representations and warranties shall not survive the
Closing and the signatories to any closing certificate shall have no personal
liability for any of the representations and warranties or as a result of
signing such certificate.
(d) Performance of Obligations. The Company shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing and the Company shall have delivered
to the Plan Investor at the Closing a certificate signed by its Chief Executive
Officer and Chief Administrative Officer, dated the Closing Date, in form and
substance reasonably satisfactory to the Plan Investor, to the foregoing effect
and such signatories shall have no personal liability as a result of signing
such certificate.
(e) Financing. The Exit Financing Facility shall be in full force
and effect, there shall exist no material breach of or default under the Exit
Financing Facility, and any and all fees and expenses paid or payable by the
Company or the Reorganized Debtors to any commercial bank or any other financial
institution in connection with the Exit Financing Facility shall be as provided
in the Commitment Letter and related side letters or for amounts otherwise
reasonably acceptable to the Plan Investor.
(f) Final Orders Approving the Plan. The Confirmation Order and
any Assumption Orders, each in form and substance reasonably satisfactory to the
Plan Investors, approving the Plan the assumption of the Assumed Contracts shall
have been entered by the Bankruptcy Court and shall have become Final Orders.
All conditions precedent to the effectiveness of the Plan (other than those
relating to the Closing hereunder) shall have been fully satisfied or waived by
the Plan Investor in its discretion.
(g) Consents and Approvals. All Required Consents and Governmental
Requirements shall have been obtained or deemed obtained by operation of the
Plan, the Confirmation Order and/or the Assumption Orders and shall be in full
force and effect.
(h) Amended and Restated Certificate of Incorporation and Bylaws.
The Company shall have adopted the Amended and Restated Certificate of
Incorporation and the Bylaws.
(i) No Material Adverse Effect. From September 21, 2005, through
the Closing, there shall have not occurred, and be continuing, any event,
occurrence or development or state of circumstances or facts which, individually
or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect.
(j) Reclamation Claims. All reclamation claims for which any of
the Debtors is responsible in the Bankruptcy Cases (other than reclamation
claims held by the Plan Investor) shall not exceed $500,000 in the aggregate.
(k) Other Administrative Claims. Excluding professional fee
claims, and claims described in clauses (j) above and other than administrative
claims incurred in the Ordinary Course of Business and reflected in the Budget
or Business Plan, the aggregate amount of Administrative Claims (as defined in
the Plan) to which the Debtors are liable as of the Effective Date shall not
exceed $500,000 in the aggregate.
(l) Priority and Secured Claims. Other than the claims identified
on Section 7.1 of the Company Disclosure Schedule (which Schedule shall be
delivered within 30 days of the date hereof and shall be reasonably acceptable
to the Plan Investor), the Debtors shall have no obligations or liabilities
under the Plan with respect to any Other Priority Claims, Priority Tax Claims or
Other Secured Claims (as each term is defined in the Plan).
(m) Government Settlements. The Company shall have obtained
approval of a settlement agreement with the SEC and the United States Attorney's
office for the Eastern District of New York investigations, in each case, in
form and substance satisfactory to the Plan Investor.
(n) IRS. The IRS shall have withdrawn all of the claims filed by
in the Bankruptcy Cases or the Company shall have (i) entered into a settlement
agreement with the IRS in form and substances reasonably satisfactory to the
Plan Investor with respect to such claims, (ii) obtained a judicial resolution
with respect to such claim in an amount reasonably acceptable to the Plan
Investor, or (iii) reached a status, in connection therewith, that is otherwise
reasonably satisfactory to the Plan Investor.
(o) Trust Claims. The Trust Claims (as defined in the Plan) shall
be identified to the reasonable satisfaction of the Plan Investor.
(p) Vendor Participation. The Company shall have received
commitments from the trade vendors in an amount sufficient to fund their portion
of the payout to unsecured creditors under the Plan as described in Annex 1
hereto.
(q) Cure Cost Estimates. The Company shall have provided
estimates, which shall be reasonably acceptable to the Plan Investor, that Cure
Costs are not expected to exceed, in the aggregate, the amount set forth on
Section 7.1 of the Company Disclosure Schedule (which schedule shall be
delivered within 30 days of the date hereof and shall be reasonably acceptable
to the Plan Investor).
Section 7.2 Conditions to the Obligations of the Company. The
obligation of the Company to consummate the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
(a) HSR Approval. The applicable waiting period (and any extension
thereof) under the HSR Act, relating to the transactions contemplated by the
Transaction Documents shall have been terminated or shall have expired.
(b) No Injunction. No Restraint preventing consummation of any of
the transactions contemplated hereby shall be in effect.
(c) Plan. All conditions precedent to the effectiveness of the
Plan (other than those relating the Closing hereunder) shall have been satisfied
or waived.
(d) Representations and Warranties. The representations and
warranties of the Plan Investor set forth in this Agreement shall be true and
correct, in all material respects, taken as a whole, in light of the
transactions contemplated by this Agreement, as of the Closing Date as though
made on the Closing Date (or, if made as of a specified date, as of such date),
and the Company shall have received certificates to such effect signed on the
Closing Date on behalf of the Plan Investor by its authorized representative in
their corporate (not personal) capacities as such, in form and substance
reasonably satisfactory to the Company, to the foregoing effect. Said
representations and warranties shall not survive the Closing and the signatories
to any closing certificate shall have no personal liability for any of the
representations and warranties or as a result of signing such certificate.
(e) Performance of Obligations. The Plan Investor shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing and the Plan Investor shall
have delivered to the Company at the Closing a certificate signed by its
authorized representative, dated the Closing Date, in form and reasonably
substance satisfactory to the Company, to the foregoing effect. Such signatories
having no personal liability as a result of signing such certificate.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date notwithstanding the fact that any requisite authorization and
approval of the transactions contemplated hereby shall have been received and no
party hereto shall have any liability to any other party hereto as a result of
its invoking its rights to terminate this Agreement pursuant to this Section
(provided that any such termination shall not relieve any party from liability
for a breach of any provision hereof prior to such termination):
(a) by the mutual written consent of the Plan Investor and the
Company;
(b) by the Plan Investor, (i) if the Board of Directors withdraws
or changes its recommendation of this Agreement in a manner materially adverse
to the Plan Investor, (ii) if the Board of Directors recommends an Alternative
Proposal, (iii) if the Company enters into a written agreement or letter of
intent or agreement in principle (whether or not binding) providing for any
Alternative Proposal or (iii) takes any action in the Bankruptcy Court for the
purposes of obtaining approval of such Alternative Proposal;
(c) (i) by the Plan Investor, if the Company shall be in breach of
its obligations hereunder such that the conditions to the obligations of the
Plan Investor set forth in Section 7.1 will not be satisfied at or prior to
November 30, 2005, and such failure cannot be or has not been cured within
thirty (30) days after the giving of written notice to the Company; (ii) by the
Company, if the Plan Investor shall be in material breach of its obligations
hereunder such that the conditions to the obligations of the Company set forth
in Section 7.2 will not be satisfied at or prior to the Closing, and such
failure cannot be or has not been cured within thirty (30) days after the giving
of written notice to the Plan Investor;
(d) by the Plan Investor, if: (i) the Closing has not occurred by
December 31, 2005 or (ii) there shall be any Law that makes consummation of the
purchase of the New Common Shares hereunder illegal or otherwise prohibited or
if any court of competent jurisdiction or Governmental Entity shall have issued
an order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the purchase of the New Common Shares hereunder and such
order, decree, ruling or other action shall have become final and
non-appealable,
(e) by the Company, if (i) the Board of Directors determines in
good faith that termination of this Agreement is necessary in order for the
Company to accept any Alternative Proposal, or (ii) the Bankruptcy Court on its
own accord and not at the request of (or by the acquiescence of) the Company has
ordered the Company to terminate this Agreement in order to accept any
Alternative Proposal; provided that the Company shall have the right to
terminate this Agreement pursuant to clause (i) above only if it has complied in
all material respects with the provisions of Section 6.2(a);
(f) at the election of the Plan Investor, if the Company and the
Subsidiaries shall not have maintained their exclusive right to file and solicit
acceptances of a plan; and
(g) by the Plan Investor, if the Break-Up Fee and the Expenses
provisions set forth in Section 8.2 hereof has not been approved by the
Bankruptcy Court by October 31, 2005.
(h) by the Plan Investor, if the Company (i) participates in any
discussions or negotiations regarding any Alternative Proposal, or (ii)
furnishes any nonpublic information to any third party in connection with an
Alternative Proposal.
Section 8.2 Break-up Fee; Fees and Expenses
(a) Subject to the approval of this provision by the Bankruptcy
Court, if (i)(x) the Company or the Plan Investor, as the case may be,
terminates this Agreement pursuant to Sections 8.1(b) or 8.1(e), or (y) the
Company consummates an Alternative Proposal within six months following the
termination of this Agreement, other than any termination pursuant to Sections
8.1(a), 8.1(c)(ii) or 8.1(g); then, in any such case, the Company shall pay to
the Plan Investor a fee, in cash, equal to $5 million, or (ii) if the Plan
Investor terminates this Agreement pursuant to Section 8.1(c)(i) as a result of
a willful and intentional breach of the terms of this Agreement, the Company
shall pay to the Plan Investor a fee, in cash, equal to $3.5 million (the
payment pursuant to either of (i) or (ii), the "Break-up Fee"); provided,
however, that the Company in no event shall be obligated to pay more than $5
million in the aggregate with respect to the Break-up Fee with respect to all
such agreements and occurrences and such termination. Any payment required to be
made pursuant to this Section 8.2 shall be made to the Plan Investor, by wire
transfer of immediately available same day funds to an account designated by the
Plan Investor, within five (5) business days after the termination of this
Agreement giving rise to the payment of or, if earlier, the consummation of an
Alternative Proposal.
(b) In addition to any other rights or remedies available to the
Plan Investor, subject to the approval of this provision by the Bankruptcy
Court, the Company agrees to reimburse the Plan Investor for all documented
out-of-pocket costs and expenses incurred by the Plan Investor and its
Affiliates, including fees and expenses of financial advisors, outside legal
counsel, accountants, experts and consultants, in connection with or related to
the authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby if this Agreement is
terminated for any reason other by the Company in accordance with Section
8.1(c)(ii) (the "Expenses"). If the Company terminates this Agreement in
accordance with Section 8.1(c)(ii), the Company shall be entitled to all
judicially available remedies; provided, that the Plan Investor shall not be
liable to the Debtors for any punitive or consequential damages as a result
thereof, except in the event of a willful breach of this Agreement by the Plan
Investor, provided, that in no event shall the Plan Investor be liable for
damages hereunder in excess of the Purchase Price. The provisions of this
Section 8.2 shall survive termination of this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal and substantive Laws of the State of
New York.
Section 9.2 Jurisdiction; Forum; Service of Process; Waiver of Jury
Trial. With respect to any suit, action or proceeding ("Proceeding") arising out
of or relating to this Agreement, the Company and the Plan Investor hereby
irrevocably:
(a) submits to the exclusive jurisdiction of the Bankruptcy Court
for so long as the Bankruptcy Cases are open, for any Proceeding arising out of
or relating to this Agreement or the other Transaction Documents and the
transactions contemplated hereby and thereby (and the Company agrees not to
commence any Proceeding relating hereto or thereto except in such Court) and
waives any objection to venue being laid in the Bankruptcy Court whether based
on the grounds of forum non conveniens or otherwise;
(b) consents to service of process in any Proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, or
by recognized international express carrier or delivery service, to the Company
or the Plan Investor at their respective addresses referred to in Section 9.5
hereof; provided, however, that nothing herein shall affect the right of any
party hereto to serve process in any other manner permitted by law; and
(c) waives, to the fullest extent permitted by law, any right it
may have to a trial by jury in any Proceeding directly, or indirectly arising
out of, under or in connection with this Agreement or the other Transaction
Documents.
Section 9.3 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors by operation of law of the parties hereto. No assignment of
this Agreement may be made by any party at any time, whether or not by operation
of law, without the other parties' prior written consent. Only the parties to
this Agreement or their successors shall have rights under this Agreement.
Section 9.4 Entire Agreement; Amendment. This Agreement (including
the Exhibits and Schedules attached hereto), the other Transaction Documents and
the Plan constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and supersedes all prior agreements
relating to the subject matter hereof. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and by the
Plan Investor. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar). No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof. For periods prior to
the Effective Date, the parties agree that to the extent any provision of the
Plan relating to the Plan Investor conflicts with any provision of this
Agreement, the provisions of this Agreement shall control. After the Effective
Date, in the event that any terms of this Agreement conflict with any terms of
the Plan, the terms of the Plan shall control.
Section 9.5 Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient and
effective if contained in a written instrument (i) delivered in person, when
such delivery is made at the address specified at the address specified in this
Section 9.5, (ii) sent by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 9.5 and appropriate confirmation is
received, (iii) nationally recognized overnight courier, the next day or (iv)
first class registered or certified mail, return receipt requested, postage
prepaid, 5 days after deposit, in each case, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
(i) If to the Company or to any Subsidiary that is a Debtor:
Xxxxxxxx'x Inc., et al.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attn: C. Xxxxxx Xxxxx, Esq.
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
Attn: Xxxx Xx. Xxxxxx, Jr., Esq. and
Xxxxxx X. Xxxxxxxxx, Esq.
(ii) If to the Plan Investor, to:
c/o HMC Distressed Investment Offshore Manager, LLC
Xxx Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxxxx
(iii) With a copy to:
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxx
- and -
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxx, Esq.
Section 9.6 Delays or Omissions. Except as expressly provided herein,
no delay or omission to exercise any right, power or remedy accruing to the
Company or the Plan Investor upon any breach or default of any party under this
Agreement, shall impair any such right, power or remedy of the Company or the
Plan Investor nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of the Company or the Plan Investor of any breach or default under this
Agreement, or any waiver on the part of any such party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to the Company or the Plan
Investor shall be cumulative and not alternative.
Section 9.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by only one of the parties
hereto, each of which shall be enforceable against the party actually executing
such counterpart, and all of which together shall constitute one instrument.
Section 9.8 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provisions; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
Section 9.9 Headings. The table of contents and headings used in this
Agreement are used for convenience only, do not constitute a part of this
Agreement and are not to be considered in construing or interpreting this
Agreement.
Section 9.10 No Public Announcement. The Company and the Plan
Investor shall, to the extent reasonably practicable, consult with the other
regarding the content of any press releases, public announcements or filings
with Governmental Entities concerning the transactions contemplated by the
Transaction Documents.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, each of the undersigned has caused the foregoing
Agreement to be executed as of the date first above written.
XXXXXXXX'X INC.
By: /s/ C. Xxxxxx Xxxxx
-------------------------------
Name: C. Xxxxxx Xxxxx
Title: Chief Administrative
Officer
XXXXXXX DISTRESSED INVESTMENT
MASTER FUND, LTD.
By: HMC Distressed Investment
Offshore Manager, LLC, Its
Investment Manager
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
