EXHIBIT 2.1
RECAPITALIZATION AGREEMENT
This Recapitalization Agreement (this "Agreement"), dated as
of October 8, 1997, as amended and restated as of November 25, 1997, is made and
entered into by and among X.X. Childs Equity Partners, L.P., a Delaware limited
partnership ("Buyer"), Desa Holdings Corporation, a Delaware corporation
("Holdings"), and the undersigned stockholders (collectively, the "Sellers") of
Holdings.
RECITALS:
WHEREAS, Buyer, Holdings and the Sellers are parties to a
Stock Purchase Agreement dated as of October 8, 1997 (the "Stock Purchase
Agreement");
WHEREAS, Buyer, Holdings and the Sellers have agreed to amend
and restate the Stock Purchase Agreement as set forth herein;
WHEREAS, the Sellers own all of the issued and outstanding
shares of common stock, par value $.01 per share (the "Common Stock"), and
nonvoting common stock, par value $.01 per share (the "Nonvoting Common Stock"),
of Holdings;
WHEREAS, the Sellers desire to sell to Holdings, and Holdings
desires to purchase from the Sellers, certain shares of Common Stock and
Nonvoting Common Stock owned by the Sellers;
WHEREAS, certain of the Sellers desire to retain a certain
number of shares of Common Stock and/or Nonvoting Common Stock; and
WHEREAS, Holdings desires to issue and sell to Buyer, and
Buyer desires to purchase from Holdings, the Newly Issued Shares.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1.
DEFINITIONS
The capitalized terms used herein will have the following
meanings. Unless the context otherwise requires, such capitalized terms will
include the singular and plural and the conjunctive and disjunctive forms of the
terms defined.
"Act" shall have the meaning ascribed to it in Section 5.3
hereof.
"Adjusted Working Capital" shall have the meaning ascribed to
it in Section 2.5(b)(i) hereof.
"Adverse Consequences" means all charges, complaints, actions,
suits, proceedings, hearings, investigations, claims, demands, judgments,
orders, decrees, stipulations, injunctions, damages, dues, penalties, fines,
costs, amounts paid in settlement, Liabilities, obligations, Taxes, Liens,
expenses, and fees, including all attorneys' fees and court costs.
"Affiliate" of, or a Person "affiliated" with, a specified
Person, shall mean a Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control with, the
Person specified.
"Affiliated Group" means any affiliated group within the
meaning of Code Section 1504(a) filing consolidated Tax Returns.
"Agreement" shall mean this Recapitalization Agreement,
together with the exhibits attached hereto, and the Disclosure Schedule.
"Alternative Transaction" shall have the meaning ascribed to
it in Section 6.4 hereof.
"Arbitrator" shall have the meaning ascribed to it in Section
2.6(c) hereof.
"Assets" shall mean all assets or properties of every kind,
nature, character, and description (whether real, personal, or mixed, whether
tangible or intangible, whether absolute, accrued, contingent, fixed, or
otherwise, and wherever situated) as now operated, owned, or leased by a
specified Person, including without limitation cash, cash equivalents,
securities (including capital stock and securities of Affiliates), accounts and
notes receivable, real estate, equipment, inventory (including, but not limited
to, raw materials, packaging, film, labels, work-in-progress and finished
goods), furniture, fixtures, goodwill, intellectual property and going-concern
value.
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"Balance Sheets" shall have the meaning ascribed to it in
Section 3.5 hereof.
"Bridge Commitment Letter" shall mean that certain bridge
commitment letter by and between NationsBridge, L.L.C. and Buyer included in
Exhibit C attached hereto.
"Buyer" shall have the meaning set forth in the first
paragraph of this Agreement.
"Cap" shall have the meaning set forth in Section 11.2 hereof.
"Closing" shall mean the closing of the transactions
contemplated by this Agreement as provided in Section 2.8 hereof.
"Closing Date" shall mean (a) the first business day after the
day following the expiration or termination of the applicable waiting period
under the HSR Act and the related regulations promulgated thereunder or (b) if
the other conditions to closing set forth in Articles 8 and 9 of this Agreement
are not satisfied at such time, as promptly as practicable after each of the
conditions set forth in Articles 8 and 9 of this Agreement have been either
waived or satisfied, but in no event after December 1, 1997, unless otherwise
agreed to by Buyer and the Representative.
"Closing Date Balance Sheet" shall have the meaning ascribed
to it in Section 2.6(a) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common Stock" shall have the meaning ascribed to it in the
recitals hereof.
"Company Benefit Plans" shall mean all material "employee
benefit plans" (as defined in Section 3(3) of ERISA) maintained by Holdings or
any of its Subsidiaries for the benefit of its employees.
"Confidentiality Agreement" shall have the meaning ascribed to
it in Section 6.5(b) hereof.
"Contract" shall mean any agreement, lease, sublease, license,
sublicense, promissory note, evidence of indebtedness, insurance policy, or
other contract or commitment (whether written or oral).
"Control" shall mean the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
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"Costs" shall have the meaning ascribed to it in Section
2.7(a) hereof.
"CPAs" shall have the meaning ascribed to it in Section 2.6(a)
hereof.
"Current Board" shall have the meaning ascribed to it in
Section 2.8(b)(i) hereof.
"Customer Calls" shall have the meaning ascribed to it in
Section 6.5 hereof.
"Damages" shall have the meaning ascribed to it in Section
2.7(b) hereof.
"Designated Price" shall mean that per share price equal to
the quotient obtained by dividing (A) the sum of the Estimated Pre-Closing Net
Acquisition Purchase Price plus the aggregate exercise price of all Options by
(B) the aggregate number of Shares outstanding on the Closing Date.
"Disclosure Schedule" shall mean the disclosure schedule dated
the date hereof furnished by the Sellers and Holdings to Buyer and containing
all lists, descriptions, exceptions and other information and materials as are
required to be included therein pursuant to this Agreement.
"Environmental Laws" shall mean any federal, state, local or
foreign law, statute, ordinance, rule, regulation, consent, judgment, order or
permit applicable to Holdings and its Subsidiaries and pertaining to the
environment, natural resources or the licensing of underground storage tanks as
presently in effect.
"Environmental Permits" shall have the meaning ascribed to it
in Section 3.15 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended (including without limitation any successor act), and the
applicable regulations promulgated thereunder.
"Estimated Pre-Closing Net Acquisition Purchase Price" shall
have the meaning ascribed to it in Section 2.5(a) hereof.
"Estimated Recapitalization Proceeds" shall mean the Estimated
Pre-Closing Net Acquisition Purchase Price less the Rollover Amount.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"FAS 87" means Financial Accounting Standards Board Statement
No. 87, as amended from time to time.
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"Fiduciary" shall have the meaning set forth in Section 3(21)
of ERISA.
"Financial Statements" shall have the meaning ascribed to it
in Section 3.5 hereof.
"Financing Commitments" shall have the meaning ascribed to it
in Section 5.7 hereof.
"Funded Debt" shall have the meaning ascribed to it in Section
2.5(b)(ii) hereof.
"GAAP" shall mean generally accepted accounting principles
applied on a basis and method consistent with prior periods.
"Xxxxxxx Sachs" means Xxxxxxx, Xxxxx & Co.
"Governmental Entity" shall mean any federal, state, local,
municipal, foreign or other governmental or quasi-governmental entity or
authority of any nature.
"Gross Acquisition Purchase Price" shall mean $325,000,000.
"Hazardous Materials" shall mean any substance or material as
of the date of this Agreement (a) the presence of which requires investigation,
removal or remediation under any Environmental Law, (b) that is defined as a
"hazardous waste", "hazardous material" or "hazardous substance" under any
Environmental Law including but not limited to the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. ss.6091 et. seq., as amended, and the rules and
regulations promulgated thereunder and the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. 9601 et. seq., as amended, and
the rules and regulations promulgated thereunder ("CERCLA" or "Superfund").
"Holdings" shall have the meaning set forth in the first
paragraph of this Agreement.
"HSR Act" shall mean Section 7A of the Xxxxxxx Act (Title II
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended)
(including without limitation any successor act), and the rules and regulations
promulgated thereunder.
"Indemnified Party" shall have the meaning ascribed to it in
Section 11.4
hereof.
"Indemnifying Party" shall have the meaning ascribed to it in
Section 11.4 hereof.
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"Initial Period" shall have the meaning ascribed to it in
Section 6.5 hereof.
"Intellectual Property" means all (a) patents, patent
applications, patent disclosures, and improvements thereto, (b) trademarks,
service marks, trade dress, logos, trade names, and corporate names and
registrations and applications for registration thereof, (c) copyrights and
registrations and applications for registration thereof, (d) mask works and
registrations and applications for registration thereof, (e) computer software,
data, and documentation, (f) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information), (g) other proprietary rights, and (h) copies and tangible
embodiments thereof (in whatever form or medium) of Holdings and its
Subsidiaries. All references in this Agreement to "Intellectual Property" shall
include those items of intellectual property listed or described in Section 3.16
of the Disclosure Schedule.
"Interim Balance Sheets" shall have the meaning ascribed to it
in Section 3.5 hereof.
"IRS" shall mean the United States Internal Revenue Service or
any successor agency.
"knowledge of Holdings" shall mean the knowledge of the
management of Holdings and its Subsidiaries.
"Laws" shall mean all laws (including Securities Laws and
Environmental Laws), statutes, ordinances, regulations, and other pronouncements
having the effect of law of the United States of America, any foreign country,
or any domestic or foreign state, province, commonwealth, city, county,
municipality, territory, protectorate, possession, court, tribunal, agency,
government, department, commission, arbitrator, board, bureau, or
instrumentality thereof.
"Liabilities" shall mean all debts, obligations, guaranties
and other liabilities of a Person (whether absolute, accrued, contingent, fixed,
known or unknown or otherwise, or whether due or to become due).
"Lien" shall mean any mortgage, pledge, assessment, security
interest, lease, sublease, lien, adverse or prior claim, levy, charge, easement,
rights of way, covenants, restrictions, rights of first refusal, encroachments,
options or encumbrances of any kind, or any defects in title, conditional sale
Contract, title retention Contract, or other Contract to give or to refrain from
giving any of the foregoing; provided, however, that the term "Liens" shall
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not include (i) statutory liens for Taxes, assessments and other governmental
charges to the extent that the payment thereof is not in arrears or otherwise
due, (ii) encumbrances in the nature of zoning restrictions, easements, rights
or restrictions of record on the use of real property if the same do not detract
from the value of such property or impair its use in the business of Holdings or
its Subsidiaries as currently conducted, (iii) statutory or common law liens to
secure landlords, lessors or renters under leases or rental agreements confined
to the premises rented to the extent that no payment or performance under any
such lease or rental agreement is in arrears or is otherwise due, (iv) deposits
or pledges made in connection with, or to secure payment of, worker's
compensation, unemployment insurance, old age pension programs mandated under
applicable law or other social security and (v) statutory or common law liens to
secure claims for labor, materials or supplies and other like liens, in favor of
carriers, warehousemen, mechanics and materialmen, which secure obligations to
the extent that payment thereof is not in arrears or otherwise due.
"Litigation" shall have the meaning ascribed to it in Section
3.9 hereof.
"Material Adverse Effect" shall mean any change in or effect
on the business, operations, Liabilities, Assets or conditions, financial or
otherwise, of a party which, when considered either singly or in the aggregate
together with all other adverse changes or effects with respect to which such
phrase is used in this Agreement, is materially adverse to such party and its
Subsidiaries considered as one enterprise or, when used in reference to the
validity or enforceability of this Agreement, the consummation of the
transactions contemplated hereby, or a party's ability to perform its
obligations hereunder, shall mean a material and adverse effect on such
validity, enforceability, consummation, or ability, as the case may be. When
used in Section 9.1 or Section 10.4(a) in respect of the failure of any
representation or warranty to be true or correct, or the breach thereof, the
term "Material Adverse Effect" shall mean that the overall composite of the
representations and warranties as to the business, operations, Liabilities,
Assets or condition (financial or other) of Holdings and its Subsidiaries, taken
as a whole, set forth in this Agreement as supplemented by the Disclosure
Schedule, is materially and adversely inaccurate or false as to Holdings and its
Subsidiaries taken as a whole.
"Multi-employer Plan" means a plan described in Section
4001(a)(3) of ERISA as to which Holdings or any of its Subsidiaries has any
obligation or liability (contingent or otherwise).
"Net Acquisition Purchase Price" shall mean (a) the Gross
Acquisition Purchase Price, minus (b) the Net Debt of Holdings on the Closing
Date, minus (c) to the extent not included in current Liabilities of Holdings
and its Subsidiaries on a consolidated basis, all unpaid management and
consulting fees and expenses and investment banking and financial advisor fees
owed to Hicks, Muse, Xxxx & Xxxxx Incorporated and its Affiliates and all
transaction fees and expenses charged to Holdings or its Subsidiaries and
incurred or payable by or on behalf of Holdings or the Sellers in connection
with the transactions contemplated by
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this Agreement (other than in connection with Holdings' cooperation and
assistance relating to the financing pursuant to the Financing Commitments),
including those of Xxxxxxx Sachs, all attorneys, accountants, actuaries,
consultants, experts or other professionals engaged by or on behalf of Holdings
or the Sellers in connection with this Agreement and the transactions
contemplated hereby, plus (d) the amount of the Adjusted Working Capital on the
Closing Date.
"Net Debt" shall have the meaning ascribed to it in Section
2.5(b)(iv) hereof.
"New Board" shall have the meaning ascribed to it in Section
2.8(b)(i) hereof.
"Newly Issued Common Shares" shall mean that number of shares
of Common Stock to be purchased by the Buyer at Closing pursuant to this
Agreement.
"Newly Issued Shares" shall mean the Newly Issued Common
Shares plus the Preferred Stock to be purchased by Buyer at Closing pursuant to
this Agreement.
"Nonvoting Common Stock" shall have the meaning ascribed to it
in the recitals hereof.
"Offsetting Tax Benefit" shall have the meaning ascribed to it
in Section 11.5 hereof.
"Operating Subsidiary" shall mean Desa International, Inc., a
Delaware corporation and wholly-owned Subsidiary of Holdings.
"Options" shall have the meaning ascribed to it in Section 9.5
hereof.
"Order" shall mean any writ, judgment, decree, injunction or
similar order.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
its successor.
"Permits" shall mean licenses, franchises, permits and
authorizations.
"Person" shall mean any natural person, corporation, general
partnership, limited partnership, proprietorship, trust, union, association,
court, tribunal, agency, government, department, commission, self-regulatory
organization, arbitrator, board, bureau, instrumentality, or other entity,
enterprise, authority, or business organization.
"Plan" shall have the meaning ascribed to it in Section 9.5
hereof.
"Post-Closing Estimated Net Acquisition Purchase Price" shall
have the meaning ascribed to it Section 2.6(a) hereof.
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"Post-Closing Statement" shall have the meaning ascribed to it
in Section 2.6(a)
hereof.
"Pre-Closing Statement" shall have the meaning ascribed to it
in Section 2.5(a).
"Preferred Stock" shall mean a newly issued series of
preferred stock of Holdings having substantially the terms set forth on Exhibit
B hereof.
"Prohibited Transaction" means a non-exempt prohibited
transaction as described in Section 406 of ERISA or Section 4975 of the Code.
"Purchased Shares" shall mean an aggregate number of Shares
equal to the Shares less the Retained Shares. As to any Seller, such Seller's
Purchased Shares shall be equal to the number of Shares listed opposite such
Seller's name in the "Shares Purchased by Holdings" column set forth on Exhibit
A hereto.
"Recapitalization Proceeds" shall mean an aggregate amount
equal to the Net Acquisition Purchase Price less the Rollover Amount.
"Related Transactions" shall mean (i) the purchase of the
Shares, issuance of the Newly Issued Shares and other actions contemplated by
this Agreement, (ii) the issuance of the Preferred Stock and (iii) the
consummation of the transactions, including borrowings thereunder, contemplated
by the Financing Commitments.
"Reportable Event" means an event described in Section 4043(c)
of ERISA for which the 30-day notice has not been waived by applicable
regulation.
"Representative" shall have the meaning ascribed to it in
Section 2.7(a) hereof.
"Reserve" shall have the meaning ascribed to it in Section
2.7(a) hereof.
"Retained Shares" shall mean the Shares less the Purchased
Shares. As to any Seller, such Seller's Retained Shares shall be equal to the
number of Shares listed opposite such Seller's name in the "Shares Retained by
Seller" column set forth on Exhibit A hereto.
"Required Exercise" shall have the meaning set forth in
Section 8.8 hereof.
"Rollover Amount" shall mean $8.585 million; provided,
however, that if and to the extent the aggregate purchase price designated by
Buyer for shares of Common Stock pursuant to Section 2.4 is less than $73.8
million, the $8.585 million amount specified hereinabove shall be reduced pro
rata in proportion to the reduction in Buyer's designated shares of Common Stock
below $73.8 million in value.
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"Review Period" shall have the meaning ascribed to it in
Section 2.6(b) hereof.
"Securities Laws" shall mean the Act, the Exchange Act, the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, and the rules and regulations promulgated thereunder, and any
similar state Laws.
"Sellers" shall have the meaning set forth in the first
paragraph of this Agreement.
"Shares" shall mean (i) the total issued and outstanding
shares of Common Stock and Nonvoting Common Stock plus (ii) that number of
shares of Common Stock that would be issued assuming the exercise of all
outstanding Options, as determined on the Closing Date.
"Stockholders Agreement" shall mean that certain Stockholders
Agreement, to be dated as of the Closing Date, among Buyer, Holdings and the
Sellers, in substantially the form of Exhibit G hereto.
"Subsidiaries" shall mean each Person of which Holdings, Buyer
or another Person, as indicated, directly or indirectly owns shares of capital
stock or other ownership interests having in the aggregate 50% or more of the
total combined voting power of the issued and outstanding shares of capital
stock or other ownership interests entitled to vote generally in the election of
directors or other governing body of such Person and shall include Patco L.P.
as to Holdings only.
"Tax" means any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever imposed by the United States of
America, any state, local or foreign government, or any subdivision, agency, or
other similar Person of the United States or any such government, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Benefits" shall have the meaning ascribed to it in
Section 11.5 hereof.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Threshold" shall have the meaning ascribed to it in Section
11.2 hereof.
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Unless the context of this Agreement otherwise requires, (a)
words of any gender are deemed to include each other gender; (b) words using the
singular or plural number also include the plural or singular number,
respectively; (c) the terms "hereof," "herein," "hereby," "hereto," and
derivative or similar words refer to this entire Agreement; (d) the terms
"ARTICLE" or "Section" refer to the specified ARTICLE or Section of this
Agreement; (e) the term "or" means "and/or"; (f) the term "party" means, on the
one hand, Buyer, and on the other hand, the Sellers and Holdings; and (g) all
references to "dollars" or "$" refer to currency of the United States of
America.
ARTICLE 2.
HOLDINGS PURCHASE, SALE OF NEWLY ISSUED SHARES AND CLOSING
Section 2.1 Holdings Purchase. Subject to the terms and
conditions, and in reliance upon the representations, warranties and covenants,
set forth in this Agreement, the Sellers agree to sell the Purchased Shares to
Holdings at the Closing and Holdings agrees to purchase the Purchased Shares
from the Sellers at the Closing.
Section 2.2 Purchase and Sale of Newly Issued Shares. Subject
to the terms and conditions, and in reliance upon the representations,
warranties and covenants, set forth in this Agreement, Holdings agrees to sell
the Newly Issued Shares to Buyer at the Closing and Buyer agrees to purchase the
Newly Issued Shares from Holdings at the Closing.
Section 2.3 Purchase Price for Shares. Subject to the
post-closing adjustment to be made pursuant to Section 2.6, the purchase price
for each Purchased Share shall be equal to the Designated Price. Subject to the
post-closing adjustment to be made pursuant to Section 2.6, the aggregate amount
payable for the Purchased Shares shall be equal to the amount of the Estimated
Recapitalization Proceeds.
Section 2.4 Purchase Price for Newly Issued Shares. The
aggregate purchase price for the Newly Issued Shares shall be $91.6 million. The
purchase price for each share of Common Stock purchased pursuant to this Section
2.4 shall be equal to the Designated Price. The purchase price for each share of
Preferred Stock purchased by Buyer pursuant to this Section 2.4 shall be
designated by Buyer in writing to Holdings not later than seven days prior to
the Closing Date, but in no event shall such per share purchase price be less
than the par value of such share. Not later than seven days prior to the Closing
Date, Buyer shall provide a written notice to Holdings designating the number of
shares of Common Stock and the number of shares of Preferred Stock that Buyer
wishes to purchase pursuant hereto; provided, that in no event shall Buyer
designate a number of shares of Common Stock that would equal less than $61.6
million in aggregate purchase price or an aggregate number of Newly Issued
Shares that would result in a purchase price of less than $91.6 million. Buyer
shall have the right to
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assign its right to purchase Newly Issued Shares (but not its obligation to do
so) to a third party or parties.
Section 2.5 Pre-Closing Statement.
a. Not later than seven days prior to the Closing, Holdings
shall deliver to Buyer a statement (the "Pre-Closing Statement") which shall set
forth Holdings' good faith estimate of the Net Acquisition Purchase Price as of
the Closing Date (the "Estimated Pre-Closing Net Acquisition Purchase Price").
The Pre-Closing Statement shall have been prepared in accordance with GAAP,
without regard to any adjustment in respect of or relating to the transactions
contemplated hereby.
b. As used herein,
i. "Adjusted Working Capital" shall mean
current Assets (excluding cash and cash equivalents) minus current Liabilities
of Holdings (excluding accrued interest and Funded Debt, to the extent reflected
in current Liabilities) minus $29.686 million. Current Assets and current
Liabilities shall be determined for all purposes in accordance with GAAP. To the
extent the Adjusted Working Capital is a negative number, such amount shall be
deducted from the Gross Acquisition Purchase Price in calculating the Net
Acquisition Purchase Price.
ii. "Funded Debt" shall mean indebtedness of
Holdings for borrowed money (including accrued interest thereon and any
prepayment penalties assessed thereon) as reflected in existing instruments,
plus amounts reflected in capital leases to the extent that such amounts would
be required to be shown as indebtedness on a consolidated balance sheet of
Holdings prepared in accordance with GAAP.
iii. "Holdings", for purposes of Sections
2.3, 2.5 and 2.6 hereof, shall mean Holdings and its Subsidiaries on a
consolidated basis.
iv. "Net Debt" shall mean an amount equal to
Funded Debt minus cash and cash equivalents.
Section 2.6 Post-Closing Adjustment.
(a) Commencing promptly after the Closing, Buyer, at Buyer's
expense, shall cause Holdings to prepare and deliver to the Representative
within 30 days following the Closing Date a statement (the "Post-Closing
Statement") setting forth Buyer's calculation of the Net Acquisition Purchase
Price as of the Closing Date (the "Post-Closing Estimated Net Acquisition
Purchase Price") derived from the consolidated balance sheet of Holdings
prepared as of the Closing Date and immediately prior to Closing, without regard
to any adjustments thereto in respect of or relating to the transactions
contemplated hereby or simultaneous or
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subsequent action by Buyer or Holdings (the "Closing Date Balance Sheet"). The
Post-Closing Statement shall be prepared by Ernst & Young LLP ("CPAs"), the
accounting firm regularly engaged by Holdings. The Post-Closing Statement shall
include the Closing Date Balance Sheet and be supported by reasonable detail to
permit the Representative to determine the derivation of the Post-Closing
Estimated Net Acquisition Purchase Price.
(b) The Representative and its professionals shall consult
with the CPAs during the preparation of the Post-Closing Statement and shall
have the opportunity to review the Post-Closing Statement in detail upon
completion. In connection with such review, such persons shall have full access
to work papers and personnel to be able to determine the manner in which any
item reflected on the Post-Closing Statement was determined and the accuracy of
any such determination. Buyer shall provide, and shall cause Holdings to
provide, the Representative and its professionals full access at all reasonable
times to Holdings' books, records, premises and facilities and other materials,
and shall furnish the Representative and its professionals with such information
and assistance as any of them shall request to assist them in their review of
the Post-Closing Statement in accordance with this Section 2.6. Within 30 days
after delivery of the Post-Closing Statement (the "Review Period"), the
Representative shall deliver a written notice setting forth a description of all
of its objections, if any, to the Post-Closing Statement.
(c) Buyer and the Representative shall attempt to resolve all
of the Representative's objections within 15 days of delivery by the
Representative of its notice of objections. If any objections remain unresolved
after the end of such 15-day period, Buyer and the Representative shall retain
the New York office of Deloitte & Touche LLP (the "Arbitrator") to resolve all
disputes relating to the Closing Date Balance Sheet and the Post-Closing
Statement. Buyer and the Representative shall each pay one-half of the
Arbitrator's fees and expenses. The Arbitrator shall give full consideration to
all materials and positions presented by the Representative and Buyer and shall
make a final resolution of all disputes within 10 business days after being
retained by Buyer and the Representative.
(d) Within 10 days after the resolution of all disputes
arising out of the review of the Post-Closing Statement in accordance with
Section 2.6(c), or, if the Representative shall not have delivered the notice
setting forth its objections pursuant to Section 2.6(b), then within 10 days
after the Representative has indicated in writing its agreement with the
Post-Closing Statement or, if no notice of objections has been delivered by the
Buyer, within 10 days after the end of the Review Period, whichever is earlier,
(i) (A) there shall be added to the Net
Acquisition Purchase Price the amount, if any, by which the Adjusted Working
Capital derived from the Post-Closing Statement is more than the Adjusted
Working Capital derived from the Pre-Closing Statement; or (B) there shall be
subtracted from the Net Acquisition Purchase Price the amount, if any, by which
the Adjusted Working Capital derived from the
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Post-Closing Statement is less than the Adjusted Working Capital derived from
the Pre-Closing Statement; and
(ii) the Net Acquisition Purchase Price
shall be recomputed to reflect the adjustments set forth above in accordance
with the definition thereof.
(e) Following the recomputation, if any, to be made pursuant
to Section 2.6(d)(ii),
(i) Buyer shall promptly pay to the
Representative (on behalf of the Sellers) by wire transfer to an account
designated by the Representative any increase in the Net Acquisition Purchase
Price in excess of the Estimated Pre-Closing Net Acquisition Purchase Price paid
at the Closing; or
(ii) the Representative (on behalf of the
Sellers) shall promptly pay to Holdings by wire transfer to an account
designated by Holdings any decrease in the Net Acquisition Purchase Price below
the Estimated Pre-Closing Net Acquisition Purchase Price paid at the Closing.
Section 2.7 Designation of Representative; Indemnification of
Representative.
(a) Each Seller hereby designates Hicks, Muse, Xxxx & Xxxxx
Incorporated and Xxxxxx X. Xxxxx, jointly and acting in unison, as
representative (the "Representative") to act on behalf of the Sellers as
contemplated or provided herein. Buyer shall be entitled to rely upon
instructions from the Representative (signed by both parties comprising the
Representative) with respect to (i) the payment of the Estimated
Recapitalization Proceeds as provided for in Section 2.8(b) hereof, (ii) any
payment of an increase in the Net Acquisition Purchase Price in excess of the
Estimated Pre-Closing Net Acquisition Purchase Price as provided for in Section
2.6(e)(i) hereof, (iii) the payment of any Costs on behalf of the Sellers and
(iv) the allocation among Sellers of the Recapitalization Proceeds in accordance
with the terms hereof. Each Seller hereby appoints the Representative as its
agent for purposes of clauses (i) through (iv) of the preceding sentence,
including the receipt of any payments due from Buyer to the Sellers hereunder or
related hereto. Each Seller hereby agrees that, prior to distribution of the
Recapitalization Proceeds by the Representative, the Representative is hereby
instructed to pay all amounts, if any, owed to Holdings in respect of any
decrease in the Net Acquisition Purchase Price as provided for in Section
2.6(e)(ii) hereof. In addition, the Representative is hereby instructed to pay
all costs, fees, expenses and Liabilities of the Sellers hereunder, which amount
shall include any professional fees and expenses which Representative reasonably
determines to be necessary or advisable ("Costs"), and, if in the reasonable
judgment of the Representative a reserve for future Costs is necessary or
appropriate, to establish an appropriate reserve for such Costs and place an
amount in cash equal to any such reserve(s) in an interest-bearing account for
the benefit of the Sellers to meet future Costs (the "Reserve"). Following
payment of such sums, the Representative is hereby
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instructed to deliver to each Seller his or its share of the remaining
Recapitalization Proceeds pro rata as his or her interests may appear in
accordance with Exhibit A attached hereto. Each Seller who is an Option holder
acknowledges and agrees that any distribution to such Seller of his or its
portion of the Recapitalization Proceeds set forth on Exhibit A shall be net of
the exercise price of each of such Seller's Options, and applicable federal and
state withholding taxes. At such time as the Representative has determined in
its reasonable discretion that there is no longer any need for the Reserve, the
Representative shall distribute any amounts remaining in the Reserve to the
Sellers, pro rata in accordance with Exhibit A, net, to the extent applicable,
of the amount of any Option exercise price, and applicable federal and state
withholding taxes.
(b) To the fullest extent permitted by law, the Sellers, pro
rata in proportion to the number of Purchased Shares sold by each Seller, shall
indemnify and hold harmless the Representative and its affiliates and each of
their respective directors, officers, partners, employees, agents and
representatives from and against any and all losses, damages and expenses
(including, without limitation, reasonable attorneys' fees and expenses),
amounts paid in settlement, court costs and other expenses of litigation
(collectively, "Damages") to the extent relating to, resulting from or arising
out of any act or omission of the Representative acting in such capacity under
this Agreement and any instrument or other document delivered pursuant to this
Agreement. Each Seller hereby expressly agrees that any such Damages incurred by
the Representative may be withheld from the Recapitalization Proceeds prior to
the distribution to the Sellers thereof.
(c) By execution of this Agreement, each Seller hereby
appoints the Representative its attorney-in-fact to act on such Seller's behalf
and to take such actions and exercise such discretion as is required of the
Representative pursuant to the terms of this Agreement (and any such actions
shall be binding on each of the Sellers and the holders of Options) including
without limitation the following:
(i) to receive, hold and deliver to the Company the
share certificates representing the Common Stock and Nonvoting Common Stock and
any other documents relating thereto;
(ii) to execute, acknowledge, deliver, record and
file all ancillary agreements, certificates and documents which the
Representative deems necessary or appropriate in connection with the
consummation of the transactions contemplated by the terms and provisions of
this Agreement including without limitation any amendments to this Agreement
which change the economics of this Agreement or otherwise;
(iii) to receive any payments due under this
Agreement and acknowledge receipt for such payments;
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(iv) to waive any breach or default under this
Agreement, or to waive any condition precedent to the Closing;
(v) to terminate this Agreement; and
(vi) to receive service of process in connection with
any claims under this Agreement.
Section 2.8 Closing.
(a) The closing of the transactions contemplated hereby (the
"Closing") will take place at the offices of Weil, Gotshal & Xxxxxx LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m., local time, on the Closing Date.
(b) The closings of each of the Related Transactions will be
deemed to have occurred substantially simultaneously subject to all the terms
and conditions of this Agreement, but in the sequence set forth below:
(i) The board of directors of Holdings as of the date
hereof (the "Current Board") will appoint a new board of directors as designated
by Buyer (the "New Board"), to be effective immediately upon the resignation of
each of the members of the Current Board.
(ii) Each of the members of the Current Board will
resign from the board of directors of Holdings.
(iii) Each of the members of the New Board will
accept his appointment by the Current Board and (x) ratify all actions taken by
the Current Board in connection with or related to the consummation of the
transactions contemplated by this Agreement; and (y) approve the issuance by
Holdings of the Preferred Stock and the issuance by Holdings and its
Subsidiaries of the indebtedness contemplated by the Financing Commitments.
(iv) Buyer will (x) pay to Holdings an amount equal
to $91.6 million by wire transfer of immediately available funds to such account
or accounts as Holdings specifies to Buyer in writing at least one business day
before the Closing Date; and (y) deliver to Holdings such documents and
instruments required to be delivered to Holdings under the terms of the
agreements relating to issuance of the Newly Issued Shares.
(v) Holdings will deliver to Buyer a certificate or
certificates representing the Newly Issued Shares.
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(vi) Buyer will (x) pay or cause to be loaned to
Holdings and/or its Subsidiaries an amount equal to the Estimated
Recapitalization Proceeds less $91.6 million by wire transfer of immediately
available funds to such account or accounts as Holdings specifies to Buyer in
writing at least one business day before the Closing Date; and (y) deliver to
Holdings such documents and instruments required to be delivered to Holdings
under the terms of this Agreement. Buyer will, to the extent necessary, cause
the Operating Subsidiary to advance or otherwise distribute to Holdings
sufficient funds to pay the Representative the Estimated Recapitalization
Proceeds.
(vii) Holdings or the Operating Subsidiary will (x)
pay to the Representative, by wire transfer of immediately available funds to
such account as the Representative may specify to Holdings in writing at least
one business day before the Closing Date, an amount equal to the Estimated
Recapitalization Proceeds for subsequent distribution to the Sellers in
accordance with Section 2.7 hereof; and (y) deliver to the Representative, on
behalf of the Sellers, such documents and instruments as are required to be
delivered by Holdings under the terms of this Agreement. As to any Seller who is
required to participate in the Required Exercise, such exercise price per Option
shall be deemed to have been made from the portion of the Estimated
Recapitalization Proceeds otherwise due to such Seller together with such
Seller's labor on behalf of Holdings and the Subsidiaries during such Seller's
employment.
(viii) Each Seller will deliver to Holdings (x) a
certificate or certificates representing all the Seller's Purchased Shares,
accompanied by a stock power duly endorsed in blank; and (y) such other
documents and instruments as are required to be delivered by such Seller under
the terms of this Agreement.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings represents and warrants to Buyer that:
Section 3.1 Organization and Good Standing. Each of Holdings
and its respective Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation, and is duly qualified in all foreign jurisdictions in which it is
required to so qualify, except for where such failures to be so qualified,
individually or in the aggregate, would not have a Material Adverse Effect. Each
of Holdings and its respective Subsidiaries has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as it is currently being conducted by it. True and correct copies of the
certificate of incorporation and bylaws of Holdings and its respective
Subsidiaries have been made available to Buyer. This Agreement has been duly and
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validly authorized, executed and delivered by Holdings and, assuming this
Agreement constitutes a valid and binding obligation of Buyer and each of the
Sellers, is the valid and binding obligation of Holdings enforceable against
Holdings in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent transfer or conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Section 3.2 Authorization and Validity. Holdings has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby.
Section 3.3 Capitalization of Holdings. The authorized
capitalization of Holdings consists of 30,000,000 shares of Common Stock,
2,000,000 shares of Nonvoting Common Stock, and 2,000,000 shares of preferred
stock. As of the date hereof, 23,568,876 shares of Common Stock, 1,781,557
shares of Nonvoting Common Stock, and no shares of preferred stock are issued
and outstanding, and such issued and outstanding shares are validly issued,
fully paid and nonassessable, and have not been issued in violation of any
preemptive rights of stockholders. The Newly Issued Shares, upon issuance as
contemplated by this Agreement and payment of the purchase price therefor, will
be validly issued, fully paid and nonassessable and will not have been issued in
violation of any preemptive rights of stockholders. Except as set forth in
Section 3.3 of the Disclosure Schedule, there are no outstanding options,
warrants, calls, conversion rights, commitments, preemptive or other rights
obligating Holdings to issue or sell any shares of Common Stock.
Section 3.4 Subsidiaries and Equity Investments.
a. Section 3.4 of the Disclosure Schedule sets forth (i) the
name of each Subsidiary of Holdings; and (ii) (A) the jurisdiction of
incorporation or organization and (B) the capitalization thereof and the
percentage of each class of voting stock or other ownership interest owned by
Holdings or by any of its Subsidiaries on the date hereof.
b. All of the outstanding shares of capital stock of each
Subsidiary that is a corporation have been duly authorized and validly issued,
are fully paid and nonassessable, have not been issued in violation of any
preemptive rights, and (except as specified in Section 3.4 of the Disclosure
Schedule) are owned of record and beneficially, directly or indirectly, by
Holdings, free and clear of any Liens, claims, charges, security interests or
other legal or equitable encumbrances, limitations or restrictions.
c. There are no options, warrants, calls, subscriptions,
conversion or other rights obligating any of the Subsidiaries to issue any
additional shares of capital stock of such
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Subsidiary or any other securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of such capital stock.
Section 3.5 Financial Statements. Holdings has delivered to
Buyer (i) copies of the audited consolidated balance sheets of Holdings and its
Subsidiaries as of March 2, 1996 and March 1, 1997 (the "Balance Sheets"),
together with the related audited consolidated statements of income,
stockholders' equity and changes in cash flow for the fiscal year ended on such
dates, and the notes thereto and (ii) copies of the unaudited consolidated
balance sheets of Holdings and its Subsidiaries dated August 30, 1997 (the
"Interim Balance Sheets"), together with the related unaudited consolidated
statements of income, stockholders' equity and changes in cash flow for the
six-month period ended on such date, certified by the chief executive officer
and the chief accounting officer of Holdings (such audited and unaudited interim
financial statements being hereinafter referred to as the "Financial
Statements"). The Financial Statements, including the notes thereto, (a) were
prepared in accordance with GAAP throughout the periods covered thereby, except
as otherwise noted thereon or disclosed in Section 3.5 of the Disclosure
Schedule, and (b) present fairly in all material respects the consolidated
financial position, results of operations and changes in cash flow of Holdings
as of such dates and for the periods then ended (subject, in the case of the
unaudited interim Financial Statements, to the absence of footnotes and normal
year-end audit adjustments consistent with prior periods that would not be
material, individually or in the aggregate). Except as disclosed in Section 3.5
of the Disclosure Schedule or specifically reflected in the Interim Balance
Sheets, there are no Liabilities against, relating to, or affecting Holdings or
its Subsidiaries that are required by GAAP to be reflected on a balance sheet.
Section 3.6 Absence of Changes. Since August 30, 1997, there
has not been, occurred, or arisen any change in, or any event, condition, or
state of facts of any character in respect of Holdings and its Subsidiaries,
except (i) as disclosed in Section 3.6 of the Disclosure Schedule or (ii) for
such changes, events, conditions or state of facts that would not have a
Material Adverse Effect. Except as disclosed in Section 3.6 of the Disclosure
Schedule or as contemplated by the Related Transactions, since August 30, 1997,
Holdings and its Subsidiaries have operated only in the ordinary and usual
course of business, and (without limiting the generality of the foregoing) there
has not been, occurred, or arisen:
a. any declaration, setting aside, or payment of any dividend
or other distribution in respect of the capital stock of Holdings and its
Subsidiaries or any direct or indirect redemption (other than the purchases
contemplated by this Agreement), purchase, or other acquisition by Holdings and
its Subsidiaries of any such stock;
b. any increase in the base compensation of any officer,
director or employee of Holdings or any of its Subsidiaries other than increases
that were made in the ordinary and usual course of business;
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c. any issuance, sale, or disposition by Holdings and the
Subsidiaries of any of their respective shares of capital stock (other than
pursuant to the exercise of options outstanding on the date hereof and pursuant
to the transactions contemplated by this Agreement) or any grant of options,
warrants or preemptive or other rights to acquire (including upon conversion or
exercise) any of its capital stock;
d. any material Lien created on any of the Assets of Holdings
or the Subsidiaries, other than those created in the ordinary and usual course
of business;
e. any Liability involving the borrowing of money or the
incurrence of any deferred purchase price obligation (other than trade credit
incurred by the Subsidiaries in the ordinary and usual course of business,
capital lease obligations and borrowings by the Operating Subsidiary under its
revolving credit facility made in the ordinary and usual course of business by
Holdings or the Subsidiaries);
f. any payment, prepayment, discharge, or satisfaction by
Holdings or its Subsidiaries of any material Lien or Liability other than Liens
or Liabilities that were paid, discharged, or satisfied in the ordinary and
usual course of business;
g. any cancellation of any Liability owed to Holdings or its
Subsidiaries by any other Person except substantially in accordance with prior
practice;
h. any sale, transfer, or conveyance of any material Assets of
Holdings or its Subsidiaries other than for fair market value in the ordinary
and usual course of business;
i. any transaction or arrangement under which Holdings or any
of its Subsidiaries paid, lent, or advanced any amount to or in respect of, or
sold, transferred, or leased any of its Assets or any services to, (i) any
Seller, (ii) any officer or director of Holdings or its Subsidiaries, (iii) any
Affiliate of Holdings or of its Subsidiaries, or of any such officer or
director, or (iv) any business or other Person in which any Seller, Holdings,
its Subsidiaries, any such officer or director, or any such Affiliate has any
material interest, except for (a) payments of salaries and wages to officers or
directors of Holdings and its Subsidiaries in the ordinary and usual course of
business, (b) advances made to, or reimbursements of, officers or directors of
Holdings and its Subsidiaries for travel and other business expenses in
reasonable amounts in the ordinary and usual course of business, (c) payments of
management and consulting fees to Hicks, Muse, Xxxx & Xxxxx Incorporated or any
of its Affiliates pursuant to a monitoring and oversight agreement and a
financial advisory agreement between the parties and (d) transactions made
pursuant to an arm's length agreement on terms no more favorable than would be
afforded to third parties;
j. any commitments or agreements for capital expenditures
except in the ordinary and usual course of its business or consistent with its
annual budget;
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k. any amendment or termination (other than in accordance with
its terms) made or suffered to any Contract involving more than $500,000 to
which it is a party or by which it is bound (other than Contracts involving
sales to customers and trade credit incurred by the Subsidiaries in the ordinary
and usual course of business, and capital lease obligations and borrowings by
the Operating Subsidiary under its revolving credit facility made in the
ordinary and usual course of business by Holdings or the Subsidiaries);
l. any Contract involving more than $500,000 (other than sales
to customers or purchase from suppliers in the ordinary and usual course of
business);
m. any capital investment in, loan to or acquisition of the
securities or Assets of any other Person involving more than $500,000;
n. any charitable or other capital contribution other than in
the ordinary and usual course of business;
o. any change made or authorized in any of their respective
certificates of incorporation or bylaws;
p. as of the date hereof, any damage, destruction or loss
(whether or not covered by insurance) to its property in excess of $100,000 in
any case or $500,000 in the aggregate;
q. any termination that is not seasonal in nature of a
relationship with one of the customers of Holdings or its Subsidiaries listed in
Section 3.6(q) of the Disclosure Schedule; or
r. any commitment to do any of the foregoing except as
contemplated by this Agreement or the agreements in respect of the Related
Transactions
Section 3.7 Tax Matters. Except as set forth in Section 3.7 of
the Disclosure Schedule:
a. Each of Holdings and its Subsidiaries has filed all
material Tax Returns that it was required to file. All such Tax Returns were
correct and complete in all material respects. All material Taxes which are due
and owing with respect to each of Holdings and its Subsidiaries (whether or not
shown on any Tax Return) have been paid. None of Holdings and its Subsidiaries
currently is the beneficiary of any extension of time within which to file any
material Tax Return. No claim has been made within the last three years by any
taxing authority in any jurisdiction where any of Holdings and its Subsidiaries
does not file Tax Returns that it is or may be subject to material Taxes imposed
by that jurisdiction. There are no Liens on any of the Assets of any of Holdings
and its Subsidiaries that arose in connection with any failure to pay any
material Taxes on or before the due date thereof without penalty, except to the
extent such Taxes are being disputed in good faith through proper proceedings.
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b. Each of Holdings and its Subsidiaries has withheld and paid
all material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor or independent contractor or
other third party.
c. There is no currently pending audit or proceeding with
respect to Taxes in which any claim for material unpaid Taxes due from any of
Holdings and its Subsidiaries has been made in writing by any taxing authority,
and to the knowledge of Holdings and its Subsidiaries, no such claim for
material unpaid Taxes has been threatened. Section 3.7 of the Disclosure
Schedule lists all federal and all material state, local and foreign income Tax
Returns filed with respect to any of Holdings and its Subsidiaries for the
taxable periods ended on or after December 31, 1993, indicates which of those
Tax Returns have been audited by a taxing authority, and indicates which of
those Tax Returns are currently the subject of an audit by a taxing authority.
Holdings has made available to Buyer or its representatives correct and complete
copies of all federal income Tax Returns of Holdings and its Subsidiaries with
respect to taxable periods ending on or after December 31, 1993, (ii)
examination reports with respect to federal income Taxes issued since December
31, 1993, and (iii) statements of material federal income Tax deficiencies
assessed against or agreed to by any of Holdings and its Subsidiaries since
December 31, 1993.
d. None of Holdings and its Subsidiaries has waived or
extended any statute of limitations in respect of the assessment or collection
of material Taxes.
e. The Interim Balance Sheets contain adequate accruals or
reserves for all material unpaid Taxes of Holdings and its Subsidiaries with
respect to current and prior taxable periods, determined as of the date thereof
and in accordance with GAAP.
f. None of Holdings and its Subsidiaries has filed a currently
effective consent under Code Section 341(f)(2) concerning collapsible
corporations. None of Holdings and its Subsidiaries is obligated to make any
payments or is a party to any agreement that could obligate it to make any
payments in connection with the transactions herein contemplated that will not
be deductible under Code Section 280G. None of the Sellers is a foreign person
within the meaning of Code Section 1445. None of Holdings and its Subsidiaries
is a party to any Tax allocation or Tax sharing agreement. Since January 1,
1994, none of Holdings and its Subsidiaries has been a member of an Affiliated
Group other than a group the common parent of which is Holdings.
g. None of Holdings or any Subsidiary is bound by any
currently effective private ruling issued by a taxing authority or any currently
effective closing agreement or other similar settlement agreement with any
taxing authority which has a continuing effect with respect to material Taxes.
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h. None of Holdings or any of its Subsidiaries is subject to
any adjustment under Code Section 481(a) as a result of its agreement to any
change in accounting method, and there is no application pending with any taxing
authority requesting permission for any change in any accounting method of
Holdings or any Subsidiary.
i. Immediately following the Closing Date, neither Holdings
nor any of its Subsidiaries will have any material amount of income or gain that
has been deferred under Treasury Regulation Section 1.1502-13, or any material
excess loss account in a Subsidiary corporation under Treasury Regulation
Section 1.1502-19.
Section 3.8 Employee Benefits. Section 3.8 of the Disclosure
Schedule lists all Company Benefit Plans that any of Holdings and its
Subsidiaries maintains or to which any of Holdings and its Subsidiaries
contributes for the benefit of any current or former employee of any of Holdings
and its Subsidiaries.
a. Each Company Benefit Plan (and each related trust) complies
in form and in operation in all material respects with the applicable
requirements of ERISA and the Code.
b. All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan Descriptions)
have been filed or distributed appropriately with respect to each Company
Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and
of Code Section 162(i) have been met with respect to each Company Benefit Plan.
c. All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
Company Benefit Plan which is qualified under Section 401 of the Code, and all
contributions to each Company Benefit Plan which is a welfare plan in accordance
with past custom and practice for any period ending or before the Closing Date
which are not yet due have been paid or accrued or remain unpaid and not
accrued, in accordance with the past custom and practice of Holdings and its
Subsidiaries. All premiums or other payments for all periods ending on or before
the Closing Date have been timely paid with respect to each Company Benefit Plan
which is a welfare plan in accordance with past custom and practice.
d. Each Company Benefit Plan intended to qualify under Code
Section 401(a) does so qualify and has received, within the last six years, a
favorable determination letter from the IRS.
e. Except as disclosed in Section 3.8(e) of the Disclosure
Schedule, the market value of Assets under each Company Benefit Plan subject to
Title IV of ERISA (other than any Multi-employer Plan) equals or exceeds the
present value of accrued benefit liabilities thereunder (determined on a plan
termination basis). The projected benefit obligation of
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Holdings or any of its Subsidiaries (as calculated using actuarial assumptions
used to calculate liabilities under FAS 87 with respect to post-employment
benefits accrued) under each Company Benefit Plan that is a defined benefit
pension plan is fully funded by Assets of such plan or by an adequate reserve on
the applicable balance sheet of Holdings or any of its Subsidiaries. No Company
Benefit Plan subject to Title IV of ERISA (other than any Multi-employer Plan)
has been completely or partially terminated or been the subject of a Reportable
Event as to which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any Company Benefit Plan subject to Title IV
of ERISA (other than any Multi-employer Plan) has been instituted or, to the
knowledge of any of the Sellers and Holdings and its Subsidiaries, threatened.
f. There have been no Prohibited Transactions with respect to
any Company Benefit Plan. No Fiduciary has any liability for breach of fiduciary
duty or any other failure to act or comply in connection with the administration
or investment of the Assets of any Company Benefit Plans which would reasonably
be expected to result in liability to Holdings and its Subsidiaries. No charge,
complaint, action, suit, proceeding, hearing, claim, or demand with respect to
the administration or the investment of the Assets of any Company Benefit Plan
(other than routine claims for benefits) is pending or, to the knowledge of any
of the Sellers and Holdings and its Subsidiaries, threatened. None of the
Sellers, Holdings and its Subsidiaries has any knowledge of any basis for any
such charge, complaint, action, suit, proceeding, claim (other than routine
claims for benefits), or demand.
g. Holdings has delivered to Buyer correct and complete copies
of (A) the most recent plan documents and summary plan descriptions, (B) the
most recent determination letter received from the IRS, (C) the most recent Form
5500 Annual Report, and (D) the most recent related trust agreements, insurance
contracts, and other funding agreements which implement each Company Benefit
Plan.
h. None of Holdings or its Subsidiaries contributes to, ever
has contributed to, or ever has been required to contribute to any
Multi-employer Plan or has any liability (including withdrawal liability) under
any Multi-employer Plan. None of Holdings and its Subsidiaries has incurred any
liability to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal liability) with respect to any
Company Benefit Plan that any of Holdings and its Subsidiaries maintains or ever
has maintained or to which any of them contributes, ever has contributed, or
ever has been required to contribute. Except as disclosed in Section 3.8 of the
Disclosure Schedule, none of Holdings and its Subsidiaries maintains or ever has
maintained or contributes, ever has contributed, or ever has been required to
contribute to any Company Benefit Plan providing health, accident, or life
insurance benefits coverage to former employees, their spouses, or their
dependents (other than in accordance with Code Section 162(k)).
Section 3.9 Litigation. Except (a) as set forth in Section 3.9
of the Disclosure Schedule, (b) for claims under worker's compensation or
similar laws, (c) for routine claims
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for employee benefits and (d) for claims for money damages alone of less than
$50,000 in each case, as of the date hereof there is no action, suit or
proceeding ("Litigation") pending or, to the knowledge of Holdings and its
Subsidiaries, threatened against Holdings or any of its Subsidiaries before any
court, arbitrator or administrative or governmental body which, if determined
adversely, would have a Material Adverse Effect on (i) the validity or
enforceability of this Agreement with respect to Holdings, (ii) the consummation
of the transactions contemplated by this Agreement or (iii) Holdings. Neither
Holdings nor any of its Subsidiaries is in default under any judgment, decree,
injunction, or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Holdings or any of its
Subsidiaries. The reserve accrued in the Financial Statements in respect of the
litigation set forth in Section 3.9 of the Disclosure Schedule is adequate to
meet Liabilities arising therefrom.
Section 3.10 No Violation. Except as set forth in Section 3.10
of the Disclosure Schedule, neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will result in the breach
or violation of any term or provision of, or constitute a default under, any
charter provision or bylaw of Holdings or any agreement, mortgage, note, bond,
license, indenture, instrument, order, decree, law or regulation to which
Holdings or any Subsidiary is a party or which is otherwise applicable to any of
them, which breach, violation or default would have a Material Adverse Effect on
(i) the validity or enforceability of this Agreement with respect to Holdings,
(ii) the consummation of the transactions contemplated by this Agreement or
(iii) Holdings.
Section 3.11 Labor Relations. Other than as set forth in
Section 3.11 of the Disclosure Schedule, (a) none of Holdings or any of its
Subsidiaries has violated any applicable federal or state law or regulation
relating to labor or labor practices, the violation of which would have a
Material Adverse Effect and (b) to the knowledge of Holdings and its
Subsidiaries, neither Holdings nor any of its Subsidiaries has been the subject
of any union activity or labor dispute which would have a Material Adverse
Effect.
Section 3.12 No Consents. Other than as set forth in Section
3.12 of the Disclosure Schedule or required by the HSR Act, no consent,
declaration, filing or approval or authorization of, or registration with, any
federal, state, municipal or local government or regulatory authority or any
other Person is required in connection with the execution and delivery of this
Agreement by Holdings or the consummation of the transactions contemplated
hereby, other than such consents, declarations, filings, approvals or
authorizations, which the failure to make or obtain, as the case may be,
individually or in the aggregate, would not have a Material Adverse Effect on
(i) the validity or enforceability of this Agreement with respect to Holdings,
(ii) the consummation of the transactions contemplated by this Agreement or
(iii) Holdings.
Section 3.13 Insurance. All material insurance policies and
the amount of coverage thereunder with respect to the property, Assets,
operations, and business of Holdings
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and its Subsidiaries (including, without limitation, life insurance policies)
are listed in Section 3.13 of Disclosure Schedule and are on the date of this
Agreement in full force and effect. Holdings and its Subsidiaries are covered by
insurance in amounts customary and reasonable for the businesses in which they
are engaged.
Section 3.14 Title To Properties. Holdings and its
Subsidiaries have good and indefeasible title to all of the Assets and
properties which they purport to own, as reflected on the Interim Balance
Sheets, that are material to the business of Holdings and its Subsidiaries,
taken as a whole (except for Assets and properties sold, consumed or otherwise
disposed of since the date of the Interim Balance Sheets or disclosed in Section
3.14 of the Disclosure Schedule), free and clear of all Liens, except for (i)
Liens for current taxes not yet due and payable or for taxes the validity of
which is being contested in good faith by appropriate proceedings, (ii) as set
forth in Section 3.14 of the Disclosure Schedule, (iii) purchase money Liens
arising in the ordinary course of business, (iv) Liens described in the
Financial Statements and (v) Liens which individually or in the aggregate would
not result in a Material Adverse Effect.
Section 3.15 Environmental Matters.
a. Except as described in Section 3.15 of the Disclosure
Schedule, each of Holdings and its Subsidiaries has made all filings and has
obtained all permits, licenses, other authorizations, registrations and other
governmental consents ("Environmental Permits") which are required under any
Environmental Laws, other than filings as to which the failure to effect, and
Environmental Permits as to which the failure to obtain, would not have a
Material Adverse Effect. None of Holdings and its Subsidiaries has any material
Liability under any Environmental Laws. There has been no disposal, release,
burial, or placement of Hazardous Materials by Holdings or any Subsidiary on any
property owned, operated or leased by Holdings or any Subsidiary which would
reasonably be expected to result or has resulted in contamination at
concentrations in excess of those allowed by current Environmental Laws and
which would reasonably be expected to result in Holdings or any Subsidiary
incurring material Liability under current Environmental Laws. To the knowledge
of Holdings and its Subsidiaries, there are no underground storage tanks,
underground injection xxxxx, asbestos or equipment containing polychlorinated
biphenyls located at any site or facility currently owned or operated by
Holdings or any Subsidiary the presence of which violates Environmental Laws in
any material respect.
b. Except as described in Section 3.15 of the Disclosure
Schedule, Holdings and each of its Subsidiaries has conducted their operations
in compliance with all terms and conditions of such Environmental Permits, all
other applicable Environmental Laws, and any applicable order, decree, judgment
or agreement with any governmental authority or any arbitral award relating to
any Environmental Law, excluding from the operation of this sentence any
failures to comply that would not have a Material Adverse Effect.
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Section 3.16 Intellectual Property Rights. Section 3.16 of the
Disclosure Schedule sets forth all Intellectual Property of Holdings and its
Subsidiaries. Except as set forth in Section 3.16 of the Disclosure Schedule,
Holdings and its Subsidiaries have the right to use, free and clear of any
claims or rights of others, all Intellectual Property and, to the knowledge of
Holdings and its Subsidiaries, such use does not infringe on any patent,
trademark, copyright, service xxxx or trade name of others.
a. Holdings and its Subsidiaries own or have the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the combined businesses of Holdings and
its Subsidiaries as presently conducted and as presently proposed to be
conducted. Each material item of Intellectual Property owned or used by any of
Holdings and its Subsidiaries immediately prior to the Closing hereunder will be
owned or available for use by Holdings and its Subsidiaries on substantially
similar terms and conditions immediately subsequent to the Closing hereunder.
Each of Holdings and its Subsidiaries has taken all necessary or desirable
action to protect each item of Intellectual Property that it owns or uses.
b. Except as disclosed in Section 3.16(b) of the Disclosure
Schedule, none of Holdings and its Subsidiaries has during the past five years
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and none of
Holdings and its Subsidiaries has during the past five years received any
charge, complaint, claim or notice alleging any such interference, infringement,
misappropriation, or violation. To the knowledge of Holdings and its
Subsidiaries, and except as disclosed in Section 3.16(b) of the Disclosure
Schedule, during the past five years no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of any of Holdings and its Subsidiaries.
c. Section 3.16 of the Disclosure Schedule identifies each
patent or trademark or registration therefor which has been issued to any of
Holdings and its Subsidiaries with respect to any of its Intellectual Property,
identifies each pending patent or trademark application or application for
registration which any of Holdings and its Subsidiaries has made with respect to
any of its Intellectual Property, and identifies each license, agreement, or
other permission which any of Holdings and its Subsidiaries has granted to any
third party with respect to any of its Intellectual Property (together with any
exceptions).
d. Section 3.16 of the Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and that any of
Holdings and its Subsidiaries uses pursuant to license, sublicense, agreement or
permission. With respect to each such item of used Intellectual Property:
(i) the license, sublicense, agreement or permission
covering the item is legal, valid, binding, enforceable and in full force and
effect;
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(ii) the license, sublicense, agreement or permission
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing;
(iii) no party to the license, sublicense, agreement
or permission is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification or acceleration thereunder; and
(iv) no party to the license, sublicense, agreement
or permission has repudiated any provision thereof.
Section 3.17 Finder's Fees. Other than fees paid or payable to
Xxxxxxx Xxxxx and reasonable out-of-pocket expenses of the Representative
incurred in acting as such (which fees and expenses have been deducted from the
Gross Acquisition Purchase Price), neither Holdings nor any of its Subsidiaries
has incurred any obligation for any finder's, broker's or agent's fee in
connection with the transactions contemplated by this Agreement.
Section 3.18 Tangible Assets. Each of Holdings and its
Subsidiaries owns or leases all tangible Assets necessary for the conduct of its
business as presently conducted.
Section 3.19 Product Warranty. Each product manufactured or
sold by any of Holdings and its Subsidiaries has been in conformity with all
applicable contractual commitments and all express and implied warranties in all
material respects, and none of Holdings and its Subsidiaries has any Liability
for replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth in the
Financial Statements as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of Holdings and its
Subsidiaries.
Section 3.20 Product Liability. None of Holdings and its
Subsidiaries has any knowledge of Liability arising out of any injury to persons
or property as a result of the ownership, possession, or use of any product
manufactured or sold by any of Holdings and its Subsidiaries except as disclosed
in Section 3.20 of the Disclosure Schedule and as to which Holdings has adequate
insurance coverage (including self-retention portions thereof), together with
(but not in duplication of) any reserves set forth in the Financial Statements,
as adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of Holdings and its Subsidiaries, to meet such
Liabilities.
Section 3.21 Material Contracts. Section 3.21 of the
Disclosure Schedule contains a true and complete list of each of the following
Contracts or other documents or arrangements (true and complete copies, or, if
none, written descriptions, of which have been made available to Buyer), to
which Holdings or any of its Subsidiaries is a party or by which any of its
Assets is or may be bound:
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a. all employment, agency, consultation, letter or memorandum
agreements, or representation Contracts or other Contracts of any type
(including without limitation loans or advances) with any present officer,
director, employee, agent, consultant, or other similar representative of
Holdings or any of its Subsidiaries (or former officer, director, employee,
agent, consultant or similar representative of Holdings or any of its
Subsidiaries if there exists any present or future Liability with respect to
such Contract) which are not terminable at will with 30 days' notice without
penalty or premium;
b. all Contracts with any Person containing any provision or covenant
limiting the ability of Holdings or any of its Subsidiaries to (i) sell any
products or services of any other Person, (ii) engage in any line of business,
or (iii) compete with or to obtain products or services from any Person or
limiting the ability of any Person to compete with or to provide products or
services to Holdings or any of its Subsidiaries;
c. all Contracts relating to the borrowing of money by Holdings or any
of its Subsidiaries, relating to the deferred purchase price for property or
services, or relating to the direct or indirect guarantee by Holdings or any of
its Subsidiaries of any Liability in excess of $500,000 individually or in the
aggregate, including without limitation any Contract relating to (i) the
maintenance of compensating balances that are not terminable without penalty
upon not more than 60 calendar days' notice, (ii) any line of credit or similar
facility, (iii) the payment for property, products, or services of any other
Person, or (iv) the obligation to take-or-pay, keep-well, make-whole, or
maintain equity or earnings levels or perform other financial ratios or
requirements;
d. all Contracts pursuant to which Holdings or any of its Subsidiaries
has agreed to indemnify or hold harmless any Person (other than indemnifications
in the ordinary and usual course of business and consistent substantially with
past practice);
e. all leases or subleases of real property used in the business,
operations, or affairs of Holdings or any of its Subsidiaries;
f. all Contracts with suppliers for raw materials which exceed $500,000
(other than purchase orders entered into in the ordinary and usual course of
business);
g. all sales Contracts with customers for finished goods which exceed
$500,000 (other than purchase orders entered into in the ordinary and usual
course of business);
h. all Contracts with other Persons to produce, package, market or sell
finished goods which exceed $500,000; and
i. all other Contracts that involve the payment or potential payment,
pursuant to the terms of such Contracts, by or to Holdings or any of its
Subsidiaries of more than
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$500,000 individually or in the aggregate or that are otherwise material to the
business or condition of Holdings or any of its Subsidiaries.
Holdings has made available to Buyer a true, accurate and complete copy of each
Contract disclosed or required to be disclosed in Section 3.21 of the Disclosure
Schedule. Each Contract disclosed or required to be disclosed in Section 3.21 of
the Disclosure Schedule is in full force and effect and constitutes a legal,
valid, and binding obligation of Holdings or any of its Subsidiaries, as
applicable, and, to the knowledge of Holdings or any of its Subsidiaries, as
applicable, of each other party thereto in accordance with its terms. Except as
set forth in Section 3.21 of the Disclosure Schedule, neither Holdings nor any
of its Subsidiaries has received any notice, whether written or oral, of
termination or intention to terminate from any other party to such Contract.
Neither Holdings nor any of its Subsidiaries nor (to the knowledge of either
Holdings or any of its Subsidiaries) any other party to such Contract is in
material violation or breach of or default under any such Contract (or with or
without notice or lapse of time or both, would be in violation or breach of or
default under any such Contract).
Section 3.22 Compliance with Laws. Except (i) as set forth in
Schedule 3.22 of the Disclosure Schedule, (ii) for Permits the failure of which
to obtain would not result, individually or in the aggregate, in a Material
Adverse Effect, and (iii) for Laws and Orders the violation of which would not
result, individually or in the aggregate, in a Material Adverse Effect, (a)
Holdings and its Subsidiaries hold all Permits necessary for the lawful conduct
of their businesses under and pursuant to, and (b) the businesses of Holdings
and its Subsidiaries are not otherwise being conducted in violation of, any Law
or Order.
Section 3.23 Disclosure. The representations and warranties
contained in this Article 3 do not contain any untrue statement of a fact or
omit to state any fact necessary in order to make the statements and information
contained in this Article 3 not misleading in any material respect.
ARTICLE 4.
REPRESENTATIONS AND
WARRANTIES OF SELLERS
Each Seller, severally and not jointly, for such Seller alone,
represents and warrants to Buyer that, as of the date of this Agreement:
Section 4.1 Ownership of Shares. Such Seller is the holder of
record and owns beneficially that number of Shares set forth opposite his, her
or its name on Exhibit A hereto. Such Seller owns the Shares set forth on such
exhibit free and clear of any Liens. Such Seller is not a party to any voting
trust, proxy or other agreement with respect to the voting of any
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Shares which will remain in force or effect after the Closing. Upon consummation
of the transactions contemplated hereby, such Seller will convey to Holdings
good title to the Shares set forth opposite his, her or its name under the
column titled "Shares Purchased by Holdings" on Exhibit A hereto free and clear
of any Liens.
Section 4.2 Authority. Such Seller has full legal capacity to
execute and deliver this Agreement and to perform the obligations of such Seller
hereunder. This Agreement has been duly and validly executed and delivered by
such Seller and, assuming this Agreement constitutes a valid and binding
obligation of Buyer, and each of the other Sellers, will constitute a valid and
binding obligation of such Seller, enforceable against it in accordance with its
terms, except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefore may be brought. Each consent, authorization, order or
approval of, or filing or registration with, any governmental commission, board
or other regulatory body, or any other person required by applicable law on or
before the Closing Date for or in connection with the execution and delivery by
such Seller of this Agreement, or the performance by such Seller of his, her or
its obligations hereunder, will have been obtained or made on or before the
Closing Date, except where the failure to obtain any such consent,
authorization, order, approval, filing or registration would not affect such
Seller's ability to perform his, her or its obligations under this Agreement in
any material respect.
Section 4.3 No Conflicts. The execution, delivery and
performance by such Seller of this Agreement does not (i) violate or breach any
provision of any law or statute applicable to such Seller, except where the
violation or breach would not affect such Seller's ability to perform its
obligations under this Agreement in any material respect or (ii) violate,
breach, cause a default under, or result in the creation of a Lien pursuant to,
any agreement or instrument to which such Seller is a party or to which it or
any of its properties may be subject, except where the violation, breach,
default or creation of a Lien is not material to such Seller's ability to
perform the obligations of such Seller under this Agreement in any material
respect.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Holdings and Sellers that:
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Section 5.1 Organization and Good Standing. Buyer is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware. Buyer has all requisite power and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted.
Section 5.2 Authorization and Validity. Buyer has the
requisite partnership power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by Buyer and is a valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer or conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
Section 5.3 Investment Intent. Buyer represents that it is and
will be acquiring the Shares for investment only and for its own account and not
with a view to the distribution or resale of the Shares within the meaning of
the Securities Act of 1933, as amended (the "Act"). Buyer will refrain from
transferring or otherwise disposing of any of the Shares, or any interest
therein, in such manner as to cause Sellers or Holdings to be in violation of
the registration requirements of the Act or applicable state securities or blue
sky laws.
Section 5.4 No Violation. Neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby will
result in the breach or violation of any term or provision of, or constitute a
default under, the limited partnership agreement, as amended, or Certificate of
Limited Partnership (or other comparable constituent documents) of Buyer, or any
agreement, mortgage, note, bond, license, indenture, instrument, judgment,
order, decree, law, rule or regulation to which Buyer is a party or which is
otherwise applicable to Buyer, which breach, violation or default would have a
Material Adverse Effect on (i) the validity or enforceability of this Agreement
with respect to Buyer, (ii) the consummation of the transactions contemplated
under this Agreement or (iii) Buyer.
Section 5.5 No Consents. Except as required by the HSR Act, no
consent, declaration, filing or approval or authorization of, or registration
with, any federal, state, municipal or local governmental or regulatory
authority or any other person or entity is required in connection with the
execution and delivery of this Agreement by Buyer, or the consummation by Buyer
of the transactions contemplated hereby, other than such consents, declarations,
filings, approvals or authorizations, which the failure to make or obtain, as
the case may be, individually or in the aggregate, would not have a Material
Adverse Effect on (i) the validity or enforceability of this Agreement with
respect to Buyer, (ii) the consummation of the transactions contemplated by this
Agreement or (iii) Buyer.
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Section 5.6 Litigation. There are currently no pending, and to
the knowledge of Buyer, any threatened, lawsuits or administrative proceedings
against Buyer, or to which any of its Assets are subject, which could reasonably
be expected to have a Material Adverse Effect on the ability of Buyer to
consummate the transactions contemplated by this Agreement. Buyer is not subject
to any currently existing order, writ, injunction or decree relating to its
operations or any of its Assets which has, or would have, a Material Adverse
Effect on (i) the validity or enforceability of this Agreement with respect to
Buyer, (ii) the consummation of the transactions contemplated by this Agreement
or (iii) Buyer.
Section 5.7 Financing. Buyer has delivered to Holdings and the
Representative a true and complete copy of (i) a letter of commitment obtained
by Buyer from NationsBank, N.A. and NationsBanc Xxxxxxxxxx Securities, Inc. to
provide debt financing for the transactions contemplated hereby pursuant to a
senior credit facility; and (ii) a letter of commitment obtained by Buyer from
NationsBridge, L.L.C. with respect to senior subordinated debt financing for the
transactions contemplated hereby pursuant to the sale by Holdings of senior
subordinated notes (collectively, the "Financing Commitments"). Executed copies
of the Financing Commitments are attached hereto as Exhibit C. Assuming that the
financing contemplated by the Financing Commitments is consummated in accordance
with the terms thereof, the funds to be borrowed and/or provided thereunder by
Buyer and Holdings, together with additional equity available to Buyer, will
provide sufficient funds to pay the Gross Acquisition Purchase Price, plus the
Adjusted Working Capital and all related fees and expenses. As of the date of
this Agreement, Buyer is not aware of any facts or circumstances that create a
reasonable basis for Buyer to believe that Buyer and Holdings will not be able
to obtain financing in accordance with the terms of the Financing Commitments
and Buyer agrees to promptly notify Holdings and the Representative if it
becomes aware of any such facts and circumstances. Buyer agrees with Holdings
and the Representative that it will not waive, release, modify, rescind,
terminate or otherwise amend any of the material terms or conditions in the
commitment letters referred to in this Section 5.7, other than changes that are
favorable to the obligor without adversely affecting the equity structure of
Holdings without the prior written consent of Holdings and the Representative.
Section 5.8 Finder's Fee. Buyer has not incurred any
obligation for any finder's, broker's or agent's fee in connection with the
transactions contemplated hereby.
Section 5.9 Solvency. As of and from and after the date of
this Agreement and after giving effect to the consummation of the Related
Transactions, Holdings and its Subsidiaries: (a) owns and will own Assets the
fair saleable value of which are (i) greater than the total amount of
Liabilities (including contingent Liabilities) of such Person and (ii) greater
than the amount that will be required to pay the probable Liabilities of such
Person's then existing debts as they become absolute and matured considering all
financing alternatives and potential Asset sales reasonably available to such
Person; (b) has capital that is not unreasonably small in relation to its
business as presently conducted or any contemplated or
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undertaken transaction; and (c) does not intend to incur and does not believe
that it will incur debts beyond its ability to pay such debts as they become
due.
ARTICLE 6.
COVENANTS OF HOLDINGS
Holdings covenants and agrees that between the date hereof and
the Closing, except to the extent Buyer may otherwise consent in writing (which
consent shall not be unreasonably withheld):
Section 6.1 Reasonable Efforts. Holdings shall take, and shall
cause each of its Subsidiaries to take, all commercially reasonable steps which
are within their respective power to cause to be fulfilled those of the
conditions precedent to Buyer's obligations to consummate the transactions
contemplated hereby which are dependent upon the actions of any of them.
Section 6.2 Xxxx-Xxxxx-Xxxxxx. Holdings will (i) take promptly
all actions necessary to make the filings required of Holdings or its Affiliates
under the HSR Act with respect to the transactions contemplated by this
Agreement, (ii) comply at the earliest practicable date with any request for
additional information received by Holdings or its Affiliates from the Federal
Trade Commission or the Antitrust Division of the Department of Justice pursuant
to the HSR Act, (iii) not (A) extend any waiting period under the HSR Act or (B)
enter into any agreement with any governmental agency not to consummate the
transactions contemplated by this Agreement, except with the prior consent of
Buyer, and (iv) cooperate with Buyer in connection with the filing by or on
behalf of Buyer under the HSR Act with respect to the transactions contemplated
by this Agreement and use its commercially reasonable efforts to cause the
lifting or removal of any temporary restraining order or preliminary injunction
which may be entered in connection with the transactions contemplated by this
Agreement as may be necessary to secure the expiration or termination of the
applicable waiting periods under the HSR Act or the removal, dissolution, stay
or dismissal of any injunction, restraining order or other judicial or
administrative order which prevents the consummation of the transactions
contemplated hereby.
Section 6.3 Business Operations. Except as contemplated by
this Agreement, as set forth in Section 6.3 of the Disclosure Schedule or with
the prior written consent of Buyer (which consent shall not be unreasonably
withheld) during the period from the date of this Agreement to the Closing Date,
Holdings will, and will cause each of its Subsidiaries to, conduct its business
and operations according to its ordinary and usual course of business. Without
limiting the generality of the foregoing, and except as otherwise contemplated
by this Agreement, neither Holdings nor any of its Subsidiaries will, prior to
the Closing Date, without the prior written consent of Buyer (which consent
shall not be unreasonably withheld):
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i. dispose of any material Assets other than in the
ordinary and usual course of business;
ii. change its certificate of incorporation or bylaws
or merge or consolidate with or into any entity or obligate itself to do so;
iii. issue, sell or pledge, or authorize or propose
the issuance, sale or pledge of, additional shares of capital stock of any class
(including shares of Common Stock) (other than as a result of the exercise of
options or warrants outstanding on the date hereof or pursuant to the
transactions contemplated by this Agreement), or securities convertible into any
such shares, or any rights, warrants or options to acquire any such shares or
other convertible securities or declare, set aside or pay any dividend or other
distribution on or in respect of shares of its capital stock, or redeem, retire
or purchase any of such shares (other than payments in respect of options or
warrants outstanding on the date hereof or pursuant to the transactions
contemplated by this Agreement);
iv. other than in the ordinary and usual course of
its business, discharge or satisfy any Lien or indebtedness which is
individually or in the aggregate material to the business, operations or
financial condition of Holdings and its Subsidiaries, taken as a whole, except
those required to be discharged or satisfied in accordance with their terms
during such period (excluding those required to be discharged or satisfied as a
result of any acceleration or default);
v. other than in the ordinary and usual course of its
business or consistent with its annual budget, make any capital expenditures;
vi. other than in the ordinary and usual course of
its business, institute, settle or agree to settle any Litigation, action or
proceeding before any court or governmental body which is individually or in the
aggregate material to the business, operations or financial condition of
Holdings and its Subsidiaries, taken as a whole;
vii. other than in the ordinary and usual course of
its business, mortgage, pledge or subject to any other encumbrance, any of its
property or Assets, tangible or intangible, which is individually or in the
aggregate material to the business, operations or financial condition of
Holdings and its Subsidiaries, taken as a whole;
viii. authorize any compensation increases for any
employee except for normal increases in the ordinary and usual course of
business;
ix. other than in the ordinary and usual course of
its business, cancel or terminate any policies of insurance with respect to any
of Holdings' or any of its Subsidiaries' insurable properties which are
individually or in the aggregate material to
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the business, operations or financial condition of Holdings and its
Subsidiaries, taken as a whole; or
x. other than in the ordinary and usual course of its
business, cancel any lease to which Holdings or its Subsidiaries is a party
which is individually or in the aggregate material to the business, operations
or financial condition of Holdings and its Subsidiaries, taken as a whole.
Section 6.4 Competing Proposals. From and after the date
hereof through the earlier of the date specified in Section 10.2 or the Closing
Date, Sellers and Holdings will not, and will direct their advisors and
representatives not to, directly or indirectly, (i) encourage or solicit any
inquiries or proposals by, or furnish any confidential information to, any
person (other than any holder of Shares or pursuant to the terms of this
Agreement) concerning a transaction involving a merger, recapitalization,
acquisition or purchase of Holdings and any of its Subsidiaries or the purchase,
sale, issuance (other than pursuant to exercises of options outstanding on the
date hereof) or encumbrance of any portion of their respective capital stock or
Assets (an "Alternative Transaction"), (ii) engage in any discussions or
negotiations concerning any Alternative Transaction or (iii) enter any agreement
or understanding concerning any Alternative Transaction. Upon the execution of
this Agreement, (i) to the extent that any confidential information regarding
Holdings or any of its Subsidiaries has been furnished prior to the date hereof
to any third party in connection with an Alternative Transaction proposed by
such third party, Holdings shall, as promptly as practicable, request that such
third party return to Holdings or destroy such confidential information and (ii)
Holdings shall cancel any meetings with any such third party for the purpose of
such third party conducting a due diligence investigation of Holdings.
Section 6.5 Access.
a. Prior to the Closing, Holdings shall permit the authorized
representatives of Buyer to meet with the management of Holdings and its
Subsidiaries and their representatives and to have access (upon reasonable prior
notice) during normal business hours to all the properties, financial,
accounting and business records and documents of Holdings and its Subsidiaries,
but only to the extent that such access does not unreasonably interfere with the
business and operations of Holdings and its Subsidiaries, and shall furnish to
Buyer and its representatives such financial records and other documents, or, at
Buyer's reasonable request, copies thereof, with respect to Holdings' and its
Subsidiaries' operations and business as Buyer shall reasonably request in order
that Buyer may conduct, among other things, a commercial, accounting, legal,
insurance and non-invasive environmental investigation of the business and
affairs of Holdings and its Subsidiaries, except that the furnishing of any such
records or documents or other information to Buyer hereunder shall be limited,
or reasonable procedures shall be implemented, to the extent necessary to avoid
any potential violation of law or anticompetitive concerns. In addition, during
the period commencing at the time this Agreement is executed and contact names
and telephone numbers are supplied to Buyer and
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continuing until two business days thereafter (the "Initial Period"), Buyer
shall be permitted to contact those customers of the business set forth on
Exhibit D hereto as to those matters specifically agreed upon between Buyer and
senior management of Holdings ("Customer Calls"); provided, however, that to the
extent, in the reasonable judgment of senior management of Holdings, Buyer has
used commercially reasonable efforts to make the Customer Calls and has failed
to complete same, the Initial Period shall be extended an additional two
business days.
b. Buyer acknowledges and agrees that any information provided
to Buyer pursuant to Section 6.5(a) above, or otherwise in connection with this
Agreement and the transactions contemplated hereby, shall be subject to the
Confidentiality Agreement dated July 12, 1997 between Xxxxxxx Sachs (on behalf
of Holdings) and Buyer (the "Confidentiality Agreement").
Section 6.6 Notice of Developments. The Sellers and Holdings
will give prompt written notice to Buyer of any material development affecting
the Assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of Holdings and its Subsidiaries taken as a
whole. The Sellers and Holdings will give prompt written notice to Buyer of any
material development affecting the ability of the Sellers or Holdings to
consummate the transactions contemplated by this Agreement. No disclosure
pursuant to this Section 6.6, however, shall be deemed to amend or supplement
the Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant, absent the express written agreement, waiver or
consent of Buyer.
Section 6.7 Preservation of Business. Except as set forth in
Section 6.7 of the Disclosure Schedule, as contemplated herein or as otherwise
consented to by Buyer, during the period from the date of this Agreement and
continuing until the Closing Date, Holdings will, and will cause its
Subsidiaries to, use their respective commercially reasonable efforts to (i)
carry on the business in the usual, regular and ordinary course as presently
conducted and consistent with past practice, (ii) keep the business intact,
(iii) keep available the services of the present employees of the business, and
(iv) maintain the goodwill associated with the business, including but not
limited to preserving the relationships of customers, suppliers and others
having business dealings with the business.
Section 6.8 Financial Information. Holdings will furnish Buyer
within 20 days after the end of each month ending prior to the Closing Date, a
consolidated balance sheet for Holdings and its Subsidiaries as at such
month-end and related consolidated statements of operations and cash flows for
such month and the year-to-date period then ended, in each case prepared in
accordance with GAAP (subject to normal year-end audit adjustments and the
absence of footnotes).
Section 6.9 Resignations of Directors. The Sellers will cause
such members of the board of directors and such officers of Holdings as are
designated by Buyer to tender,
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effective at the Closing, their resignations from such board of directors or
from such offices. If requested by Buyer, the Sellers will cause the election of
Buyer's nominees to such board of directors simultaneously with the Closing if
such election is necessary to carry out the transactions contemplated hereunder.
Section 6.10 Cooperation with Respect to Refinancings.
Holdings and its Subsidiaries shall use all commercially reasonable efforts to
cooperate with Buyer and its Affiliates and their respective representatives,
agents, financial consultants, advisors, counsel, accountants, and financing
sources in connection with Buyer's compliance with its covenant regarding the
refinancing of certain obligations of Holdings and its Subsidiaries set forth in
Section 7.3 hereof. Such cooperation shall include, without limitation, (i)
providing access to and the assistance of officers and employees of, and
financial consultants, advisors, accountants, and counsel to, Holdings and its
Subsidiaries to the extent that providing such access and assistance does not
unreasonably interfere with the operation of the businesses of Holdings and its
Subsidiaries, (ii) providing access to the books and records of Holdings and its
Subsidiaries to the extent that providing such access does not unreasonably
interfere with the operation of the businesses of Holdings and its Subsidiaries,
(iii) the preparation, adoption, approval, and delivery of documents and
instruments (including financing documents, board resolutions, officers'
certificates and legal opinions), (iv) causing the release and discharge of
Liens and the termination of all agreements relating to the obligations being
refinanced, and (v) waiving any required notice or waiting periods applicable
with respect to the discharge of any such obligations. Holdings and its
Subsidiaries shall use their respective commercially reasonable efforts to cause
the lenders under its credit facility to waive any right they may have to
receive any premium, prepayment penalties, make-whole amounts or similar
payments or amounts upon the refinancing of the indebtedness outstanding
thereunder as contemplated by Section 7.3 of this Agreement; provided, however,
that such commercially reasonable efforts shall not include the payment of any
such amounts by any Seller or Holdings.
Section 6.11 Intellectual Property. Holdings shall cause to be
removed or cleared the Liens and the title matters on certain trademarks and
patents set forth on the attached Exhibit E prior to Closing (other than in
respect of Bankers Trust).
Section 6.12 Accrual for Management Bonuses. At the Closing
Date, Holdings shall have accrued as a current Liability $1.2 million on its
financial books and records for the payment of management bonuses (the
"Management Bonuses") in accordance with the terms of Holdings' Management Bonus
Plan.
Section 6.13 Termination of Financial Advisory. At Closing,
Holdings shall cause the termination of all financial advisory agreements by and
among Holdings, Desa International, Inc. and Hicks, Muse, Xxxx & Xxxxx
Incorporated.
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ARTICLE 7.
COVENANTS OF BUYER
Buyer covenants and agrees that between the date hereof and
the Closing, except to the extent the Representative may otherwise consent in
writing (which consent shall not be unreasonably withheld):
Section 7.1 Reasonable Efforts. Buyer shall take all
commercially reasonable steps which are within its power to cause to be
fulfilled those of the conditions precedent to Sellers' obligations to
consummate the transactions contemplated hereby which are dependent upon the
actions of Buyer.
Section 7.2 Xxxx-Xxxxx-Xxxxxx. Buyer will (i) take promptly
all actions necessary to make the filings required of Buyer or its Affiliates
under the HSR Act with respect to the transactions contemplated by this
Agreement, (ii) comply at the earliest practicable date with any request for
additional information received by Buyer or its Affiliates from the Federal
Trade Commission or the Antitrust Division of the Department of Justice pursuant
to the HSR Act, (iii) not (A) extend any waiting period under the HSR Act or (B)
enter into any agreement with any governmental agency not to consummate the
transactions contemplated by this Agreement, except with the prior consent of
both the Representative and Holdings, and (iv) cooperate with Holdings and its
Subsidiaries and any Seller in connection with the filing by or on behalf of
Holdings and its Subsidiaries or such Seller under the HSR Act with respect to
the transactions contemplated by this Agreement and use its commercially
reasonable efforts to cause the lifting or removal of any temporary restraining
order or preliminary injunction which may be entered in connection with the
transactions contemplated by this Agreement, and such cooperation shall include
the execution, delivery and performance by Buyer of such divestiture agreements
or other actions, as the case may be, as may be necessary to secure the
expiration or termination of the applicable waiting periods under the HSR Act or
the removal, dissolution, stay or dismissal of any injunction, restraining order
or other judicial or administrative order which prevents the consummation of the
transactions contemplated hereby or requires as a condition thereto that all or
any part of the business and Assets of Buyer or Holdings be held separate.
Section 7.3 Refinancing Certain Obligations.
(a) Contemporaneously with the Closing and with the
cooperation of the Sellers and Holdings as provided in Section 6.10 hereof and
subject to the condition set forth in Section 9.8, Buyer shall cause (i) the
indebtedness outstanding under the Credit Agreement among Holdings, the
Operating Subsidiary, the lenders party thereto, and Bankers Trust Company, as
Agent, dated as of November 30, 1993 and amended and restated as of January 12,
1996, to be paid in full and (ii) all prepayment penalties and fees in
connection with the repayment of the amounts set forth under item (i) to be paid
in full.
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(b) Contemporaneously with the Closing, Buyer shall cause the
funding contemplated by the Financial Commitments (including without limitation
the Bridge Commitment Letter to the extent necessary) to be provided by the
lender(s) named therein, subject to the conditions set forth in Section 9.8.
Section 7.4 Leverage Ratio.
(a) Subject to the fulfillment of the conditions to funding
contained in the Bridge Commitment Letter, to the extent that, on a pro forma
basis after giving effect to the consummation of the Related Transactions, the
debt to EBITDA ratio as defined in the Bridge Commitment Letter described under
the heading "Principal" in Exhibit A to the Bridge Commitment Letter is such
that it would exceed 6.0 to 1.0, Buyer shall provide such additional equity
capital by purchasing additional shares of Common Stock from Holdings in amounts
sufficient to assure that the condition to closing set forth in Section 9.8 is
met (unless noncompliance with such debt to EBITDA ratio is waived by
NationsBridge, L.L.C.).
(b) Buyer will not knowingly or intentionally take or agree or
commit to take any action to prohibit or prevent the financing sources of Buyer
and Holdings or its Subsidiaries from providing the debt and equity financing
contemplated by the Financing Commitments.
Section 7.5 Indemnification; Insurance.
a. For a period of six years from and after the Closing Date,
Buyer shall, and shall cause Holdings to, indemnify and hold harmless to the
fullest extent permitted under applicable law each person who is now an officer
or director of Holdings (or any Subsidiary thereof) (individually, and for
purposes of this Section 7.6 only, an "Indemnified Party" and collectively, the
"Indemnified Parties") against all losses, claims, damages, liabilities, costs
or expenses (including reasonable attorneys' fees), judgments, fines, penalties
and amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation (and shall pay reasonable expenses for legal fees in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted under applicable law upon
receipt from any Indemnified Party of any undertaking contemplated by applicable
law, including, without limitation, an undertaking to reimburse Buyer or
Holdings for such expenses paid in advance in the event that it is ultimately
determined that such Indemnified Party is not entitled to the payment of such
expenses for any reason) arising out of or pertaining to acts or omissions, or
alleged acts or omissions, by them in their capacities as such prior to the
Closing Date, whether commenced, asserted or claimed before the Closing Date and
including, without limitation, liabilities arising under the Act, the Exchange
Act and state corporation laws; provided that Holdings shall pay for only one
law firm (in addition to local counsel) for all Indemnified Parties, unless the
use of one law firm for all Indemnified Parties would present such law firm with
a conflict of interest. For a period of six years from and after the Closing
Date and except as may be required by applicable law, Buyer shall cause
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Holdings to keep in effect Holdings' current provisions in its certificate of
incorporation and bylaws providing for exculpation of director and officer
liability and indemnification of the Indemnified Parties to the fullest extent
permitted under the General Corporation Law of the State of Delaware. In the
event of any actual or threatened claim, action, suit, proceeding or
investigation in respect of such acts or omissions, Buyer shall cause Holdings
to cooperate in the defense of any such matter; provided, however, that neither
Buyer nor Holdings shall be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld).
Notwithstanding the prior provisions of this paragraph, the indemnity provided
herein shall not apply to any Seller to the extent that any action is brought
against a Seller in his capacity as a Seller hereunder.
(b) From and after the Closing Date, Buyer shall, or shall
cause Holdings to, maintain in effect for a period ending not earlier than the
six year anniversary of the Closing Date directors' and officers' liability
insurance providing a minimum of $25 million in coverage and otherwise having
the same coverage with respect to Holdings' officers and directors as the
current policy maintained by Holdings, with respect to matters occurring prior
to or existing as of the Closing Date, including the transactions contemplated
by this Agreement and the Related Transactions, to the extent such insurance is
commercially available at reasonable cost with respect to such matters.
Section 7.6 Certificate of Incorporation. Buyer agrees that
Holdings may amend its certificate of incorporation after the date hereof and
prior to the Closing Date to the extent necessary to permit the valid issuance
of the Newly Issued Shares.
Section 7.7 Solvency Opinion. Buyer agrees that, to the extent
any lender under the Financing Commitments requires that Buyer cause the
delivery of a solvency opinion in respect of the Related Transactions, Buyer
shall cause such opinion to be addressed and delivered to the Current Board
dated as of the Closing Date.
Section 7.8 Payment of Management Bonuses. Following the
Closing, Buyer shall cause the Management Bonuses in the amount of $1.2 million
to be paid in accordance with Holdings' customary procedures and the terms of
Holdings' Management Bonus Plan.
ARTICLE 8.
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligation of each of Sellers under this Agreement to
close the transactions contemplated hereby is subject to the satisfaction at or
prior to the Closing of each of the following conditions:
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Section 8.1 Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement shall have
been true and correct in all respects as of the date hereof and as of the
Closing Date, with the same effect as though such representations and warranties
had been made as of the Closing Date (except for any representation or warranty
that expressly relates to an earlier date, in which case it shall have been true
and correct as of such earlier date), except where the failure of the
representations and warranties to be true and correct in all respects as of such
date would not have a Material Adverse Effect on Buyer's ability to perform its
obligations hereunder. In determining whether such failure to perform or comply
has resulted in a Material Adverse Effect, the terms "material," "materially,"
"material adverse effect" or similar terms, if contained in the text of the
subject covenant or agreement, shall be disregarded.
Section 8.2 Performance. Buyer shall have performed and
complied with in all respects all the covenants and agreements required by this
Agreement to be performed or complied with by Buyer at or prior to the Closing,
except where the failure to perform and comply with such covenants and
agreements would not have a Material Adverse Effect on Buyer or on Buyer's
ability to perform its obligations hereunder. In determining whether such
failure to perform or comply has resulted in a Material Adverse Effect, the
terms "material," "materially," "material adverse effect" or similar terms, if
contained in the text of the subject covenant or agreement, shall be
disregarded.
Section 8.3 No Legal Bar. There shall not be in effect on the
Closing Date any Law, Order, writ, injunction or decree of any governmental body
of competent jurisdiction prohibiting or making illegal the consummation of the
transactions contemplated by this Agreement.
Section 8.4 HSR Act. Any waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated.
Section 8.5 Certificate. The Representative shall have
received a certificate to the effect of Sections 8.1, 8.2 and 8.4 signed by an
executive officer of Buyer and dated as of the Closing Date.
Section 8.6 Stockholders Agreement. The Stockholders Agreement
shall have been duly executed and delivered by Buyer.
Section 8.7 Proceedings; Opinions. All actions to be taken by
Buyer in connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably satisfactory
in form and substance to Holdings and the Representative. Holdings and the
Sellers shall have received from counsel to Buyer a legal opinion reasonably
satisfactory in form and substance to Holdings and the Representative.
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Section 8.8 Exercise of Options. Each holder of Options on the
date of the Stock Purchase Agreement shall have (i) exercised, (ii) been deemed
to have exercised or (iii) elected to terminate his or her Options prior to the
date hereof. In the event any such holder of Options shall have exercised or
been deemed to have exercised his or her Options, such holder shall (i) retain,
if applicable, that number of shares of Common Stock set forth opposite such
holder's name under the column titled "Shares Retained by Seller" on Exhibit A
hereto and/or (ii) sell to the Company that number of shares of Common Stock set
forth opposite such holder's name under the column titled "Shares Purchased by
Holdings" on Exhibit A hereto.
ARTICLE 9.
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer under this Agreement to close the
transactions contemplated hereby is subject to the satisfaction at or prior to
the Closing of each of the following conditions:
Section 9.1 Representations and Warranties. The
representations and warranties of Holdings and Sellers contained in this
Agreement shall have been true and correct in all respects as of the date hereof
and as of the Closing Date, with the same effect as though such representations
and warranties had been made as of the Closing Date (except for any
representation or warranty that expressly relates to an earlier date, in which
case it shall have been true and correct as of such earlier date), except where
the failure of the representations and warranties to be true and correct in all
respects as of such date would not have a Material Adverse Effect on Holdings or
on Holdings' or the Sellers' ability to perform their obligations hereunder. In
determining whether such breach has resulted in a Material Adverse Effect, the
terms "material," "materially," "material adverse effect" or similar terms, if
contained in the text of the subject representation or warranty, shall be
disregarded.
Section 9.2 Performance. Holdings and Sellers shall have
performed and complied with in all respects all the covenants and agreements
required by this Agreement to be performed or complied with by them at or prior
to the Closing, except where the failure to perform and comply with such
covenants and agreements would not have a Material Adverse Effect on Holdings or
on Holdings' or the Sellers' ability to perform their obligations hereunder. In
determining whether such failure to perform or comply has resulted in a Material
Adverse Effect, the terms "material," "materially," "material adverse effect" or
similar terms, if contained in the text of the subject covenant or agreement,
shall be disregarded.
Section 9.3 No Legal Bar. There shall not be in effect on the
Closing Date any Law, Order, writ, injunction or decree of any governmental body
of competent jurisdiction
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prohibiting or making illegal the consummation of the transactions contemplated
by this Agreement.
Section 9.4 HSR Act. Any waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated.
Section 9.5 Holdings Options. In accordance with Holdings'
1994 Stock Option Plan (the "Plan"), the board of directors of Holdings (or any
authorized committee thereof) shall have declared all outstanding options
("Options") to purchase Common Stock issued under the Plan immediately
exercisable, and all such Options shall have been exercised or terminated on or
prior to the date hereof in accordance with the Plan.
Section 9.6 Certificate. Buyer shall have received a
certificate to the effect of Sections 9.1, 9.2, 9.4, and 9.5 as they apply to
Holdings signed by an executive officer of Holdings and dated as of the Closing
Date.
Section 9.7 Purchase. Holdings shall have received from
Sellers such instruments of transfer, assignment, conveyance and other
instruments sufficient to convey, transfer and assign to Holdings all right,
title and interest in and to the Purchased Shares.
Section 9.8 Financing. The financing of the transactions
contemplated in the Financing Commitments heretofore delivered by Buyer to
Holdings and the Representative shall have been funded by such lenders;
provided, however, that the funding of the Financing Commitments by the lenders
shall only be a condition to Closing to the extent the Financing Commitments
have not been waived, released, modified, rescinded, terminated or otherwise
amended with respect to any of the material terms and conditions contained
therein other than changes that are favorable to the obligor without adversely
affecting the equity structure of Holdings without the prior written consent of
Holdings and the Representative.
Section 9.9 Employment Agreements. Xxxxxx X. Xxxxx, Xxxxx X.
Xxxxxxx and Xxxx X. Xxxxx shall have executed and delivered amendments to their
current employment agreements with Holdings or any Subsidiary, effective from
and after the Closing, substantially as set forth in Exhibit F hereto.
Section 9.10 Proceedings; Opinions. All actions to be taken by
the Sellers and Holdings and its Subsidiaries in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer. Buyer shall have received from counsel to Sellers and Holdings a legal
opinion reasonably satisfactory in form and substance to Buyer.
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Section 9.11 Stockholders Agreement. The Stockholders
Agreement shall have been duly executed and delivered by the Sellers and
Holdings and all other stockholders of Holdings who continue to be stockholders
following the Closing Date. In addition, that certain Stockholders Agreement,
dated as of December 1, 1993, as amended, among Holdings and the stockholders of
Holdings signatory thereto, shall have been terminated.
ARTICLE 10.
TERMINATION
Section 10.1 Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Closing by the mutual written consent of
Buyer, Holdings and the Representative.
Section 10.2 Termination by Either Holdings or Buyer. This
Agreement may be terminated by Holdings or Buyer at any time:
a. if the Closing shall not have occurred on or before December 1,
1997; provided, that the terminating party shall not have breached its
obligations under this Agreement in any manner that shall have proximately
contributed to the failure of the Closing to occur; or
b. if a United States federal or state court of competent jurisdiction
or United States federal or state governmental, regulatory or administrative
agency or commission shall have issued an Order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable.
Section 10.3 Termination by Holdings. This Agreement may be
terminated at any time prior to the Closing by Holdings if there shall have been
a breach of any representation, warranty, covenant or agreement on the part of
Buyer which breach shall not have been cured within 10 days following delivery
to Buyer of written notice of such breach (but such time period shall be
extended for so long as Buyer is diligently pursuing a cure of such breach or,
if more than one, aggregate then-existing breaches, and such cure is reasonably
susceptible of being effected prior to December 1, 1997); provided, that
Holdings may not terminate this Agreement pursuant to this section unless such
breach or breaches, individually or collectively, have resulted in a Material
Adverse Effect on Buyer or on the ability of Buyer to perform its obligations
hereunder, understanding that time is of the essence in such performance. In
determining whether such breach has resulted in a Material Adverse Effect, the
terms "material," "materially," "material adverse effect" or similar terms, if
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contained in the text of the subject representation, warranty, covenant or
agreement, shall be disregarded.
Section 10.4 Termination by Buyer.
a. This Agreement may be terminated at any time prior to the
Closing by Buyer if there shall have been a breach of any representation,
warranty, covenant or agreement on the part of Holdings or any Seller which
breach shall not have been cured within 10 days following delivery to Holdings
(and, in the case of a breach by Seller(s), such Seller(s)) of written notice of
such breach (but such time period shall be extended for so long as Holdings or
Seller(s), as the case may be, are diligently pursuing a cure of such breach or,
if more than one, aggregate then-existing breaches, and such cure is reasonably
susceptible of being effected prior to December 1, 1997). In addition, if in the
reasonable judgment of Buyer, it has learned any information during the course
of its Customer Calls that would lead Buyer to believe that Holdings and its
Subsidiaries, taken as a whole, have suffered or are subject to a material
diminution in value, this Agreement may be terminated by Buyer within a period
of four business days after the date hereof. Buyer may not terminate this
Agreement pursuant to the first sentence of this Section 10.4(a) unless such
breach or breaches, individually or collectively, have resulted in a Material
Adverse Effect on Holdings or on the ability of Sellers and Holdings to perform
their obligations hereunder. In determining whether such breach has resulted in
a Material Adverse Effect, the terms "material," "materially," "material adverse
effect" or similar terms, if contained in the text of the subject
representation, warranty, covenant or agreement, shall be disregarded.
(b) In the event (i) the Closing shall not have occurred on or
before December 1, 1997, (ii) all conditions to Buyer's obligations to
consummate the transactions contemplated by this Agreement (other than those
that have not been met as a result of a material breach of this Agreement by
Buyer) shall have been met on December 1, 1997, (iii) this Agreement shall not
have been validly terminated pursuant to Section 10.1, 10.2(b) or Section
10.4(a) on or before December 1, 1997, and (iv) Buyer shall not have the right,
as of December 1, 1997, to terminate this Agreement pursuant to Section 10.4(a),
then the Sellers, collectively, shall be entitled to recover from Buyer
liquidated damages of $4,000,000. It is understood and agreed that such
liquidated damage amount represents the Sellers' reasonable estimate of actual
damages and does not constitute a penalty. Recovery of liquidated damages shall
be the sole and exclusive remedy of the Sellers and Holdings with respect to the
failure by Buyer to consummate the transactions contemplated by this Agreement
and shall be applicable regardless of the actual amount of damages sustained by
any of the Sellers or Holdings and all other remedies are deemed waived by the
Sellers and Holdings.
Section 10.5 Effect of Termination. If this Agreement is
validly terminated by Holdings or Buyer pursuant to Article 10 hereof, this
Agreement will forthwith become null and void and there will be no liability or
obligation on the part of Holdings, Sellers or Buyer (or any of their respective
officers, directors, partners, employees, agents or other
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representatives or Affiliates), except that the provisions of this Section 10.5
and Section 6.5(b) will continue to apply following any such termination and
nothing contained herein shall relieve any party hereto from liability for any
willful and material breach of its representations, warranties, covenants or
agreements contained in this Agreement.
Section 10.6 Specific Performance. The parties recognize that
if any Seller or Holdings refuses to perform under the provisions of this
Agreement, monetary damages alone will not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other remedies
that may be available, to obtain specific performance of the terms of this
Agreement. If any action is brought by Buyer to enforce this Agreement, each
Seller and Holdings shall waive the defense that there is an adequate remedy at
law.
ARTICLE 11.
REMEDIES FOR BREACHES OF THIS AGREEMENT
Section 11.1 Survival of Representations, Warranties and
Covenants. Except as provided hereinbelow, all of the representations and
warranties of the Sellers and Holdings contained in Articles 3 and 4 above shall
survive the Closing for a period of one (1) year. The representations and
warranties set forth in Section 3.7 hereof shall survive until the 61st day
after the expiration of the last day on which any Tax may be validly assessed by
any Governmental Entity against Holdings or any of its Subsidiaries. The
representations and warranties set forth in Sections 4.1 and 4.2 hereof shall
survive indefinitely. The representations and warranties of Buyer contained in
Section 5 shall survive the Closing for one (1) year.
Section 11.2 Indemnification Provisions for Benefit of Buyer.
From and after the Closing, in the event any Seller or Holdings breaches any of
their respective representations, warranties, and covenants contained herein,
and provided that Buyer makes a written claim for indemnification pursuant to
Section 12.1 below within the applicable survival period, then each of the
Sellers (severally as to the representations, warranties or covenants of any
Seller and severally as their interests appear), agrees to indemnify Buyer from
and against the entirety of any Adverse Consequences Buyer may suffer through
and after the date of the claim for indemnification (including any Adverse
Consequences Buyer may suffer after the end of the applicable survival period)
resulting from, arising out of, relating to, or caused by such breach; provided,
however, that no Seller shall have any obligation from and after the Closing to
indemnify Buyer from and against any Adverse Consequences resulting from,
arising out of, relating to, or caused by the breach of any representation or
warranty of Holdings contained in Article 3 above until Buyer has suffered
aggregate losses by reason of all such breaches in excess of a $1,500,000
threshold ("Threshold") (and then only for any excess); provided, further, that
Buyer shall be entitled, in each case without regard to the Threshold or the
Cap, to recover the full amount of any Damages resulting from, arising out of,
relating to, or
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caused by the breach of any representation or warranty by any Seller (from such
breaching Seller) or the breach of the covenant set forth in Section 6.11
hereof); provided, further, that the maximum aggregate liability of the Sellers
under this Article 11 shall not exceed $4,000,000 (the "Cap"). For purposes of
determining whether a breach has resulted in aggregate losses exceeding the
Threshold, the terms "material," and "materially," "material adverse effect" or
similar terms, if contained in a representation, warranty or covenant, shall be
disregarded.
Section 11.3 Indemnification Provisions for Benefit of the
Sellers and Holdings. From and after the Closing, in the event Buyer breaches
any of its representations, warranties, and covenants contained herein, and any
of the Sellers and Holdings makes a written claim for indemnification pursuant
to Section 12.1 below within the applicable survival period, then Buyer agrees
to indemnify each of the Sellers and Holdings from and against the entirety of
any Adverse Consequences the Sellers or Holdings may suffer through and after
the date of the claim for indemnification (including any Adverse Consequences
the Sellers or Holdings may suffer after the end of the applicable survival
period) resulting from, arising out of, relating to, or caused by such breach.
Section 11.4 Matters Involving Third Parties. If any third
party shall notify any party (the "Indemnified Party") with respect to any
matter which may give rise to a claim for indemnification against any other
party (the "Indemnifying Party") under this Article 11, then the Indemnified
Party shall notify each Indemnifying Party thereof promptly; provided, however,
that no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Party thereby
is damaged. In the event any Indemnifying Party notifies the Indemnified Party
within 15 days after the Indemnified Party has given notice of the matter that
the Indemnifying Party is assuming the defense thereof (A) the Indemnifying
Party will defend the Indemnified Party against the matter with counsel of its
choice reasonably satisfactory to the Indemnified Party, (B) the Indemnified
Party may retain separate co-counsel at its sole cost and expense (except that
the Indemnifying Party will be responsible for the fees and expenses of the
separate co-counsel to the extent the Indemnified Party concludes reasonably
that the counsel the Indemnifying Party has selected has a conflict of
interest), (C) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Indemnifying Party (not to be withheld unreasonably), and
(D) the Indemnifying Party will not consent to the entry of any judgment with
respect to the matter, or any settlement which does not include a provision
pursuant to which plaintiff or claimant in the matter releases the Indemnified
Party from all Liability with respect thereto, without the written consent of
the Indemnified Party. In the event no Indemnifying Party notifies the
Indemnified Party within 15 days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense thereof, however,
the Indemnified Party may defend against, or enter into any settlement with
respect to, the matter in any manner it reasonably may deem appropriate, all at
the risk and expense of the Indemnifying Party.
-48-
Section 11.5 Determination of Loss. The parties shall make
appropriate adjustments for Tax Benefits and insurance proceeds (reasonably
certain of receipt and utility in each case) in determining the amount of loss
for purposes of this Article 11. For such purposes, "Tax Benefits" means any net
reduction in Taxes actually realized by Buyer, Holdings or any Subsidiary,
including, without limitation, an Offsetting Tax Benefit. The term "Offsetting
Tax Benefit" means the amount of any Tax Benefit actually realized by Buyer,
Holdings, its Subsidiaries or any Affiliate thereof in a subsequent taxable
period (including, without limitation, a taxable period ending after the Closing
Date) attributable to, realized in connection with or relating to an adjustment
with respect to Taxes in a prior taxable period which adjustment is subject to
indemnification by the Sellers hereunder.
Section 11.6 Exclusive Remedy. From and after the Closing, the
indemnification under this Article 11 shall be the sole and exclusive remedy of
the parties in respect of this Agreement and the representations, warranties and
covenants herein contained, except for actions in equity to enforce this
Agreement.
Section 11.7 Tax Matters. Without the prior written consent of
the Representative, Buyer shall not cause or permit any of Holdings or its
Subsidiaries to file any amended Tax Returns. Buyer shall pay any applicable
sales, transfer, recording, deed, stamp and other similar Taxes resulting from
the consummation of the transactions contemplated by this Agreement.
ARTICLE 12.
MISCELLANEOUS
Section 12.1 Notices. Any notice, request, instruction,
document or other communication to be given under this Agreement must be in
writing and shall be deemed to have been duly given only if delivered personally
or sent by registered or certified mail, postage prepaid, at the addresses shown
below, or to such other address or person as any party may designate by written
notice to the others or sent via facsimile to the facsimile number shown below
or to such other facsimile number as any party may designate by written notice
of the others.
To Holdings: Desa Holdings Corporation
c/o Desa International, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxx
-49-
with copies to Hicks, Muse, Xxxx & Xxxxx Incorporated
the Representative: 000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx
Xxxxxxxx X. Xxxxxx, Xx.
with copies to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
and copies to: Xxxxxxxxxx, Xxxxxx & Xxxx, PLC
Harpeth on the Green III
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxxx, Esq.
To Buyer: X.X. Childs Equity Partners, L.P.
c/o X.X. Childs Associates, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
with copies to: Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxxxxx Xxxxx, Esq.
All such notices, requests, instructions, documents and other communications
will (i) if delivered personally to the address as provided in this Section
12.1, be deemed given upon delivery, (ii) if delivered by facsimile transmission
to the facsimile number as provided in this Section 12.1, be deemed given upon
receipt, and (iii) if delivered by mail in the manner described above to the
address as provided in this Section 12.1, be deemed given upon receipt (in each
case regardless of whether such notice is received by any other person to whom a
copy of such communication is to be delivered pursuant to this Section 12.1).
-50-
Section 12.2 Extensions and Waivers.
a. Buyer may, by written instrument, extend the time for the
performance of any of the obligations or other acts of Holdings or any of
Sellers, and (i) waive any inaccuracies of any of Sellers or Holdings in the
representations and warranties contained herein or in any document delivered
pursuant to this Agreement, (ii) waive compliance with any of the covenants of
Holdings or any of Sellers contained in this Agreement, (iii) waive performance
by Holdings or any of Sellers of any of the obligations set out in this
Agreement and (iv) waive any term or condition in this Agreement that it is
entitled to the benefits thereof.
b. The Representative may, by written instrument, extend the
time for the performance of any of the obligations or other acts of Buyer, and
(i) waive any inaccuracies of Buyer in the representations and warranties
contained herein or in any document delivered pursuant to this Agreement, (ii)
waive compliance with any of Buyer's covenants contained in this Agreement,
(iii) waive performance by Buyer of any of the obligations set out in this
Agreement and (iv) waive any term or condition in this Agreement that it is
entitled to the benefits thereof.
Section 12.3 Costs and Expenses. Whether or not the
transactions contemplated hereby are consummated, the parties shall each bear
their respective costs and expenses in connection with the negotiation and
consummation of the transactions contemplated hereby except as otherwise
provided in this Agreement.
Section 12.4 Agreements of Parties. This Agreement, the
Confidentiality Agreement and the documents referred to herein set forth all the
covenants, promises, agreements, conditions and understandings among the parties
hereto, and there are no other covenants, promises, agreements, conditions or
understandings, whether oral or written, among the parties hereto relating to
the subject matter hereof.
Section 12.5 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York (without
giving effect to the conflicts of laws principles thereof).
Section 12.6 Further Assurances. Each party hereto agrees to
execute any and all documents, and to perform such other acts, to the extent
permitted by law, whether before or after Closing, that may be reasonably
necessary or expedient to further the purposes of this Agreement or to further
assure the benefits intended to be conferred hereby.
Section 12.7 Successors and Assigns. All covenants and
agreements contained in this Agreement by or on behalf of the parties hereto
will bind or inure to the benefit of the respective personal representatives,
successors and assigns of such parties.
-51-
Section 12.8 Counterparts. This Agreement may be executed in
one or more counterparts for the convenience of the parties hereto, all of which
together shall constitute one and the same instrument.
Section 12.9 Headings. The headings used in this Agreement
have been inserted for convenience of reference only and do not define or limit
the provisions hereof.
Section 12.10 Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (i) such
provision will be fully severable, (ii) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (iii) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
Section 12.11 Amendment. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of Buyer, Holdings and the Representative.
Section 12.12 Public Announcements. At all times at or before
the Closing, none of Sellers, Holdings nor Buyer will issue or make any reports,
statements or releases to the public with respect to this Agreement or the
transactions contemplated hereby without the consent of the others, which
consent shall not be unreasonably withheld. If any of the parties is unable to
obtain the approval of its public report, statement or release from the other
parties and such report, statement or release is, in the written opinion of
legal counsel to such party, required by law in order to discharge such party's
disclosure obligations, then such party may make or issue the legally required
report, statement or release and promptly furnish the other parties with a copy
thereof. Holdings, Sellers and Buyer will also obtain the other parties' prior
approval of any press release to be issued immediately following the Closing
announcing the consummation of the transactions contemplated by this Agreement.
Section 12.13 Signing Stockholders. Buyer, Holdings and
Sellers shall permit any holder of Common Stock or Nonvoting Common Stock that
is not a party to this Agreement as of the date hereof to become a party to this
Agreement by executing a counterpart to this Agreement and delivering the same
to Holdings, Buyer and the Representative (on behalf of Sellers) at any time
before two business days prior to the Closing Date. Upon the execution and
delivery of such a counterpart to this Agreement by such a holder, this
Agreement shall automatically be deemed to be amended to add such holder as a
Seller, such holder shall be deemed a Seller for all purposes hereunder and the
portion of the
-52-
shares of Common Stock or Nonvoting Common Stock to be sold by such holder to
Holdings hereunder shall be deemed to be Shares for all purposes of this
Agreement.
-53-
EXHIBIT LIST
Exhibit A Shares and Options
Exhibit B Preferred Stock Terms
Exhibit C Financing Commitments
Exhibit D Customer Calls
Exhibit E Intellectual Property Liens
Exhibit F Employment Agreement Modifications
Exhibit G Stockholders' Agreement
-54-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
X.X. CHILDS EQUITY PARTNERS, L.P.
By: X.X. CHILDS ADVISORS, L.P., its general partner
By: X.X. CHILDS ASSOCIATES, L.P., its general
partner
By: X.X. CHILDS ASSOCIATES, INC., its
general partner
By:
Xxxx X. Xxxxxx,
Vice President
DESA HOLDINGS CORPORATION
By:
Name:
Title:
-55-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
SELLERS:
HICKS, MUSE, XXXX & XXXXX EQUITY FUND II, L.P.
By: HM2/GP PARTNERS, L.P., its general partner
By: XXXXX, MUSE GP PARTNERS, L.P., its general
partner
By: XXXXX, MUSE FUND II
INCORPORATED, its general partner
By:
Xxxx X. Xxxxx,
Executive Vice President and
Managing Director
MUSE CHILDREN GS TRUST
By:
Name:
Title:
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
-56-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxx Xxxxxxx
-57-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxxx X. Xxxxxx
-58-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxx X. Xxxxxxxxx, Xx.
Xxxxxxx X. Xxxxxxx
CCC/OMNI INVESTMENT PARTNERS, L.P.
By:
Name:
General Partner
BT INVESTMENT PARTNERS, INC.
By:
Name:
Title:
Xxxxxxxx X. Xxxxxx, Xx.
-59-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Xxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
-60-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxx X. Xxxxxxx
Xxxx X. Xxxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxx Xxxxx
Xxxxx X. Xxxx
Xxxxxx X. Xxxxxxx
-61-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxxx X. Xxxxxxx
-62-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxx Xxxxxx
Xxxxx Xxxx
Xxxxx X. Xxxxxx
Xxxx X. Xxxxxx Revocable Trust
-63-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxxx Xxxxxxxx
-64-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxx Xxxxxxxx
Kaitrin Xxxxx Xxxxxxx
-65-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxx Xxxxxxx
-66-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxx Xxxxxxxxxx
-67-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxx Xxxxxx
-68-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxx Xxxxx
-69-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxx Xxxxxxx
-70-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxx Xxxxx
-71-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xx Xxxxx
-72-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxx Xxxxx
-73-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxx Xxxxxx
-74-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxx Xxxxx
Xxxxx X. Xxxxx
-75-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxx Xxxxxx
-76-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxx Xxxxx
-77-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
R. Xxxxxx Xxxxxxx
-78-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
X. X. Xxxxx
-79-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
R. Xxxxx Xxxxx
-80-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxx Xxxxxxxxxx
-81-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
V. Xxxx Xxxxxxxx
-82-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxx X. Xxx
-83-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxxx X. XxXxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxxxxx
JDF FAMILY TRUST
By:
____________, Trustee
Xxx X. Xxxxxxxxxxxx
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxx
-84-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxx Xxxxxx
-85-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxxx X. Xxxxx, as Custodian for
Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxx X. Xxxxx, as Custodian for
Xxxxxxxxx Xxx Xxxxx
XXXXX XXXXXX INC., XXX
Custodian f/b/o Xxxxxxx X. Xxxxx
By:
Name:
Title:
Xxxx X. Xxxx
Xxxxx X. X'Xxxxx
Xxxxxx X. Xxxxx
-86-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxxx Xxxxxxxx
-87-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxxx X. Xxxxxxxxx
-88-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxx Xxxxxx
-89-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxx X. Xxxxx
Xxxxxxx X. Xxxx
-90-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
TRANSFINANCIAL BANK, N.A.,
Trustee U/A for Xxxxxx X. Xxxxxx
By:
Name:
Title:
TRANSFINANCIAL BANK, N.A.,
Trustee U/A for Xxxxxxx X. Xxxxxx
By:
Name:
Title:
TRANSFINANCIAL BANK, N.A.,
Trustee U/A for Xxxx X. Xxxxxx
By:
Name:
Title:
TRANSFINANCIAL BANK, N.A.,
Trustee U/A for Xxxxx X. Xxxxxx
By:
Name:
Title:
MANCHESTER CAPITAL, L.L.C.
By:
Name:
Title:
-91-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
3MS EQUITY PARTNERS
By:
Name:
Title:
-92-
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in
one or more counterparts, each of which shall be deemed one and the same
instrument, as of the date first above written.
Xxxxxx X. Xxxxxx,
Co-Trustee U/A for Xxxx X. Xxxxxx
By:
Name:
Title:
-93-
RECAPITALIZATION AGREEMENT
AMONG
X.X. CHILDS EQUITY PARTNERS, L.P.,
DESA HOLDINGS CORPORATION,
AND EACH STOCKHOLDER OF DESA HOLDINGS CORPORATION
NAMED HEREIN
Dated as of October 8, 1997
As amended and restated as of November 25, 1997
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
2
ARTICLE 2
HOLDINGS PURCHASE, SALE OF NEWLY ISSUED SHARES AND CLOSING 13
Section 2.1 Holdings Purchase 13
Section 2.2 Purchase and Sale of Newly Issued Shares 13
Section 2.3 Purchase Price for Shares 13
Section 2.4 Purchase Price for Newly Issued Shares 13
Section 2.5 Pre-Closing Statement 14
Section 2.6 Post-Closing Adjustment 15
Section 2.7 Designation of Representative; Indemnification of Representative 17
Section 2.8 Closing 19
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HOLDINGS 20
Section 3.1 Organization and Good Standing 20
Section 3.2 Authorization and Validity 21
Section 3.3 Capitalization of Holdings 21
Section 3.4 Subsidiaries and Equity Investments 21
Section 3.5 Financial Statements 22
Section 3.6 Absence of Changes 22
Section 3.7 Tax Matters 25
Section 3.8 Employee Benefits 26
Section 3.9 Litigation 28
Section 3.10 No Violation 29
Section 3.11 Labor Relations 29
Section 3.12 No Consents 29
Section 3.13 Insurance 29
Section 3.14 Title To Properties 30
Section 3.15 Environmental Matters 30
Section 3.16 Intellectual Property Rights 31
Section 3.17 Finder's Fees 32
Section 3.18 Tangible Assets 32
Section 3.19 Product Warranty 32
Section 3.20 Product Liability 32
Section 3.21 Material Contracts 33
Section 3.22 Compliance with Laws 34
Section 3.23 Disclosure 35
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF SELLERS 35
Section 4.1 Ownership of Shares. 35
Section 4.2 Authority. 35
Section 4.3 No Conflicts. 36
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER 36
Section 5.1 Organization and Good Standing 36
Section 5.2 Authorization and Validity 36
Section 5.3 Investment Intent 37
Section 5.4 No Violation 37
Section 5.5 No Consents 37
Section 5.6 Litigation 37
Section 5.7 Financing 37
Section 5.8 Finder's Fee 38
Section 5.9 Solvency 38
-ii-
ARTICLE 6
COVENANTS OF HOLDINGS 39
Section 6.1 Reasonable Efforts 39
Section 6.2 Xxxx-Xxxxx-Xxxxxx 39
Section 6.3 Business Operations 39
Section 6.4 Competing Proposals 41
Section 6.5 Access 41
Section 6.6 Notice of Developments 42
Section 6.7 Preservation of Business 42
Section 6.8 Financial Information 43
Section 6.9 Resignations of Directors 43
Section 6.10 Cooperation with Respect to Refinancings 43
Section 6.11 Intellectual Property 44
Section 6.12 Accrual for Management Bonuses 44
Section 6.13 Termination of Financial Advisory 44
ARTICLE 7
COVENANTS OF BUYER 44
Section 7.1 Reasonable Efforts 44
Section 7.2 Xxxx-Xxxxx-Xxxxxx 44
Section 7.3 Refinancing Certain Obligations 45
Section 7.4 Leverage Ratio 45
Section 7.5 Indemnification; Insurance 46
Section 7.6 Certificate of Incorporation 47
Section 7.7 Solvency Opinion 47
Section 7.8 Payment of Management Bonuses 47
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF SELLERS 47
Section 8.1 Representations and Warranties 47
Section 8.2 Performance 48
Section 8.3 No Legal Bar 48
Section 8.4 XXX Xxx 00
Section 8.5 Certificate 48
Section 8.6 Stockholders Agreement 48
Section 8.7 Proceedings; Opinions 48
Section 8.8 Exercise of Options 48
-iii-
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF BUYER 49
Section 9.1 Representations and Warranties 49
Section 9.2 Performance 49
Section 9.3 No Legal Bar 49
Section 9.4 HSR Act 50
Section 9.5 Holdings Options 50
Section 9.6 Certificate 50
Section 9.7 Purchase 50
Section 9.8 Financing 50
Section 9.9 Employment Agreements 50
Section 9.10 Proceedings; Opinions 50
Section 9.11 Stockholders Agreement 51
ARTICLE 10
TERMINATION 51
Section 10.1 Termination by Mutual Consent 51
Section 10.2 Termination by Either Holdings or Buyer 51
Section 10.3 Termination by Holdings 51
Section 10.4 Termination by Buyer 52
Section 10.5 Effect of Termination 53
Section 10.6 Specific Performance 53
ARTICLE 11
REMEDIES FOR BREACHES OF THIS AGREEMENT 53
Section 11.1 Survival of Representations, Warranties and Covenants 53
Section 11.2 Indemnification Provisions for Benefit of Buyer 53
Section 11.3 Indemnification Provisions for Benefit of the Sellers and Holdings 54
Section 11.4 Matters Involving Third Parties 54
Section 11.5 Determination of Loss 55
Section 11.6 Exclusive Remedy 55
Section 11.7 Tax Matters 55
ARTICLE 12
MISCELLANEOUS 56
Section 12.1 Notices 56
Section 12.2 Extensions and Waivers 57
Section 12.3 Costs and Expenses 58
Section 12.4 Agreements of Parties 58
Section 12.5 Governing Law 58
Section 12.6 Further Assurances 58
-iv-
Section 12.7 Successors and Assigns 58
Section 12.8 Counterparts 58
Section 12.9 Headings 58
Section 12.10 Invalid Provisions 59
Section 12.11 Amendment 59
Section 12.12 Public Announcements 59
Section 12.13 Signing Xxxxxxxxxxxx 00
-x-
