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EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
AMONG
SAW MILL INVESTMENTS LLC,
GEEG HOLDINGS, L.L.C.,
GEEG ACQUISITION HOLDINGS CORP.
AND
GEEG ACQUISITION, L.L.C.
DATED AS OF JULY 14, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 THE MERGER............................................................................................. 1
Section 1.1 Merger................................................................................ 1
Section 1.2 Closing of the Merger................................................................. 2
Section 1.3 Effective Time........................................................................ 2
Section 1.4 Effects of the Merger................................................................. 2
Section 1.5 Certificate of Formation; Limited Liability Company Agreement......................... 2
Section 1.6 Directors............................................................................. 2
Section 1.7 Officers.............................................................................. 2
Section 1.8 Effect on Equity Securities........................................................... 2
Section 1.9 Purchase Price........................................................................ 4
Section 1.10 Company Equity Options................................................................ 10
Section 1.11 Additional Actions.................................................................... 11
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................... 11
Section 2.1 Organization and Qualification; Subsidiaries.......................................... 11
Section 2.2 Capitalization of the Company......................................................... 13
Section 2.3 Authority............................................................................. 13
Section 2.4 Financial Statements.................................................................. 13
Section 2.5 Consents and Approvals; No Violations................................................. 14
Section 2.6 Material Contracts.................................................................... 14
Section 2.7 No Undisclosed Liabilities; Absence of Changes........................................ 16
Section 2.8 Litigation............................................................................ 17
Section 2.9 Compliance with Applicable Law........................................................ 17
Section 2.10 Employee Plans........................................................................ 18
Section 2.11 Environmental, Health, and Safety Matters............................................. 18
Section 2.12 Intellectual Property................................................................. 19
Section 2.13 Labor Matters......................................................................... 20
Section 2.14 Insurance............................................................................. 20
Section 2.15 Tax Matters........................................................................... 21
Section 2.16 Brokers............................................................................... 22
Section 2.17 Real and Personal Property............................................................ 22
Section 2.18 Transactions with Affiliates.......................................................... 23
Section 2.19 Product Warranty...................................................................... 23
Section 2.20 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES......................................... 24
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................................................ 24
Section 3.1 Organization.......................................................................... 24
Section 3.2 Authority............................................................................. 24
Section 3.3 Consents and Approvals; No Violations................................................. 25
Section 3.4 Brokers............................................................................... 25
Section 3.5 Financing............................................................................. 25
Section 3.6 Merger Sub Activities................................................................. 26
Section 3.7 Capitalization........................................................................ 26
ARTICLE 4 COVENANTS.............................................................................................. 27
Section 4.1 Conduct of Business of the Company.................................................... 27
Section 4.2 Tax Matters........................................................................... 28
Section 4.3 Access to Information................................................................. 32
Section 4.4 Efforts to Consummate................................................................. 32
Section 4.5 Public Announcements.................................................................. 32
Section 4.6 Indemnification; Directors' and Officers' Insurance................................... 32
Section 4.7 Exclusive Dealing..................................................................... 33
Section 4.8 Financing............................................................................. 33
Section 4.9 Tax Distributions..................................................................... 34
Section 4.10. Rollover Equity of WB Holding Corp.................................................... 34
ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER............................................................... 34
Section 5.1 Conditions to the Obligations of the Company, Parent and Merger Sub................... 34
Section 5.2 Other Conditions to the Obligations of Merger Sub and Parent.......................... 35
Section 5.3 Other Conditions to the Obligations of the Company.................................... 36
ARTICLE 6 TERMINATION; AMENDMENT; WAIVER......................................................................... 36
Section 6.1 Termination........................................................................... 36
Section 6.2 Effect of Termination................................................................. 37
Section 6.3 Fees and Expenses..................................................................... 37
Section 6.4 Amendment............................................................................. 37
Section 6.5 Extension; Waiver..................................................................... 38
ARTICLE 7 SURVIVAL OF REPRESENTATIONS AND COVENANTS; INDEMNIFICATION............................................. 38
Section 7.1 Survival of Representations and Covenants............................................. 38
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Section 7.2 General Indemnification............................................................... 38
Section 7.3 Third Party Claims.................................................................... 39
Section 7.4 Limitations on Indemnification Obligations............................................ 40
Section 7.5 Saw Mill.............................................................................. 40
Section 7.6 Exclusive Remedy...................................................................... 41
ARTICLE 8 REPRESENTATIVE OF THE EQUITYHOLDERS OF THE COMPANY..................................................... 41
Section 8.1 Authorization of Representative....................................................... 41
ARTICLE 9 MISCELLANEOUS.......................................................................................... 44
Section 9.1 Entire Agreement; Assignment.......................................................... 44
Section 9.2 Notices............................................................................... 44
Section 9.3 Governing Law......................................................................... 46
Section 9.4 Construction; Interpretation.......................................................... 46
Section 9.5 Parties in Interest................................................................... 46
Section 9.6 Severability.......................................................................... 46
Section 9.7 Counterparts.......................................................................... 46
Section 9.8 Obligations of Parent and Merger Sub.................................................. 46
Section 9.9 Knowledge of the Company.............................................................. 46
Section 9.10 Waiver of Jury Trial.................................................................. 47
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SCHEDULES:
2.1 -- Subsidiaries
2.2 -- Capitalization of the Company
2.4 -- Financial Statements
2.5 -- Consents
2.6 -- Material Contracts
2.7(a) -- Liabilities
2.7(b) -- Certain Events
2.8 -- Litigation
2.10 -- Employee Plans
2.11 -- Environmental, Health and Safety Matters
2.12 -- Intellectual Property
2.13 -- Labor Matters
2.14 -- Insurance
2.15 -- Tax Matters
2.17(a) -- Owned Real Property
2.17(b) -- Leased Real Property
2.17(c) -- Personal Property; Liens
2.18 -- Transactions with Affiliates
3.7 -- Capitalization of the Surviving Entity
4.1 -- Permitted Actions
4.2(c) -- Allocation of Purchase Price
EXHIBITS
A-1 -- Allocation of the Common Equity Amount and the Retained
Common Equity
A-2 -- Allocation of the Preferred Equity Amount and Retained
Preferred Equity
B -- Net Working Capital as of May 27, 2000
C -- Form of Purchase Price Escrow Agreement
D -- Form of Indemnification Escrow Account
E -- Form of Surviving Entity's Limited Liability Company
Agreement
F -- Required Consents
G -- Method of Calculating the Estimated Net Working Capital
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July
14, 2000 is made by and among Saw Mill Investments LLC, a Delaware limited
liability company ("Saw Mill"), GEEG Holdings, L.L.C., a Delaware limited
liability company (the "Company"), GEEG Acquisition Holdings Corp., a Delaware
corporation ("Parent"), and GEEG Acquisition, L.L.C., a Delaware limited
liability company and a wholly owned subsidiary of Parent ("Merger Sub").
WHEREAS, the Board of Directors of the Company has, upon the terms and
subject to the conditions set forth herein, (i) approved this Agreement and the
transactions contemplated hereby and (ii) recommended acceptance of the Merger
(as herein defined) and approval of this Agreement by the Company's
equityholders;
WHEREAS, the equityholders of the Company, have, upon the terms and
subject to the conditions set forth herein, unanimously approved and consented
to the Merger, the execution by the Company of this Agreement and the
consummation of the transactions contemplated hereby in accordance with the
Delaware Limited Liability Company Act (the "DLLCA") as well as all other
applicable law and the Company's limited liability agreement, as in effect as of
the date hereof (the "Company LLC Agreement"); and
WHEREAS, the Board of Directors of Parent and Merger Sub, and Parent,
in its capacity as the sole equityholder of Merger Sub, have each, upon the
terms and subject to the conditions set forth herein, approved and consented to
the Merger, the execution by Parent and Merger Sub of this Agreement and the
consummation of the transactions contemplated hereby in accordance with the
DLLCA as well as all other applicable law.
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Saw Mill, the Company,
Parent and Merger Sub hereby agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DLLCA, Merger Sub shall be
merged with and into the Company (the "Merger") at the Effective Time (as herein
defined). Following the Effective Time, the separate existence of Merger Sub
shall cease and the Company shall continue as the surviving entity of the Merger
(the "Surviving Entity") and shall succeed to and assume all the rights and
obligations of Merger Sub in accordance with the DLLCA.
SECTION 1.2 CLOSING OF THE MERGER. The closing of the Merger (the
"Closing") shall take place at 10:00 a.m., New York time, on a date to be
specified by the parties hereto, which shall be no later than the second
business day after satisfaction (or waiver) of the conditions set forth in
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Article 5 (the "Closing Date"), at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another time, date or place is
agreed to in writing by the parties hereto.
SECTION 1.3 EFFECTIVE TIME. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date (or such other date as Parent and
the Company may agree), the parties hereto shall cause an agreement or
certificate of merger (in any such case, the "Certificate of Merger") to be
executed and filed with the Secretary of State of the State of Delaware in such
form as required by, and in accordance with applicable provisions of, the DLLCA,
at which time the Merger shall become effective (the time the Merger becomes
effective being referred to herein as the "Effective Time").
SECTION 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 18-209 of the DLLCA.
SECTION 1.5 CERTIFICATE OF FORMATION; LIMITED LIABILITY COMPANY
AGREEMENT.
(a) At the Effective Time, the Company's Certificate of
Formation (the "Certificate of Formation") shall be the certificate of formation
of the Surviving Entity until thereafter changed or amended as provided therein
or by applicable law.
(b) At the Effective Time, the Company LLC Agreement in effect
immediately prior to the Effective Time shall be amended and restated in its
entirety in the form attached hereto as Exhibit E (the "Surviving Entity LLC
Agreement") and shall be the limited liability company agreement of the
Surviving Entity until thereafter changed or amended as provided therein or by
applicable law.
SECTION 1.6 DIRECTORS. The directors of Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Entity, each
to hold office in accordance with the limited liability company agreement of the
Surviving Entity until such director's successor is duly elected or appointed
and qualified.
SECTION 1.7 OFFICERS. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Entity, each
to hold office in accordance with the limited liability company agreement of the
Surviving Entity until such officer's successor is duly elected or appointed and
qualified.
SECTION 1.8 EFFECT ON EQUITY SECURITIES.
(a) Conversion of Membership Interests of Merger Sub. At the
Effective Time, by virtue of the Merger and without any action on the part of
the holder thereof, (x) each preferred unit of Merger Sub (each of which shall
have been issued by Merger Sub in exchange for $100 cash) (collectively, the
"Merger Sub Preferred Units") which will be issued and outstanding immediately
prior to the Effective Time shall be converted into one Surviving Entity
Preferred Unit (as herein
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defined) and (y) each common unit of Merger Sub (each of which shall have been
issued by Merger Sub in exchange for $10 cash) (collectively, the "Merger Sub
Common Units"; and collectively with the Merger Sub Preferred Units, the "Merger
Sub Units") which will be issued and outstanding immediately prior to the
Effective Time shall be converted into one Surviving Entity Common Unit (as
herein defined). For purposes of this Agreement, (i) the term "Surviving Entity
Preferred Unit" shall mean a Preferred Unit (as such term is defined in the
Surviving Entity LLC Agreement) and (ii) the term "Surviving Entity Common Unit"
shall mean a Common Unit (as such term is defined in the Surviving Entity LLC
Agreement).
(b) Conversion of Company Common Units. At the Effective Time,
each of the Company's Common Units (as such term is defined in the Company LLC
Agreement) (collectively, the "Company Common Units") other than Company Common
Units representing, in the aggregate, $2.04 million ($2,040,000) of the Purchase
Price (the "Common Equity Amount") owned by certain equityholders of the
Company, all as set forth on Exhibit A-1 (the "Common Rollover Equity") and
Company Common Units representing, in the aggregate, $18.36 million
($18,360,000) of the Purchase Price (the "Preferred Equity Amount" and,
collectively with the Common Equity Amount, the "Equity Amount") owned by
certain equityholders of the Company, all as set forth on Exhibit A-2 (the
"Preferred Rollover Equity" and, collectively with the Common Rollover Equity,
the "Rollover Equity"), shall, by virtue of the Merger and without any action on
the part of Parent, Merger Sub, the Company or the holder of such Company Common
Units, be canceled and extinguished and be converted into and shall become the
right to receive a portion of the Purchase Price (as herein defined) as provided
herein. At the Effective Time, the Company Common Units comprising the Common
Rollover Equity shall, by virtue of the Merger and without any action on the
part of Parent, Merger Sub, the Company or the holder of such Company Common
Units, be retained and represent, in the aggregate, $2.04 million ($2,040,000)
of Surviving Entity Common Units (which shall be represented by 204,000
Surviving Entity Common Units and shall be allocated among the holders of the
Common Rollover Equity as set forth on Exhibit A-1) and the Company Common Units
comprising the Preferred Rollover Equity shall, by virtue of the Merger and
without any action on the part of Parent, Merger Sub, the Company or the holder
of such Company Common Units, be retained and represent, in the aggregate,
$18.36 million ($18,360,000) of Surviving Entity Preferred Units (which shall be
represented by 183,600 Surviving Entity Preferred Units and shall be allocated
among the holders of the Preferred Rollover Equity as set forth on Exhibit A-2).
From and after the Effective Time, the holder(s) of certificates evidencing
ownership of the Company Common Units outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Company
Common Units except as otherwise provided for herein (including pursuant to
Section 1.9) or by applicable law.
(c) Conversion of Company Equity Options. Each Company Equity
Option (as defined in Section 1.10(a) hereof), issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive from the Surviving Entity the applicable Option Consideration (as
defined in Section 1.10(a) hereof) and the other applicable amounts payable, if
any, pursuant to Section 1.9(d)(i) and/or Section 1.10(b) hereof. As of the
Effective Time, all such Company Equity Options shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to
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exist, and each holder of any such Company Equity Option shall cease to have any
rights with respect thereto, except the right to receive the cash into which
their Company Equity Options have been converted by the Merger as provided in
this Section 1.8(c) and Section 1.10.
(d) Withholding. Surviving Entity shall be entitled to deduct
and withhold from the Purchase Price and from the Option Consideration otherwise
payable pursuant to this Agreement to any holder of Company Equity Securities
(as such term is defined in Section 8.1(a)) such amount as Surviving Entity is
required to deduct and withhold with respect to such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of applicable
state, local or foreign law. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Company Equity Securities in respect of which such
deduction and withholding was made.
SECTION 1.9 PURCHASE PRICE.
(a) Definitions. For purposes of this Agreement, the terms set
forth below have the following meanings:
"Actual Adjustment" means (x) the Purchase Price as set forth
on the Final Statement of Purchase Price (as herein defined) minus (y) the
Estimated Purchase Price.
"Cash and Cash Equivalents" means the sum of the fair market
value (expressed in United States dollars) of all cash and cash equivalents
(including marketable securities and short term investments) of the Company and
the Subsidiaries (as herein defined) as of immediately prior to the Closing
(excluding any actual cash received by the Company (as exercise price) during
the period beginning on the date hereof and ending as of immediately prior to
the Closing from the exercise of any Company Equity Options).
"Closing Date Funded Indebtedness" means the Funded
Indebtedness as of immediately prior to the Closing.
"Enterprise Value" means $295.0 million.
"Estimated Purchase Price" means a good faith estimate of the
Purchase Price, as determined by Saw Mill based upon the Company's most recent
financial statements as of the date of such estimate while taking into account
changes in the Company's financial position since the date of such financial
statements. In connection with determining the Estimated Purchase Price, Saw
Mill shall estimate the Net Working Capital as of immediately prior to the
Closing by using the methodology set forth on Exhibit G attached hereto.
"Funded Indebtedness" means, as of any date, without
duplication, the outstanding principal amount of, accrued and unpaid interest on
and other payment obligations (including any prepayment premiums payable as a
result of the consummation of the Merger) arising under any
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obligations of the Company or any Subsidiary consisting of (i) indebtedness for
borrowed money or indebtedness issued in substitution or exchange for borrowed
money or for the deferred purchase price of property or services (other than
trade payables and accrued expenses arising in the ordinary course of business
but including all seller notes and "earn-out" payments), (ii) indebtedness
evidenced by any note, bond, debenture or other debt security, (iii) obligations
under capitalized leases to the extent treated as liabilities on a balance sheet
in accordance with GAAP (as herein defined) (but excluding any and all operating
leases) or (iv) obligations under any interest rate, currency or other hedging
agreements, in each case, as of such date, excluding any undrawn letters of
credit and including, without limitation, pursuant to (x) the Credit Agreement,
dated as of June 8, 1998, as amended (the "Paribas Credit Agreement"), among the
Company, Global Energy Equipment Group, L.L.C. ("GEEG"), Paribas, as agent,
Credit Agricole Indosuez, as co-agent, and the other parties named therein and
(y) the Senior Subordinated Loan Agreement, dated as of June 8, 1998, as amended
(the "Xxxxx Subordinated Loan Agreement"), among the Company, GEEG, Xxxxxxx
Xxxxx Mezzanine Capital Fund II, Credit Agricole Indosuez and Paribas Capital
Funding, LLC as well as the Senior Subordinated Notes issued pursuant thereto.
"Net Working Capital" means, as of any date:
(I) (A) accounts receivable (net of reserves for
doubtful accounts) plus (B) other receivables (net of
reserves, if any), plus (C) inventories plus (D) costs and
estimated earnings in excess of xxxxxxxx on uncompleted
contracts plus (E) prepaid expenses
minus
(II) (A) accounts payable plus (B) accrued expenses
and liabilities plus (C) xxxxxxxx in excess of costs and
estimated earnings on uncompleted contracts,
in each case, of the Company and the Subsidiaries, on a consolidated basis, as
of such date, as determined in accordance with the Company's and the
Subsidiaries' accounting practices, applied on a basis consistent with the
preparation of the Net Working Capital as of May 27, 2000, which is attached
hereto as Exhibit B. Notwithstanding the foregoing, "Net Working Capital" shall
not include any Cash and Cash Equivalents, property, plant and equipment,
intangible assets, debt issuance cost, Funded Indebtedness, Seller Expenses, any
fees, expenses or other liabilities incurred in connection with the financing by
Parent, Merger Sub and their respective affiliates of the transactions
contemplated hereby (including pursuant to the Commitment Letters (as herein
defined)), any reserves for or other liabilities in connection with the June
2000 Xxxxxx EEOC Claim (as such term is defined in Section 7.2(a) hereof) or any
other types of liabilities which are listed as exclusions on Exhibit B (other
than tax distribution payable). Notwithstanding the foregoing, "Net Working
Capital as of immediately prior to the Closing", shall include the amount of the
aggregate bonuses accrued as of the Closing by the Company or any of its
Subsidiaries pursuant to the 1999 Retention Bonus, dated September 30, 1999,
which is disclosed on Schedule 2.13 hereto, but only to the extent such bonuses
have not been paid by the Company or any Subsidiary prior to the Closing.
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"Net Working Capital Adjustment" means (i) the amount of Net
Working Capital as of immediately prior to the Closing minus (ii) negative
sixteen million four hundred sixty-six thousand dollars ( - $16,466,000).
"Option Payments" means the aggregate amount of Option
Consideration (as herein defined) payable to the holders of the Company Equity
Options (as herein defined) pursuant to Section 1.10(a) hereof.
"Purchase Price" means (i) the Enterprise Value, plus (ii) the
Net Working Capital Adjustment (which may be a negative number), plus (iii) the
amount of Cash and Cash Equivalents, minus (iv) the amount of Closing Date
Funded Indebtedness minus (v) the amount of Seller Expenses minus (vi) the
Option Payments.
"Purchase Price Escrow Amount" means one million dollars
($1,000,000).
"Seller Expenses" means (i) the collective amount payable by
the Company or any of its Subsidiaries to Xxxxxxx Xxxxx & Co. and Xxxxxxxx &
Xxxxx as of the Closing plus (ii) the $500,000 management fee which will be
payable by the Company to Saw Mill Capital L.L.C. as of the Closing pursuant to
the SMC Management Services Agreement plus (iii) the $50,000 payable by the
Company as of the Closing as an expense reserve for the benefit of the
Representative (as herein defined), as provided in Section 8.1(b) hereof.
"SMC Management Services Agreement" means the Management
Services Agreement, dated as of June 8, 1998, as amended, between the Company,
GEEG and Saw Mill Capital L.L.C.
(b) Estimated Purchase Price. No later than three business
days prior to the Closing, Saw Mill shall deliver to Parent a calculation of the
Estimated Purchase Price. On the Closing Date, contemporaneously with the filing
of the Certificate of Merger, Parent shall pay, or shall cause the Company,
Merger Sub or the Surviving Entity to pay the Estimated Purchase Price (less the
Equity Amount) as follows:
(i) an amount of cash equal to the Purchase Price
Escrow Amount (such cash, the "Purchase Price Escrow Funds") shall be deposited
into an escrow account (the "Purchase Price Escrow Account"), which shall be
established pursuant to an escrow agreement (the "Purchase Price Escrow
Agreement"), which Purchase Price Escrow Agreement (x) shall be entered into on
the Closing Date among the Surviving Entity, Saw Mill and an escrow agent to be
mutually agreed upon between Merger Sub and Saw Mill and (y) shall be
substantially in the form of Exhibit C attached hereto;
(ii) $13,275,000 of cash (such amount, the
"Indemnification Escrow Amount" and such cash, the "Indemnification Escrow
Funds") shall be deposited into an escrow account (the "Indemnification Escrow
Account"; and collectively with the Purchase Price Escrow
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Account, the "Escrow Accounts"), which shall be established pursuant to an
escrow agreement (the "Indemnification Escrow Agreement"; and collectively with
the Purchase Price Escrow Agreement, the "Escrow Agreements"), which
Indemnification Escrow Agreement (x) shall be entered into on the Closing Date
among the Surviving Entity, Saw Mill and an escrow agent to be mutually agreed
upon between Merger Sub and Saw Mill and (y) shall be substantially in the form
of Exhibit D attached hereto; and
(iii) an amount (such amount, the "Closing Date Cash
Payment") equal to the Estimated Purchase Price minus the aggregate of the
Equity Amount, the Purchase Price Escrow Amount and the Indemnification Escrow
Amount shall be paid by wire transfer of immediately available funds to Saw Mill
(on behalf of the holders of the Company Common Units as of immediately prior to
the Closing) in full satisfaction of Parent's obligations under this Section
1.9(c)(iii). Immediately after receipt of the Closing Date Cash Payment, Saw
Mill shall distribute the Closing Date Cash Payment to the holders of the
Company Common Units as of immediately prior to the Closing in accordance with
the distribution provisions of Section 12.2(b)(iii) of the Company LLC Agreement
(provided that any Equity Amount received by any such holder shall be deemed to
be an advance of such holder's distributions pursuant to such Section
12.2(b)(iii)).
(c) Preparation of the Final Statement of Purchase Price.
(i) As soon as practicable, but no later than 60 days
after the Closing Date, Parent shall prepare and deliver to Saw Mill (A) a
proposed calculation of the Net Working Capital as of immediately prior to the
Closing (the "Proposed Closing Date Statement of Net Working Capital"), (B) a
proposed calculation of the amount of Cash and Cash Equivalents (the "Proposed
Cash and Cash Equivalents"), (C) a proposed calculation of the amount of Closing
Date Funded Indebtedness (the "Proposed Closing Date Funded Indebtedness"), (D)
a proposed calculation of the Option Payments (the "Proposed Option Payments")
and (E) a proposed calculation of the Purchase Price (the "Proposed Purchase
Price Calculation") and, in each case, the components thereof. The Proposed
Closing Date Statement of Net Working Capital, the Proposed Cash and Cash
Equivalents, the Proposed Closing Date Funded Indebtedness, the Proposed Option
Payments and the Proposed Purchase Price Calculation shall collectively be
referred to herein from time to time as the "Proposed Closing Date
Calculations".
(ii) If Saw Mill does not give written notice of
dispute (a "Purchase Price Dispute Notice") to Parent within 25 days of
receiving the Proposed Closing Date Calculations, Saw Mill and the other parties
hereto agree that (i) the Proposed Closing Date Statement of Net Working Capital
shall be deemed to set forth the Net Working Capital as of immediately prior to
the Closing, (ii) the Proposed Cash and Cash Equivalents shall be deemed to set
forth the Cash and Cash Equivalents, (iii) the Proposed Closing Date Funded
Indebtedness shall be deemed to set forth the Closing Date Funded Indebtedness,
(iv) the Proposed Option Payments shall be deemed to set forth the Option
Payments and (v) the Proposed Purchase Price Calculation shall be deemed to set
forth the Purchase Price. If Saw Mill gives a Purchase Price Dispute Notice to
Parent (which Purchase Price Dispute Notice must set forth, in reasonable
detail, the items and amounts in dispute) within
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such 25-day period, Parent and Saw Mill will use reasonable efforts to resolve
the dispute during the 30-day period commencing on the date Parent receives the
applicable Purchase Price Dispute Notice from Saw Mill. If Saw Mill and Parent
do not obtain a final resolution within such 30-day period, then the items in
dispute shall be submitted immediately to an accounting firm mutually acceptable
to Parent and Saw Mill. If Parent and Saw Mill are unable to agree on the choice
of an accounting firm, then Parent and Saw Mill shall select a
nationally-recognized accounting firm by lot (after excluding their respective
regularly used accounting firms). Any accounting firm so selected ("Accounting
Firm") shall be required to render a determination of the applicable dispute
within 45 days after referral of the matter to such Accounting Firm, which
determination must be in writing and must set forth, in reasonable detail, the
basis therefor. The determination of such Accounting Firm shall be conclusive
and binding upon Saw Mill and the other parties hereto. Parent will revise the
Proposed Closing Date Calculations as appropriate to reflect the resolution of
any objections thereto pursuant to this Section 1.9(c)(ii). The "Final Statement
of Purchase Price" shall mean the Proposed Purchase Price Calculation together
with any revisions thereto pursuant to this Section 1.9(c)(ii).
(iii) In the event Saw Mill and Parent submit any
unresolved objections to an Accounting Firm for resolution as provided in
Section 1.9(c)(ii) above, Saw Mill and Parent will share responsibility for the
fees and expenses of such Accounting Firm as follows:
(A) if such Accounting Firm resolves all of
the remaining objections in favor of Parent's position (the
Purchase Price so determined is referred to herein as the "Low
Value"), then Saw Mill will be responsible for all of the fees
and expenses of such Accounting Firm;
(B) if such Accounting Firm resolves all of
the remaining objections in favor of Saw Mill's position (the
Purchase Price so determined is referred to herein as the
"High Value"), then Parent will be responsible for all of the
fees and expenses of such Accounting Firm; and
(C) if such Accounting Firm neither resolves
all of the remaining objections in favor of Parent's position
nor resolves all of the remaining objections in favor of Saw
Mill's position (the Purchase Price so determined is referred
to herein as the "Actual Value"), then Saw Mill will be
responsible for that fraction of the fees and expenses of such
Accounting Firm equal to (x) the difference between the High
Value and the Actual Value over (y) the difference between the
High Value and the Low Value, and Parent will be responsible
for the remainder of the fees and expenses of such Accounting
Firm.
(iv) The Company will, and will cause each Subsidiary
to, make its financial records available to Saw Mill and its accountants and
other representatives at reasonable times at any time during the review by Saw
Mill of, and the resolution of any objections with respect to, the Proposed
Closing Date Calculations.
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(d) Adjustment to Estimated Purchase Price.
(i) If the Actual Adjustment is a positive amount,
Surviving Entity will pay to Saw Mill (on behalf of the holders of the Company
Common Units as of immediately prior to the Closing) and to each holder of
Common Equity Options as of immediately prior to the Closing an amount equal to,
in the case of Saw Mill, such holders' of the Company Common Units or, in the
case of a holder of Company Equity Options, such holder's, in each case, pro
rata share (based upon such holder's or holder's share of the number of Company
Common Units outstanding as of immediately prior to the Closing (on a
fully-diluted basis)) of such positive amount (plus interest thereon at a rate
of 7.50% per annum from the Closing Date), net of applicable withholding taxes,
if any, by wire transfer or delivery of other immediately available funds, in
each case, within three business days after the date on which the Purchase Price
is finally determined pursuant to Section 1.9(c) above. Immediately after
receipt of any such payment, Saw Mill shall distribute such payment to the
holders of the Company Common Units as of immediately prior to the Closing based
upon such holder's share of the number of Company Common Units outstanding as of
immediately prior to the Closing.
(ii) If the Actual Adjustment is a negative amount,
then within three business days after the date on which the Purchase Price is
finally determined pursuant to Section 1.9(c) above, the Surviving Entity and
Saw Mill shall deliver joint written instructions to the Purchase Price Escrow
Agent instructing the Purchase Price Escrow Agent to deliver to the Surviving
Entity an amount equal to the lesser of (x) an amount equal to such negative
amount (plus interest thereon at a rate of 7.50% per annum from the Closing
Date) (which amount determined pursuant to this clause (x) shall be reduced
dollar-for-dollar by any amounts previously paid to the Surviving Entity
pursuant to Section 1.9(e) below) and (y) the amount of the Purchase Price
Escrow Funds then held by the Purchase Price Escrow Agent in the Purchase Price
Escrow Account.
(e) Purchase Price Escrow Funds. If upon Parent's receipt of a
Purchase Price Dispute Notice from Saw Mill, there is an amount which has been
conclusively determined to be payable to Surviving Entity pursuant to Section
1.9(d)(ii) (the "Surviving Entity Payment Amount"), then the Company and Saw
Mill shall promptly deliver joint written instructions to the Purchase Price
Escrow Agent instructing the Purchase Price Escrow Agent to deliver to the
Surviving Entity the Surviving Entity Payment Amount. If upon Parent's receipt
of a Purchase Price Dispute Notice from Saw Mill, the amount then in the
Purchase Price Escrow Account (prior to the distribution of the Surviving Entity
Payment Amount) is in excess of the sum of (i) the Surviving Entity Payment
Amount and (ii) the amount of the Purchase Price then in dispute, then the
Company and Saw Mill shall promptly deliver joint written instructions to the
Purchase Price Escrow Agent instructing the Purchase Price Escrow Agent to
deliver to Saw Mill (on behalf of the holders of the Company Equity Securities)
an amount equal
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to such excess. If during the period after Parent's receipt of a Purchase Price
Dispute Notice from Saw Mill and prior to the final determination of the
Purchase Price, any of the items of the Purchase Price which are in dispute are
agreed upon in Saw Mill's favor in accordance with Section 1.9(c), then the
Company and Saw Mill shall promptly deliver joint written instructions to the
Purchase Price Escrow Agent instructing the Purchase Price Escrow Agent to
deliver to Saw Mill (on behalf of the holders of the Company Equity Securities)
an amount equal to the amount of the Purchase Price the holders of the Company
Equity Securities are entitled to as a result of such agreement. If during the
period after Parent's receipt of a Purchase Price Dispute Notice from Saw Mill
and prior to the final determination of the Purchase Price, any of the items of
the Purchase Price which are in dispute are agreed upon in Surviving Entity's
favor in accordance with Section 1.9(c), then the Company and Saw Mill shall
promptly deliver joint written instructions to the Purchase Price Escrow Agent
instructing the Purchase Price Escrow Agent to deliver to Surviving Entity an
amount equal to the amount of the Purchase Price Surviving Entity is entitled to
as a result of such agreement. Once the Purchase Price has been conclusively
determined in accordance with Section 1.9(c) and all amounts payable to
Surviving Entity out of the Purchase Price Escrow Funds pursuant to the terms
hereof have been made, then the Company and Surviving Entity shall promptly
deliver joint written instructions to the Purchase Price Escrow Agreement
instructing the Purchase Price Escrow Agreement to deliver to Saw Mill (on
behalf of the holders of the Company Equity Securities) all amounts, if any,
then remaining in the Purchase Price Escrow Account.
SECTION 1.10 COMPANY EQUITY OPTIONS.
(a) At the Closing, the Surviving Entity shall pay to each
holder of any particular outstanding option or warrant to purchase Company
Common Units (a "Company Equity Option") issued pursuant to either (i) the
Company's 1998 Option Plan, as amended (the "Company Employee Option Plan"),
(ii) the Company's 1998 Non-Employee Director Option Plan, as amended (the
"Company Non-Employee Director Option Plan", and collectively with the Company
Employee Option Plan, the "Option Plans"), or (iii) the Warrant Agreement, dated
as of June 8, 1998 (the "Warrant Agreement"), among the Company, Credit Agricole
Indosuez and Paribas Capital Funding LLC, in settlement of each such Company
Equity Option, whether or not exercisable or vested, an amount of cash in
respect thereof equal to (A)(x)(I) the Estimated Purchase Price (without regard
to the Option Payments) plus the aggregate exercise price for all Company Equity
Options plus $161,217.16 (which represents the difference between the Senior
Liquidation Preference Amount and the Junior Liquidation Preference Amount
multiplied by the 10,400 issued and outstanding Junior Common Units (as such
terms are defined in the Company LLC Agreement)) minus the aggregate of the
Purchase Price Escrow Amount and the Indemnification Escrow Amount divided by
(II) the number of Company Common Units outstanding as of immediately prior to
the Closing on a fully-diluted basis minus (y) the exercise price per Company
Common Unit for such Company Equity Option multiplied by (B) the number of
Company Common Units issuable upon exercise of such Company Equity Option
(assuming, with respect to this clause (B) only, that such Company Equity Option
is fully exercisable and vested and that the Merger has not occurred) (such
gross amount of cash, the "Option Consideration"). The actual payment of Option
Consideration by the Company shall be net of applicable withholding taxes, if
any. Upon receipt of the appropriate Option Consideration by the holder of a
Company Equity Option, such Company Equity Option shall be canceled. The
surrender of a Company Equity Option to the Company or the Surviving Entity in
exchange for the appropriate Option Consideration shall be deemed a release of
all rights the holder had or may have had in respect of such Company Equity
Option, except to the extent provided in Section 1.9(d)(i) or Section 1.10(b)
hereof.
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(b) If Saw Mill, as Representative, receives any cash from
either Escrow Account or distributes any unused Expense Funds (as defined in
Article 8 hereof) for the benefit of the former holders of Company Common Units
and/or Company Equity Options, then Saw Mill shall promptly deliver to the
Surviving Entity (on behalf of the former holders of the Company Equity Options
issued pursuant to the Option Plans) an amount of cash equal to (x) the
aggregate amount of cash received by Saw Mill from the applicable Escrow Account
(net of any out-of-pocket expenses incurred by Saw Mill) or the amount of such
unused Expenses Funds, as the case may be, multiplied by (y) the percentage
determined by dividing (i) the number of Company Common Units which would have
been issued to holders of Company Equity Options if all Company Equity Options
issued pursuant to the Option Plans were fully exercisable and vested and were
exercised immediately prior to the Merger by (ii) the number of Company Common
Units outstanding as of immediately prior to the Closing on a fully-diluted
basis. Upon receipt of any such cash from Saw Mill, the Surviving Entity shall
promptly pay to each former holder of Company Equity Options issued pursuant to
the Option Plans such former holder's applicable share of such cash, net of
applicable withholding taxes, if any. Any cash received by Saw Mill from either
Escrow Account which is properly payable to any holder of any Company Equity
Options issued pursuant to the Warrant Agreement shall be distributed by Saw
Mill to such holder as provided in Article 8 hereof.
(c) Prior to the Closing, the Company shall take the
appropriate actions pursuant to the Warrant Agreement and Section 5.5 and/or
Section 6.4 of the Option Plans that are necessary to give effect to the
provisions of Section 1.8(c) and this Section 1.10 with respect to the Company
Equity Options issued pursuant to the Warrant Agreement and either of the Option
Plans.
(d) The Option Plans shall terminate as of the Effective Time,
and no holder of Company Equity Options issued pursuant to any Option Plan or
any participant in any Option Plan shall have any rights thereunder, including
any rights to acquire any equity securities of the Company, the Surviving Entity
or any Subsidiary, other than to receive Option Consideration payable pursuant
to Section 1.10(a) and the other applicable amounts payable, if any, pursuant to
Section 1.9(d)(i) and/or Section 1.10(b) hereof.
SECTION 1.11 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Entity shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Entity its right, title or interest in, to or under any of the rights,
properties or assets of Merger Sub or the Company or otherwise to carry out this
Agreement, the officers of the Surviving Entity shall be authorized to execute
and deliver, in the name and on behalf of Merger Sub or the Company, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of Merger Sub or the Company, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Entity or otherwise to carry out this Agreement.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
SECTION 2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of Saw Mill, the Company and the Subsidiaries (as
herein defined) is duly organized, validly existing and in good standing (or the
equivalent thereof) under the laws of its formation or incorporation, as
applicable. Each of the Company and the Subsidiaries has the requisite power and
authority to own, lease and operate its properties and to carry on its
businesses as presently conducted, except where the failure to have such power
or authority could not reasonably be expected to have a material adverse effect
on the assets, liabilities, properties, results of operations or conditions
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole
(excluding any change or effect (x) resulting from general economic conditions
or relating to those industries specific to the business of the Company and the
Subsidiaries, (y) resulting from the public announcement of the transactions
contemplated by this Agreement or (z) relating to or resulting from actions
taken by Parent or Merger Sub or any of their respective affiliates) (a "Company
Material Adverse Effect").
(b) Each of the Company and the Subsidiaries is duly qualified
or licensed to do business and is in good standing (or the equivalent thereof)
in each jurisdiction in which the property owned, leased or operated by it, or
the nature of the business conducted by it, makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing could not reasonably be expected
to have a Company Material Adverse Effect.
(c) The Company has made available to Parent an accurate and
complete copy of the Company LLC Agreement, GEEG's Limited Liability Company
Agreement, Deltak, L.L.C.'s Limited Liability Company Agreement and Xxxxxx
Manufacturing, L.L.C.'s Limited Liability Company Agreement, in each case, as in
effect as of the date hereof.
(d) Except as set forth on Schedule 2.1, neither the Company
nor any Subsidiary directly or indirectly owns any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, limited liability
company, joint venture or other business association or entity. Schedule 2.1
sets forth the name, owner, jurisdiction of organization and percentages of
outstanding equity securities owned, directly or indirectly, by the Company,
with respect to each corporation, partnership, limited liability company, joint
venture or other business association or entity of which the Company owns
directly or indirectly, any equity or equity related securities (any such
corporation, partnership, limited liability company, joint venture or other
business association or entity, whether or not set forth on Schedule 2.1, a
"Subsidiary" and collectively, the "Subsidiaries"). Except as set forth on
Schedule 2.1, all outstanding shares of stock or other equity securities of each
Subsidiary (except to the extent such concepts are not applicable under the
applicable law of such Subsidiary's
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jurisdiction of formation or other applicable law) have been duly authorized and
validly issued and are fully paid and non-assessable, are free and clear of any
preemptive rights (except to the extent provided by applicable law),
restrictions on transfer (other than restrictions under applicable federal,
state and other securities laws), or liens and are owned, beneficially and of
record, by the Company or another Subsidiary free and clear of all claims,
pledges, security interests, liens, charges, encumbrances, options, proxies,
voting trusts or agreements and other restrictions and limitations of any kind
(except to the extent provided by applicable law), other than applicable
federal, state and other securities law restrictions. Except as set forth on
Schedule 2.1, there are outstanding (i) no other equity securities of any
Subsidiary, (ii) no securities of any Subsidiary convertible into or
exchangeable for equity securities for any Subsidiary, and (iii) no options or
other rights to acquire from any Subsidiary and no obligation of any Subsidiary
to issue, any equity securities or securities convertible into or exchangeable
for equity securities of any Subsidiary.
SECTION 2.2 CAPITALIZATION OF THE COMPANY. As of the date hereof, the
authorized membership interests of the Company consists of (i) 100,000 Preferred
Units, none of which are issued and outstanding; (ii) 200,000 Class A Senior
Common Units, 66,969.34 of which are issued and outstanding; (iii) 25,000 Class
B Senior Common Units, 9,090 of which are issued and outstanding; and (iv)
10,400 Junior Common Units, all of which are issued and outstanding (as such
terms are defined in the Company LLC Agreement). All of the issued and
outstanding Company Common Units are duly authorized and validly issued, are
fully paid and non-assessable and, as of the date hereof, are owned,
beneficially and of record, as set forth on Schedule 2.2. Except as set on
Schedule 2.2, as of the date hereof, there are outstanding (i) no other equity
securities of the Company, (ii) no securities of the Company convertible into or
exchangeable for equity securities of the Company, and (iii) no options or other
rights to acquire from the Company and no obligations of the Company to issue,
any equity securities or securities convertible into or exchangeable for equity
securities of the Company.
SECTION 2.3 AUTHORITY. Each of Saw Mill and the Company has the
requisite limited liability company power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
limited liability company action on the part of each of Saw Mill and the
Company, and no other limited liability company proceedings, including by its
equityholders, on the part of Saw Mill or the Company are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of Saw Mill and the
Company and constitutes a valid, legal and binding agreement of each of Saw Mill
and the Company, enforceable against each of Saw Mill and the Company in
accordance with its terms, except (i) to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally and (ii) that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding thereof may be
brought.
SECTION 2.4 FINANCIAL STATEMENTS. Attached hereto as Schedule 2.4 are
true and complete copies of the following financial statements (such financial
statements, the "Financial Statements"):
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(i) the audited consolidated balance sheet of the Company as
of December 26, 1998 and the related audited consolidated statements of
income, cash flows and members' equity for the period beginning on June
5, 1998 and ending on December 26, 1998;
(ii) the audited consolidated balance sheet of the Company as
of December 25, 1999 and the related audited consolidated statements of
income, cash flows and members' equity for the year ending on December
25, 1999; and
(iii) the unaudited consolidated balance sheets of the Company
as of each of March 25, 2000 and May 27, 2000 and the related unaudited
consolidated statements of income and cash flows for the three-month
and five-month periods, as the case may be, ending on such date.
Except as set forth on Schedule 2.4, the Financial Statements (A) have been
prepared, in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods covered
thereby, except as may be indicated in the notes thereto and except, in the case
of unaudited Financial Statements, for the absence of footnotes and subject to
normal year-end adjustments, and (B) fairly present, in all material respects,
the consolidated financial position of the Company as of the dates thereof and
its consolidated results of operations for the periods then ended (subject, in
the case of the unaudited interim Financial Statements, to the absence of
footnotes and to normal year-end adjustments).
SECTION 2.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
on Schedule 2.5, assuming the truth and accuracy of the representations and
warranties of Parent and Merger Sub in Section 3.3, except for (a) filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and (b) the filing of the Certificate
of Merger, no material filing with or material notice to, and no material
permit, authorization, consent or approval of, or material order of, any court
or tribunal or administrative, governmental or regulatory body, agency or
authority (a "Governmental Entity") is necessary for the execution and delivery
by the Company of this Agreement or the consummation by the Company of the
transactions contemplated hereby. Neither the execution, delivery and
performance of this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the Company LLC Agreement, (b) except as set forth on
Schedule 2.5, result in a material violation or material breach of, or cause
acceleration, or constitute (with or without due notice or lapse of time or
both) a material default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any
Material Contracts (as defined in Section 2.6), (c) violate any order, writ,
injunction, decree, law, statute, rule or regulation of any court, or any
Governmental Entity having jurisdiction over the Company, the Subsidiaries or
any of their respective properties or assets, except, in the case of this clause
(c) only, for violations which would not be material to the business of the
Company and its Subsidiaries, taken as a whole, or (d) result in the creation of
any material lien, security interest, change or encumbrance upon any of the
assets
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of the Company or any of its Subsidiaries (other than in connection with
the financing of the transactions contemplated hereby).
SECTION 2.6 MATERIAL CONTRACTS. Except as set forth on Schedule 2.6
(collectively, the "Material Contracts") and except for this Agreement and
except for any Material Lease (as herein defined), as of the date hereof,
neither the Company nor any of the Subsidiaries is a party to or bound by any:
(i) contract for the employment of any officer,
individual employee or other person on a full-time, part-time,
consulting or other basis providing annual compensation in excess of
$100,000;
(ii) agreement or indenture relating to Funded
Indebtedness except for Funded Indebtedness for an amount less than
$250,000;
(iii) lease or agreement under which the Company or
any Subsidiary is lessee of or holds or operates any property (other
than real property), owned by any other party, except for any lease or
agreement under which the aggregate annual rental payments do not
exceed $250,000;
(iv) lease or agreement under which the Company or
any Subsidiary is lessor of or permits any third party to hold or
operate any property (other than real property), owned or controlled by
the Company, except for any lease or agreement under which the
aggregate annual rental payments do not exceed $100,000;
(v) contract or group of related contracts with the
same party or group of affiliated parties the performance of which
involves outstanding consideration in excess of $1,000,000, other than
sales invoices or purchase orders;
(vi) material sales, distribution, supply,
consulting, investment advisory services or investment banking
agreement;
(vii) agreement which contains restrictions with
respect to payment of dividends or any other distribution in respect of
any of the equity securities of the Company or any Subsidiary;
(viii) agreement, contract or commitment limiting the
ability of the Company or any Subsidiary to engage in any line of
business or to compete with any person;
(ix) any collective bargaining agreement, labor
contract or other written agreement, arrangement with any labor union
or any employee organization; or
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(x) any contract, arrangement or understanding that
relates to the future disposition or acquisition of material assets or
properties, or any merger or business combination, whether or not
enforceable.
Except as set forth on Schedule 2.6, each Material Contract is valid and binding
on the Company or the applicable Subsidiary, as the case may be, and, to the
Company's knowledge, on the other parties thereto and is in full force and
effect. Except as set forth on Schedule 2.6, the Company or the applicable
Subsidiary, as the case may be, and, to the Company's knowledge, each of the
other parties thereto has performed in all material respects all material
obligations required to be performed by it under each Material Contract.
SECTION 2.7 NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.
(a) Except (i) as set forth on Schedule 2.7(a) or any other
schedule to this Agreement or as disclosed, set forth or reserved for in the
Financial Statements (including the notes thereto), (ii) liabilities and/or
obligations (other than Funded Indebtedness) incurred in the ordinary course of
business, (iii) liabilities and/or obligations arising under any of the Material
Contracts or Material Leases or any other contract or agreement to which the
Company or any Subsidiary is a party as of the date hereof or (iv) liabilities
and/or obligations arising under any contract or agreement which would be a
Material Contract or a Material Lease to which the Company or any Subsidiary
becomes a party with the consent of Parent (as provided in Section 4.1) during
the period beginning on the date hereof and ending on the Closing Date, neither
the Company nor any Subsidiary has any Funded Indebtedness or other material
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by GAAP to be reflected on a consolidated
balance sheet of the Company and the Subsidiaries (including the notes thereto)
or, to the Company's knowledge, any other material liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise. Neither the Company
nor any Subsidiary has guaranteed the obligations of any person (other than the
Company or any Subsidiary) consisting of (x) indebtedness for borrowed money or
indebtedness issued in substitution or exchange for borrowed money or for the
deferred purchase price of property or services (other than trade payables and
accrued expenses arising in the ordinary course of business but including all
seller notes and "earn-out" payments) and (y) indebtedness evidenced by any
note, bond, debenture or other debt security.
(b) Except in connection with the transactions contemplated by
this Agreement, during the period beginning on December 25, 1999 and ending on
the date hereof, the Company and the Subsidiaries have conducted their
respective businesses, in all material respects, in the ordinary course
consistent with past practice and, except as set forth on Schedule 2.7(b), none
of the following have occurred:
(i) any damage, destruction or other casualty loss
(to the extent not covered by insurance) affecting the business or
assets of the Company or any Subsidiary in excess, in the aggregate for
all such losses, of $1,000,000;
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(ii) any material change in any method of accounting
or accounting practice by the Company or any Subsidiary, except for any
change required by reason of a change in GAAP;
(iii) any (A) increase in benefits payable under any
existing severance or termination pay policies or (B) increase in
compensation, bonus or other benefits payable to directors or officers
(who are not employees) of the Company or a Subsidiary, or to employees
(including officers who are employees) of the Company or a Subsidiary,
in each case other than in the ordinary course of business;
(iv) declaration or payment of any dividends or
distributions with respect to the equity securities of the Company or
redeemed or purchased any of the equity securities of the Company;
(v) the sale, lease or disposal of any of the
Company's or any Subsidiary's assets outside the ordinary course of
business which have a value in excess of $500,000;
(vi) any action by the Company or any Subsidiary with
the intention of causing a material reduction in capital expenditures,
except in the ordinary course of business consistent with past
practice; or
(vii) any agreement to do any of the foregoing (other
than the items referred to in clause (i) or (ii)).
(c Except in connection with the transactions contemplated by
this Agreement, since December 25, 1999, no event or change in circumstance has
occurred which has had or could reasonably be expected to have a Company
Material Adverse Effect.
SECTION 2.8 LITIGATION. Except as set forth on Schedule 2.8, there is
no suit, litigation, arbitration, claim, action, proceeding or investigation
pending or, to the Company's knowledge, threatened against the Company, any
Subsidiary or any of their respective properties (including, but not limited to,
intellectual property), assets or business before any Governmental Entity which
could reasonably be expected to have a Company Material Adverse Effect. Except
as disclosed on Schedule 2.8, neither the Company nor any Subsidiary is subject
to any outstanding order, writ, injunction or decree that could reasonably be
expected to have a Company Material Adverse Effect.
SECTION 2.9 COMPLIANCE WITH APPLICABLE LAW. The Company and the
Subsidiaries hold all permits, licenses, consents, authorizations, certificates,
variances, exemptions, orders and approvals of and from all, and has made all
declarations and filings with, Governmental Entities necessary for the lawful
conduct of their respective businesses, as presently conducted, and to own,
lease, license and use their respective properties and assets (the "Company
Permits"), except for failures to hold such permits, licenses, consents,
authorizations, certificates, variances, exemptions, orders and approvals which
could not reasonably be expected to have a Company Material Adverse
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Effect. The Company and the Subsidiaries are in compliance with the terms of the
Company Permits, except where the failure to comply could not reasonably be
expected to have a Company Material Adverse Effect. The activities or businesses
of the Company and the Subsidiaries is not being conducted in violation of or in
conflict with, in any material respect, any law, rule, order, judgment, decree,
ordinance or regulation of the United States, any state, county or locality, or
of any Governmental Entity of the United States, except where the violation or
conflict could not reasonably be expected to result in a Company Material
Adverse Effect. No investigation or review by any Governmental Entity of the
United States, any country, any state, county or locality or of any foreign
jurisdiction with respect to the Company or any Subsidiary is pending or, to the
Company's knowledge, threatened, nor, to the Company's knowledge, has any
Governmental Entity of the United States, any country, any state, county or
locality or of any foreign jurisdiction indicated an intention to conduct the
same, other than, in each case, those which could not reasonably be expected to
have a Company Material Adverse Effect.
SECTION 2.10 EMPLOYEE PLANS. Except as set forth on Schedule 2.10, as
of the date hereof, there are no employee benefit plans (including without
limitation, retirement, savings, thrift, deferred compensation, severance, stock
ownership, stock purchase, stock option, performance, bonus, incentive, vacation
or holiday pay, travel, fringe benefit, hospitalization or other medical,
disability, life or other insurance, and any other employee benefit policy,
trust, understanding or arrangement of any kind) maintained or contributed to by
the Company or any Subsidiary or with respect to which the Company or any
Subsidiary has any actual or potential liability (the "Employee Plans") except
for liabilities that could not reasonably be expected to have a Company Material
Adverse Effect. Except for multiemployer plans (as such term is defined in
Section 4001(a)(3) of ERISA) (collectively, the "Multiemployer Plans"), the
Employee Plans have been administered and operated in all respects in accordance
with their terms and are in compliance with applicable law, including without
limitation, the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Code, except for instances of administration, operation and
non-compliance that could not reasonably be expected to have a Company Material
Adverse Effect. Except for Multiemployer Plans, each Employee Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the Code has
received a favorable determination letter for the Internal Revenue Service and,
to the knowledge of the Company, no event has occurred and no condition exists
which could reasonably be expected to result in the revocation of any such
determination. Except for the Multiemployer Plans, none of the Employee Plans
are subject to Title IV of ERISA nor provide for medical or life insurance
benefits to retired or former employees of the Company or any Subsidiary (other
than as required under Code Section 4980B, or similar state law). Except for the
Multiemployer Plans, none of the Employee Plans have any material unfunded
liabilities which are not disclosed, set forth or reserved for in the Financial
Statements (including the notes thereto) as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of the Company. To the Company's knowledge, the Company and each person
(as defined in Section 3(9) of ERISA) which together with the Company or a
Subsidiary would be deemed a "single employer" within the meaning of Section
414(b), (c), (m) or (o) of the Code (an "ERISA Affiliate") have made all
contributions to each Multiemployer Plan or any collectively bargained
agreement, except where the failure to make such contributions could not
reasonably be expected to have a Company Material Adverse Effect. To the
Company's knowledge, neither the
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Company nor any ERISA Affiliate has incurred any unsatisfied withdrawal
liability under Part 1 of Subtitle E of Title IV of ERISA to any Multiemployer
Plan and, as of June 30, 1997, neither the Company nor any ERISA Affiliate would
have been subject to any material withdrawal liability if, as of June 30, 1997,
the Company or any ERISA Affiliate had engaged in a complete withdrawal (as
defined in Section 4203 of ERISA) or partial withdrawal (as defined in Section
4205 of ERISA) from any such Multiemployer Plan. Notwithstanding this Section
2.10, any representation or warranty made by the Company with respect to
Multiemployer Plans are made to the Company's knowledge.
SECTION 2.11 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(a) Except as set forth on Schedule 2.11:
(i) the Company and each Subsidiary are in compliance
with Environmental, Health, and Safety Requirements (including without
limitation obtaining all permits and licenses required thereunder),
except for such noncompliance as could not reasonably be expected to
have a Company Material Adverse Effect;
(ii) neither the Company nor any Subsidiary has
received any written notice, report or other information regarding any
actual or alleged violation of Environmental, Health, and Safety
Requirements, or any liabilities or potential liabilities, including
any material investigatory, remedial or corrective obligations,
relating to the Company or any Subsidiary and arising under
Environmental, Health, and Safety Requirements, the subject of which
could reasonably be expected to have a Company Material Adverse Effect;
and
(iii) there are no facts, circumstances or conditions
relating to the business or operations of the Company or any of its
Subsidiaries, or to any real property at any time owned, leased or
operated by the Company or any of its Subsidiaries, that could
reasonably be expected to give rise to any claim, proceeding or action,
or to any liability, under any Environmental, Health, and Safety
Requirements where any of the foregoing could reasonably be expected to
have a Company Material Adverse Effect.
(b) This Section 2.11 contains the sole and exclusive
representations and warranties of the Company with respect to any environmental,
health, or safety matters, including, without limitation, any arising under any
Environmental, Health, and Safety Requirements.
(c) As used herein,"Environmental, Health, and Safety
Requirements" shall mean all federal, state, local and foreign statutes,
regulations, and ordinances concerning pollution or protection of the
environment, including, without limitation, all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, as such requirements are enacted and in effect on or prior to the
Closing Date.
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SECTION 2.12 INTELLECTUAL PROPERTY. Except as set forth on Schedule
2.12, the Company and each Subsidiary owns the entire right, title and interest
in and to, or possesses valid licenses or other rights to use, all existing
United States and foreign patents, trademarks, trade names, service marks,
uniform resource locators ("URLs"), Internet domain names, copyrights, computer
software, source code, know-how, technology, trade dress, methods, unpatented
inventions, and trade secrets and other confidential and proprietary
information, including any applications and registrations of any of the
foregoing (as applicable), necessary for the operation of the business of the
Company or such Subsidiary, as the case may be, as now conducted (the "Company
Intellectual Property") free and clear of any liens, except where the failure to
own or possess valid rights to use such Company Intellectual Property could not
reasonably be expected to have a Company Material Adverse Effect. Schedule 2.12
sets forth a complete and accurate list of all patents, patent applications,
registrations, applications for registration, material unregistered trademarks
and copyrights, and domain names included in the Company Intellectual Property
that is owned by the Company or any of its Subsidiaries and all licenses of
Company Intellectual Property (other than licenses of mass-marketed software).
Each item constituting part of the Company Intellectual Property that is owned
by the Company or any Subsidiary and listed on Schedule 2.12 has been duly
registered with, filed in or issued by, as the case may be, the United States
Patent and Trademark Office, United States Copyright Office or such other
government entities, domestic or foreign, or a duly accredited and appropriate
domain name registrar, as are indicated in Schedule 2.12, and such
registrations, filings and issuances remain in full force and effect as of the
Closing Date. To the knowledge of the Company, neither the Company's nor any of
the Subsidiaries' use of the Company Intellectual Property infringes any other
person's rights thereto nor are any of the Company's rights in the Company
Intellectual Property being infringed by any third party, except for any such
infringement that could not reasonably be expected to have a Company Material
Adverse Effect. No Company Intellectual Property set forth on Schedule 2.12 has
been canceled, abandoned, or otherwise terminated and all renewal and
maintenance fees (if applicable) in respect thereof have been duly paid. The
Company and the Subsidiaries have the exclusive right to file, prosecute and
maintain all applications and registrations with respect to the Company
Intellectual Property that is owned by the Company or any of the Subsidiaries.
SECTION 2.13 LABOR MATTERS. The Company and each Subsidiary is in
compliance with all laws applicable to it respecting employment and employment
practices, terms and conditions of employment and wages and hours and has not
engaged, and is not engaging, in any unfair labor practice with respect to
employees of the Company or any Subsidiary except to the extent such failure to
comply or such engagement, individually or in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth on Schedule 2.13, or as could not reasonably be expected to have a Company
Material Adverse Effect (i) there is no union organizing effort pending, or to
the knowledge of the Company, threatened with respect to the employees of the
Company or any Subsidiary; (ii) no complaint against the Company or any
Subsidiary is pending before the National Labor Relations Board, or to the
knowledge of the Company, threatened; (iii) there is no labor strike, dispute,
slowdown or stoppage pending or, to the knowledge of the Company, threatened
against or involving the Company or any Subsidiary; (iv) the Company and each
Subsidiary is in compliance with the requirements of the Federal Workers'
Adjustment and Retraining Notification Act; (v) no grievance or arbitration
proceeding arising out
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of or under any collective bargaining agreement with respect to employees of the
Company or any Subsidiary is pending, and no claim therefor has been asserted;
and (vi) there are no material labor or employment claims or proceedings pending
between the Company or any Subsidiary and any of their respective employees.
Schedule 2.13 sets forth, on an employee by employee basis, payments due, if
any, to any employees of the Company or any Subsidiary as a result of this
Agreement (other than payments of Purchase Price and/or Option Consideration and
other than the receipt of Rollover Equity).
SECTION 2.14 INSURANCE. The Company and/or the Subsidiaries maintain
insurance policies (the "Insurance Policies") against all risks of a character
and in such amounts as are usually insured against by similarly situated
companies in the same or similar businesses. Each Insurance Policy is and after
the execution of this Agreement and consummation of the transactions
contemplated hereby will be in full force and effect and is valid, outstanding
and enforceable, and all premiums due thereon have been paid in full. Set forth
on Schedule 2.14 is a complete and accurate list of all Insurance Policies in
effect as of the date hereof.
SECTION 2.15 TAX MATTERS.
(a) The Company and each Subsidiary has prepared and duly
filed with the appropriate domestic federal, state, local and foreign taxing
authorities all material tax returns, information returns, statements, forms and
reports (each a "Tax Return" and, collectively, the "Tax Returns") required to
be filed with respect to the Company or such Subsidiary and has timely paid all
material Taxes (as defined below) owed or payable by it, including Taxes which
the Company or any Subsidiary is obligated to withhold. All Tax Returns filed
with respect to the Company and each Subsidiary are true and correct in all
material respects. As used herein, the terms "Tax" or "Taxes" means all federal,
state, local and foreign taxes, assessments, charges, duties, fees, levies and
other governmental charges, including, without limitation, income, profits,
franchise, employment, transfer, withholding, property, excise, sales and use
taxes (including interest and penalties thereon and additions thereto) (whether
payable directly or by withholding and whether or not requiring the filing of a
Tax Return), all estimated taxes and deficiency assessments and shall include
any liability for such amounts as a result either of being a member of a
combined, consolidated or unitary group or a contractual obligation to indemnify
any person or other entity.
(b) As of the date hereof, there is no outstanding claim
concerning any Tax liability of the Company or any Subsidiary. Schedule 2.15
attached hereto sets forth those Tax Returns of the Company or any Subsidiary
that, as of the date hereof, are the subject of audit.
(c) Except as set forth on Schedule 2.15,
(i) neither the Company nor any Subsidiary has received any
written notices from any taxing authority relating to any issue which
could affect the Tax liability of the Company or any Subsidiary after
the Closing Date;
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(ii) neither the Company nor any Subsidiary has (A) entered
into an agreement or waiver or been requested to enter into an
agreement or waiver extending any statute of limitations relating to
the payment or collection of Taxes of the Company or any Subsidiary to
a date after the date hereof or (B) since June 9, 1998 applied for
and/or received a ruling or determination from a taxing authority
regarding a past or prospective transaction of the Company or any
Subsidiary;
(iii) neither the Company nor any Subsidiary has been included
in any "consolidated," "unitary" or "combined" Tax Return provided for
under the law of the United States, any foreign jurisdiction or any
state or locality with respect to Taxes for any taxable period for
which the statute of limitations has not expired;
(iv) since June 9, 1998 no claim has been made by any taxing
authority in a jurisdiction where the Company or any Subsidiary does
not file Tax Returns that the Company or any Subsidiary, as the case
may be, is or may be subject to taxation by that jurisdiction;
(v) there are no tax sharing, allocation, indemnification or
similar agreements in effect as between the Company or any Subsidiary
or any predecessor or affiliate thereof (other than such agreements
between the Company and wholly-owned Subsidiaries) and any other party
(including any predecessors or affiliates thereof) under which Parent,
Merger Sub, the Company or any Subsidiary could be liable for any Taxes
or other claims of any party;
(vi) neither the Company nor any Subsidiary has applied for,
been granted, or agreed to any accounting method change for which it
will be required to take into account after the Closing Date any
adjustment under Section 481 of the Code, or any similar provision of
the Code or the corresponding tax laws of any nation, state or
locality;
(vii) the Company and each Subsidiary that is a limited
liability company is currently and has been for its existence properly
treated as either a partnership or a disregarded entity for United
States federal income tax purposes; and
(viii) no Subsidiary that is a corporation for U.S. federal
income tax purposes is a party to any agreement that would require such
Subsidiary or affiliate thereof to make any payment that would
constitute an "excess parachute payment" for purposes of Sections 280G
and 4999 of the Code.
(d) This Section 2.15 contains the sole and exclusive
representations and warranties of the Company with respect to Taxes.
SECTION 2.16 BROKERS. No broker, finder or investment banker, other
xxxx Xxxxxxx Xxxxx & Co. (whose fees shall be included in the Seller Expenses),
is entitled to any broker's, finder's or
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investment banker's fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
the Company.
SECTION 2.17 REAL AND PERSONAL PROPERTY.
(a) Owned Real Properties. Schedule 2.17(a) sets forth a
complete and accurate list of all real property owned in whole or in part by the
Company and each Subsidiary as of the date hereof (the "Owned Real Property").
Schedule 2.17(a) includes the name of the record title holder thereof as of the
date hereof. Except as set forth in Schedule 2.17(a), the Company or relevant
Subsidiary has good and marketable fee title in and to the Owned Real Property,
free and clear of all liens except (i) for general real estate taxes and special
assessments not yet delinquent, easements, rights of parties in possession,
covenants, conditions and restrictions and other matters of record which do not
materially impair the occupancy or use of the Owned Real Property for the
purposes for which it is currently used in connection with the Company's or
relevant Subsidiary's business, and (ii) as otherwise set forth on Schedule
2.17(a). Except as disclosed in Schedule 2.17(a), there are no pending or
proposed special or other assessments, for public improvements or otherwise,
affecting any Owned Real Property which could reasonably be expected to have a
Company Material Adverse Effect. The Owned Real Property complies with all
applicable laws and is benefitted by those licenses or permits required
to be maintained for the development, use or occupancy of any portion of the
Owned Real Property except to the extent such failure to comply or be
benefitted, individually or in the aggregate, could not reasonably be expected
to have a Company Material Adverse Effect.
(b) Leased Real Properties. Schedule 2.17(b) sets forth
(whether as lessee or lessor) leases of real property ("Leased Real Property")
to which the Company or any Subsidiary is a party or by which any of them is
bound, in each case, as of the date hereof, except for any lease or agreement
under which the aggregate annual rental payments do not exceed $100,000 (each a
"Material Lease", and collectively the "Material Leases"). Except as set forth
on Schedule 2.17(b), each Material Lease is valid and binding on the Company or
the applicable Subsidiary, as the case may be, and, to the Company's knowledge,
on the other parties thereto and is in full force and effect. Except as set
forth on Schedule 2.17(b), the Company or the applicable Subsidiary, as the case
may be, and, to the Company's knowledge, each of the other parties thereto has
performed in all material respects all material obligations required to be
performed by it under each Material Lease. To the Company's knowledge, the
Leased Real Property complies with all applicable laws and is benefitted by
those licenses or permits required to be maintained for the development, or use
or occupancy of any portion of the Leased Real Property, except to the extent
such failure to comply could not reasonably be expected to have a Company
Material Adverse Effect.
(c) Personal Property. Except as disclosed in Schedule
2.17(c), as of the date hereof, the Company and each Subsidiary collectively own
or hold under valid leases all material plants, machinery, equipment and other
personal property necessary for the conduct of its business as currently
conducted, subject to no lien except for (i) liens identified on Schedule
2.17(c), (ii) liens for non-delinquent ad valorem taxes and non-delinquent
statutory liens arising other than by reason of default, (iii) statutory liens
of landlords, liens of carriers, warehousemen, mechanics and
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materialmen incurred in the ordinary course of business for sums not yet due,
(iv) liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance and other types of
social security, (v) purchase money liens, and (vi) minor irregularities of
title which do not materially detract from the value or use of said personalty.
SECTION 2.18 TRANSACTIONS WITH AFFILIATES. Schedule 2.18 sets forth all
arrangements between the Company and any Subsidiary, on the one hand, and
affiliates of the Company (other than any Subsidiary or any employee of the
Company or any of its Subsidiaries who is not an officer of the Company or any
of its Subsidiaries), on the other hand, that will not be terminated effective
as of the Closing Date. To the Company's knowledge, none of the Company, any
Subsidiary and their respective affiliates, directors, officers or employees
possesses, directly or indirectly, any financial interest in, or is a director,
officer or employee of, any person (other than the Company or any of its
Subsidiaries) which is a material client, supplier, customer, lessor, lessee, or
competitor of the Company or any Subsidiary. Ownership of securities of a
company whose securities are registered under the Securities and Exchange Act of
1934, as amended, of 2% or less of any class of such securities shall not be
deemed to be a financial interest for purposes of this Section 2.18.
SECTION 2.19 PRODUCT WARRANTY.
(a) To the Company's knowledge, all of the products
manufactured, sold, leased, installed or delivered by the Company or any
Subsidiary have conformed in all material respects with all applicable
contractual commitments and all express and implied warranties and, to the
Company's knowledge, none of the Company and any Subsidiary have any material
liability for replacement or material repair thereof or other material damages
in connection therewith, subject only to the reserve for product warranty claims
set forth in the Financial Statements as adjusted for operations and
transactions through the Closing Date in accordance with the past custom
practice of the Company.
(b) This Section 2.19 contains the sole and exclusive
representations and warranties of the Company with respect to the matters
referred to in Section 2.19(a).
SECTION 2.20 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES. THE
REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY IN THIS AGREEMENT ARE IN LIEU
OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTIES. THE COMPANY HEREBY DISCLAIMS ANY
SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE
DELIVERY OR DISCLOSURE TO PARENT OR MERGER SUB OR THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIONS OF ANY DOCUMENTATION OR OTHER
INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA).
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant, on a joint and
several basis, to the Company as follows:
SECTION 3.1 ORGANIZATION. Each of Parent and Merger Sub is a
corporation or a limited liability company, as the case may be, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation and has all requisite power and authority to carry on its businesses
as now being conducted, except where the failure to have such power or authority
would not be reasonably expected to prevent or materially delay the consummation
of the Merger.
SECTION 3.2 AUTHORITY. Each of Parent and Merger Sub has all necessary
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Parent and Merger Sub and no
other proceeding (including by their respective equityholders) on the part of
Parent or Merger Sub is necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. No vote of Parent's equityholders is
required to approve this Agreement or for Parent or Merger Sub to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Merger Sub and constitutes a valid,
legal and binding agreement of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms, except (i)
to the extent that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally and (ii) that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding thereof may be brought.
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming the truth
and accuracy of the Company's representations and warranties contained in
Section 2.5, except for (a) filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of the HSR
Act and (b) the filing of the Certificate of Merger, no material filing with or
material notice to, and no material permit, authorization, consent or approval
of, or material order of, any Governmental Entity is necessary for the execution
and delivery by Parent or Merger Sub of this Agreement or the consummation by
Parent or Merger Sub of the transactions contemplated hereby. Neither the
execution, delivery and performance of this Agreement by Parent or Merger Sub
nor the consummation by Parent or Merger Sub of the transactions contemplated
hereby will (a) conflict with or result in any breach of any provision of the
respective certificate or articles of incorporation or Bylaws (or similar
governing documents) of Parent or Merger Sub, (b) result in a material violation
or material breach of, or constitute (with or without due notice or lapse of
time or both) a material default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Parent or Merger Sub is a party or by
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which any of them or any of their respective properties or assets may be bound
or (c) violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to Parent or Merger Sub or any of Parent's subsidiaries or
any of their respective properties or assets, except in the case of this clause
(c) only, for violations which would not, individually or in the aggregate, be
reasonably expected to prevent or materially delay the consummation of the
Merger.
SECTION 3.4 BROKERS. No broker, finder or investment banker, other than
Xxxxxxxxx, Xxxxxx & Xxxxxxxx ("DLJ") is entitled to any brokerage, finder's or
investment banker's fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
Parent or Merger Sub or any of their respective affiliates.
SECTION 3.5 FINANCING. Parent has obtained commitment letters (the
"Commitment Letters") (copies of which have been delivered to the Company) from
DLJ and the Bankers Trust Company ("BT") providing for, subject to certain
conditions set forth therein, commitments to provide all funds necessary,
together with funds available to Parent, to consummate the transactions
contemplated hereby, including the repayment of all Closing Date Funded
Indebtedness (to the extent due and payable at Closing) and all fees and
expenses incurred in connection with the negotiation and execution of this
Agreement and the consummation of the transactions contemplated hereby. As of
the date hereof, the Commitment Letters are in full force and effect and have
not been amended or modified. As of the date hereof, Parent and Merger Sub
believe they will be able to obtain the financing described in the Commitment
Letters on the terms provided in the Commitment Letters. As of the date hereof,
neither DLJ nor BT has advised either Parent or Merger Sub or any of their
respective affiliates of any reason why the Commitment Letters will not be
fulfilled in accordance with their terms.
SECTION 3.6 MERGER SUB ACTIVITIES. Merger Sub was organized solely for
the purpose of entering into this Agreement and consummating the transactions
contemplated hereby and has not engaged in any activities or business, and has
incurred no liabilities or obligations whatsoever, in each case, other than
those incident to its organization and the execution of this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 3.7 CAPITALIZATION.
(a) As of immediately prior to the Effective Time, the issued
and outstanding membership interests of Merger Sub will consist solely of the
Merger Sub Preferred Units (which will have been issued to Parent in exchange
for a cash payment of $100 per Merger Sub Preferred Unit and for an aggregate
cash payment of at least $73,800,000 (the "Merger Sub Preferred Units Purchase
Price")) and the Merger Sub Common Units (which will have been issued to Parent
in exchange for a cash payment of $10 per Merger Sub Common Unit and for an
aggregate cash payment of at least $8,200,000 (the "Merger Sub Common Units
Purchase Price")); provided that Parent and/or Merger Sub shall only be able to
increase the Merger Sub Common Units Purchase Price above $8,200,000 if for
every $1 increase in the Merger Sub Common Units Purchase Price above $8,200,000
there is a corresponding $9 increase in the Merger Sub Preferred Units Purchase
Price; provided, further, that additional Surviving Entity Preferred Units
(issued at $100 per
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Surviving Entity Preferred Unit) with an aggregate value of no more than
$6,936,774 and additional Surviving Entity Common Units (issued at $10 per
Surviving Entity Common Unit) with an aggregate value of no more than $770,753
may be issued without an increase in either the Merger Sub Preferred Units
Purchase Price or the Merger Sub Common Units Purchase Price in connection with
the participation of DLJ in Merger Sub, Parent and/or Surviving Entity, so long
as for every $1 worth of Surviving Entity Common Units issued under this proviso
there is a corresponding issuance of $9 worth of Surviving Entity Preferred
Units. As of immediately prior to the Effective Time, all of the issued and
outstanding membership interests of Merger Sub (which will consist solely of the
Merger Sub Units) will be duly authorized and validly issued, will be fully paid
and non-assessable and will be owned, beneficially and of record, by Parent.
Except for the Merger Sub Units, as of immediately prior to the Effective Time,
there will be outstanding (i) no other equity securities of Merger Sub, (ii) no
securities of Merger Sub convertible into or exchangeable for equity securities
of Merger Sub, and (iii) no options or other rights to acquire from Merger Sub
and no obligations of Merger Sub to issue, any equity securities or securities
convertible into or exchangeable for equity securities of Merger Sub.
(b) As of immediately after the Effective Time, the authorized
membership interests of the Surviving Entity will consist solely of Surviving
Entity Preferred Units and Surviving Entity Common Units. As of immediately
after the Effective Time, all of the issued and outstanding Surviving Entity
Preferred Units and Surviving Entity Common Units will be duly authorized and
validly issued, will be fully paid and non-assessable and will be owned,
beneficially and of record and in such amounts, as set forth on Schedule 3.7.
Except as set forth on Schedule 3.7, as of immediately after the Effective Time,
there will be outstanding (i) no other equity securities of the Surviving
Entity, (ii) no securities of the Surviving Entity convertible into or
exchangeable for equity securities of the Surviving Entity, and (iii) no options
or other rights to acquire from the Surviving Entity and no obligations of the
Surviving Entity to issue, any equity securities or securities convertible into
or exchangeable for equity securities of the Surviving Entity.
(c) Harvest Partners III, L.P. is entitled to appoint a
majority of the board of directors of Parent.
ARTICLE 4
COVENANTS
SECTION 4.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated
by this Agreement, during the period from the date hereof to the Effective Time,
the Company will, and will cause each Subsidiary to, conduct its operations in
the ordinary course of business consistent with past practice, and the Company
shall, and shall cause each Subsidiary to, use its reasonable efforts to
preserve substantially intact its business organization, to keep available the
services of its present officers and key employees and to preserve the present
commercial relationships with key persons with whom it does business. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, during the period from the date hereof to the
Effective Time, the Company will not, and will not permit any Subsidiary to,
without the prior
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written consent of Parent, which consent shall not be unreasonably withheld or
delayed, and except to the extent set forth on Schedule 4.1:
(a) amend the Company LLC Agreement;
(b) issue, sell or agree or commit to issue (whether through
the issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any capital stock of any class or any other
equity securities or equity equivalents (except pursuant to the exercise of any
Company Equity Options);
(c) split, combine or reclassify any of its equity securities
or declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its equity
securities except to the extent necessary to permit the Company to comply with
its obligations to make tax distributions to its members pursuant to Section 6.4
of the Company LLC Agreement;
(d) (i) incur or assume any Funded Indebtedness except for
Funded Indebtedness not exceeding $5,000,000 in the aggregate and except for
borrowings under the Paribas Credit Agreement, or (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except for
obligations not exceeding $1,000,000 in the aggregate;
(e) except as may be required by law or as contemplated by
this Agreement, (i) enter into, adopt or amend or terminate any material bonus,
profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee of the Company or any
Subsidiary in any material manner, (ii) except for normal salary increases and
bonus payments in the ordinary course of business consistent with past practice,
increase in any material manner the compensation of any director, officer or
employee of the Company or any Subsidiary or (iii) pay any material benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock appreciation rights or
performance units);
(f) sell, lease or dispose of or acquisition of any assets
outside the ordinary course of business which have a value in the aggregate in
excess of $500,000;
(g) except as may be required by law or as contemplated by
this Agreement, alter through merger, liquidation, reorganization, restructuring
or in any other fashion the capital structure of the Company or any Subsidiary;
(h) modify or amend any Material Contract or enter into any
contract which would be a Material Contract, in each case, other than in the
ordinary course of business;
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(i) effect any change in any of its methods of accounting,
except as may be required by GAAP;
(j) make any election changing the status of GEEG from a
disregarded entity, or the status of the Company or any Subsidiary organized as
a domestic limited liability company (other than GEEG) from a partnership, in
each case, for federal income tax purposes;
(k) loan money to any person which would result in the
creation of an "other receivable" for purposes of Net Working Capital except for
the creation of "other receivables" in the ordinary course of business which in
the aggregate during such period do not exceed $1,000,000;
(l) intentionally take any action, engage in any transaction
or enter into any agreement that would cause the Company to be unable to
deliver, at the Closing, the officer's certificate referred to in Section
5.2(a);
(m) except in the ordinary course of business consistent with
past practice, take any action with the intention of causing a material
reduction in capital expenditures; or
(n) agree to do any of the foregoing.
SECTION 4.2 TAX MATTERS.
(a) Each of the Company, Parent, Merger Sub, Surviving Entity
and Saw Mill agrees for federal (and, where applicable, state and local) Tax
purposes, to treat the transactions contemplated by this Agreement as having
occurred in the following steps and in the following order: (i) the use of the
Company's cash and the proceeds of the borrowings incurred by the Company,
Surviving Entity and/or their respective Subsidiaries on the Closing Date (A) to
pay the Option Consideration and (B) to make a distribution (pursuant to the
order and priority of the distribution mechanism found in Section 12.2(b)(iii)
of the Company LLC Agreement) not in redemption of any Company Common Units to
the holders of the Company Common Units, (ii) the purchase by Parent of all of
the Company Common Units (other than that certain number of Company Common Units
which are held by the holders of Company Common Units set forth on Exhibits A-1
and A-2 hereto and which have an aggregate value equal to the Equity Amount
(allocated amongst such holders as set forth on such Exhibits A-1 and A-2) (the
"Rollover Company Common Units")) and (iii) the recapitalization of the Rollover
Company Common Units into the Rollover Equity.
(b) Each of the Company, Parent, Merger Sub, Surviving Entity
and Saw Mill agrees for federal income Tax purposes to treat the transactions
contemplated by this Agreement as producing a termination of the Company
pursuant to Code section 708(b)(1)(B) (and any similar provision of state and/or
local income tax law) which in turn produces, as required by current Treasury
Regulations, a termination of certain Subsidiaries of the Company treated as
partnerships for federal income tax purposes (the "Terminated Subsidiaries").
Each of the Company, Parent,
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Merger Sub, Surviving Entity and Saw Mill agrees to allocate the income, gains,
losses, deductions, credits and other items of the Company (and, where
necessary, of any Terminated Subsidiary) to the holders of Company Common Units
(or the owner of any Terminated Subsidiary) for the taxable period ending on the
Closing Date by using a "closing of the books" method (as described in Treasury
Regulation Section1.706-1(c), and not by estimating the pro rata part of such
items) as of the end of the Closing Date. In the event that it is determined
that the transactions contemplated by this Agreement do not result in a
termination of the Company pursuant to Code section 708(b)(1)(B), then each of
the Company, Parent, Merger Sub, Surviving Entity and Saw Mill agrees that for
purposes of Code section 706 (for both members who dispose of their entire
interest in the Company and members whose interest in the Company changes) to
allocate the income, gains, losses, deductions, credits and other items of the
Company (and, where necessary, of any Terminated Subsidiary) to the holders of
Company Common Units (or the owner of any Terminated Subsidiary) for the taxable
period ending on the Closing Date by using a "closing of the books" as of the
end of the Closing Date.
(c) Each of the Company, Parent, Merger Sub, Surviving Entity
and Saw Mill agrees that the value of the assets of the Company and the amount
of the liabilities of the Company existing immediately prior to the Merger will
be calculated as provided on Schedule 4.2(c) attached hereto. Each of the
Company, Parent, Merger Sub, Surviving Entity and Saw Mill agrees to file all
Tax Returns using the amounts contained on Schedule 4.2(c), and none of them
shall take a position on any tax return, report or filing contrary with such
allocation unless otherwise required by law.
(d) Each of the Company, Parent, Merger Sub, Surviving Entity,
and Saw Mill agrees that the value of the assets of any Subsidiary of the
Company treated as a flow-through entity for federal income tax purposes and the
amount of the liabilities of the such Subsidiary existing immediately prior to
the Merger will be calculated as provided on Schedule 4.2(c) attached hereto.
Each of the Company, Parent, Merger Sub, Surviving Entity and Saw Mill agrees to
file all Tax Returns using the amounts contained on Schedule 4.2(c), and none of
them shall take a position on any tax return, report or filing contrary with
such allocation unless otherwise required by law.
(e) Any Tax Returns of the Company or any Subsidiary with
respect to a period ending on or prior to the Closing Date not filed as of the
Closing Date shall be timely filed by Saw Mill with the appropriate taxing
authorities; provided, however, that Tax Returns shall be prepared by treating
items on such Tax Returns in a manner consistent with the past practices of the
Company and the Subsidiaries with respect to such items; and provided, further,
that Saw Mill shall provide Parent with draft Tax Returns for the Company and
each Subsidiary required to be prepared by Saw Mill pursuant to this Section
4.2(e). Saw Mill shall provide Parent with an opportunity to review and comment
on such Tax Returns and Saw Mill shall consider in good faith such comments in
its preparation of such Tax Returns. Parent shall provide, and shall cause the
Company and each Subsidiary to provide, to Saw Mill such assistance (including
the provision of information and any reasonably required consents, powers of
attorney or authorizations) necessary to allow Saw Mill to file any Tax Returns
described in this subsection (e). Any Tax Returns of the Company or any
Subsidiary with respect to a period beginning on or prior to the Closing Date
and ending after the Closing Date shall be timely filed by Parent with the
appropriate taxing authorities; provided,
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however, that any such Tax Returns shall be prepared (except as otherwise
required by law) by treating items on such Tax Returns in a manner consistent
with the past practices of the Company and Subsidiaries with respect to such
items; and provided further, that Parent shall provide Saw Mill with draft Tax
Returns for the Company and each Subsidiary required to be prepared by Parent
pursuant to this Section 4.2(e). Parent shall provide Saw Mill with an
opportunity to review and comment on such Tax Returns and Parent shall consider
in good faith such comments in its preparation of such Tax Returns. Saw Mill and
Parent agree to the extent permitted by applicable law to elect with the
relevant taxing authority to treat for all purposes the Closing Date as the last
day of a taxable period of the Company and Subsidiaries. Any amount of Tax
payable on a Tax Return filed pursuant to this subsection (c) shall be paid by
the Company or the Subsidiary on whose behalf the Tax Return is filed.
(f) Subject to the following sentence, without the express
written permission of Saw Mill (which consent shall not be unreasonably withheld
or delayed by Saw Mill), Parent shall not amend, and shall not permit the
Company or any Subsidiary to amend, any Tax Return filed by Saw Mill prior to
the Closing Date or pursuant to subsection (e) above. With respect to income Tax
Returns of the Company or any Subsidiary treated as a partnership for federal
income tax purposes, Parent shall not amend and shall not permit the Company or
any Subsidiary to amend any income Tax Return of the Company or any Subsidiary
treated as a partnership for federal income tax purposes without the express
written permission of Saw Mill (which may be given or withheld in the sole
discretion of Saw Mill) unless otherwise expressly required by law. In no event
shall any member or former member of Saw Mill file or cause to be filed any
amended Tax Return or claim for refund with respect to the Company or any
Subsidiary that affects or may affect the Tax liability of Parent, the Company
or any Subsidiary for any period that begins on or after the Closing Date
without the consent of Parent, which consent shall not be unreasonably withheld
or delayed.
(g) In the event Parent, the Company or any Subsidiary
receives notice of any audit or other inquiry with respect to Taxes for a period
ending on or prior to the Closing Date which could (depending upon its
resolution) affect the income tax liability of Saw Mill or any other direct or
indirect owner of the Company, Parent and the Company shall (i) inform Saw Mill
of such notice, (ii) allow Saw Mill to manage, control and defend (at its sole
expense) such audit or inquiry and (iii) provide, and cause the Company and each
Subsidiary to provide, such assistance and access to information to Saw Mill as
is reasonably necessary. Saw Mill shall have the sole discretion to settle,
compromise or litigate any matter described above in this subsection (g);
provided, however, that none of Saw Mill or any of its affiliates, members
(including tax matters partners) or representatives shall without consent of
Parent enter into any settlement of or otherwise compromise any such audit or
inquiry that adversely affects or may adversely affect the income Tax liability
of Parent, the Company, any Subsidiary, or any affiliate of the foregoing for
any period ending after the Closing Date (which consent shall not be
unreasonably withheld or delayed by Parent). A member or representative of Saw
Mill shall keep Parent fully and timely informed with respect to the
commencement, status and nature of any such audit or inquiry. A member or
representative of Saw Mill shall in good faith allow Parent, at its sole
expense, to make comments to Saw Mill regarding the conduct of or positions
taken in any such proceeding, which comments such member or representative shall
consider in good faith. Parent shall have the right to manage, control and
defend
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any audit or inquiry not referenced in the first sentence of this subsection
(g), except that Parent shall not, without the consent of Saw Mill (which
consent shall not be unreasonably withheld or delayed by Saw Mill), enter into
the settlement of or compromise any such audit or inquiry with respect to Taxes
(other than income Taxes) for a period ending on or prior to the Closing Date to
the extent that any liability resulting from such settlement or compromise would
be reimbursed from either Escrow Account.
(h) All transfer, sales and use, value added, registration,
documentary, stamp and similar Taxes imposed directly in connection with any
deemed transfer of the Company Common Units resulting from the Merger shall be
borne by holders of the Company Common Units as of immediately prior to the
Closing. All other transfer, sales and use, value added, registration,
documentary, stamp and similar Taxes shall be borne by the Company.
(i) The Company and each Subsidiary of the Company that is
treated as a partnership for U.S. federal income tax purposes shall cause a
timely and valid election under Section 754 of the Code with respect to the
Company and each such Subsidiary, respectively, (unless such election has
already been made with respect to the Company or each such Subsidiary, as the
case may be, and has not been revoked) for the adjustment to the basis of the
Company's or each such Subsidiary's property.
(j) The Company agrees that, unless waived by Parent, (i) if
permitted by the Code and applicable Treasury Regulations and authoritative
Internal Revenue Service pronouncements, to cause the holders of the Company
Common Units as of immediately prior to the Closing to include in income on the
federal income tax return for the period ending on the Closing Date pursuant to
Section 956 of the Code the highest outstanding balance of the amount lent by
Xxxxxx-Europe B.V. to Xxxxxx Manufacturing, L.L.C. as of any date during the
period beginning on June 8, 1998 and ending on the Closing Date (but not more
than the earnings and profits of Xxxxxx-Europe B.V. as of immediately prior to
the Closing) (such amount, the "Xxxxxx-Europe Amount") or (ii) Xxxxxx-Europe
B.V. shall prior to the Closing declare a dividend payable to Xxxxxx
Manufacturing, L.L.C. equal to the Xxxxxx-Europe Amount.
SECTION 4.3 ACCESS TO INFORMATION. Between the date hereof and the
Effective Time, upon reasonable notice, and subject to restrictions contained in
confidentiality agreements to which the Company and the Subsidiaries are
subject, the Company will provide to Parent and Merger Sub and their authorized
representatives (including, without limitation, its accountants and financing
sources and their representatives) during normal business hours reasonable
access to all employees, plants, offices, warehouses and other facilities and to
all books and records of the Company and the Subsidiaries, will permit Parent
and Merger Sub and their authorized representatives (including, without
limitation, its accountants and financing sources and their representatives) to
make such inspections as Parent and Merger Sub may reasonably require and will
cause the officers of the Company and the Subsidiaries to furnish Parent and
Merger Sub with such financial and operating data and other information with
respect to the business and properties of the Company and the Subsidiaries as
Parent or Merger Sub may from time to time reasonably request. All of such
information shall be treated as Confidential Information pursuant to the terms
of the Confidentiality
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Agreement, dated February 22, 2000, between the Company and Harvest Partners,
Inc., the provisions of which are by this reference incorporated herein. Any
review pursuant to this Section 4.3 shall not affect the representations and
warranties made by the Company in this Agreement or the remedies of Parent or
Merger Sub for breaches of those representations and warranties.
SECTION 4.4 EFFORTS TO CONSUMMATE. Subject to the terms and conditions
herein provided, each of Parent, Merger Sub and the Company agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, without limitation, (a) cooperation in the preparation and filing of
any filings that may be required under the HSR Act and any amendments thereto,
(b) the compliance with all requirements under the HSR Act applicable to the
transactions contemplated hereby, (c) contesting any legal proceeding relating
to the Merger and (d) the execution of any additional instruments necessary to
consummate the transactions contemplated hereby.
SECTION 4.5 PUBLIC ANNOUNCEMENTS. Parent and Merger Sub, and the
Company, as the case may be, will consult with one another and seek one
another's approval before issuing any press release, or otherwise making any
public statements, with respect to the transactions contemplated by this
Agreement, including, without limitation, the Merger and shall not issue any
such press release or make any such public statement prior to such consultation
and approval, except as may be required by applicable law.
SECTION 4.6 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) Parent and Merger Sub agree that all rights to
indemnification or exculpation now existing in favor of the directors, officers,
employees and agents of the Company, as provided in indemnification agreements
or the Company LLC Agreement or otherwise in effect as of the date hereof with
respect to matters occurring prior to the Effective Time, shall survive the
Merger and shall continue in full force and effect. To the maximum extent
permitted by the DLLCA, such indemnification shall be mandatory rather than
permissive, and the Surviving Entity shall advance expenses in connection with
such indemnification as provided in such indemnification agreements. The
indemnification and liability limitation or exculpation provisions of the
Surviving Entity's governing instruments shall not be amended, repealed or
otherwise modified after the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who, as of the date hereof and prior
to the Effective Time, were directors, officers, employees or agents of the
Company, unless such modification is required by applicable law.
(b) Parent shall cause the Company to and the Company shall
maintain in effect for not less than six (6) years from the Effective Time the
coverage provided by the policies of the directors' and officers' liability and
fiduciary insurance most recently maintained by the Company; provided, that the
Company may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous to the
beneficiaries thereof so long as such
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substitution does not result in gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time; and, provided further that the
Company shall not be obligated to pay annual premiums in excess of 300% of the
annual aggregate premium for existing insurance with respect to such insurance
for the next renewal of such insurance (the "Current Premium"). If such annual
premium for such insurance would at any time exceed 300% of the Current Premium,
then Parent shall cause to be maintained policies of insurance which, in
Parent's good faith determination, provide the maximum coverage reasonably
available at an annual premium equal to 300% of the Current Premium.
(c) The directors, officers, employees and agents of the
Company entitled to the indemnification, liability limitation, exculpation and
insurance set forth in this Section 4.6 are intended to be third party
beneficiaries of this Section 4.6. This Section 4.6 shall survive the
consummation of the Merger and shall be binding on all successors and assigns of
Parent and the Surviving Entity.
SECTION 4.7 EXCLUSIVE DEALING. During the period from the date of this
Agreement through the Closing Date or the earlier termination of this Agreement
pursuant to Section 6.1, the Company shall not take, nor will it permit any of
its affiliates, officers, directors, employees, representatives, consultants,
financial advisors, attorneys, accountants or other agents to take, any action
to solicit, encourage, initiate or engage in discussions or negotiations with,
or provide any information to or enter into any agreement with any person (other
than Parent, Merger Sub and/or their respective affiliates) concerning any
purchase of any of the Company's equity securities or any merger, sale of
substantial assets or similar transaction involving the Company or any of the
Subsidiaries (other than the exercise of outstanding options and warrants and
other than assets sold in the ordinary course of business).
SECTION 4.8 FINANCING. Parent and Merger Sub shall use commercially
reasonable efforts to satisfy the requirements of the Commitment Letters and to
obtain the funding contemplated by and on the terms contained in the Commitment
Letters, or if any of the Commitment Letters is terminated or such funds shall
not otherwise be available, shall use commercially reasonable efforts to obtain
an alternative source(s) of financing in order to consummate the transactions
contemplated hereby. Following the date hereof, any amendment, termination or
cancellation of any Commitment Letter or any information known to Parent or
Merger Sub which makes it unlikely to obtain the financing set forth in the
Commitment Letters shall be promptly disclosed to the Company. Neither Parent,
Merger Sub nor any of their respective affiliates shall attempt, directly or
indirectly, to intentionally induce or encourage the exercise by DLJ or BT of
any right not to fund any of the financing provided for by the Commitment
Letters. If DLJ and/or BT fails to fund any such financing, Parent and Merger
Sub shall request DLJ and/or BT, as the case may be, to communicate in writing
directly to the Company the circumstances and bases therefor; provided, however,
that the failure of DLJ and/or BT, as the case may be, to provide such
communication shall not be deemed a breach of this covenant by Parent or Merger
Sub.
SECTION 4.9 TAX DISTRIBUTIONS. In the event an amount of tax
distribution payable is included in the calculation of Net Working Capital as of
immediately prior to the Closing, the
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Surviving Entity shall immediately pay to the holder of the Company Common Units
as of immediately prior to the Merger (in proportion to the Company Common Units
held by them) an amount equal to the tax distribution payable included therein.
SECTION 4.10. ROLLOVER EQUITY OF WB HOLDING CORP. As set forth on
Exhibits A-1 and A-2 as in effect as of the date hereof, WB Holding Corp. ("WB")
has been allocated a Preferred Equity Amount of $3,424,528 and a Common Equity
Amount of $380,503 (collectively, the "WB Rollover Equity Amount"). The parties
hereto hereby agree that at any time during the period beginning on the date
hereof and ending on the date one business day prior to the Closing, Saw Mill
may elect to re-allocate the WB Rollover Equity Amount from WB to (i) Saw Mill,
SMC Power Holdings LLC ("SMC Power"), Xxxxxxx Xxxxxxxx and/or any of their
respective affiliates (including any entity controlled by Xxxxxx Xxxxx), (ii)
any equityholder of Saw Mill or SMC Power or any affiliate of any such
equityholders, (iii) any affiliate of Xxxxxxx Xxxxx Mezzanine Capital Fund II,
L.P., and/or (iv) with the prior written consent of Parent, any other person by
delivering written notice to Parent and the Company. Any such written notice
shall include revised Exhibits A-1 and A-2 and Schedule 3.7, in each case, which
will be revised solely to reflect such re-allocation and any such revised
Exhibits A-1 and A-2 and Schedule 3.7 shall at all times thereafter be deemed to
be Exhibits A-1 and A-2 and Schedule 3.7 for purposes of this Agreement.
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 5.1 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY, PARENT AND
MERGER SUB. The obligations of the Company, Parent and Merger Sub to consummate
the Merger are subject to the satisfaction (or, if permitted by applicable law,
waiver by the party for whose benefit such condition exists) of the following
conditions:
(a) the Company (or the applicable Subsidiary) shall have
obtained all necessary consents, authorizations, approvals or waivers of and
shall have made all necessary filings or registrations with, any Governmental
Entity or other person or entity which are listed on Exhibit F hereto, in each
case, for the applicable matter listed on such Exhibit.
(b) any applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated; and
(c) no statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other Governmental Entity or
other legal restraint or prohibition preventing the consummation of the Merger
shall be in effect and no proceeding or lawsuit shall have been commenced by any
Governmental Entity or other third party for the purpose of obtaining any such
order, decree, injunction, restraint or prohibition and no written notice shall
have been received from any such Governmental Entity indicating an intent to
restrain, prevent, materially delay or restructure the transaction contemplated
hereby; provided, however, that each of Parent, Merger Sub and the
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Company shall have used reasonable efforts to prevent the entry of any such
injunction or other order or the commencement of any such proceeding or lawsuit
and to appeal as promptly as possible any injunction or other order that may be
entered.
SECTION 5.2 OTHER CONDITIONS TO THE OBLIGATIONS OF MERGER SUB AND
PARENT. The obligations of Merger Sub and Parent to consummate the Merger are
subject to the satisfaction or, if permitted by applicable law, waiver by Merger
Sub and Parent of the following further conditions:
(a) the representations and warranties of the Company set
forth in Article 2 hereof shall be true and correct in all respects as of the
date hereof and as of the Closing Date as though made on and as of the Closing
Date, except to the extent such representations and warranties are made on and
as of a specified date, in which case the same shall continue on the Closing
Date to be true and correct as of the specified date, and except to the extent
the failure of such representations and warranties to be true and correct as of
such dates could not reasonably be expected to have a Company Material Adverse
Effect, and Merger Sub and Parent shall have received a certificate of an
officer of the Company signed on behalf of the Company to such effect;
(b) the Company shall have performed and complied in all
material respects with all covenants required to be performed or complied with
by the Company under this Agreement on or prior to the Closing Date, and Merger
Sub and Parent shall have received a certificate of an officer of the Company
signed on behalf of the Company to such effect;
(c) there shall have been no Company Material Adverse Effect
since December 25, 1999;
(d) Parent, the Surviving Entity and/or any of the
Subsidiaries shall have received the proceeds of the financings described in the
Commitment Letters or otherwise obtained debt and/or other financing sufficient
to consummate the Merger;
(e) the Company or GEEG (with a copy to Parent) shall have
received a final invoice from each of Xxxxxxxx & Xxxxx and Xxxxxxx Xxxxx & Co.
with respect to all services provided by such advisors to the Company and its
Subsidiaries in connection with the transactions contemplated by this Agreement;
and
(f) after all payments required to be made under the SMC
Management Services Agreement have been made (including the $500,000 payment
referred to in the definition of Sellers Expenses), the SMC Management Services
Agreement shall have been terminated.
SECTION 5.3 OTHER CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or, if permitted by applicable law, waiver by the Company of the
following further conditions:
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(a) the representations and warranties of Merger Sub and
Parent set forth in Article 3 hereof shall be true and correct in all material
respects as of the date hereof and as of the Closing Date as though made on and
as of the Closing Date, except to the extent such representations and warranties
are made on and as of a specified date, in which case the same shall continue on
the Closing Date to be true and correct as of the specified date, and the
Company shall have received a certificate of an officer of Merger Sub signed on
behalf of Merger Sub and a certificate of an officer of Parent signed on behalf
of Parent, in each case, to such effect;
(b) Merger Sub and Parent shall each have performed and
complied in all material respects with all covenants required to be performed or
complied with by them under this Agreement on or prior to the Closing Date, and
the Company shall have received a certificate of an officer of Merger Sub signed
on behalf of Merger Sub and a certificate of an officer of Parent signed on
behalf of Parent, in each case, to such effect; and
(c) the Company shall have received evidence that Parent has
(i) made a cash payment to Merger Sub in an amount equal to the Merger Sub
Preferred Units Purchase Price in exchange for the Merger Sub Preferred Units
and (ii) made a cash payment to Merger Sub in an amount equal to the Merger Sub
Common Units Purchase Price in exchange for the Merger Sub Common Units.
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
SECTION 6.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Closing:
(a) by mutual written consent of Parent and the Company;
(b) by Parent if the Merger shall not have been consummated on
or before August 15, 2000 (the "Termination Date"), unless the failure to
consummate the Merger is the result of a breach by Parent or Merger Sub of its
respective obligations or covenants under this Agreement;
(c) by the Company if the Merger shall not have been
consummated on or before the Termination Date, unless the failure to consummate
the Merger is the result of a breach by the Company of its obligations or
covenants under this Agreement;
(d) by either Parent or by the Company if any Governmental
Entity shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger and such
order, decree or ruling or other action shall have become final and
nonappealable; provided, that the party seeking to terminate this Agreement
pursuant to this paragraph (d) shall have used commercially reasonable efforts
to remove such order, decree, ruling, judgment or injunction;
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(e) by Parent in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set forth in
Sections 5.2(a) or 5.2(b) hereof and (ii) cannot be or has not been cured on the
earlier of (x) the 20th business day after the giving of written notice thereof
to the Company by Parent and (y) three business days prior to the Termination
Date; or
(f) by the Company in the event of a breach by Merger Sub or
Parent of any representation, warranty, covenant or other agreement contained in
this Agreement which (i) would give rise to the failure of a condition set forth
in Sections 5.3(a) or 5.3(b) hereof and (ii) cannot be or has not been cured on
the earlier of (x) the 20th business day after the giving of written notice
thereof to Parent by the Company and (y) three business days prior to the
Termination Date.
SECTION 6.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 6.1, this Agreement shall forthwith become
void, and there shall be no liability or obligation on the part of Parent,
Merger Sub or the Company or their respective officers, directors or
equityholders, other than (a) the provisions of this Section 6.2, the last
sentence of Section 4.3, Sections 4.5, 6.3 and Article 9, and (b) any liability
of any party hereto for any breach of this Agreement prior to such termination.
SECTION 6.3 FEES AND EXPENSES. Whether or not the Merger is
consummated, all fees and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated by this Agreement, including the
fees and disbursements of counsel, financial advisors and accountants, shall be
paid by the party hereto incurring such fees or expenses.
SECTION 6.4 AMENDMENT. Prior to the Effective Time, subject to
applicable law, including the DLLCA, this Agreement may be amended or modified
only by a written agreement executed and delivered by duly authorized officers
of Parent and the Company. After the Effective Time, subject to applicable law,
including the DLLCA, this Agreement may be amended or modified only by written
agreement executed and delivered by duly authorized officers of the Company and
Saw Mill. This Agreement may not be modified or amended except as provided in
the immediately preceding two sentences.
SECTION 6.5 EXTENSION; WAIVER. At any time prior to the Closing, the
Company may (a) extend the time for the performance of any of the obligations or
other acts of Parent or Merger Sub contained herein, (b) waive any inaccuracies
in the representations and warranties of Parent or Merger Sub contained herein
or in any document, certificate or writing delivered by Parent or Merger Sub
pursuant hereto or (c) waive compliance by Parent or Merger Sub with any of the
agreements or conditions contained herein. At any time prior to the Closing,
Parent may (a) extend the time for the performance of any of the obligations or
other acts of the Company contained herein, (b) waive any inaccuracies in the
representations and warranties of the Company contained herein or in any
document, certificate or writing delivered by the Company pursuant hereto or (c)
waive compliance by the Company with any of the agreements or conditions
contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set
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forth in an instrument in writing signed on behalf of such party. The failure of
any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND COVENANTS; INDEMNIFICATION
SECTION 7.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS. The
representations and warranties of the Company and of Parent and Merger Sub
contained in this Agreement (whether or not contained in Articles 2 and 3) or in
any certificate or other instrument or document delivered pursuant hereto shall
survive the Closing for a period of one year after the Closing Date. Covenants
shall survive in accordance with their terms, except that all rights arising out
of a breach of any covenant contained in Section 4.1 shall terminate on the date
one year after the Closing Date.
SECTION 7.2 GENERAL INDEMNIFICATION.
(a) If, after the Closing Date, Parent, Merger Sub and/or
their respective officers, directors, employees, affiliates and/or agents (each
a "Purchaser Indemnitee" and together the "Purchaser Indemnitees") suffer any
damages, losses, liabilities, obligations, claims of any kind, interest or
expenses (including, without limitation, reasonable attorneys' fees and
expenses) ("Loss") as a result of, in connection with, or arising out of (i) the
failure of any representation or warranty made by the Company in this Agreement
(whether or not contained in Article 2) or in any schedule or in any certificate
or other instrument or document delivered to Parent and Merger Sub pursuant to
this Agreement to be true and correct in all respects as of the date of this
Agreement and as of the Closing Date (without giving effect to the term
"material", "materially" or "Company Material Adverse Effect" in any such
representation or warranty, except for the representations and warranties
contained in clauses (vi) and (x) of Section 2.6, clause (vi) of Section 2.7(b),
Section 2.7(c), the second sentence of Section 2.12, and the second sentence of
Section 2.18 whereby the term "material", "materially" and "Company Material
Adverse Effect" will be given effect for purposes of this Section 7.2(a)), (ii)
any breach by the Company of any of its covenants or agreements contained herein
which are to be performed by the Company on or before the Closing Date and (iii)
that specific charge which was filed with the Equal Employment Opportunity
Commission against Xxxxxx Manufacturing, L.L.C. and which is referred to in item
6 on Schedule 2.8 attached hereto (the "June 2000 Xxxxxx EEOC Claim"), then,
subject to the other provisions of this Article 7, such Purchaser Indemnitee(s)
shall be entitled to be reimbursed the amount of such Loss from the
Indemnification Escrow Account.
(b) After the Closing, each of Parent and Surviving Entity
agree to indemnify, defend and hold the direct and indirect equityholders of the
Company (including Saw Mill) as of the date of this Agreement and their
respective affiliates, officers, directors, employees, and agents (each a
"Seller Indemnitee" and together the "Seller Indemnitees") harmless from any
Loss suffered or paid, directly or indirectly, as a result of, in connection
with, or arising out of (i) the failure of any representation or warranty made
by Parent or Merger Sub in this Agreement (whether or not contained in Article
3) or in any certificate or other instrument or document delivered to the
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Company or Saw Mill pursuant to this Agreement to be true and correct in all
respects as of the date of this Agreement and as of the Closing Date, (ii) any
breach by Parent of any of its covenants or agreements contained herein and
(iii) any breach by Surviving Entity (including by way of being the successor of
Merger Sub and the Company) of any of its covenants or agreements contained
herein which are to be performed by the Surviving Entity after the Closing Date.
(c) The obligations to indemnify and hold harmless pursuant to
this Section 7.2 shall survive the consummation of the transactions contemplated
hereby for the periods set forth in Sections 7.1, except for claims for
indemnification asserted prior to the end of such periods which claims shall
survive until final resolution thereof.
SECTION 7.3 THIRD PARTY CLAIMS.
(a) If a claim, action, suit or proceeding by a third party (a
"Third Party Claim") is made against any person or entity entitled to
indemnification pursuant to Section 7.2 hereof (an "Indemnified Party"), and if
such party intends to seek indemnity with respect thereto under this Article 7,
such Indemnified Party shall promptly notify the party obligated to indemnify
such Indemnified Party (or, in the case of a Purchaser Indemnitee seeking
indemnification, such Purchaser Indemnitee shall promptly notify Saw Mill (such
notified party, the "Responsible Party") of such claims; provided, that the
failure to so notify shall not relieve the Responsible Party of its obligations
hereunder, except to the extent that the Responsible Party is actually and
materially prejudiced thereby. The Responsible Party shall have 30 days after
receipt of such notice to assume the conduct and control, through counsel
reasonably acceptable to the Indemnified Party at the expense of the Responsible
Party, of the settlement or defense thereof, and the Indemnified Party shall
cooperate with it in connection therewith; provided that the Responsible Party
shall permit the Indemnified Party to participate in such settlement or defense
through counsel chosen by such Indemnified Party, provided that, the fees and
expenses of such counsel shall be borne by such Indemnified Party. So long as
the Responsible Party is reasonably contesting any such claim in good faith, the
Indemnified Party shall not pay or settle any such claim. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay or settle any such
claim, provided that in such event it shall waive any right to indemnity
therefor by the Responsible Party or from the Indemnification Escrow Account, as
the case may be, for such claim unless the Responsible Party shall have
consented to such payment or settlement. If the Responsible Party does not
notify the Indemnified Party within 30 days after the receipt of the Indemnified
Party's notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the Indemnified Party shall have the right to contest, settle
or compromise the claim but shall not thereby waive any right to indemnity
therefor pursuant to this Agreement. The Responsible Party shall not, except
with the consent of the Indemnified Party, enter into any settlement that does
not include as an unconditional term thereof the giving by the person or persons
asserting such claim to all Indemnified Parties of an unconditional release from
all liability with respect to such claim or consent to entry of any judgment.
Notwithstanding any of the foregoing, if the Indemnified Party is a Purchaser
Indemnitee and it is reasonably foreseeable that the amount of any Loss to be
incurred by the Indemnified Party with respect to any Third Party Claim will be
more than twice the amount indemnifiable hereunder as a result solely of
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Section 7.4(c) hereof, then the Indemnified Party shall be entitled to conduct
and control the defense and/or settlement of any such Third Party Claim without
the consent of the Responsible Party.
(b) All of the parties hereto shall cooperate in the defense
or prosecution of any Third Party Claim in respect of which indemnity may be
sought hereunder and shall furnish such records, information and testimony, and
attend such conferences, discovery proceedings, hearings, trials and appeals, as
may be reasonably requested in connection therewith.
SECTION 7.4 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. The rights of
the Purchaser Indemnitees to indemnification pursuant to the provisions of
Section 7.2(a) are subject to the following limitations:
(a) the amount of any and all Losses shall be determined net
of any amounts recovered or reasonably expected to be recovered by the Purchaser
Indemnitees under insurance policies with respect to such Losses;
(b) the Purchaser Indemnitees shall not be entitled to recover
Losses pursuant to Section 7.2(a) until the total amount which the Purchaser
Indemnitees would recover under Section 7.2(a) (as limited by the provisions of
Sections 7.4(a)), but for this Section 7.4(b), exceeds $2,950,000 (the
"Threshold") and then only for the excess over the Threshold (except for Losses
pursuant to Section 7.2(a)(iii) which shall not be subject to the Threshold);
and
(c) the Purchaser Indemnitees shall be entitled to recover no
more than $13,275,000.
SECTION 7.5 SAW MILL. The parties hereto acknowledge and agree that Saw
Mill is a party to this Agreement solely to perform certain administrative
functions in connection with the consummation of the transactions contemplated
hereby. Accordingly, the parties hereto acknowledge and agree that Saw Mill
shall have no liability to, and shall not be liable for any Losses of, any party
hereto or to any Purchaser Indemnitee in connection with any obligations of Saw
Mill under this Agreement or either Escrow Agreement or otherwise in respect of
this Agreement or the transactions contemplated hereby, except to the extent
such Losses shall be proven to be the direct result of willful misconduct by Saw
Mill in connection with the performance of its obligations hereunder or under
either Escrow Agreement.
SECTION 7.6 EXCLUSIVE REMEDY. Except for the rights of certain parties
hereto to receive a distribution of amounts from the Purchase Price Escrow
Account as provided in Sections 1.9(d) and 1.9(e), notwithstanding anything else
contained in this Agreement to the contrary, after the Closing, (i)
indemnification pursuant to the provisions of this Article 7 shall be the
exclusive remedy for the parties hereto for any misrepresentation or breach of
any warranty, covenant or other provision contained in this Agreement or in any
certificate or other instrument or document delivered pursuant hereto and (ii)
except in the case of fraud or willful misconduct, making a claim for a proper
distribution from the Indemnification Escrow Account shall be the sole and
exclusive remedy available to the Purchaser Indemnitees for any Loss, Losses or
other amounts
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(including, without limitation, any relating to environmental, health or safety
matters or Tax matters) arising under the indemnification obligations set forth
herein, or otherwise in respect of the transactions contemplated hereby.
ARTICLE 8
REPRESENTATIVE OF THE EQUITYHOLDERS OF THE COMPANY
SECTION 8.1 AUTHORIZATION OF REPRESENTATIVE.
(a) Saw Mill is hereby appointed, authorized and empowered to
act as a representative (the "Representative"), for the benefit of the holders
of Company Common Units and Company Equity Options (collectively, the "Company
Equity Securities"), as the exclusive agent and attorney-in-fact to act on
behalf of each holder of Company Equity Securities, in connection with and to
facilitate the consummation of the transactions contemplated hereby, including
pursuant to the Escrow Agreements, which shall include the power and authority:
(i) to execute and deliver each of the Escrow Agreements (with
such modifications or changes therein as to which the Representative,
in its sole discretion, shall have consented) and to agree to such
amendments or modifications thereto as the Representative, in its sole
discretion, determines to be desirable;
(ii) to execute and deliver such waivers and consents in
connection with this Agreement and each of the Escrow Agreements and
the consummation of the transactions contemplated hereby and thereby as
the Representative, in its sole discretion, may deem necessary or
desirable;
(iii) except as otherwise provided herein, including Section
1.10(b) hereof, to collect and receive all moneys and other proceeds
and property payable to the holders of Company Equity Securities
pursuant to the terms of the Escrow Agreements, including, without
limitation, the Purchase Price Escrow Funds, the Indemnification Escrow
Funds and any portion of or earnings accrued on such Escrow Funds which
are distributable to holders of Company Equity Securities, subject to
the Escrow Agreements, and, subject to any applicable withholding
retention laws, and net of any out-of-pocket expenses incurred by
Representative, to disburse and pay the same (as well as any unused
Expense Funds (as herein defined) as provided in Section 8.1(b)) to
each of the holders of Company Equity Securities to the extent of, and
in accordance with, the respective interests of the holders of Company
Equity Securities in the Purchase Price (the "Percentage Interests");
(iv) as Representative, to enforce and protect the rights and
interests of the holders of Company Equity Securities (including the
Representative, in its capacity as an equityholder in the Company) and
to enforce and protect the rights and interests of the Representative
arising out of or under or in any manner relating to this Agreement and
the
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Escrow Agreements, and each other agreement, document, instrument or
certificate referred to herein or therein or the transactions provided
for herein or therein (including, without limitation, in connection
with any and all claims for indemnification brought under Article 7
hereof), and to take any and all actions which the Representative
believes are necessary or appropriate under either of the Escrow
Agreement and/or this Agreement for and on behalf of the holders of
Company Equity Securities, including, without limitation, asserting or
pursuing any claim, action, proceeding or investigation (a "Claim")
against Parent, Merger Sub and/or Surviving Entity, defending any Third
Party Claims or Claims by the Purchaser Indemnitees, consenting to,
compromising or settling any such Claims, conducting negotiations with
Parent, Surviving Entity and their respective representatives regarding
such Claims, and, in connection therewith, to (A) assert any claim or
institute any action, proceeding or investigation; (B) investigate,
defend, contest or litigate any claim, action, proceeding or
investigation initiated by Parent, the Surviving Entity or any other
person, or by any federal, state or local Governmental Entity against
the Representative and/or any of the holders of Company Equity
Securities, the Purchase Price Escrow Funds and/or the Indemnification
Escrow Funds, and receive process on behalf of any or all holders of
Company Equity Securities in any such claim, action, proceeding or
investigation and compromise or settle on such terms as the
Representative shall determine to be appropriate, and give receipts,
releases and discharges with respect to, any such claim, action,
proceeding or investigation; (C) file any proofs of debt, claims and
petitions as the Representative may deem advisable or necessary; (D)
settle or compromise any claims asserted under either of the Escrow
Agreements; and (E) file and prosecute appeals from any decision,
judgment or award rendered in any such action, proceeding or
investigation, it being understood that the Representative shall not
have any obligation to take any such actions, and shall not have any
liability for any failure to take any such actions;
(v) to refrain from enforcing any right of the holders of
Company Equity Securities or any of them and/or the Representative
arising out of or under or in any manner relating to this Agreement,
the Escrow Agreements or any other agreement, instrument or document in
connection with the foregoing; provided, however, that no such failure
to act on the part of the Representative, except as otherwise provided
in this Agreement or in either of the Escrow Agreements, shall be
deemed a waiver of any such right or interest by the Representative or
by the holders of Company Equity Securities unless such waiver is in
writing signed by the waiving party or by the Representative; and
(vi) to make, execute, acknowledge and deliver all such other
agreements, guarantees, orders, receipts, endorsements, notices,
requests, instructions, certificates, stock powers, letters and other
writings, and, in general, to do any and all things and to take any and
all action that the Representative, in its sole and absolute
discretion, may consider necessary or proper or convenient in
connection with or to carry out the transactions contemplated by this
Agreement, the Escrow Agreements, and all other agreements, documents
or instruments referred to herein or therein or executed in connection
herewith and therewith.
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(b) The Representative shall not be entitled to any fee,
commission or other compensation for the performance of its services hereunder,
but shall be entitled to the payment of all its expenses incurred as the
Representative. In connection with the foregoing, at the Closing, the Surviving
Entity shall transfer $50,000 (the "Expense Funds") to the Representative, to be
used by Representative to pay expenses incurred by Representative in its
capacity as Representative. Once Representative determines, in its sole
discretion, that Representative will not incur any additional expenses in its
capacity as Representative, then Representative will distribute the remaining
unused Expense Funds, if any, to the holders of Company Equity Securities
pursuant to Section 8(a)(iii) hereof. In connection with this Agreement, the
Escrow Agreements and any instrument, agreement or document relating hereto or
thereto, and in exercising or failing to exercise all or any of the powers
conferred upon the Representative hereunder (i) the Representative shall incur
no responsibility whatsoever to any holders of Company Equity Securities by
reason of any error in judgment or other act or omission performed or omitted
hereunder or in connection with either of the Escrow Agreements or any such
other agreement, instrument or document, excepting only responsibility for any
act or failure to act which represents willful misconduct, and (ii) the
Representative shall be entitled to rely on the advice of counsel, public
accountants or other independent experts experienced in the matter at issue, and
any error in judgment or other act or omission of the Representative pursuant to
such advice shall in no event subject the Representative to liability to any
holders of Company Equity Securities. Each holder of Company Equity Securities
shall indemnify, pro rata based upon such holder's Percentage Interest, the
Representative against all losses, damages, liabilities, claims, obligations,
costs and expenses, including reasonable attorneys', accountants' and other
experts' fees and the amount of any judgment against them, of any nature
whatsoever (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened or any claims whatsoever), arising out of or
in connection with any claim, investigation, challenge, action or proceeding or
in connection with any appeal thereof, relating to the acts or omissions of the
Representative hereunder, or under either of the Escrow Agreements or otherwise.
The foregoing indemnification shall not apply in the event of any action or
proceeding which finally adjudicates the liability of the Representative
hereunder for its willful misconduct. In the event of any indemnification
hereunder, upon written notice from Representative to the holders of Company
Equity Securities as to the existence of a deficiency toward the payment of any
such indemnification amount, each holder of Company Equity Securities shall
promptly deliver to the Representative full payment of his or her ratable share
of the amount of such deficiency, in accordance with such holder's Percentage
Interest.
(c) All of the indemnities, immunities and powers granted to
the Representative under this Agreement shall survive the Effective Date and/or
any termination of this Agreement and/or either of the Escrow Agreements.
(d) Parent and Surviving Entity shall have the right to rely
upon all actions taken or omitted to be taken by the Representative pursuant to
this Agreement and the Escrow Agreements, all of which actions or omissions
shall be legally binding upon the holders of Company Equity Securities.
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(e) The grant of authority provided for herein (i) is coupled
with an interest and shall be irrevocable and survive the death, incompetency,
bankruptcy or liquidation of any holder of Company Equity Securities; and (ii)
shall survive the consummation of the Merger.
(f) Upon the written request of any holder of Company Equity
Securities, Representative shall provide such holder with an accounting of all
monies received and distributed by Representative, in its capacity as
Representative, and shall provide such holder with such other reasonable
information regarding Representative's actions, in its capacity as
Representative, as such holder may reasonably request.
SECTION 9
MISCELLANEOUS
SECTION 9.1 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a)
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties hereto with respect to
the subject matter hereof and (b) shall not be assigned by any party hereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties hereto; provided that Parent and Merger Sub may, at any time,
and without the prior consent of any party hereto, assign their rights under
this Agreement to their and their subsidiaries' financing sources by way of
security, to any person appointed to enforce such security or any person in
connection with such enforcement.
SECTION 9.2 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested) to the other party as follows:
To Parent or Merger Sub:
c/o Harvest Partners
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to
Parent or Merger Sub) to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
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To Saw Mill:
x/x Xxx Xxxx Xxxxxxx X.X.X.
000 Xxxxxxxxxxxxx Xxxx
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to
Saw Mill) to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxx, Esq.
W. Xxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
To the Company:
Global Energy Equipment Group, L.L.C.
0000 Xxxxx Xxxx, Xxxxx 0000
Xxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to the
Company) to:
x/x Xxx Xxxx Xxxxxxx X.X.X.
000 Xxxxxxxxxxxxx Xxxx
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxx, Esq.
W. Xxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
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or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.3 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 ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THE DLLCA SHALL BE HELD TO GOVERN THE MERGER.
SECTION 9.4 CONSTRUCTION; INTERPRETATION. The headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement. Article, section, exhibit,
schedule, annex, party, preamble and recital references are to this Agreement
unless otherwise stated. No party, nor its respective counsel, shall be deemed
the drafter of this Agreement for purposes of construing the provisions hereof,
and all provisions of this Agreement shall be construed according to their fair
meaning and not strictly for or against any party.
SECTION 9.5 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party and its successors and permitted
assigns and, except as provided in Section 4.6 and Article 7, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement. Notwithstanding the foregoing, the equityholders of
the Company as of immediately prior to the Closing are third party beneficiaries
of Articles 7 and 8 of this Agreement.
SECTION 9.6 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 9.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.8 OBLIGATIONS OF PARENT AND MERGER SUB. The obligations of
Parent and Merger Sub hereunder are jointly and severally guaranteed by the
other.
SECTION 9.9 KNOWLEDGE OF THE COMPANY. For all purposes of this
Agreement, the phrase "to the Company's knowledge" and "known by the Company"
shall mean as of the applicable date, the actual knowledge, after reasonable
investigation, of Xxxxx Xxxxxxx, Xxxx Xxxxxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx
Xxxxxxx and/or Xxxxx Xxxxxx, except, with respect to the representations and
warranties contained in Section 2.7, in which case, the phrase "to the Company's
knowledge" and "known by the Company" shall mean as of the applicable date, the
actual knowledge, without investigation, of Xxxxx Xxxxxxx, Xxxx Xxxxxxxxxxxx,
Xxxx Xxxxxxxxxx, Xxxxxxx Xxxxxxx and/or Xxxxx Xxxxxx.
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SECTION 9.10 WAIVER OF JURY TRIAL. The parties to this Agreement each
hereby waives, to the fullest extent permitted by law, any right to trial by
jury of any claim, demand, action, or cause of action (i) arising under this
Agreement or (ii) in any way connected with or related or incidental to the
dealings of the parties hereto in respect of this Agreement or any of the
transactions related hereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity, or otherwise. The parties to
this Agreement each hereby agrees and consents that any such claim, demand,
action, or cause of action shall be decided by court trial without a jury and
that the parties to this Agreement may file an original counterpart of a copy of
this Agreement with any court as written evidence of the consent of the parties
hereto to the waiver of their right to trial by jury.
* * * * *
54
IN WITNESS WHEREOF, each of the parties has caused this Agreement and
Plan of Merger to be duly executed on its behalf as of the day and year first
above written.
SAW MILL INVESTMENTS LLC
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: President
GEEG HOLDINGS, L.L.C.
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxx
Title: President and CEO
GEEG ACQUISITION HOLDINGS CORP.
By: /s/ illegible
____________________________________
Name:
Title:
GEEG ACQUISITION, L.L.C.
By: /s/ illegible
____________________________________
Name:
Title:
