AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of April 7, 2006, is made by and among Acorn Products, Inc., a Delaware
corporation (the "Company"), Xxxx True Temper, Inc., a Delaware corporation (the
"Purchaser"), and XXXXX Holdings, Inc., a Delaware corporation and wholly-owned
subsidiary of the Purchaser (the "Merger Sub"). Capitalized terms used and not
otherwise defined herein have the meanings set forth in Article VII below.
WHEREAS, the Company owns all of the issued and outstanding
capital stock of UnionTools, Inc., a Delaware corporation ("UTI"), and the
Company and two executive officers of the Company collectively own all of the
issued and outstanding capital stock of Razorback International, Ltd., a
corporation organized under the laws of Hong Kong ("Razorback").
WHEREAS, UTI is engaged in the business of manufacturing and
distributing, and Razorback is engaged in the business of distributing,
non-powered lawn and garden tools.
WHEREAS, upon the terms set forth in this Agreement,
Purchaser, Merger Sub and the Company have approved the acquisition of the
Company by Purchaser, by means of a merger of Merger Sub with and into the
Company (the "Merger"), with the Company continuing as the surviving corporation
and a wholly-owned subsidiary of Purchaser (as such, the "Surviving
Corporation");
WHEREAS, the boards of directors of Purchaser, Merger Sub and
the Company each have unanimously (i) determined that the Merger is advisable
and fair to, and in the best interests of their respective stockholders and (ii)
approved and adopted this Agreement and the transactions contemplated hereby;
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the Company has received irrevocable written consents (the
"Written Consents") from holders of the Company's capital stock
("Stockholders"), who in the aggregate hold 100% of the voting power represented
by all of the issued and outstanding shares of the Company's capital stock,
pursuant to which such Stockholders have approved and adopted this Agreement and
the Merger;
WHEREAS, as an essential inducement for Purchaser and Merger
Sub to enter into the Agreement, the TCW Stockholders (as defined in Article VII
below) and OCM Principal Opportunities Fund, L.P. ("POF") have entered into
nondisclosure and, nonsolicitation agreements with the Company;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
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1.01 THE MERGER.
(a) At the Effective Time and subject to and upon the terms of
this Agreement, the Merger Sub shall merge with and into the Company in
accordance with the Delaware General Corporation Law (the "Delaware Law"),
whereupon the separate existence of the Merger Sub shall cease, and the Company
shall be the Surviving Corporation.
(b) Concurrently with the execution and delivery of this
Agreement, the Company and the Merger Sub shall cause a certificate of merger to
be executed, acknowledged and filed with the Secretary of State of the State of
Delaware (the "Certificate of Merger") and make all other filings or recordings
required by the Delaware Law in connection with the Merger. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Delaware (the "Effective Time").
(c) From and after the Effective Time, the Surviving
Corporation shall succeed to all the assets, rights, privileges, powers and
franchises and be subject to all of the liabilities, restrictions, disabilities
and duties of the Company and the Merger Sub, all as provided under the Delaware
Law.
1.02 CONVERSION OF CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company or Merger
Sub or of the stockholders thereof:
(a) Prior to the Effective Time, the Company has distributed
to each holder of record of a certificate or certificates (the "Certificates")
representing shares of the Company's common stock, par value $0.40 per share
(the "Common Stock"), excluding Certificates representing treasury shares, as
set forth herein, a letter of transmittal in the Form of Exhibit A-1 hereto (a
"Letter of Transmittal"). Except as otherwise provided in Section 1.02(b), each
share of Common Stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive in cash the Per Share Portion
of $1,116,420.00, payable in accordance with Section 1.04. The aggregate
consideration to which holders of Common Stock become entitled pursuant to this
Section 1.02(a) is referred to herein as the "Merger Consideration."
For purposes of this Agreement, the term "Per Share Portion"
means a fraction, the numerator of which is one, and the denominator of which is
the number of shares of Common Stock issued and outstanding immediately prior to
the Effective Time (other than Common Stock held by the Company as treasury
stock, held by any Subsidiary of the Company or held by the Merger Sub).
(b) Each share of Common Stock held immediately prior to the
Effective Time by the Company as treasury stock, held by any Subsidiary of the
Company or held by the Merger Sub shall be canceled and no payment shall be made
with respect thereto.
(c) Each share of the Merger Sub's common stock, par value
$0.01 per share, issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
1.03 INTENTIONALLY OMITTED.
1.04 EXCHANGE OF CERTIFICATES; LOST CERTIFICATES. The
Purchaser shall act as paying agent in effecting the exchange of cash for
Certificates which, immediately prior to the Effective Time, represented shares
of Common Stock entitled to payment pursuant to Section 1.02. At the Closing,
each holder of Certificates shall surrender to the Purchaser Certificates
representing the number of shares of Common Stock held by such holder, together
with a duly executed Letter of Transmittal. At the Closing, the Purchaser shall
pay, as applicable, each Stockholder, in each case who has surrendered his or
its Certificates, together with a duly executed Letter of Transmittal, the
amount of cash to which each such Stockholder is entitled under Section 1.02.
Surrendered Certificates shall forthwith be canceled. Until so surrendered and
exchanged, each such Certificate shall represent solely the right to receive the
portion of the Merger Consideration payable pursuant to Section 1.02 in respect
of the shares it theretofore represented, and the Surviving Corporation shall
not be required to pay the holder thereof the cash to which he or it would
otherwise have been entitled. Notwithstanding the foregoing, if any such
Certificate shall have been lost, stolen or destroyed, then, upon the making of
an affidavit of such fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, upon the
posting by such Person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate (provided that, if such Person is a
financial institution or other institutional investor, its own agreement shall
be satisfactory), the Purchaser shall issue, in exchange for such lost, stolen
or destroyed Certificate, the portion of the Merger Consideration to be paid in
respect of the shares of Common Stock represented by such Certificate, as
contemplated by this Article I.
1.05 CERTIFICATE OF INCORPORATION. The certificate of
incorporation of the Company as in effect immediately prior to the Effective
Time shall, subject to the provisions of Section 5.02, be amended and restated
as of the Effective Time so as to contain the provisions, and only the
provisions, contained in the certificate of incorporation of the Merger Sub,
except Article 1, which shall provide "The name of the Corporation is Acorn
Products, Inc."
1.06 BYLAWS. The Bylaws of the Company as in effect
immediately prior to the Effective Time shall, subject to the provisions of
Section 5.02, be amended and restated as of the Effective Time so as to contain
the provisions, and only the provisions, contained in the Bylaws of the Merger
Sub, except that they shall provide that the name of the Surviving Corporation
is Acorn Products, Inc.
1.07 DIRECTORS AND OFFICERS. From and after the Effective
Time, until successors are duly elected or appointed in accordance with
applicable law, the directors and officers of the Merger Sub immediately prior
to the Effective Time shall be the directors and officers, as applicable, of the
Surviving Corporation.
1.08 UNREGISTERED TRANSFER OF CAPITAL STOCK. In the event of a
transfer of ownership of Common Stock which is not registered in the transfer
records of the Company, the portion of the Merger Consideration payable in
respect thereof pursuant to Section 1.02 may be issued to a transferee if the
Certificate representing such Common Stock is presented to the Surviving
Corporation, accompanied by all documents reasonably required by the Surviving
Corporation, including (i) documents to evidence such transfer and to evidence
that any applicable stock transfer taxes have been paid and (ii) documents
evidencing transferee's representations or warranties to the Surviving
Corporation with respect to the ownership of such Common Stock.
ARTICLE II
THE CLOSING
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2.01 THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxxxx
Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 immediately upon
execution and delivery of this Agreement. The date and time of the Closing are
referred to herein as the "Closing Date."
2.02 THE CLOSING TRANSACTIONS. Upon the terms set forth in
this Agreement, upon execution and delivery of this Agreement, the parties
hereto shall consummate the following transactions (the "Closing Transactions")
at the Closing:
(a) the Company and the Merger Sub shall cause the Certificate
of Merger to be executed, acknowledged and filed with the Secretary of State of
the State of Delaware;
(b) the Purchaser shall deliver to each Stockholder by wire
transfer of immediately available funds to the account(s) designated by such
Stockholder or by check to the address specified by such Stockholder, in each
case upon delivery by such Stockholder of one or more Certificates representing
the number of shares of Common Stock held by such Stockholder as of immediately
prior to the Effective Time, together with a duly executed Letter of
Transmittal, the portion of the Merger Consideration (as determined in
accordance with Section 1.02(a)) allocable to the shares of Common Stock
represented by such Certificate(s);
(c) the Purchaser shall repay on behalf of the Surviving
Corporation and its Subsidiaries, or cause the Surviving Corporation to repay,
all amounts necessary to discharge fully the then outstanding balance of all
Funded Indebtedness, by wire transfer of immediately available funds to the
account(s) designated by the holders of such Funded Indebtedness pursuant to
payoff letters (the "Payoff Letters") providing, subject to the payment of
payoff amounts identified therein, for each holder of such Funded Indebtedness
to release all Liens on any assets and securities of the Company and its
Subsidiaries; and
(d) the Purchaser shall repay on behalf of the Surviving
Corporation and its Subsidiaries, or cause the Surviving Corporation to repay,
all amounts necessary to discharge fully the then outstanding balances of all
Company Transaction Expenses, by wire transfer of immediately available funds to
the account(s) designated by the payees of such Company Transaction Expenses.
(e) the Company shall deliver to the Purchaser a certificate,
validly executed by the Chief Financial Officer of the Company for and on its
behalf, to the effect that:
(i) that the schedule attached thereto
represents the Company's accounting of the total Company Transaction Expenses,
together with an itemization and description of such Company Transaction
Expenses in reasonable detail and certifying, to the knowledge of such officer,
that no other Company Transaction Expenses shall be due and payable; and
(ii) the schedule attached thereto shows a
true and correct comparison of the projected working capital of the Company and
its Subsidiaries as of April 2, 2006 as compared to a good faith estimate of the
actual working capital of the Company and its Subsidiaries as of such date,
determined on a basis consistent with the methodology used in preparing the
projections.
2.03 REQUIRED WITHHOLDING. The Purchaser shall, or shall cause
the Surviving Corporation to, deduct and withhold from any consideration payable
or otherwise deliverable pursuant to this Agreement to any holder or former
holder of Common Stock such amounts as may be required to be deducted or
withheld therefrom under the Code or under any applicable provision of federal,
state, local or foreign Tax Law. To the extent such amounts are so deducted or
withheld, the amount of such consideration shall be treated for all purposes
under this Agreement as having been paid to the Person to whom such
consideration would otherwise have been paid.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser that the
statements in this Article III are true, correct and complete as of the date of
this Agreement, except as set forth in the Schedules accompanying this Agreement
(each, a "Schedule" and, collectively, the "Disclosure Schedules"). Each
Schedule shall be deemed to incorporate by reference all information disclosed
in any other Schedule but only to the extent it is reasonably apparent that
disclosure of such information is applicable to any other Schedules. Capitalized
terms used in the Disclosure Schedules and not otherwise defined therein have
the meanings given to them in this Agreement.
3.01 ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware, and the Company has all requisite corporate power and
authority and all material consents, licenses, permits, approvals,
registrations, grants or other authorizations (i) pursuant to which the Company
or any Subsidiary currently holds any interest in any of its properties or (ii)
which is required for the Company's and its Subsidiaries' business as currently
conducted ("Company Authorizations"). The Company is duly qualified or licensed
to do business in every jurisdiction in which its ownership, leasing or
operation of property or the conduct of business as now conducted requires it to
qualify, as set forth on the Qualification Schedule, except where the failure to
be so qualified or licensed would not have a Material Adverse Effect. The
Company
has made available to Purchaser a copy of each of its and its Subsidiaries'
certificate of incorporation and by-laws or, for the Subsidiaries that are not
corporations, the equivalent organizational documents (collectively, the
"Company Charter Documents"), each as amended to date and in full force and
effect on the date hereof. The Company Charter Documents and the minutes of the
Boards of Directors of the Company and each of its Subsidiaries or, for the
Subsidiaries that are not corporations, of the managing member(s) or general
partner(s) thereof, heretofore made available to Purchaser are true, complete
and accurately reflect the applicable stock or equity ownership of the Company
and its Subsidiaries, the transfer of any shares of capital stock of the Company
and its Subsidiaries, and, in all material respects, proceedings of the
stockholders, members, partners and directors and all committees of the Company
and its Subsidiaries to the extent applicable.
3.02 SUBSIDIARIES. Except as set forth on the Subsidiary
Schedule, neither the Company nor any of its Subsidiaries owns or holds the
right to acquire any stock, partnership interest or joint venture interest or
other equity ownership interest in any other corporation, organization or
entity. Each of the Subsidiaries identified on the Subsidiary Schedule, which
Schedule identifies the ownership of each such Subsidiary and the jurisdiction
of organization, is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite
organizational power and authority and all material Company Authorizations
necessary to own, lease and license its properties and to carry on its
businesses as now conducted. Each Subsidiary of the Company is qualified or
licensed to do business in every jurisdiction in which its ownership, licensing
or operations of property or the conduct of businesses as now conducted requires
it to qualify, except where the failure to be so qualified or licensed would not
have a Material Adverse Effect. All of the outstanding shares of capital stock
of each Subsidiary of the Company have been duly authorized, validly issued and
are fully paid and nonassessable and owned by the Company, by another Subsidiary
of the Company or by the Company and another such Subsidiary as set forth on the
Subsidiary Schedule, free and clear of all Liens, other than Liens pursuant to
applicable securities Laws and other than Liens that will be discharged at
Closing pursuant to the Payoff Letters. There are no other options, warrants,
calls, rights, commitments or agreements of any character to which any
Subsidiary is a party or by which it is bound obligating such Subsidiary to
issue, deliver, sell, repurchase or redeem or cause to be issued, delivered,
sold, repurchased or redeemed, any equity interests of such Subsidiary or
obligating such Subsidiary to grant any such option, warrant, call, right,
commitment or agreement. No Subsidiary is a party to, and there are no other
voting trusts, proxies or other agreements or understandings with respect to the
voting stock of any Subsidiary. There are no preemptive rights or agreements,
arrangements or understandings to issue preemptive rights with respect to the
issuance or sale of equity interests of any Subsidiary created by statute, the
organizational documents of any Subsidiary or any written agreement or other
arrangement to which any Subsidiary is a party or by which it is bound, and
there are no written agreements, arrangements or understandings to which any
Subsidiary is a party pursuant to which such Subsidiary has the right to elect
to satisfy any liability of such Subsidiary by issuing equity interests in such
Subsidiary.
3.03 AUTHORIZATION; NO BREACH. The Company has all requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action, and, other than the Written
Consents, no other corporate proceedings on its part are necessary to authorize
the execution, delivery or performance of this Agreement. Without limiting the
foregoing, the Written Consents constitute the only approval by the holders of
capital stock of the Company necessary to authorize this Agreement, the Merger
and the transactions contemplated hereby and no other action by any holder of
capital stock is required in order to consummate the transactions contemplated
hereby on the terms set forth herein. At the Effective Time, the Merger will be
effective in accordance with the terms set forth herein. The Board of Directors
of the Company (the "Company Board") has unanimously (i) approved and adopted
this Agreement, the Merger and the transactions contemplated hereby and (ii)
declared that the Merger and this Agreement and the other transactions
contemplated by this Agreement are in the best interests of the Company and its
Stockholders, and (iii) recommended that the stockholders of the Company adopt
this Agreement and the Merger. No other action on the part of the Company Board
is required to authorize the execution, delivery and performance of this
Agreement or to consummate the Merger or for any of the transactions
contemplated hereby. Except as set forth on the Authorization Schedule, the
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby do not and will not
conflict with or result in (with or without notice or lapse of time, or both)
any material breach of, constitute a material default under, result in a
material violation of, result in the creation of any Lien upon any material
assets or properties of the Company or any of its Subsidiaries under, or require
any material authorization, consent, approval, exemption or other action by or
notice to any court, Person or governmental body under, the provisions of any
Company Charter Documents or any material indenture, mortgage, lease, loan
agreement or other agreement or instrument to which the Company or any of its
Subsidiaries is bound, or any law, statute, rule or regulation or order,
judgment or decree to which the Company or any of its Subsidiaries is subject.
This Agreement has been duly executed and delivered by the Company and, assuming
that this Agreement is a valid and binding obligation of the other parties
hereto, this Agreement constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms, except as such enforceability
may be subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or other Law affecting or relating to creditors'
rights generally and general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
3.04 CAPITAL STOCK. The authorized capital stock of the
Company consists of (i) 50,000 shares of Preferred Stock (the "Preferred
Stock"), par value $0.001 per share, none of which are issued and outstanding
and (ii) 450,000 shares of Common Stock, par value $0.40 per share, 111,642 of
which are issued and outstanding and are owned of record by the Stockholders in
the amounts set forth on the Stockholders Schedule. All of the outstanding
shares of Common Stock have been duly authorized and are validly issued, fully
paid and nonassessable and not subject to preemptive rights created by statute,
the Company Charter Documents or any agreement to which the Company is a party
or by which it is bound and have been issued in compliance with all applicable
Law. Except as set forth on the Capital Stock Schedule, the
Company does not have any other capital stock, equity securities or securities
containing any equity features authorized, issued or outstanding, and there are
no agreements, options, warrants or other rights or arrangements existing or
outstanding which provide for the sale, issuance, repurchase or redemption of
any of the foregoing by the Company. Except as set forth on the Capital Stock
Schedule, there are no rights, subscriptions, warrants, options, conversion
rights or agreements of any kind outstanding to purchase, redeem or otherwise
acquire any shares of capital stock or other equity securities of the Company of
any kind. Except as set forth on the Capital Stock Schedule, there are no
agreements or other obligations (contingent or otherwise) which require the
Company to repurchase, redeem or otherwise acquire any shares of the Company's
capital stock or other equity securities and there are no written agreements,
arrangements or understandings to which the Company is a party pursuant to which
the Company has the right to elect to satisfy any liability of the Company by
issuing equity interests in the Company.
3.05 FINANCIAL STATEMENTS. The Financial Statements Schedule
attached hereto consists of: the Company's audited consolidated balance sheets
as of December 31, 2003, 2004 and 2005 and the related statements of income,
cash flows and stockholders' equity for the fiscal years then ended, together
with the report thereon of Ernst & Young LLP (collectively, the "Financial
Statements" and the audited consolidated balance sheet as of December 31, 2005
being referred to as the "Latest Balance Sheet"). Except as set forth on the
Accounting Schedule, the Financial Statements have been prepared in accordance
with GAAP, consistently applied throughout the periods indicated, and present
fairly in all material respects the financial condition and results of
operations of the Company and its Subsidiaries as of the times and for the
periods referred to therein.
3.06 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on
the Developments Schedule, since the date of the Latest Balance Sheet, the
Company and its Subsidiaries have conducted their business only in the ordinary
course of business in a manner consistent with past practice and there has not
been any event or circumstance that has had a Material Adverse Effect. Except as
set forth on the Developments Schedule and except as expressly contemplated by
this Agreement, since the date of the Latest Balance Sheet, there has not been,
occurred or arisen any of the following:
(a) any capital expenditure or commitment by the Company
or any Subsidiary exceeding $200,000 individually or $1,000,000 in the aggregate
not provided for in the Company's 2006 capital expenditure budget (the "2006
Capital Budget");
(b) except as required by GAAP or applicable Law, any
material change to the Company's or any of its Subsidiaries' accounting policies
or procedures or a revaluation by the Company or any Subsidiary of any of its
assets, properties or business;
(c) any acquisition or disposition by the Company or any
of its Subsidiaries of any asset or property (excluding capital expenditures and
excluding obsolete/slow moving inventory) having a value in excess of $100,000,
outside the ordinary course of business consistent with past practices;
(d) any entry by the Company or any of its Subsidiaries
into any material transaction that would result in payments by or to the Company
or any of its Subsidiaries in excess of $100,000 per annum, other than in the
ordinary course of business consistent with past practice;
(e) any Lien on any material assets or properties,
tangible or intangible, other than in the ordinary course of business consistent
with past practice except for Liens for Taxes not yet delinquent;
(f) any waiver, release or assignment of rights or
cancellation of debt in excess of $50,000;
(g) any issuance or sale, or contract to issue or sell,
by the Company of any shares of Common Stock or other capital stock or
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock or other capital stock, or any securities, warrants, options or
rights to purchase any of the foregoing;
(h) any declaration, setting aside or payment of a
dividend or other distribution (whether in cash, stock or property) in respect
of any Common Stock, or any split, combination or reclassification in respect of
any shares of Common Stock, or any issuance or authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
Common Stock, or any direct or indirect repurchase, redemption or other
acquisition by the Company of any shares of Common Stock (or options, warrants
or other rights convertible into, exercisable or exchangeable therefor);
(i) (i) any increase (whether in cash, stock or property)
in the base salary or other compensation payable or to become payable by the
Company or any Subsidiary to any of their respective officers, directors or
employees (except in the case of officers and employees for annual or periodic
increases made in the ordinary course of business consistent with past practices
not exceeding $2,500 individually or $25,000 in the aggregate), (ii) any
adoption of, or (except as required by Law) amendment materially increasing
payments to or benefits under, any savings, insurance, pension, retirement or
other employee benefit plan, or (iii) the declaration, payment or commitment or
obligation of any kind for the payment by the Company or any Subsidiary of a
severance payment, termination payment, bonus, profit sharing, deferred
compensation or other additional salary or compensation to any such Person,
other than (x) pursuant to the terms of any existing written agreement or plan
or (y) annual or periodic increases made in the ordinary course of business
consistent with the Company's or such Subsidiary's past practice, not exceeding
$2,500, individually or $25,000 in the aggregate;
(j) any incurrence by the Company or any of its
Subsidiaries of any material obligations or material liabilities, whether
absolute, accrued, contingent or otherwise (including without limitation,
liabilities as guarantor or otherwise with respect to obligations of others),
other than obligations and liabilities incurred in the ordinary course of
business consistent with past practice and other than obligations or liabilities
imposed expressly under this Agreement;
(k) the commencement, settlement, notice or, to the
knowledge of the Company, threat of any lawsuit or proceeding or other
investigation against the Company or any Subsidiary or seeking damages in excess
of $100,000 per occurrence or $250,000 in the aggregate, seeking any equitable
or injunctive relief;
(l) any damage to or destruction or loss of any asset or
property of the Company or any Subsidiary not covered by insurance with an
aggregate value in excess of $100,000;
(m) termination (or written notice of planned
termination) of (i) any contract or agreement with any customers of the Company
or its Subsidiaries representing, in the aggregate, $500,000 or more of the
consolidated revenues of the Company during the twelve months ended December 31,
2005 or (ii) any contract or agreement pursuant to which the Company or any of
its Subsidiaries is or was licensed to use any Licensed Intellectual Property
material to, or necessary for the conduct of, the business of the Company and
Subsidiaries;
(n) any material malfunction with respect to the IT
Systems that has not been remedied or replaced in all material respects;
(o) any event that could reasonably be expected to
prevent or materially delay the performance of the Company's obligations
pursuant to this Agreement or the consummation of the Merger by the Company;
(p) any amendment to the Company Charter Documents;
(q) any material Tax election, any change in annual Tax
accounting period, any adoption or change of any method of Tax accounting,
filing of an amended Tax Return, execution of a closing agreement, settlement of
a Tax claim or assessment, the surrender of any right to claim a Tax refund,
consent to the extension or waiver of the limitations period applicable to any
Tax claim or assessment, the taking or the omission to take any other action, if
any such action or omission would have the effect of materially increasing the
Tax liability or reducing any Tax Asset, of the Company, any of its
Subsidiaries, Purchaser or any affiliate of Purchaser. For purposes of this
Agreement, "Tax Asset" shall mean any net operating loss, net capital loss,
investment Tax credit, or any other credit or Tax attribute which could reduce
Taxes (including, without limitation, deductions and credits related to
alternative minimum Taxes); and
(r) any agreement by the Company or any Subsidiary to do
any of the things described in the preceding clauses (a) through (q) of this
Section 3.06.
3.07 TITLE TO PROPERTIES.
(a) The Company owns good and marketable title to all of the
personal property shown on the Latest Balance Sheet, free and clear of all
Liens, except for Permitted Liens.
(b) The real property demised by the leases described on the
Leased Real Property Schedule constitutes all of the real property leased by the
Company and its Subsidiaries. The leases described on the Leased Real Property
Schedule are in full force and effect, and the Company or a Subsidiary of the
Company holds a valid and existing leasehold interest under
each such lease. The Company has delivered to the Purchaser, or provided the
Purchaser with access to, complete and accurate copies of each of the leases
described on the Leased Real Property Schedule, and none of such leases have
been modified in any material respect, except to the extent that such
modifications are disclosed by the copies provided to the Purchaser. To the
Company's knowledge, neither the Company nor any of its Subsidiaries is in
default in any material respect under any of such leases.
(c) Except as set forth on the Owned Real Property Schedule,
neither the Company nor any of its Subsidiaries owns any real property. With
respect to each parcel of real property listed on the Owned Real Property
Schedule:
(i) either the Company or a Subsidiary of
the Company owns good and marketable title to such parcel of real property, free
and clear of all Liens, easements and other restrictions, other than (A) real
estate Taxes and installments of special assessments not yet delinquent, (B)
easements, covenants and restrictions of record, (C) utility easements, building
restrictions, zoning restrictions and other easements and restrictions which are
not violated by existing usage of and improvements on such property, (D) matters
which would be disclosed by an accurate survey of each parcel of real property,
(E) public roads and highways, (F) other encumbrances and exceptions set forth
on the Owned Real Property Schedule, and (G) Permitted Liens;
(ii) there are no leases, subleases,
licenses, concessions or other agreements granting to any party or parties the
right of use or occupancy of any portion of such parcel of real property; and
(iii) there are no outstanding options or
rights of first refusal to purchase such parcel of real property, any portion
thereof or interest therein.
(d) There is no portion of the Owned Real Property or Leased
Real Property that is not currently used in connection with the business of the
Company or any of its Subsidiaries.
(e) Neither the Company nor a Subsidiary of the Company owns
or leases (or holds any legal or beneficial right in or to) any real property
except for the Owned Real Property or the Leased Real Property, as applicable.
(f) All right, title and interest in and to all real property,
fixtures, easements, licenses, access rights (including, without limitation,
access to (and from) such property and access to utilities), water rights and
appurtenances used in connection with the business of the Company or any of its
Subsidiaries is included within the Owned Real Property or the Leased Real
Property.
3.08 TAX MATTERS. The Company and its Subsidiaries and each
affiliated group (within the meaning of Section 1504 of the Code) or combined,
consolidated or unitary group (under state, local or foreign law) of which the
Company or any Subsidiary is a member (each, an "Affiliated Group") have filed
all federal and all material foreign, state, county and local income, excise,
property and other Tax Returns that are required to be filed by them and all
such Tax Returns are true, correct and complete in all material respects. Except
as set forth on the Taxes Schedule, all Taxes shown as owing by the Company, its
Subsidiaries and each Affiliated Group on all such Tax Returns have been fully
paid or accrued. To the Company's knowledge, the provision for Taxes on the
Latest Balance Sheet is sufficient for all accrued and unpaid Taxes as of the
date thereof. All material Taxes which the Company or any of its Subsidiaries is
obligated to withhold from amounts owing to any employee, creditor or third
party have been fully paid or properly accrued. No Tax liens have been filed
and, to the knowledge of the Company, no claims are being asserted with respect
to any Taxes of the Company, any Subsidiary or any Affiliated Group, and, to the
knowledge of the Company, no examination, audit or inquiry is currently being
conducted by any Taxing authority, including any examination, audit or inquiry
which could result in a Tax liability for which the Company or any Subsidiary
could be severally liable under Treasury Regulations ss. 1.1502-6 or any
comparable state, local or foreign Tax provision. Neither the Company nor any
Subsidiary has been a member of any affiliated group within the meaning of
Section 1504 of the Code other than the Affiliated Group of which the Company is
the common parent. There are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns of the Company, any Subsidiary or any Affiliated Group.
Neither the Company nor any Subsidiary is a party to any agreement or
understanding providing for the allocation or sharing of Taxes other than with
respect to each other. Neither the Company nor any Subsidiary is required to
include in income any adjustment pursuant to Section 481(a) of the Code. Neither
the Company nor any Subsidiary has filed with respect to any item a disclosure
statement pursuant to Section 6662 of the Code. Neither the Company, any
Subsidiary nor any Affiliated Group has made or is required to make any
disclosure with respect to any "listed transaction" within the meaning of
Treasury Regulation Section 1.6011-4. Neither the Company nor any Subsidiary has
within the past 5 years been a party to a transaction intended to qualify under
Section 355 of the Code or under so much of Section 356 of the Code as relates
to Section 355 of the Code.
3.09 CONTRACTS AND COMMITMENTS
(a) Except as set forth on the Contracts Schedule, neither the
Company nor any Subsidiary is party to or bound by any, whether written or oral:
(i) collective bargaining agreement or contract with any labor union; (ii)
bonus, pension, profit sharing, retirement, severance, post-retirement or other
form of deferred compensation plan, other than as described in Section 3.13 or
the Schedules relating thereto; (iii) stock purchase, stock option, stock
appreciation or similar plan; (iv) contract or other agreement for the
employment of any officer, individual employee, director or other person on a
full-time or consulting basis; (v) agreement, instrument or indenture relating
to the borrowing of money or to mortgaging, pledging or otherwise placing a Lien
on any material portion of the assets of the Company and its Subsidiaries; (vi)
guaranty of any obligation for borrowed money or other guaranty (including so
called take-or-pay or keep-well agreements); (vii) lease or agreement under
which it is lessee of, or holds or operates any personal property owned by any
other party, for which the annual rental
exceeds $50,000; (viii) lease or agreement under which it is lessor of or
permits any third party to hold or operate any property, real or personal, for
which the annual rental exceeds $50,000; (ix) contract or group of related
contracts with the same party for the purchase of products or services, under
which the undelivered balance of such products and services has a selling price
in excess of $50,000; (x) contract or group of related contracts with the same
party for the sale of products or services under which the undelivered balance
of such products or services has a sales price in excess of $50,000; (xi)
contract which prohibits or materially restricts the Company or any of its
Subsidiaries or any of their respective Affiliates from freely engaging in
business anywhere in the world or from soliciting customers, suppliers,
employees or consultants, (xii) any fidelity or surety bond or completion bond;
(xiii) any letters of credit, drawn or undrawn; (xiv) contract or agreement
relating to capital expenditures and involving payments in excess of $100,000;
(xv) any contract or agreement relating to the disposition or acquisition of
assets or any interest in any business enterprise, including any option thereon,
outside the ordinary course of business consistent with past practice or in
excess of $250,000; (xvi) any distribution, joint marketing or development
agreement; (xvii) any joint venture, partnership agreement, limited liability
company agreement and any other similar contract (however named) involving a
sharing of profits or losses, costs or liabilities by the Company or a
Subsidiary with any other Person; (xviii) any contract or agreement providing
for the payment by the Company or any of its Subsidiaries amounts owing as
deferred purchase price for property or services, including all seller notes and
"earn-out" payments, in each case other than trade payables incurred in the
ordinary course of business; (xix) all agreements or contracts evidencing
obligations of the Company or any of its Subsidiaries under leases which have
been or should be, in accordance with GAAP, recorded as capital leases; (xx)
commitments or obligations by which the Company or any of its Subsidiaries
assures a creditor against loss pursuant to contingent reimbursement obligations
with respect to letters of credit or similar financial instruments; (xxi)
agreements or contracts providing any customer or supplier with "most favored"
status as to pricing or other terms; or (xxii) agreements or contracts
evidencing obligations under any interest rate, currency or other hedging
agreement;
(b) The Purchaser either has been supplied with, or has been
given access to on the online data site, a true, complete and correct copy of
all contracts or agreements, or a summary of the material terms of any contracts
or agreements that are not in writing, in each case which are referred to on the
Contracts Schedule, together with all material amendments, waivers or other
changes thereto (collectively, the "Material Contracts").
(c) Each Material Contract is in full force and effect and
constitutes a legal, valid and binding agreement of the Company or its
Subsidiary party thereto, enforceable against the Company or such Subsidiary
and, to the Company's knowledge, the other parties thereto, in accordance with
its terms, except as such enforceability may be subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other Law
affecting or relating to creditors' rights generally and general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether such enforceability is considered in a proceeding
in equity or at law). The Company and its Subsidiaries are in compliance in all
material respects with and have not breached, violated or defaulted under in any
material respect, or received notice that any one of them has breached, violated
or defaulted under, any of the terms or conditions of any Material Contract, and
the Company has no knowledge of any event that would constitute such a breach,
violation or default with the lapse of
time, giving of notice or both. To the knowledge of the Company, no other party
has breached, violated or defaulted under in any material respect any of the
terms or conditions of any Material Contract.
3.10 INTELLECTUAL PROPERTY.
(a) All of the issued, registered or applied for Patents,
Trademarks and Copyrights (and material unregistered Patents, Trademarks and
Copyrights) owned by the Company and its Subsidiaries are set forth on the
Intellectual Property Schedule. Except as set forth on the Intellectual Property
Schedule, the Company and/or its Subsidiaries, as the case may be, own and
possess all right, title and interest in and to, free and clear of any Lien
other than Permitted Liens, or possess the valid right to use, the Intellectual
Property necessary for the operation of the business of the Company and its
Subsidiaries, as presently conducted, except as would not have a Material
Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has
received any written notices of a material infringement or misappropriation from
any third party with respect to any third party's Intellectual Property rights.
To the Company's knowledge, neither the Company nor any of its Subsidiaries is
currently infringing on the Intellectual Property of any other Person, except
for any infringement that would not have a Material Adverse Effect.
(c) There are no actions, suits, proceedings or claims
pending, or, to the knowledge of Company, threatened by or against Company or
any of its Subsidiaries that involve claims concerning the infringement or other
violation, validity, enforceability, ownership or license or other right to use
any owned or licensed Intellectual Property.
(d) The Company or its Subsidiaries have taken reasonable
measures to protect the secrecy, confidentiality and value of all Trade Secrets
used in their businesses.
(e) Except as would not materially disrupt their operations,
the IT Systems (i) are adequate in all material respects for their intended use
and for the operation of the business as currently operated by the Company and
its Subsidiaries, and are in good working condition (normal wear and tear
excepted), and, (ii) to the Company's knowledge, are free of all viruses, worms,
Trojan horses and other known contaminants and do not contain any bugs, errors
or problems. There has not been any malfunction with respect to any of the IT
systems since January 1, 2004 that has not been remedied or replaced in all
material respects.
3.11 LITIGATION. Except as set forth on the Litigation
Schedule, there are no actions, suits, claims or proceedings pending or, to the
Company's knowledge, threatened by, against or involving the Company or any of
its Subsidiaries or, to the Company's knowledge, any of their properties or
assets or employees, officers or directors, at Law or in equity, or before or by
any federal, state, municipal or other governmental department, commission or
agency, domestic or foreign, which if determined adversely to the Company or any
of its Subsidiaries would reasonably be expected to result in monetary damages
exceeding $100,000 or that would result in any form of injunctive or declaratory
relief against the Company or any of its Subsidiaries or any of their properties
or assets or employees, officers or directors. Neither the Company nor any of
its Subsidiaries has received a reservation of rights or similar notice from
any insurer with respect to any actions, suits, claims or proceedings listed on
the Litigation Schedule. To the knowledge of the Company, there is no
investigation pending or threatened against the Company, its Subsidiaries, their
properties or their officers or employees by or before any federal, state,
municipal or other governmental department, commission or agency, domestic or
foreign. No federal, state, municipal or other governmental department,
commission or agency, domestic or foreign, has provided the Company or any of
its Subsidiaries with notice challenging or questioning the legal right of the
Company or any Subsidiary to conduct its operations as conducted at that time or
as currently conducted. Except as set forth on the Litigation Schedule, neither
the Company nor any of its Subsidiaries is subject to any outstanding judgment,
order or decree of any court or governmental body.
3.12 GOVERNMENTAL CONSENTS, ETC. Except as set forth on the
Governmental Consents Schedule, no material permit, consent, approval,
registration or authorization of, or declaration to or filing with, any
governmental or regulatory authority is required in connection with any of the
execution, delivery or performance of this Agreement by the Company or the
consummation by the Company of any other transaction contemplated hereby.
3.13 EMPLOYEE BENEFIT PLANS.
(a) The Employee Benefits Schedule lists all "employee benefit
plans" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and each other material employee benefit plan,
program, agreement or arrangement sponsored, maintained or contributed to or
required to be contributed to by the Company or any of its Subsidiaries for the
benefit of any current or former employees, leased employees, directors,
officers, shareholders or independent contractors of the Company or any of its
Subsidiaries. All such plans, programs, agreements and arrangements shall be
collectively referred to herein as the "Plans."
(b) Each Plan has been maintained, funded and administered in
material compliance with its terms and the applicable provisions of ERISA, the
Internal Revenue Code of 1986, as amended (the "Code"), and other applicable
laws. Each Plan that is intended to meet the requirements of a "qualified plan"
under Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service (the "IRS") that such Plan is a qualified plan
or is in the form of a prototype plan that is the subject of a favorable opinion
letter from the IRS, and the Company is not aware of any facts or circumstances
that would adversely affect the qualified status of such Plan. There are no
actions, suits or claims pending (other than routine claims for benefits) or, to
the knowledge of the Company, threatened against any of the Plans. No Plan is
currently under governmental investigation or audit and, to the knowledge of the
Company, no such investigation or audit is contemplated or under consideration.
(c) None of the Plans, any trust created thereunder, or any
"party-in-interest" or "disqualified person" with respect thereto has engaged in
any non-exempt "prohibited transaction" or "party-in-interest transaction" as
such terms are defined in Section 4975 of the Code and Section 406 of ERISA that
could reasonably be expected to result in material liability to the Company or
any of its Subsidiaries.
(d) All contributions, claims, or premium payments that are
due to each Plan have been made within the time periods prescribed by ERISA, the
Code or other applicable law, and all material contributions or claims for any
period ending on or prior to the Closing Date which are not yet due have been
made or accrued in accordance with past practice or custom and GAAP.
(e) The Company has furnished to the Purchaser, or provided
the Purchaser with access to, true and complete copies of each of the Plans and,
as applicable, the current trust agreements or other current funding
instruments, the most recent summary plan descriptions and most recent summaries
of material modifications, the most recent determination or opinion letters
received from the IRS, the most recent Form 5500 annual reports, the most recent
actuarial reports and the most recent financial statements related thereto.
(f) Except as set forth on the Employee Benefits Schedule,
with respect to any Plan that is a "defined benefit plan," within the meaning of
Section 3(35) of ERISA and subject to Title IV of ERISA, within the past six
years, (A) no liability to the Pension Benefit Guaranty Corporation (the "PBGC")
has been incurred (other than for premiums not yet due); (B) no "accumulated
funding deficiency," within the meaning of Section 302 of ERISA or Section 412
of the Code, whether or not waived, has been incurred; (C) no "reportable event"
within the meaning of Section 4043 of ERISA (for which the 30-day notice
requirement has not been waived by the PBGC) has occurred; and (D) no Lien has
arisen under ERISA or the Code on the assets of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries maintains,
administers, contributes or is required to contribute to any "multiemployer
plan," as defined in Section 400l(a)(3) of ERISA, and neither the Company nor
any of its Subsidiaries has incurred any liability, including liability
resulting from an ERISA Affiliate (as defined below), on account of a "partial
withdrawal" or a "complete withdrawal" (within the meaning of Sections 4205 and
4203 of ERISA, respectively) from a multiemployer plan that has not been
satisfied in full. An "ERISA Affiliate" is any entity that is considered to be
in a "controlled group" with the Company pursuant to Section 4001(a)(14) of
ERISA. No event has occurred and, to the knowledge of the Company, no condition
exists that would subject the Company or any of its Subsidiaries, by reason of
their affiliation with any ERISA Affiliate, to any tax, fine, lien, penalty or
other liability imposed by ERISA, the Code or other applicable laws, rules and
regulations.
(g) Except as set forth on the Employee Benefits Schedule, no
Plan, employment agreement, consulting agreement, independent contractor
agreement, severance agreement, or collective bargaining agreement provides any
health, life insurance or other welfare benefits to retired or other terminated
employees of the Company or any of its Subsidiaries, other than continuation
coverage required by law.
(h) Without limiting the generality of the foregoing, each
Plan that covers any current or former employees of the Company or any of its
Subsidiaries residing or working outside the United States of America (the
"Non-U.S. Plans") has been established, administered and funded in material
compliance with its terms and the applicable laws of the relevant jurisdiction.
Each Non-U.S. Plan and related funding arrangement that is intended to qualify
for tax-favored and/or social security payment-favored status has been, approved
for such status by the appropriate governmental authority, and nothing has
occurred and, to the knowledge of the
Company, no condition exists that is likely to cause the loss of such
tax-favored status and/or social security payment-favored status.
(i) Neither the Company, its Subsidiaries nor, to the
Company's knowledge, any of its directors, officers, employees or any other
"fiduciary," as such term is defined in Section 3 of ERISA, to the Plans has
committed any breach of fiduciary responsibility imposed by ERISA with respect
to the Plans that would subject the Purchaser, its Subsidiaries or any of their
respective directors, officers or employees to any material liability under
ERISA or any applicable Law.
3.14 LABOR AND EMPLOYMENT. The Company has delivered or made
available to the Purchaser a complete and correct copy of each collective
bargaining agreement applicable to employees of the Company and its
Subsidiaries. Each collective bargaining agreement which is set forth on the
Labor and Employment Schedule has been operated and administered in all material
respects in accordance with its terms. To the Company's knowledge, no organizing
efforts are pending with respect to non-unionized employees of the Company or
any of its Subsidiaries. Within the last three years, there has been no strike,
work slowdown, work stoppage, lockout or other labor dispute with respect to the
employees of the Company or any of its Subsidiaries, nor is any strike, work
slowdown, work stoppage, lockout, or other labor dispute pending or, to the
knowledge of the Company, threatened. Since January 1, 2003, the Company and its
Subsidiaries have complied in all material respects with all applicable
agreements, laws, rules and regulations relating to employment, including those
related to wages, hours, nondiscrimination, equal employment opportunity,
benefits, collective bargaining, plant closing, immigration, workers'
compensation, unemployment insurance, occupational safety and health, and the
collection, payment and withholding of taxes. No event giving rise to the
requirement that notice be given to any employee of the Company or any of its
Subsidiaries under the Worker Adjustment and Retraining Notification Act or
under any similar law has occurred or been announced during the 90-day period
ending on the date of this Agreement or any longer period required by any local
legislation. There are no material complaints, charges, including unfair labor
practice charges, or claims against the Company or any of its Subsidiaries
pending or, to the Company's knowledge, threatened to be brought or filed with
any governmental authority, court or arbitrator based on, arising out of, in
connection with or otherwise relating to the employment or termination of
employment of any individual by the Company or any of its Subsidiaries.
3.15 INSURANCE.
(a) The Insurance Schedule lists (i) each insurance policy (or
binder) and fidelity or surety bonds in effect since January 1, 2003 and (ii)
each products liability insurance policy in effect since January 1, 1997 of the
Company and any of its Subsidiaries and any of their respective properties,
assets, employees, officers or directors, and sets forth the insurance company,
policy number, insured and other parties, type and amount of coverage and
deductibles and the aggregate limit of the insurer's liability under such
insurance policies and binders. To the Company's knowledge, the Insurance
Schedule lists any occurrences or circumstances since January 1, 2006 that would
lend to a (self insured) claim greater than $25,000. The Company has made
available to Purchaser copies of all such policies, bonds or binders as in
effect on the date hereof. Except for employee health or benefit claims, there
is no claim by the Company or any Subsidiary pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. Each such insurance policy, binder or
bond is legally valid, binding and enforceable and in full force and effect,
will not terminate or lapse by reason of any of the transactions contemplated by
this Agreement, and neither the Company nor any of its Subsidiaries is in
material default with respect to its obligations under any such insurance
policy, binder or bond. All premiums due and payable under all such policies and
bonds have been paid by the Company. The Company has no knowledge of threatened
termination of, or material premium increase with respect to, any of such
policies. The Company and its Subsidiaries, and their respective assets and
properties, are insured in amounts no less than as required by applicable Law
and any contract or agreement to which the Company or any Subsidiary is a party.
(b) There are no open or pending workers' compensation claims
prior to May 1, 2003 that are not fully covered by insurance. The Company has
not incurred any material loss covered by any insurance policy and still pending
for which it has not properly asserted a claim under such policy. All litigation
covered by any of the policies has been properly reported to and accepted by the
applicable insurer. To the knowledge of the Company, all insurance carriers with
respect to each policy are solvent and there are no open claims against any
insolvent insurance carrier. No historical policy limits (for products
liability) have been exhausted or materially eroded for policies in effect since
January 1, 1997. There are no gaps in products liability coverage since January
1, 1997, and, since May 1, 1999, no products liability policies have been
subject to a deductible or self-insured retention wherein the Company would be
obligated to pay any portion of a products liability claim that is within the
policy limits and covered by such policy. No product sold by the Company has
been excluded from products liability coverage since January 1, 1997.
3.16 PRODUCTS LIABILITY. The Company has never manufactured or
distributed products containing any (air) pressurized component. The Company has
never sold any products containing asbestos.
3.17 COMPLIANCE WITH LAWS. The Company and each of its
Subsidiaries is and has been since January 1, 2003 in compliance, in all
material respects, with all applicable Laws of foreign, federal, state and local
governments and all agencies thereof. The Company has not received, since
January 1, 2002, any written notice from any governmental entity alleging that
the Company or any Subsidiary is in violation of any Law applicable to the
conduct of its business.
3.18 ENVIRONMENTAL MATTERS. Except as set forth on the
Environmental Compliance Schedule: (i) the operations of the Company and its
Subsidiaries are in full compliance with Environmental Laws except where the
failure to comply will not have a Material Adverse Effect; (ii) the Company and
its Subsidiaries have obtained and are in compliance with all necessary Permits
or authorizations that are required under Environmental Laws except where the
failure to comply will not have a Material Adverse Effect; (iii) there has been
no Release at any of the owned or leased properties or to the knowledge of the
Company or its Subsidiaries any formerly owned or leased property that will have
a Material Adverse Effect; (iv) no Environmental Claims have been asserted
against the Company or its Subsidiaries nor does the Company or its Subsidiaries
have knowledge or notice of any threatened or pending Environmental Claims
against the Company or its Subsidiaries for Releases at any current or formerly
owned or leased properties which will have a Material Adverse Effect; (v) no
Environmental Claims have been asserted or threatened to be asserted against the
Company or its Subsidiaries for any personal injury (including wrongful death)
or property damage (real or personal) arising out of exposure to Hazardous
Substances used, handled, generated, transported or disposed by the Company or
its, Subsidiaries at the owned or leased properties or to the Company's or its
Subsidiaries knowledge at any formerly owned or leased property which will have
a Material Adverse Effect; (vi) neither the Company nor any of its Subsidiaries
has agreed to indemnify or hold harmless any third party from Environmental
Liabilities; and (vii) to the knowledge of the Company, the Environmental
Compliance Schedule is a true, complete and accurate list of all instances where
the operations of the Company or its Subsidiaries or the environmental
conditions at the real estate presently or formerly owned or operated by the
Company or any predecessor in interest are not in compliance with Environmental
Law or give rise to Environmental Liabilities. This Section 3.18 constitutes the
sole and exclusive representation and warranty of the Company relating to
environmental, health or safety matters.
3.19 AFFILIATED TRANSACTIONS. Except as set forth on the
Affiliated Transactions Schedule, no director, Stockholder or, to the Company's
knowledge, Affiliate of the Company or any individual in such director's or
Stockholder's immediate family is a party to any agreement, contract, commitment
or transaction with the Company or has any material interest in any property
used by the Company or any of its Subsidiaries.
3.20 BROKERAGE. Except for the fees and expenses of Xxxxx
Xxxxxxx & Co. (which shall be paid pursuant to Section 2.02(d) at the Closing),
there are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of any Stockholder or
the Company.
3.21 SUPPLIERS AND CUSTOMERS. The Suppliers and Customers
Schedule sets forth a complete and accurate list of the top 15 customers and top
15 suppliers of the Company and its Subsidiaries taken as a whole, measured by
reference to the aggregate payments made to or by the Company and its
Subsidiaries taken as a whole for the 12-month period ended December 31, 2005.
Except as set forth on the Suppliers and Customers Schedule, since December 31,
2004, none of the top 15 vendors, suppliers or customers of the Company or any
Subsidiary has cancelled or otherwise materially modified its relationship with
the Company or any Subsidiary in a manner materially adverse to the Company, and
no such Person has communicated (orally or in writing) to the executive officers
or directors of the Company any intention to do so.
3.22 ACCOUNTS RECEIVABLE. All accounts receivable of the
Company and its Subsidiaries reflected on the Latest Balance Sheet included in
the Financial Statements and those otherwise reflected in the books of the
Company and its Subsidiaries after the date of the Latest Balance Sheet
represent bona fide transactions made in the ordinary course of business
consistent with past practice of the Company and its Subsidiaries, and
applicable bad debt or uncollectible account reserves reflected on the Latest
Balance Sheet and those otherwise reflected in the books of the Company and its
Subsidiaries after the date of the Latest Balance Sheet are, in the Company's
judgment, reasonable and established consistent with past practice.
3.23 BOOKS AND RECORDS. The books of account and other
financial records of the Company and its Subsidiaries, all of which have been
made available to Purchaser, are complete and correct in all material respects,
have been maintained in all material respects in accordance with sound business
practices, and accurately and fairly reflect, in all material respects, in
reasonable detail, the transactions and the assets and liabilities of the
Company and its Subsidiaries for the periods covered thereby.
3.24 CHANGE OF CONTROL. Except as set forth on the Change of
Control Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will, with or
without any action of any party or exercise of any right or with or without any
intervening event or circumstance, (a) result in any payment (whether of
severance pay or otherwise) becoming due from the Company or any of its
Subsidiaries, (b) increase any benefits otherwise payable by the Company or any
of its Subsidiaries or (c) result in the acceleration of the time of the time of
payment or vesting of any payment or benefits.
3.25 CAPITAL BUDGET. The capital expenditures made by the
Company and its Subsidiaries during the period from January 1, 2006 through the
date of this Agreement are reflected in all material respects on the Capital
Budget Schedule.
3.26 CERTAIN BUSINESS PRACTICES.
(a) Neither the Company nor any Subsidiary nor, to the
knowledge of the Company, any of their respective officers, employees,
directors, representatives or agents has made (i) any unlawful payments under
any applicable Laws or (ii) any payments or other inducements (whether or not
lawful), to any domestic or foreign governmental official, including any
official of an entity owned or controlled by a domestic or foreign government,
political party or official thereof or any candidate for political office, with
the intent or purpose of: (A) influencing any act or decision of such official
in his official capacity; (B) inducing such official to do or omit to do any act
in violation of the lawful duty of such official; (C) receiving an improper
advantage; or (D) inducing such official to use his influence with any
governmental entity to affect or influence any act or decision of such
governmental entity; in any case in order to assist the Company or any
Subsidiary in obtaining or retaining business for or with, or directing business
to, any Person.
(b) The Company and its Subsidiaries have established and
maintain a system of disclosure controls and procedures designed to ensure that
information relating to the Company, including its Subsidiaries, is accumulated
and communicated to the Company's principal executive officers and principal
financial officers, and to the knowledge of the Company, such disclosure
controls and procedures are effective to ensure that information is recorded,
processed and summarized. The Company and its Subsidiaries have established and
maintain a system of internal control over financial reporting designed to
provide reasonable assurance regarding the reliability of the Company's and its
Subsidiaries' financial reporting and the preparation of their financial
statements in accordance with GAAP. Based on the most recent evaluation of
internal controls over financial reporting by the principal executive officers
and principal financial officers of the Company, (x) there are no significant
deficiencies or material weaknesses (as defined in applicable accounting rules)
in the design or operation of internal controls over financial reporting that
are reasonably likely to adversely affect the Company's ability to record,
process, summarize and report financial information and (y) there is no fraud,
whether or not material, that involves management or other employees who have a
significant role in the Company's internal control over financial reporting.
3.27 Foreign Operations. The Foreign Operations Schedules
contains a true, correct and complete list, as of December 31, 2005, of the
revenues (or turnover), assets, sales generated in each jurisdiction outside of
the United States of America in which the Company or any of its Subsidiaries
does business or owns, operates or leases assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser represents and warrants to the Company that:
4.01 ORGANIZATION AND CORPORATE POWER. The Purchaser is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware, with full corporate power and authority to enter into
this Agreement and perform its obligations hereunder. The Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
4.02 AUTHORIZATION. Each of the Purchaser and the Merger Sub
has all requisite corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Purchaser and the Merger Sub and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all requisite
corporate action, and no other corporate proceedings on their part are necessary
to authorize the execution, delivery or performance of this Agreement. Assuming
that this Agreement is a valid and binding obligation of the Company, this
Agreement constitutes a valid and binding obligation of the Purchaser and the
Merger Sub, enforceable in accordance with its terms, except as such
enforceability may be subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other Law affecting or relating to
creditors' rights generally and general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
4.03 NO VIOLATION. Neither the Purchaser nor the Merger Sub is
subject to or obligated under its certificate of incorporation, its bylaws, any
applicable Law, or any material agreement or instrument, or any license,
franchise or permit, or subject to any order, writ, injunction or decree, which
would (with or without notice or lapse of time, or both) be breached or violated
in any material respect by the Purchaser's or the Merger Sub's execution,
delivery or performance of this Agreement.
4.04 GOVERNMENTAL AUTHORITIES; CONSENTS. Neither the Purchaser
nor the Merger Sub is required to submit any notice, report or other filing with
any governmental authority in connection with the execution, delivery or
performance by it of this Agreement or the consummation of the transactions
contemplated hereby. No consent, approval or authorization of any governmental
or regulatory authority or any other party or Person is required to be obtained
by the Purchaser or the Merger Sub in connection with its execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby.
4.05 LITIGATION. There are no actions, suits or proceedings
pending or, to the Purchaser's knowledge, overtly threatened against or
affecting the Purchaser or the Merger Sub at Law or in equity, or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which would
adversely affect the Purchaser's or the Merger Sub's performance under this
Agreement or the consummation of the transactions contemplated hereby.
4.06 BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Purchaser or the Merger Sub.
4.07 INVESTMENT REPRESENTATION. The Purchaser is acquiring the
Common Stock for its own account with the present intention of holding such
securities for investment purposes and not with a view to, or for sale in
connection with, any distribution of such securities in violation of any federal
or state securities Laws.
4.08 FINANCING. The Purchaser has and shall have at the
Closing sufficient cash to pay the full Merger Consideration, to make all other
necessary payments by it in connection with the performance by it of its
obligations under this Agreement (including payment of Funded Indebtedness and
Company Transaction Expenses) and to pay all of its related fees and expenses
and affirms that it is not a condition to Closing or any of its other
obligations under this Agreement that the Purchaser and/or Merger Sub obtain
financing for or in connection with any of the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS OF THE PURCHASER
--------------------------
5.01 ACCESS TO BOOKS AND RECORDS. From and after the Closing,
the Purchaser shall, and shall cause the Surviving Corporation to, provide POF
and its agents with reasonable access (for the purpose of examining and
copying), during normal business hours, to the books and records of the Company
and its Subsidiaries with respect to periods or occurrences prior to the Closing
Date in connection with any matter relating to the Stockholders' ownership of
Common Stock. Unless otherwise consented to in writing by POF, neither the
Purchaser nor the Company shall, for a period of seven years following the
Closing Date, destroy, alter or otherwise dispose of any of the books and
records of the Company for any period prior to the Closing Date without first
offering to surrender to POF a copy of such books and records or any portion
thereof which the Purchaser or the Company may intend to destroy, alter or
dispose of.
5.02 DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION. For
the duration of the period of six years commencing on the Closing Date, the
Purchaser shall not, and shall not permit the Company or any of its Subsidiaries
to amend, repeal or otherwise modify any provision in the Company's or any of
its Subsidiaries' certificate of incorporation (or equivalent governing
document) or bylaws relating to the exculpation or indemnification of any
officers and/or directors (unless required by law), it being the intent of the
parties that the officers and directors of the Company and its Subsidiaries
shall continue to be entitled to such exculpation and indemnification to the
full extent of the law. In addition, the Purchaser shall cause the Surviving
Corporation to maintain in effect for the duration of the period of six years
commencing on the Closing Date directors' and officers' liability insurance
covering those persons who are covered by the Company's directors' and officers'
liability insurance policy immediately prior to the Effective Time with coverage
limits not lower in any respect than, and otherwise on terms no less favorable
to the insured parties than, the Company's insurance coverage as in effect
immediately prior to the Effective Time. Purchaser may satisfy its obligations
under this Section 5.02 by purchasing on or prior to the Closing Date a "tail"
policy under the Company's existing directors' and officers' insurance policy
that (i) has an effective term of six years from the Effective Time, (ii) covers
those persons who are currently covered, or will be covered on or prior to the
Effective Time, by such insurance policy in effect on the Closing Date for
actions and omissions occurring on or prior to the Effective Time, and (iii)
contains terms and conditions (including without limitation coverage amounts)
that are at least as favorable in the aggregate as the terms and conditions of
such insurance in effect immediately prior to the Effective Time. In the event
that the Surviving Corporation would be required to expend more than $250,000
for a "tail" policy ("Maximum Premium"), the Surviving
Corporation shall obtain the maximum policy limit amount of such insurance
obtainable for the Maximum Premium.
5.03 EMPLOYMENT BENEFITS. Until December 31, 2006, the
Purchaser shall cause the Surviving Corporation to provide those employees who
are employees of the Surviving Corporation (and its Subsidiaries) at the
Effective Time with compensation and benefits that are either (i) no less
favorable in all material respects than the current compensation and benefits
that such employee is entitled to as of the Closing Date or (ii) no less
favorable to such employees than the compensation and benefits of similarly
situated employees of the Purchaser and its Affiliates; provided that such
requirement shall not apply to any employee that is entering into any written
employment agreement with the Company or Purchaser in connection with the
transactions contemplated hereby and shall not apply to any equity or
equity-based compensation or benefits; provided, further, that, subject to
compliance with any severance agreement or policy in effect as of the Effective
Time, nothing herein shall limit the Surviving Corporation's right to terminate
the employment of any such individual for any reason. The Purchaser shall take
all actions permitted under its existing policies so that eligible employees of
the Company shall receive service credit under the Purchaser's employee benefit
plans and arrangements for purposes of eligibility and vesting. To the extent
that the Purchaser modifies the coverage or benefit plans under which the
employees of the Surviving Corporation participate, the Purchaser shall, to the
extent permissible under the applicable policy of Purchaser or the Surviving
Corporation, waive any applicable waiting periods, pre-existing conditions or
actively-at-work requirements and shall, to the extent permissible under the
applicable policy of Purchaser or the Surviving Corporation, give such employees
credit under the new coverages or benefit plans for deductibles, co-payments and
out-of-pocket payments that have been paid during the year in which such
coverage or plan modification occurs. This Section 5.03 shall survive the
consummation of the Merger at the Effective Time, and is intended to benefit,
and shall be enforceable by, the Company, the Surviving Corporation and POF, and
shall be binding on all successors and assigns of the Purchaser and the
Surviving Corporation.
ARTICLE VI
ADDITIONAL COVENANTS
--------------------
6.01 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties, covenants or agreements set
forth in this Agreement or in any certificates delivered at the Closing in
connection with this Agreement shall survive the Merger, except for those
covenants and agreements contained herein that by their terms apply or are to be
performed in whole or in part after the Effective Time and except for Article
VII. The parties hereto acknowledge and agree that, upon and at all times after
the Closing, no party may bring a cause of action against any other party
claiming, based upon or arising out of a breach of any of the representations
and warranties set forth herein or any of the certificates delivered at the
Closing in connection with this Agreement.
6.02 DISCLOSURE GENERALLY. If and to the extent any
information required to be furnished in any Schedule is contained in this
Agreement or in any Schedule, such information shall be deemed to be included in
all Schedules in which the information is required to be included but only to
the extent it is reasonably apparent that disclosure of such information is
applicable to any such Schedules. The inclusion of any information in any
Schedule attached hereto shall not be deemed to be an admission or
acknowledgment by the Company or the Stockholders, in and of itself, that such
information is material to or outside the ordinary course of the business of the
Company and its Subsidiaries.
6.03 ACKNOWLEDGMENT BY THE PURCHASER. Each of the Purchaser
and the Merger Sub acknowledges that it has conducted to its satisfaction, an
independent investigation and verification of the financial condition, results
of operations, assets, liabilities, properties and projected operations of the
Company and its Subsidiaries and, in making its determination to proceed with
the transactions contemplated by this Agreement, the Purchaser and the Merger
Sub have relied on the results of their own independent investigation and
verification and the representations and warranties of the Company expressly and
specifically set forth in Article III, as qualified by the Disclosure Schedules
attached hereto. SUCH REPRESENTATIONS AND WARRANTIES BY THE COMPANY CONSTITUTE
THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES TO THE PURCHASER AND THE
MERGER SUB IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY, AND THE
PURCHASER AND THE MERGER SUB UNDERSTAND, ACKNOWLEDGE AND AGREE THAT ALL OTHER
REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE EXPRESSED OR IMPLIED
(INCLUDING, BUT NOT LIMITED TO, ANY RELATING TO THE FUTURE OR HISTORICAL
FINANCIAL CONDITION, RESULTS OF OPERATIONS, PROJECTIONS OR FORECASTS WITH
RESPECT TO THE REVENUES, ASSETS OR LIABILITIES OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES, OR THE QUALITY, QUANTITY OR CONDITION OF THE COMPANY'S OR ITS
SUBSIDIARIES' ASSETS) ARE SPECIFICALLY DISCLAIMED BY THE COMPANY AND THE
STOCKHOLDERS AND SHALL NOT FORM THE BASIS OF ANY CLAIM AGAINST THE COMPANY, ITS
SUBSIDIARIES OR ANY OF ITS ADVISORS OR AFFILIATES, INCLUDING, WITHOUT
LIMITATION, ITS STOCKHOLDERS, XXXXX XXXXXXX & CO., OR ANY OF THEIR RESPECTIVE
AFFILIATES OR REPRESENTATIVES WITH RESPECT THERETO OR WITH RESPECT TO ANY
RELATED MATTER. THE COMPANY AND THE STOCKHOLDERS DO NOT MAKE OR PROVIDE, AND THE
PURCHASER AND THE MERGER SUB HEREBY WAIVE, ANY WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, AS TO THE QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, CONFORMITY TO SAMPLES, OR CONDITION OF THE COMPANY'S OR ITS
SUBSIDIARIES' ASSETS OR ANY PART THEREOF. With respect to any projection or
forecast delivered by or on behalf of the Company and its Subsidiaries to the
Purchaser and Merger Sub, each of the Purchaser and Merger Sub acknowledges that
(x) there are uncertainties inherent in attempting to make such projections and
forecasts, (y) the accuracy and correctness of such projections and forecasts
may be affected by information which may become available through discovery or
otherwise after the date of such projections and forecasts and (z) it is
familiar with each of the foregoing.
6.04 FURTHER ASSURANCES. From time to time, as and when
requested by any party hereto and at such party's expense, any other party shall
execute and deliver, or cause to be executed and delivered, all such documents
and instruments and shall take, or cause to be taken, all such further or other
actions as such requesting party may reasonably deem necessary or desirable to
evidence and effectuate the transactions contemplated by this Agreement.
ARTICLE VII
DEFINITIONS
-----------
7.01 DEFINITIONS. For purposes hereof, the following terms
when used herein shall have the respective meanings set forth below:
"Affiliates" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Company Transaction Expenses" means (i) the fees and expenses
of legal counsel, investment bankers, advisors and accountants (including any
representatives of legal counsel, investment bankers or accountants) retained by
the Company, POF or any other stockholder of the Company, (ii) all management
bonuses and other compensation payable to the Company's management, including
the transaction bonuses set forth on the Change of Control Schedule and (iii)
all prepayment fees, penalties or similar payments in respect of any
indebtedness of the Company and its Subsidiaries, in each case incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby.
"Confidentiality Agreement" means the Confidentiality
Agreement, dated January 10, 2006, by and among the Purchaser, the Company and
Xxxxxx Xxxxxx, Inc.
"Environmental Claim" means any claim, action, cause of
action, investigation, demand, letter, written request for information or
written notice by any governmental authority or third party involving violations
of Environmental Laws or Releases of Hazardous Substances.
"Environmental Law" includes the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq., as
amended; the Resource Conservation and Recovery Act ("RCRA), 42 U.S.C. 6901 et
seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. 7401 et seq., as amended;
the Clean Water Act ("CWA"), 33 U.S.C. 1251 et seq., as amended; the
Occupational Safety and Health Act ("OSHA"), 29 U.S.C. 655 et seq., and any
other federal, state, local or municipal laws, statutes, regulations, rules or
ordinances imposing liability or establishing standards of conduct for
protection of the environment.
"Environmental Liabilities" means liabilities imposed upon the
Company as a result of an Environmental Claim filed by any governmental
authority or any third party arising from any violations of Environmental Laws
or the cleanup of Hazardous Substances from or onto any Real Property or any
facilities that received Hazardous Substances generated by the Company.
"Funded Indebtedness" means, as of any particular time, the
unpaid principal amount of, and accrued interest on, all indebtedness for
borrowed money of the Company and its Subsidiaries (excluding all intercompany
indebtedness among the Company and its Subsidiaries) as of such time.
"GAAP" means United States generally accepted accounting
principles applied in a manner consistent with those used in preparing the
Latest Balance Sheet.
"Hazardous Substance" means any substance, material or waste
that is characterized, classified, listed, defined or designated under any
Environmental Law as hazardous, toxic, pollutant or contaminant, including, but
not limited to, any petroleum or petroleum products, polychlorinated biphenyls
(PCBs) or any substance exhibiting the hazardous waste characteristics set forth
in 40 C.F.R. 261. The term "Hazardous Substances" does not include any
asbestos-containing materials.
"Intellectual Property" shall mean all (i) trademarks, service
marks, brand names, certification marks, collective marks, d/b/a's, Internet
domain names, logos, symbols, trade dress, assumed names, fictitious names,
trade names, and other indicia of origin, all applications and registrations for
all of the foregoing, and all goodwill associated therewith and symbolized
thereby, including without limitation all extensions, modifications and renewals
of same (collectively, "Trademarks"); (ii) patentable inventions, discoveries
and ideas, all patents, registrations, and applications therefor, including
without limitation divisions, continuations, continuations-in-part and renewal
applications, and including without limitation renewals, extensions and reissues
(collectively, "Patents"); (iii) confidential and proprietary information, trade
secrets and know-how, including without limitation processes, schematics,
databases, formulae, drawings, prototypes, models, designs and customer lists
(collectively, "Trade Secrets"); (iv) published and unpublished works of
authorship, whether copyrightable or not (including without limitation computer
software), copyrights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions thereof
(collectively, "Copyrights"); (v) information and data, whether in printed or
electronic form and whether contained in a database or otherwise; and (vi) all
other intellectual property or proprietary rights and claims or causes of action
arising out of or related to any infringement, misappropriation or other
violation of any of the foregoing, including without limitation rights to
recover for past, present and future violations thereof.
"IT Systems" mean electronic data processing, information,
record keeping, communications, telecommunications, account management,
inventory management and other computer systems (including all computer
programs, software, databases, firmware, hardware and related documentation) and
Internet websites and related content.
"knowledge" means, with respect to the Company, the actual
knowledge of A. Xxxxxxx Xxxxx, Xxxx X. Xxxxx, Xxxxxx Xxxxxxx, Xxxxx X. XxXxxxx,
Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxx, Xxx Hobby, Xxxx Xxxxx, Xxxxxxxx Xxxxxxx and
Xxx Xxxx.
"Law" means any international, supranational, national,
foreign, provincial, regional, federal, state, municipal or local law,
regulation, rule, ordinance, order, judgment, decree or other legally binding
requirement of any court or governmental entity.
"Leased Real Property" shall mean the real property leased or
subleased by the Company or any Subsidiary of the Company, together with, to the
extent leased or subleased by Company, all buildings and other structures,
facilities or improvements located thereon, all
fixtures thereto, and all easements, licenses, rights and other appurtenances
relating to the foregoing.
"Liens" shall mean any lien, pledge, hypothecation, charge,
option, claim, restriction on transfer, deed of trust, mortgage, lease,
easement, security interest or other encumbrance of any kind (statutory or
otherwise).
"Material Adverse Effect" means an effect that is or could
reasonably be expected to be materially adverse to the financial condition,
business, assets and properties, or results of operations of the Company and its
Subsidiaries, taken as a whole.
"Owned Real Property" shall mean the real property owned by
the Company or any Subsidiary of the Company, in each case together with all
buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures thereto, and all easements, licenses,
rights and other appurtenances relating to the foregoing.
"Permit" means any permit, license, franchise, approval,
consent, registration, clearance, variance, exemption, order, certificate or
authorization by or of any Governmental Authority, including, without
limitation, building, zoning, administrative, occupational safety and health
authorities.
"Permitted Liens" means (i) Liens securing liabilities which
are reflected or reserved against in the Latest Balance Sheet to the extent so
reflected or reserved, (ii) Liens for Taxes not yet due and payable or which are
being contested in good faith and by appropriate proceedings, (iii) mechanic's,
materialmen's, and similar Liens, (iv) purchase money liens and Liens securing
rental payments under capital lease arrangements, (v) Liens that, individually
and in the aggregate, do not and would not materially detract from the value of
the property and assets of the Company and its Subsidiaries or materially
interfere with the use thereof as currently used, (vi) licenses to Intellectual
Property granted in the ordinary course of business, and (vii) Liens set forth
on the Permitted Liens Schedule.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Real Property" shall mean Owned Real Property and Leased Real
Property.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into or through the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater and surface or subsurface
strata) or into or out of any real property, including the movement of Hazardous
Substances through or in the air, soil, surface water, groundwater or property.
"Subsidiary" means, with respect to any Person, any
corporation of which a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof, or any partnership,
association or other
business entity of which a majority of the partnership or other similar
ownership interest is at the time owned or controlled, directly or indirectly,
by such Person or one or more Subsidiaries of such Person or a combination
thereof. For purposes of this definition, a Person is deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person is allocated a majority of the gains or losses of such partnership,
association or other business entity or is or controls the managing director or
general partner of such partnership, association or other business entity.
"Tax" or "Taxes" means any federal, state, local or foreign
income, gross receipts, capital stock, franchise, profits, withholding, social
security, unemployment, disability, real property, ad valorem/personal property,
stamp, excise, occupation, sales, use, transfer, value added, alternative
minimum, estimated or other tax, custom duty, fee or other governmental charge
of any kind, including any interest, penalty or addition thereto, whether
disputed or not.
"TCW Stockholders" means, collectively, TCW Special Credits
Fund IIIb, TCW Special Credits Trust IIIb, The Common Fund for Bond Investments,
Inc., The Delaware State Employees' Retirement Fund, Weyerhaeuser Company Master
Retirement Trust, TCW Special Credits Trust, TCW Special Credits Trust IV, TCW
Special Credits Trust IV-A, TCW Special Credits Fund IV and TCW Special Credits
Plus Fund.
"Tax Returns" means any return, report, information return or
other document (including schedules or any related or supporting information)
filed or required to be filed with any governmental entity or other authority in
connection with the determination, assessment or collection of any Tax or the
administration of any laws, regulations or administrative requirements relating
to any Tax.
7.02 OTHER DEFINITIONAL PROVISIONS.
(a) Accounting Terms. Accounting terms which are not otherwise
defined in this Agreement have the meanings given to them under GAAP. To the
extent that the definition of an accounting term defined in this Agreement is
inconsistent with the meaning of such term under GAAP, the definition set forth
in this Agreement will control.
(b) "Hereof," etc. The terms "hereof," "herein" and
"hereunder" and terms of similar import are references to this Agreement as a
whole and not to any particular provision of this Agreement. Section, clause,
Schedule and Exhibit references contained in this Agreement are references to
Sections, clauses, Schedules and Exhibits in or to this Agreement, unless
otherwise specified.
(c) Successor Laws. Any reference to any particular Code
section or any other Law or regulation will be interpreted to include any
revision of or successor to that section regardless of how it is numbered or
classified.
7.03 CROSS-REFERENCE OF OTHER DEFINITIONS. Each capitalized
term listed below is defined in the corresponding Section of this Agreement:
Term Section No.
---- -----------
Affiliated Group 3.08
Agreement Preface
Certificates 1.02(a)
Certificate of Merger 1.01(b)
Closing 2.01
Closing Date 2.01
Closing Transactions 2.02
Code 3.13(b)
Common Stock 1.02(a)
Company Preface
Company Authorizations 3.01
Company Board 3.03
Company Charter Documents 3.01
Delaware Law 1.01(a)
Disclosure Schedules Article III
Effective Time 1.01(b)
ERISA 3.13(a)
ERISA Affiliate 3.13(f)
Financial Statements 3.05
IRS 3.13(b)
K&E 8.14
Latest Balance Sheet 3.05
Letter of Transmittal 1.02(a)
Material Contracts 3.09(b)
Maximum Premium 5.02
Merger Preface
Merger Sub Preface
Merger Consideration 1.02(a)
Non-U.S. Plans 3.13(h)
Oaktree 8.14
Other Material 8.07
Payoff Letters 2.02(c)
PBGC 3.13(f)
Per Share Portion 1.02(a)
Plans 3.13(a)
POF Preamble
Preferred Stock 3.04
Purchaser Preface
Razorback Preface
Schedule Article III
Stockholders Preface
Surviving Corporation Preface
Tax Asset 3.06(p)
UTI Preface
Written Consents Preface
2006 Capital Budget 3.06(a)
ARTICLE VIII
MISCELLANEOUS
-------------
8.01 PRESS RELEASES AND COMMUNICATIONS. No press release or
public announcement related to this Agreement or the transactions contemplated
herein, or prior to the Closing any other announcement or communication to the
employees, customers or suppliers of the Company, shall be issued or made
without the joint approval of the Purchaser and POF, unless required by Law (in
the reasonable opinion of counsel) in which case the Purchaser and POF shall
have the right to review such press release or announcement prior to
publication.
8.02 NOTICES. All notices, demands and other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when personally
delivered, (b) one business day after being sent to the recipient by reputable
overnight courier service (charges prepaid) or (c) five days after being mailed
to the recipient by certified or registered mail, return receipt requested and
postage prepaid. Notices, demands and communications to the Purchaser, the
Company and POF shall, unless another address is specified in writing, be sent
to the address indicated below:
Notices to the Purchaser, the Company
-------------------------------------
and/or the Merger Sub:
---------------------
Xxxx True Temper, Inc.
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Dell
with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx, Esq.
Notices to POF:
--------------
Oaktree Capital Management, LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with copies to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx
8.03 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned or delegated by the Purchaser without the prior written consent of the
Company, except that Purchaser may assign any or all of its rights, interests
and obligations under this Agreement to any lender or other financing source of
the Purchaser (or trustee or agent acting on their behalf) as collateral
security for such obligations.
8.04 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
8.05 CONSTRUCTION. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
Person. The headings of the sections and paragraphs of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
otherwise modify any of the terms or provisions hereof. The specification of any
dollar amount or the inclusion of any item in the representations and warranties
contained in this Agreement or the Disclosure Schedules or any exhibit attached
hereto is not intended to imply that the amounts, or higher or lower amounts, or
the items so included, or other items, are or are not required to be disclosed
(including, without limitation, whether such amounts or items are required to be
disclosed as material or threatened) or are within or outside of the ordinary
course of business, and no party shall use the fact of the setting of the
amounts or the fact of the inclusion of any item in this Agreement or the
Disclosure Schedules or exhibits in any dispute or controversy between the
parties as to whether any obligation, item or matter not described or included
in this Agreement or in any Schedule or exhibit is or is not required to be
disclosed (including whether the amount or items are required to be disclosed as
material or threatened) or is within or outside of the ordinary of business for
purposes of this Agreement. The information contained in this Agreement and in
the Disclosure Schedules and exhibits hereto is disclosed solely for purposes of
this Agreement, and no information contained herein or therein shall be deemed
to be an admission by any party hereto to any third party of any matter
whatsoever (including, without limitation, any violation of Law or breach of
contract).
8.06 AMENDMENT AND WAIVER. Any provision of this Agreement or
the Disclosure Schedules or exhibits hereto may be amended or waived only in a
writing signed by the Purchaser and the Company. No waiver of any provision
hereunder or any breach or default thereof shall extend to or affect in any way
any other provision or prior or subsequent breach or default.
8.07 COMPLETE AGREEMENT. This Agreement and the documents
referred to herein (including the Confidentiality Agreement) contain the
complete agreement between the parties hereto and supersede any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way. The
representations and warranties made by the Company in this Agreement, and the
Disclosure Schedules that accompany this Agreement, supersede, replace and
nullify in every respect the data set forth in any other document, material or
statement, whether written or oral, made available to the Purchaser (the "Other
Material"), and the Purchaser shall not rely on any data contained in the Other
Material for any purpose whatsoever, including, without limitation, as a
promise, projection, guaranty, representation, warranty or covenant.
8.08 THIRD-PARTY BENEFICIARIES. Certain provisions of this
Agreement are intended for the benefit of, and shall be enforceable by, POF and,
with respect to the provisions of Section 5.02 only, the officers and directors
of the Company and its Subsidiaries. Except as otherwise expressly provided
herein, nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement and the Stockholders
any legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement.
8.09 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, any one of which need not contain the signature of more than one
party, but all such counterparts taken together shall constitute one and the
same instrument.
8.10 GOVERNING LAW. All issues and questions concerning the
construction, validity, interpretation and enforceability of this Agreement and
the exhibits and schedules hereto 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 rules or provisions (whether of the State of
New York or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of New York.
8.11 JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding arising out of or relating to this Agreement or any transaction
contemplated hereby may be brought in the federal and state courts located in
the State of New York, Borough of Manhattan, and each of the parties irrevocably
submits to the exclusive jurisdiction of such courts in any such action or
proceeding, waives any objection it may now or hereafter have to venue or to
convenience of forum, agrees that all claims in respect of the action or
proceeding shall be heard and determined only in any such court and agrees not
to bring any action or proceeding arising out of or relating to this Agreement
or any transaction contemplated hereby in any other court. The parties agree
that either or both of them may file a copy of this paragraph with any court as
written evidence of the knowing, voluntary and bargained agreement between the
parties irrevocably to waive any objections to venue or to convenience of forum.
Process in any action or proceeding referred to in the first sentence of this
Section may be served on any party anywhere in the world.
8.12 WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY
FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING,
VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE
TRIAL BY JURY AND THAT ANY ACTION OR PROCEEDING WHATSOEVER BETWEEN THEM RELATING
TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY SHALL INSTEAD BE TRIED
IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
8.13 ATTORNEY'S FEES. If any action, suit, arbitration or
other proceeding for the enforcement of this Agreement is brought with respect
to or because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions hereof, the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that proceeding, in addition to any other relief to which it may be entitled.
8.14 REPRESENTATION OF THE COMPANY AND POF. Each of the
parties to this Agreement hereby agrees, on its own behalf and on behalf of its
directors, members, partners, officers, employees and Affiliates, that Xxxxxxxx
& Xxxxx LLP ("K&E") may serve as counsel to each and any of POF and its
Affiliates (collectively, "Oaktree"), on the one hand, and the Company, on the
other hand, in connection with the negotiation, preparation, execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, and that, following consummation of the Merger, K&E (or any successor)
may serve as counsel to Oaktree or any director, member, partner, officer,
employee or Affiliate of Oaktree, in connection with any litigation, claim or
obligation arising out of or relating to this Agreement or the transactions
contemplated by this Agreement, and each of the parties hereto hereby consents
thereto and waives any conflict of interest arising therefrom.
* * * *
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and Plan of Merger on the day and year first above written.
Company: ACORN PRODUCTS, INC.
By: /s/ A. Xxxxxxx Xxxxx
-------------------------------------------
Name: A. Xxxxxxx Xxxxx
Title: President and Chief Executive Officer
Purchaser: XXXX TRUE TEMPER, INC.
By: /s/ Xxxxxxx X. Dell
-------------------------------------------
Name: Xxxxxxx X. Dell
Title: President and Chief Executive Officer
Merger Sub: XXXXX HOLDINGS, INC.
By: /s/ Xxxxxxx X. Dell
-------------------------------------------
Name: Xxxxxxx X. Dell
Title: President and Chief Executive Officer
