Exhibit 10.24
AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER
by and among
SOVEREIGN SPECIALTY CHEMICALS, INC.,
XXXXXX CORPORATION
and
XXXXXX MERGER CORPORATION
October 6, 2004
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TABLE OF CONTENTS
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Page
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ARTICLE I. DEFINITIONS....................................................1
Section 1.1 Definitions..............................................1
Section 1.2 Terms Generally..........................................9
ARTICLE II. THE MERGER.....................................................9
Section 2.1 The Merger...............................................9
Section 2.2 Conversion of Securities................................10
Section 2.3 Escrow Fund.............................................11
Section 2.4 Payment of Cash for Merger Shares.......................11
Section 2.5 Treatment of Options....................................13
Section 2.6 Dissenting Shares.......................................13
Section 2.7 Effect of Withholding...................................14
ARTICLE III. THE SURVIVING CORPORATION.....................................14
Section 3.1 Certificate of Incorporation............................14
Section 3.2 Bylaws..................................................14
Section 3.3 Directors and Officers..................................14
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................14
Section 4.1 Corporate Existence and Power...........................14
Section 4.2 Corporate Authorization.................................15
Section 4.3 Governmental Authorization..............................15
Section 4.4 Non-Contravention.......................................16
Section 4.5 Capitalization..........................................16
Section 4.6 Subsidiaries of the Company.............................17
Section 4.7 Reports and Financial Statements........................17
Section 4.8 Absence of Certain Changes or Events....................18
Section 4.9 Litigation..............................................20
Section 4.10 Taxes...................................................20
Section 4.11 ERISA...................................................22
Section 4.12 Labor Matters...........................................24
Section 4.13 Compliance with Laws....................................24
Section 4.14 Finders' Fees...........................................24
Section 4.15 Environmental Matters...................................25
Section 4.16 EINECS and TSCA.........................................25
Section 4.17 Insurance...............................................26
Section 4.18 Contracts...............................................26
Section 4.19 Legal Matters...........................................27
Section 4.20 Intellectual Property...................................27
Section 4.21 Related Party Transactions..............................28
Section 4.22 Real Property...........................................29
Section 4.23 Products................................................29
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ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.......30
Section 5.1 Corporate Existence and Power...........................30
Section 5.2 Corporate Authorization.................................30
Section 5.3 Governmental Authorization..............................30
Section 5.4 Non-Contravention.......................................30
Section 5.5 Finders' Fees...........................................31
Section 5.6 Adequate Funds..........................................31
Section 5.7 No Other Information....................................31
ARTICLE VI. COVENANTS OF THE COMPANY......................................31
Section 6.1 Conduct of the Company and Its Subsidiaries.............31
Section 6.2 Access to Information; Right of Inspection..............34
Section 6.3 Other Potential Acquirers...............................34
Section 6.4 Resignation of Directors................................34
Section 6.5 Certificates............................................34
Section 6.6 Subsequent Filings......................................35
Section 6.7 Notice under the Delaware Law...........................35
Section 6.8 Intellectual Property...................................35
ARTICLE VII. COVENANTS OF PARENT AND MERGER SUB............................36
Section 7.1 Director and Officer Liability..........................36
ARTICLE VIII. COVENANTS OF THE PARTIES......................................37
Section 8.1 Reasonable Best Efforts.................................37
Section 8.2 Certain Filings.........................................38
Section 8.3 Public Announcements....................................39
Section 8.4 Further Assurances......................................39
Section 8.5 Notices of Certain Events...............................39
Section 8.6 Disposition of Litigation...............................40
Section 8.7 Employee Matters........................................40
Section 8.8 Confidentiality Agreement...............................41
ARTICLE IX. CONDITIONS TO THE MERGER......................................43
Section 9.1 Conditions to the Obligations of Each Party.............43
Section 9.2 Conditions to the Obligations of Parent and Merger Sub..43
Section 9.3 Conditions to the Obligations of the Company............44
ARTICLE X. TERMINATION...................................................45
Section 10.1 Termination.............................................45
Section 10.2 Effect of Termination...................................45
ARTICLE XI. MISCELLANEOUS.................................................46
Section 11.1 Notices.................................................46
Section 11.2 Survival of Representations and Warranties..............47
Section 11.3 Amendments No Waivers...................................47
Section 11.4 Expenses................................................47
Section 11.5 Transfer Taxes..........................................47
Section 11.6 Successors and Assigns..................................48
Section 11.7 Governing Law...........................................48
Section 11.8 Counterparts; Effectiveness; Third Party Beneficiaries..48
Section 11.9 Severability............................................48
Section 11.10 Specific Performance....................................48
Section 11.11 Entire Agreement........................................48
Section 11.12 Jurisdiction; Waiver of Jury Trial......................49
Section 11.13 Authorship..............................................49
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Exhibits
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Exhibit A Transaction Bonuses
Exhibit B Form of Indemnification and Escrow Agreement
Schedules
4.3(ii) Governmental Authorization
4.4(iii) Non-Contravention
4.5 Capitalization
4.6(a) Subsidiaries of the Company
4.6(b) Liens
4.8 Absence of Certain Changes or Events
4.9 Litigation
4.10 Taxes
4.11(a) ERISA
4.11(c) ERISA
4.11(e) ERISA
4.12 Labor Matters
4.13 Compliance with Laws
4.14 Finders' Fees
4.15 Environmental Matters
4.16 EINECS and TSCA
4.17 Insurance Policies
4.18(a) Contracts
4.18(c) Contracts
4.20 Intellectual Property
4.22 Real Property
4.23 Products
6.1 Conduct of the Company and Its Subsidiaries
9.1 Closing Conditions
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AGREEMENT AND PLAN OF MERGER
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This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of this sixth day of October, 2004 by and among Sovereign Specialty
Chemicals, Inc., a Delaware corporation (the "Company"), Xxxxxx Corporation, a
Delaware corporation ("Parent"), and Henkel Merger Corporation, a Delaware
corporation and direct or indirect subsidiary of Parent ("Merger Sub").
RECITALS
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A. The parties intend that Merger Sub be merged with and into the Company
(the "Merger"), with the Company surviving the Merger as a direct or indirect
subsidiary of Parent (the "Surviving Corporation").
B. The Board of Directors of the Company has unanimously determined that
the Merger and this Agreement are fair to and in the best interests of the
Company.
C. The Board of Directors of the Company also has unanimously (i) approved
this Agreement and declared its advisability and (ii) resolved to recommend that
the Company shareholders adopt this Agreement.
D. The shareholders of the Company, by the vote or written consent of the
holders of at least a majority of the outstanding Common Shares of the Company,
have adopted this Agreement and approved and authorized the Merger.
E. The Board of Directors of Merger Sub has approved this Agreement and
declared its advisability. Parent, as the sole shareholder of Merger Sub, has
adopted this Agreement and has approved the Merger.
F. The Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe certain conditions to the Merger, as set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the following
terms have the respective meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under common control with, such
Person. For purposes of this definition, the term "control" (including the
correlative terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Affiliated Group" means an affiliated group as that term is defined in
Section 1504(a) of the Code.
"Aggregate Merger Consideration" means an amount equal to the difference
obtained by subtracting (x) the Option Exercise Amount from (y) the product of
(a) the Merger Consideration times (b) the Total Shares.
"Aggregate Option Escrow Amount" means an amount equal to the result
obtained by multiplying (a) the Escrow Amount by (b) a fraction, the numerator
of which is the Total Spread and the denominator of which is the Aggregate
Merger Consideration.
"Balance Sheet" means the audited consolidated balance sheet of the Company
as of December 31, 2003 set forth in the Company 10-K.
"Balance Sheet Date" means December 31, 2003.
"Business Day" means any day on which banks are not required or authorized
to close in the City of New York or Dusseldorf, Germany.
"CERCLA" means the U.S. Comprehensive Environmental Response, Compensation
and Liability Act, as amended by the U.S. Superfund Amendments and
Reauthorization Act.
"CIP" has the meaning set forth in Section 8.7(d).
"Closing" has the meaning set forth in Section 2.1(d).
"Closing Date" has the meaning set forth in Section 2.1(d).
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
"Common Shares" means the shares of Common Stock.
"Common Stock" means the common stock of the Company, par value $0.01 per
share.
"Company" has the meaning set forth in the Preamble.
"Company Employees" has the meaning set forth in Section 8.7(a).
"Company IP" means all Intellectual Property that is used by the Company
and its Subsidiaries in the current conduct of their business.
"Company Options" means outstanding options to acquire Common Shares,
whether vested or unvested.
"Company SEC Reports" has the meaning set forth in Section 4.7(a).
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"Company Securities" has the meaning set forth in Section 4.5(b).
"Company 10-K" means the annual report on Form 10-K of the Company for the
fiscal year ended December 31, 2003.
"Confidentiality Agreement" means the letter agreement dated January 8,
2004, setting forth the confidentiality undertaking among the Company, AEA
Investors LLC and Xxxxxx KGaA.
"Contracts" has the meaning set forth in Section 4.18(a).
"Current Policies" has the meaning set forth in Section 7.1(a).
"Delaware Law" means the General Corporation Law of the State of Delaware.
"Disbursing Agent" has the meaning set forth in Section 2.4(b).
"Disclosure Letter" has the meaning set forth in the preamble to Article
IV.
"Dissenting Shares" has the meaning set forth in Section 2.6.
"Effective Time" has the meaning set forth in Section 2.1(b).
"EINECS" means the European Inventory of Existing Chemical Substances
created by European Community Commission Decision 81/437/EEC, as amended.
"Employee Benefit Plan" has the meaning set forth in Section 4.11(a).
"Employee Agreement" means a contract, offer letter or agreement of the
Company or any of its Subsidiaries with or addressed to any individual who is
rendering or has rendered services thereto as an employee or consultant pursuant
to which the Company or any of its Subsidiaries has any liability or obligation
to provide compensation and/or benefits in consideration for past, present or
future services or for refraining from providing any such services.
"End Date" means the date which is five months after the date of this
Agreement.
"Environmental Laws" means any and all applicable federal, state, local,
municipal and foreign Laws relating to (a) the protection of the environment,
including, without limitation, pollution, contamination, cleanup, preservation,
and reclamation of natural resources, soil, surface waters, groundwaters,
surface and subsurface soil, and ambient and indoor air; (b) protection of human
health and safety, including, without limitation, the exposure of employees or
other persons to any Hazardous Substances; (c) the presence of or Release of
Hazardous Substances, including, without limitation, the investigation, study,
assessment, monitoring, containment, removal, notification or remediation
thereof, or (d) the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (42 U.S.C. xx.xx. 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water Pollution Control
Act ( 33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.136 et seq.),
the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) and the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et
seq.), each as amended, and any analogous local, state, federal and foreign
laws, statutes and regulations promulgated pursuant thereto.
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"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to any entity, any trade or business
(whether or not incorporated) that is a member of a controlled group including
such entity or that is under common control with such entity within the meaning
of Section 414 of the Code.
"Escrow Agent" has the meaning set forth in Section 2.3.
"Escrow Amount" means $15,000,000.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Existing Contracts" has the meaning set forth in Section 6.1(b).
"401(k) Plans" has the meaning set forth in Section 8.7(c).
"GAAP" means United States generally accepted accounting principles.
"Governmental Antitrust Authority" means any Governmental Authority with
jurisdiction over the enforcement of the HSR Act or any Other Antitrust Laws.
"Governmental Authority" means any agency, public or regulatory authority,
instrumentality, department, commission, court, arbitrator, ministry, tribunal,
body or board of any nation or government or political subdivision thereof,
whether foreign or domestic and whether national, supranational, federal,
tribal, provincial, state, regional, local or municipal.
"Hazardous Substances" means any chemicals, wastes, pollutants or
contaminants that may give rise to liability under, are regulated under or are
otherwise subject to any Environmental Law, including, without limitation,
wastes, substances or materials which are defined as "hazardous materials,"
"hazardous wastes," "hazardous substances," "wastes" or other similar
designations in any Environmental Laws, including, without limitation, asbestos
and asbestos-containing materials, polychlorinated biphenyls, lead-based paints
and petroleum or petroleum products (including, without limitation, crude oil).
"HSR Act" means the U.S. Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnification and Escrow Agreement" has the meaning set forth in Section
2.3.
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"Initial Per Option Consideration" means an amount equal to the result
obtained by dividing (a) the Total Spread less the Aggregate Option Escrow
Amount by (b) the number of Common Shares subject to all of the Company Options
outstanding immediately prior to the Effective Time.
"Initial Per Share Consideration" means an amount per Common Share equal to
the difference obtained by subtracting (a) the Per Common Share Escrow Amount
from (b) the Merger Consideration.
"Insurance Policies" means all material fire and casualty, general
liability, business interruption, workers compensation, product liability,
disability, property damage, theft and sprinkler and water damage insurance
policies and other forms of insurance or bonds currently maintained by the
Company or any of its Subsidiaries.
"Intellectual Property" means all intellectual property and other similar
proprietary rights in any jurisdiction, whether owned or held for use under
license, whether registered or unregistered, including, without limitation, such
rights in and to: (i) trademarks, trade dress, service marks, certification
marks, logos, and trade names, and the goodwill associated with the foregoing
(collectively, "Trademarks"); (ii) patents and patent applications, and any and
all divisions, continuations, continuations-in-part, reissues, continuing patent
applications, reexaminations, and extensions thereof, any counterparts claiming
priority therefrom, utility models, patents of importation/confirmation,
certificates of invention, certificates of registration and like rights
(collectively, "Patents"); inventions, invention disclosures, discoveries and
improvements, whether or not patentable; (iii) writings and other works of
authorship ("Copyrights"); (iv) trade secrets (including, those trade secrets
defined in the Uniform Trade Secrets Act and under corresponding foreign
statutory and common law), business, technical and know-how information,
non-public information, and confidential information and rights to limit the use
or disclosure thereof by any Person (collectively, "Trade Secrets"); (v)
software, including, without limitation, data files, source code, object code,
application programming interfaces, databases and other software-related
specifications and documentation (collectively, "Software"); (vi) domain names
and uniform resource locators; (vii) mask works; (viii) moral rights; and (ix)
claims, causes of action and defenses relating to the enforcement of any of the
foregoing; in each case, including any registrations of, applications to
register, and renewals and extensions of, any of the foregoing with or by any
governmental authority in any jurisdiction.
"Knowledge," when used in reference to the Company or its Subsidiaries,
shall mean the actual knowledge of the following persons after due inquiry,
including inquiry of the officers and employees of the Company responsible for
the relevant matter: (i) Xx. Xxxxxx X. Xxxxx, Xx., (ii) Xx. Xxxxx X. Xxxxx,
(iii) Xx. Xxxx X. Xxxx, (iv) Xx. Xxxxx X. Xxxx, (v) Mr. Xxxxx Xxxxx, (vi) Xx.
Xxxx Xxxxx, (vii) Xx. Xxxxx Xxxxxxxx and (viii) Xx. Xxx Xxxxxxx.
"Law" means applicable statutes, common laws, rules, ordinances,
regulations, codes, orders, judgments, injunctions, writs, decrees, licenses,
permits, rules and bylaws, in each case, of a Governmental Authority.
"Leased Real Property" has the meaning set forth in Section 4.22.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, easement, right-of-way, encroachment, restriction,
condition or encumbrance of any kind in respect of such asset.
"Licensed Company IP" means all Company IP other than the Owned Company IP.
"Management Agreement" means the Management Agreement dated as of December
31, 1999 by and between the Company and AEA Investors Inc., as the same may have
been assigned or amended from time to time.
"Material Adverse Effect on the Company" has the meaning set forth in
Section 4.8(a).
"Material Employee Agreement" means an Employee Agreement pursuant to which
the Company or any of its Subsidiaries has any obligation to provide base salary
compensation in an amount in excess of $75,000 per year or any obligation for
compensation or benefits in connection with a change in control (whether alone
or together with any other event), including any obligation for retention,
termination, severance or retirement compensation or benefits.
"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" means an amount per Common Share equal to the result
obtained by dividing (a) $575,000,000, minus the aggregate principal amount of
debt for borrowed money of the Company outstanding as of the Closing Date, plus
the Option Exercise Amount, plus the Tax Benefit Amount, minus Transaction
Costs, minus Transaction Bonuses by (b) the Total Shares, without interest
thereon.
"Merger Shares" has the meaning set forth in Section 2.2(c).
"Merger Sub" has the meaning set forth in the Preamble.
"Merger Sub Common Shares" means the common stock of Merger Sub, par value
$0.01 per share.
"New Plans" has the meaning set forth in Section 8.7(b).
"Non-Voting Common Stock" means the non-voting common stock of the Company,
par value $0.01 per share.
"Old Plans" has the meaning set forth in Section 8.7(b).
"Option Exercise Amount" means the aggregate exercise price of all Company
Options outstanding immediately prior to the Effective Time.
"Other Antitrust Laws" means any Law, other than the HSR Act, enacted by
any Governmental Authority relating to antitrust matters or regulating
competition, including Council Regulation No. 4064/89 of the European Community
and any analogous or similar Laws of any foreign jurisdiction.
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"Owned Company IP" means the Company IP that is owned by the Company and
its Subsidiaries.
"Owned Real Property" has the meaning set forth in Section 4.22.
"Parent" has the meaning set forth in the Preamble.
"Per Common Share Escrow Amount" means an amount equal to the result
obtained by dividing (a) the difference between the Escrow Amount and the
Aggregate Option Escrow Amount by (b) the number of Common Shares outstanding at
the Effective Time.
"Permits" means any governmental licenses, franchises, permits,
certificates, consents, approvals or other similar authorizations or
notifications required under applicable Law.
"Permitted Liens" means (i) the liens and security interests set forth in
Section 4.6(b) of the Disclosure Letter, (ii) liens for taxes not yet due and
payable or that are being contested in good faith and by appropriate proceedings
and for which the Company has maintained adequate reserves, (iii) mechanics',
materialmen's or other liens or security interests arising in the ordinary
course of business for sums that are immaterial in amount and not yet due and
payable, or (iv) any other liens, encumbrances, security interests, easements,
rights-of-way, encroachments, restrictions, conditions and similar encumbrances
arising in the ordinary course of business that are not material in amount and
do not materially detract from the value of or materially impair the existing
use of the property affected by such encumbrance.
"Person" means any individual, corporation, limited liability company,
partnership, association, trust or any other entity, group or organization,
including any government or political subdivision or any agency or
instrumentality thereof.
"Proceeding" has the meaning set forth in Section 4.9.
"Product" has the meaning set forth in Section 4.23.
"Related Parties" has the meaning set forth in Section 4.21.
"Release" means any emission, spill, seepage, leak, escape, leaching,
discharge, injection, ejection, pumping, pouring, emptying, dumping, disposal,
or release of Hazardous Substances into or upon the environment, including the
air, soil, surface water or groundwater.
"Replacement Policies" has the meaning set forth in Section 7.1(a).
"Representative" has the meaning set forth in Section 6.3(a).
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SIP" has the meaning set forth in Section 8.7(d).
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"Subsidiary" of a Person means any corporation or other entity of which
securities or other ownership interests representing 50% or more of the total
outstanding securities or other ownership interests is owned, directly or
indirectly, by such Person and/or of which securities or other ownership
interests having ordinary voting power to elect a majority of the Board of
Directors or other persons performing similar functions are at the time owned,
directly or indirectly, by such Person.
"Surviving Corporation" has the meaning set forth in the Recitals.
"Tax" (including "Taxes") means all federal, state, local, foreign and
other taxes of any kind, levies or other like kind assessments, customs, duties,
imposts, charges or fees, including net income, gross income, gross receipts,
gains, ad valorem, value added, excise, real or personal property, asset, sales,
use, stock transfer, real estate transfer, documentary, stamp, recording,
license, payroll, transaction, capital, net worth, franchise, employment, social
security, occupation, utility, production, unemployment compensation, windfall
profits and withholding taxes, together with any interest and any penalties,
additions to tax or additional amounts imposed by any Governmental Authority
responsible for the imposition of any such tax (a "Tax Authority" or "Taxing
Authority").
"Tax Benefit Amount" means an amount equal to thirty percent (30%) of the
sum of (i) the aggregate amount payable to the holders of Company Options
pursuant to Section 2.5(a) of this Agreement including, for this purpose, any
amounts subject to withholding under applicable Tax Law, and (ii) the
Transaction Bonuses.
"Tax Law" means any Law imposed by any Taxing Authority.
"Tax Return" means any return, report, statement or other similar filing
required to be filed with any Governmental Authority with respect to Taxes.
"Third Party" means any Person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than Parent, Merger Sub
or their respective Affiliates.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger or otherwise by any Third
Party, (ii) the acquisition by a Third Party of twenty percent (20%) or more of
the assets of the Company and its Subsidiaries taken as a whole, other than the
sale of products in the ordinary course of business or (iii) the acquisition by
a Third Party of twenty percent (20%) or more of the outstanding Common Shares
or the issuance by the Company of preferred or common stock, other than upon
exercise of Company Options or upon conversion of shares of Non-Voting Stock
into shares of Voting Stock.
"Total Shares" means the number of Common Shares outstanding at the
Effective Time plus the number of Common Shares issuable upon exercise of all
Company Options outstanding immediately prior to the Effective Time.
"Total Spread" means an amount equal to the difference obtained by
subtracting (a) the Option Exercise Amount from (b) the product of (x) the
Merger Consideration multiplied by (y) the number of Common Shares subject to
all of the Company Options outstanding immediately prior to the Effective Time.
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"Transaction Bonuses" means the transaction bonuses payable to the
management of the Company in accordance with and subject to the terms and
conditions set forth on Exhibit A hereto.
"Transaction Costs" means any fees and out-of-pocket expenses incurred by
the Company or any of its Subsidiaries to third party service providers in
connection with the transactions contemplated by this Agreement (including fees
and disbursements of counsel, accountants, investment bankers and other
advisors).
"Transaction Cost Certification" has the meaning set forth in Section
9.2(d).
"Transfer Taxes" has the meaning set forth in Section 11.5.
"TSCA" means the Toxic Substances Control Act of 1976, as amended.
"TSCA Inventory" means the Chemical Substances Inventory published by the
United States Environmental Protection Agency pursuant to the TSCA.
"Voting Common Stock" means the voting common stock of the Company, par
value $0.01 per share.
Section 1.2 Terms Generally. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation," unless the context
expressly provides otherwise. All references herein to Sections, paragraphs,
subparagraphs, clauses, Exhibits or Schedules shall be deemed references to
Sections, paragraphs, subparagraphs or clauses of, or Exhibits or Schedules to,
this Agreement, unless the context requires otherwise. Unless otherwise
expressly defined, terms defined in this Agreement have the same meanings when
used in any Exhibit or Schedule hereto, including when used in the Disclosure
Letter. The words "herein," "hereof," "hereto" and "hereunder" and other words
of similar import refer to this Agreement as a whole (including the Schedules
and Exhibits) and not to any particular provision of this Agreement.
ARTICLE II.
THE MERGER
Section 2.1 The Merger.
(a) At the Effective Time, in accordance with the Delaware Law, and upon
the terms and subject to the conditions set forth in this Agreement, Merger Sub
shall be merged with and into the Company, at which time the separate existence
of Merger Sub shall cease and the Company shall survive the Merger as a direct
or indirect subsidiary of Parent.
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(b) As soon as reasonably practicable on the Closing Date, and subject
to the provisions of this Agreement, the Company and Merger Sub will file a
certificate of merger meeting the requirements of the Delaware Law with the
Secretary of State of the State of Delaware. 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, or at such later time as the Company and Merger
Sub may agree and specify in the certificate of merger (such time as the Merger
becomes effective, the "Effective Time").
(c) The Merger shall have the effects set forth in the Delaware Law.
Without limiting the generality of the foregoing, from and after the Effective
Time, the Surviving Corporation shall possess all the rights, powers, privileges
and franchises and be subject to all of the obligations, liabilities,
restrictions and disabilities of the Company and Merger Sub, all as provided
under the Delaware Law.
(d) The closing of the Merger (the "Closing") shall take place (i) at
the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP located at Xxx Xxx
Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, as soon as practicable (but in any event no
later than the fifth Business Day) after the day on which the last condition to
the Merger is satisfied or validly waived (other than those conditions that by
their nature cannot be satisfied until the Closing, but subject to the
satisfaction or valid waiver of such conditions) or (ii) at such other place and
time or on such other date as the Company and Merger Sub may agree in writing
(the actual date of the Closing, the "Closing Date").
Section 2.2 Conversion of Securities. At the Effective Time, pursuant to
this Agreement and by virtue of the Merger and without any action on the part of
the Company, Parent, Merger Sub or the holders of the Common Stock:
(a) Each share of Common Stock held by the Company as treasury stock or
owned by Parent, Merger Sub or any Subsidiary of the Company immediately prior
to the Effective Time, if any, shall be canceled and retired and shall cease to
exist, and no payment or distribution shall be made or delivered with respect
thereto.
(b) Each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
newly issued, fully paid and non-assessable share of common stock of the
Surviving Corporation, and the foregoing shall constitute the only outstanding
shares of capital stock of the Surviving Corporation.
(c) Each Common Share issued and outstanding immediately prior to the
Effective Time, other than Common Shares to be canceled pursuant to Section
2.2(a) and, subject to Section 9.2 of this Agreement, Dissenting Shares,
automatically shall be canceled and converted into the right to receive the
Merger Consideration, payable to the holder thereof upon surrender of the stock
certificate formerly representing such Common Share in the manner provided in
Section 2.4. Such Common Shares, other than those canceled pursuant to Section
2.2(a), sometimes are referred to herein as the "Merger Shares."
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(d) If between the date of this Agreement and the Effective Time, the
number of outstanding Common Shares is changed into a different number of shares
or a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split-up, combination, exchange of shares or
the like, other than pursuant to the Merger, the amount of Merger Consideration
payable per Common Share shall be correspondingly adjusted.
(e) The Company Options shall be treated as provided in Section 2.5
below.
Section 2.3 Escrow Fund. At or prior to the Effective Time, Parent, the
Company and the stockholders of the Company who have submitted a letter of
transmittal prior to such time shall enter into an indemnification and escrow
agreement in substantially the form attached hereto as Exhibit B (the
"Indemnification and Escrow Agreement") with a bank or trust company that is
reasonably satisfactory to the Company (the "Escrow Agent"). At or prior to the
Effective Time, Parent will cause the Escrow Amount to be deposited with the
Escrow Agent in accordance with the terms and provisions of the Indemnification
and Escrow Agreement, which shall represent a portion of the Merger
Consideration payable to each holder of Merger Shares and of the amounts payable
to each holder of Company Options in accordance with this Article II. The Escrow
Amount will be held and disbursed in accordance with the terms and conditions of
the Indemnification and Escrow Agreement.
Section 2.4 Payment of Cash for Merger Shares.
(a) Prior to the Closing Date, Parent shall designate a bank or trust
company that is reasonably satisfactory to the Company, that is organized and
doing business under the laws of the United States or any state thereof to serve
as the disbursing agent for the Initial Per Share Consideration and payments in
respect of Company Options (the "Disbursing Agent"). At or prior to the
Effective Time, Parent will cause to be deposited with the Disbursing Agent cash
in the amount equal to the difference between Aggregate Merger Consideration and
the Escrow Amount. Pending distribution of the cash deposited with the
Disbursing Agent and subject to the completion of the Merger, such cash shall be
held in trust for the benefit of the holders of Merger Shares and such Company
Options and shall not be used for any other purposes; provided however, that
Parent may direct the Disbursing Agent to invest such cash in obligations of or
guaranteed by the United States of America, as long as no such investments have
maturities that could prevent or delay payments to be made pursuant to Section
2.4(b) or Section 2.5 hereof.
(b) As promptly as practicable after the date of this Agreement, the
Company shall send, or cause the Disbursing Agent to send, to each record holder
of Merger Shares as of immediately prior to the Effective Time a letter of
transmittal and instructions for exchanging their Merger Shares for the Initial
Per Share Consideration payable therefor. The letter of transmittal will be in
customary form (except that it will include an agreement to be bound by the
terms of the Indemnification and Escrow Agreement) and will specify that
delivery of Merger Shares will be effected, and risk of loss and title will
pass, only upon delivery of the stock certificates representing the Merger
Shares to the Disbursing Agent. In addition to the terms and conditions set
forth in this Section 2.4, the letter of transmittal will include other
customary terms and conditions applicable to the surrender of stock certificates
and payment of the Merger Consideration, including, without limitation, as may
be required under the Delaware Law. Upon surrender of such stock certificate or
certificates to the Disbursing Agent together with a properly completed and duly
executed letter of transmittal and any other documentation as the Disbursing
Agent may reasonably require, the record holder thereof shall be entitled to
receive the Initial Per Share Consideration payable in exchange therefor, less
any amounts required to be withheld under any applicable Tax Law. As promptly as
practicable after such surrender to the Disbursing Agent, the Disbursing Agent
shall pay to the record holder thereof complying with the forgoing, the Initial
Per Share Consideration payable in exchange for the Merger Shares so
surrendered, less any amounts required to be withheld under any applicable Tax
Law. No interest will be paid or accrued on the cash payable upon the surrender
of the certificates representing the Merger Shares. Until so surrendered and
exchanged, each such certificate shall, after the Effective Time, be deemed to
represent only the right, subject to Section 2.3, to receive the Merger
Consideration, and until such surrender and exchange, no cash shall be paid to
the holder of such outstanding certificate in respect thereof.
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(c) If payment is to be made to a Person other than the registered
holder of the Merger Shares represented by the certificate or certificates
surrendered in exchange therefor, it shall be a condition to such payment that
the certificate or certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Parent or Disbursing Agent (as the case may be) any
applicable stock transfer taxes or establish to the satisfaction of the Parent
or Disbursing Agent (as the case may be) that such stock transfer taxes have
been paid or are not payable.
(d) After the Effective Time, there shall be no further transfers on the
stock transfer books of the Surviving Corporation of the Common Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, certificates representing Merger Shares are presented to the Surviving
Corporation, such shares shall be canceled and exchanged for the consideration
provided for, and in accordance with the procedures set forth, in this Article
II.
(e) If any cash deposited with the Disbursing Agent remains unclaimed
six months after the Effective Time, such cash shall be returned to the
Surviving Corporation upon demand, and any such holder who has not surrendered
his Merger Shares certificates for the Initial Per Share Consideration prior to
that time shall thereafter look only to the Surviving Corporation for payment of
the Merger Consideration, but only as general creditors thereof for payment of
their claim for the Merger Consideration, without any interest thereon.
Notwithstanding the foregoing, the Surviving Corporation shall not be liable to
any holder of Merger Shares for an amount paid to a public official pursuant to
any applicable unclaimed property laws. Any amounts remaining unclaimed by
holders of Merger Shares two years after the Effective Time (or, if earlier, as
of a date immediately prior to such time that such amounts would otherwise
escheat to or become property of any Governmental Authority), shall to the
extent permitted by applicable Law, become the property of the Surviving
Corporation free and clear of any claims or interest of any Person previously
entitled thereto.
(f) No dividends or other distributions with respect to capital stock of
the Surviving Corporation with a record date after the Effective Time shall be
paid to the holder of any unsurrendered certificate for Common Shares.
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(g) From and after the Effective Time, the holders of Common Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Common Shares, other than the right to receive the
Merger Consideration as provided in this Agreement.
(h) In the event that any Merger Share certificate has been lost, stolen
or destroyed, and upon the making of an affidavit of that fact by the Person
claiming such Merger Share certificate to be lost, stolen or destroyed, in
addition to the posting by such holder of any bond in such reasonable amount as
the Surviving Corporation may direct as indemnity against any claim that may be
made against the Surviving Corporation with respect to such Merger Share
certificate, the Disbursing Agent will issue in exchange for such lost, stolen
or destroyed Merger Share certificate the proper amount of the Initial Per Share
Consideration.
Section 2.5 Treatment of Options.
(a) As of the Effective Time, each Company Option will be canceled, and
the holder thereof will receive an amount equal to the Initial Per Option
Consideration times the number of Common Shares subject to the Company Option,
without interest and less any amounts required to be deducted and withheld under
any applicable Tax Law. An amount equal to the Aggregate Option Escrow Amount
shall be held and disbursed in accordance with Section 2.3. All payments of the
Initial Per Option Consideration with respect to canceled Company Options shall
be made by the Disbursing Agent as promptly as reasonably practicable, but in no
event more than five Business Days, after the Effective Time from funds
deposited with the Disbursing Agent by or at the direction of Parent to pay such
amounts.
(b) Prior to the Effective Time, the Company (i) will cause the
Company's stock option plans to be terminated effective at or prior to the
Effective Time and to otherwise make any amendments permitted by such plans and
the agreements thereunder to the terms of such stock option plans or the grants
made thereunder necessary to effectuate the actions contemplated by this Section
2.5 and (ii) will effectuate the actions contemplated by this Section 2.5. As
soon as reasonably practicable, but not later than five Business Days, after,
and effective as of, the date of this Agreement, the Company will amend the
Company's stock option plans to preclude the grant of any additional stock
options or other awards thereunder.
Section 2.6 Dissenting Shares. Notwithstanding any provision of this
Agreement to the contrary, but subject to Section 9.2 of this Agreement, Common
Shares that are issued and outstanding immediately prior to the Effective Time
and which are held by holders of such Common Shares who have properly exercised
appraisal rights with respect thereto in accordance with Section 262 of the
Delaware Law ("Dissenting Shares") will not be exchangeable for the right to
receive the Merger Consideration, and holders of such Dissenting Shares will be
entitled to receive payment of the appraised value of such Common Shares in
accordance with the provisions of such Section 262 unless and until such holders
fail to perfect or effectively withdraw or lose their rights to appraisal and
payment under the Delaware Law. If, after the Effective Time, any such holder
fails to perfect or effectively withdraws or loses such rights, such Common
Shares will thereupon be treated as if they had been converted into and to have
become exchangeable for, at the Effective Time, the right to receive the Merger
Consideration, subject to Section 2.3, without any interest thereon. The Company
will give Parent prompt notice of any demands received by the Company for
appraisals of Common Shares prior to the Effective Time. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to any demands for appraisal or offer to settle or settle any such demands.
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Section 2.7 Effect of Withholding. To the extent any amounts are required
to be deducted and withheld under any applicable Tax Law pursuant to Section
2.3, Section 2.4(b) or Section 2.5(a), such withheld amounts shall be treated
for all purposes as having been paid to the holder from whose Merger
Consideration or payments with respect to Company Options the amounts were so
deducted and withheld.
ARTICLE III.
THE SURVIVING CORPORATION
Section 3.1 Certificate of Incorporation. The certificate of incorporation
of Merger Sub as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation, except that Article I
thereof shall read as follows: "The name of the corporation is Sovereign
Specialty Chemicals, Inc.," until thereafter amended in accordance with the
terms thereof and as provided by applicable Law.
Section 3.2 Bylaws. The bylaws of Merger Sub in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until thereafter amended
in accordance with the terms thereof and as provided by applicable Law.
Section 3.3 Directors and Officers. From and after the Effective Time, (i)
the directors of Merger Sub at the Effective Time shall be the directors of the
Surviving Corporation, and (ii) the officers of the Company at the Effective
Time shall be the officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified in
accordance with applicable Law.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in this Agreement, the Company SEC Reports or in the
corresponding sections of the Disclosure Letter delivered to Merger Sub by the
Company prior to entering into this Agreement (the "Disclosure Letter") (it
being understood that any information set forth in a particular section of the
Disclosure Letter shall be deemed to be disclosed to each other section or
subsection thereof or hereof to which the relevance of such information is
reasonably apparent), the Company hereby represents and warrants to Parent and
Merger Sub that:
Section 4.1 Corporate Existence and Power.
(a) The Company and each of its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Company has all corporate powers and
authority required to own, lease and operate its respective properties and to
carry on its business as now conducted. The Subsidiaries of the Company have all
corporate powers and authority required to own, lease and operate their
respective properties and to carry on their business as now conducted, except
where the failure to have such power and authority would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
14
(b) Each of the Company and its Subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
(c) The Company has made available to Parent and Merger Sub true and
complete copies of the currently effective certificate of incorporation and
bylaws or similar organizational and governing documents of the Company and its
Subsidiaries.
Section 4.2 Corporate Authorization.
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the Merger and the other
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors and shareholders of the Company, and no other Company
corporate or shareholder action is necessary to authorize this Agreement or to
consummate the Merger and the other transactions contemplated hereby, except for
the filing of the certificate of merger as provided in Section 2.1(b). The only
Company shareholder action required to approve this Agreement is an affirmative
vote in favor, or approval, of this Agreement by the holders of a majority of
the outstanding Common Shares, which shareholder action has been duly taken.
(b) This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due and valid execution and delivery by Parent and
Merger Sub, constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except (i) as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar Laws affecting the enforcement of creditors' rights
generally and (ii) as the remedy of specific performance and other forms of
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(c) On or prior to the date hereof, the Board of Directors of the
Company has unanimously adopted resolutions (i) approving this Agreement, and
declaring that the Merger and the other transactions contemplated by this
Agreement are advisable and (ii) resolving to recommend that the Company
shareholders approve this Agreement. All such resolutions are in full force and
effect and have not been amended or superseded as of the date hereof.
(d) The shareholders of the Company who have voted in favor of adoption
of this Agreement as of the date hereof are holders of at least 94% of the
Voting Common Shares outstanding as of the date hereof.
Section 4.3 Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
require no action by the Company in respect of, or filing by the Company, or
cooperation in the preparation and submission of any filing with, any
Governmental Authority other than (i) the filing of the certificate of merger
described in Section 2.1(b); (ii) compliance with any applicable requirements of
the HSR Act and any applicable Other Antitrust Laws specified in Section 4.3(ii)
of the Disclosure Letter; (iii) compliance with any applicable requirements of
the Exchange Act and Securities Act; (iv) compliance with any applicable foreign
or state securities or Blue Sky laws; and (v) the filing of appropriate material
documents with the relevant authorities of the jurisdictions in which the
Company is qualified to do business.
15
Section 4.4 Non-Contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) contravene or conflict
with the organizational or governing documents of the Company or any of its
Subsidiaries; (ii) assuming compliance with the matters referenced in Section
4.3, contravene or conflict with or constitute a violation of any provision of
any Law binding upon or applicable to the Company or any of its Subsidiaries or
any of their respective properties or assets; (iii) require any consent, waiver
or approval under, or constitute a default, violation or breach under, or give
rise to a right of termination, cancellation or acceleration of any right or
obligation of the Company or any of its Subsidiaries or to a loss of any benefit
to which the Company or any of its Subsidiaries is entitled under any provision
of any agreement, contract or other instrument applicable to or binding upon the
Company or any of its Subsidiaries or any of their respective properties or
assets except those consents as set forth on Section 4.4(iii) of the Disclosure
Letter or (iv) result in the creation or imposition of any Lien on any asset of
the Company or any of its Subsidiaries (other than any such Lien arising from
any actions taken by Parent or Merger Sub), except, in the case of clauses (iii)
and (iv), as would not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect on the Company.
Section 4.5 Capitalization.
(a) The authorized capital stock of the Company consists of 2,700,000
shares of Voting Common Stock and 2,100,000 shares of Non-Voting Common Stock,
of which as of the date hereof, there are 2,162,875.98 shares of Voting Common
Stock and no shares of Non-Voting Common Stock issued and outstanding. Except as
set forth in Section 4.5 of the Disclosure Letter, no shares of capital stock
were held in the Company's treasury as of the date hereof. As of the date
hereof, there are outstanding Company Options to purchase an aggregate of
294,600 Common Shares. All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable, and are free of preemptive or similar rights.
(b) Except as set forth in this Section 4.5 or in Section 4.5 of the
Disclosure Letter and except for changes after the date hereof resulting from
the exercise of Company Options outstanding on such date and the conversion of
shares of Non-Voting Common Stock into shares of Voting Common Stock, there are
no outstanding, and there have not been reserved for issuance, any (i) shares of
capital stock or other voting securities of the Company; (ii) securities of the
Company or any Subsidiary of the Company convertible into or exchangeable for
shares of capital stock or voting securities or other ownership interests of the
Company or any of its Subsidiaries; (iii) Company Options or other rights or
options, warrants or other agreements or commitments to acquire from the Company
or any of its Subsidiaries, or obligations of the Company or any of its
Subsidiaries to issue, any shares of capital stock, voting securities, other
ownership interests, or securities convertible into or exchangeable for shares
of capital stock, voting securities or other ownership interests of the Company
or any Subsidiary, as the case may be; (iv) equity equivalent interests in the
ownership or earnings of the Company or its Subsidiaries, obligations of the
Company or any of its Subsidiaries to make any payment based on the value of any
shares of any Subsidiary of the Company, or other similar rights; or (v)
obligations of the Company or any of its Subsidiaries to grant, extend or enter
into any subscription, warrant, right, convertible or exchangeable security or
other similar agreement or commitment relating to any capital stock, voting
securities or other ownership interests in any of the Company's Subsidiaries
(the items in clauses (i) through (v) collectively, "Company Securities"). There
are no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Company Securities. There are no
stockholder agreements, voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party or by which it is bound
relating to the voting or registration of any shares of capital stock of the
Company or any of its Subsidiaries or preemptive rights with respect thereto.
16
(c) Except as set forth in Section 4.5 of the Disclosure Letter and
other than the issuance of Common Shares upon exercise of Company Options and
conversion of shares of Non-Voting Common Stock into shares of Voting Common
Stock, since the Balance Sheet Date, the Company has not declared or paid any
dividend or distribution in respect of any Company Securities, and neither the
Company nor any Subsidiary of the Company has issued, sold, repurchased,
redeemed or otherwise acquired any Company Securities, and their respective
Boards of Directors have not authorized any of the foregoing.
Section 4.6 Subsidiaries of the Company.
(a) Section 4.6(a) of the Disclosure Letter contains a list of the
Company's Subsidiaries. Each of the Company's Subsidiaries is wholly owned
(directly or indirectly) by the Company, and except for such Subsidiaries of the
Company, the Company and such Subsidiaries do not directly or indirectly own any
equity interest in any other Person.
(b) All equity interests of the Company's Subsidiaries held by the
Company or any other Subsidiary of the Company are fully paid and non-assessable
and were not issued in violation of any preemptive or similar rights. Except as
set forth in Section 4.6(b) of the Disclosure Letter, all such equity interests
are free and clear of any Liens or any other limitations or restrictions on such
equity interests (including any limitation or restriction on the right to vote,
pledge or sell or otherwise dispose of such equity interests).
Section 4.7 Reports and Financial Statements.
(a) The Company has filed with or otherwise furnished to the SEC all
forms, reports, schedules, statements and other documents required to be filed
or furnished by it under the Securities Act or the Exchange Act since January 1,
2000 and prior to the date hereof (such documents, as supplemented or amended
since the time of filing, the "Company SEC Reports"). No Subsidiary of the
Company is required to file with or furnish to the SEC any such forms, reports,
schedules, statements or other documents. As of their respective dates, the
Company SEC Reports, including any financial statements or schedules included or
incorporated by reference therein, at the time filed (i) complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
17
(b) The audited and unaudited consolidated financial statements of the
Company included (or incorporated by reference) in the Company SEC Reports
(including any related notes and schedules) fairly present, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods set forth therein,
and in each case were prepared in accordance with GAAP consistently applied
during the periods involved (except as otherwise disclosed in the notes thereto
and subject, in the case of financial statements for quarterly periods, to
normal year-end adjustments).
(c) There are no liabilities or obligations of any nature of the Company
or any of its Subsidiaries (whether accrued, contingent, absolute, determined,
determinable or otherwise), whether due or to become due, which would be
required by GAAP to be recorded or reflected on a consolidated balance sheet of
the Company other than (i) liabilities or obligations disclosed or provided for
in the Company SEC Reports or Balance Sheet or disclosed in the notes thereto;
(ii) liabilities or obligations incurred after the Balance Sheet Date in the
ordinary course of business consistent with past practice and (iii) liabilities
under this Agreement or incurred in connection with the transactions
contemplated hereby or disclosed in Section 4.14 of the Disclosure Letter.
Section 4.8 Absence of Certain Changes or Events.
(a) Since the Balance Sheet Date, the business of the Company and its
Subsidiaries has been conducted in all material respects in the ordinary course
consistent with past practice, except for the negotiation and delivery of this
Agreement. Since the Balance Sheet Date, there has not been any event,
occurrence or development that, individually or in the aggregate, has had, or
would reasonably be expected to have, a Material Adverse Effect on the Company.
For purposes of this Agreement, "Material Adverse Effect on the Company" means
any state of facts, circumstance, effect, condition, event, change, development
or occurrence that, either individually or in the aggregate with all other
states of facts, circumstances, effects, conditions, events, changes,
developments or occurrences, is or would reasonably be expected to result in a
material adverse effect on (i) the business, results of operations, properties,
assets, liabilities or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, but excluding any such state of facts,
circumstance, effect, condition, event, change, development or occurrence
resulting from or arising out of (A) general national or international economic
or business conditions, (B) conditions (including changes in economic or
financial market conditions and any change in Law or GAAP) affecting generally
the industries in which the Company and its Subsidiaries participate and not
disproportionately affecting the Company and its Subsidiaries or (C) the
execution, announcement and performance of this Agreement, or any actions taken,
delayed or omitted to be taken by the Company pursuant to this Agreement or at
the written request of Parent, Merger Sub or any of their Representatives; or
(ii) the ability of the Company to consummate the Merger.
18
(b) Without limiting the generality of the foregoing Section 4.8(a),
since the Balance Sheet Date and prior to the date hereof, other than in the
ordinary course of business or as set forth in Section 4.8 of the Disclosure
Letter, there has not been:
(i) any damage, destruction or loss to any of the assets or
properties of the Company or any of its Subsidiaries (whether or not insured)
that, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect on the Company;
(ii) any amendment or change, or proposal to amend or change, the
Company's or any of its Subsidiary's organizational or governing documents;
(iii) any declaration, setting aside or payment of any dividend or
distribution or capital return in respect of any shares of the Company's or any
of its Subsidiaries' capital stock (other than to another Subsidiary of the
Company) or any redemption, purchase or other acquisition by the Company or any
of its Subsidiaries of any shares of the Company's capital stock or any
amendment of any material term of any outstanding capital stock of the Company
or any of its Subsidiaries;
(iv) any sale, assignment, transfer, lease or other disposition or
agreement to sell, assign, transfer, lease or otherwise dispose of any material
amount of assets of the Company or any of its Subsidiaries;
(v) any acquisition (by merger, consolidation, or acquisition of
stock or assets) by the Company or any of its Subsidiaries of any corporation,
partnership or other business organization or division thereof or any equity
interest therein;
(vi) any material (A) incurrence of or guarantee with respect to or
provision of credit support for any indebtedness for borrowed money by the
Company or any of its Subsidiaries, other than pursuant to the existing credit
facilities of the Company or any of its Subsidiaries in the ordinary course of
business, (B) event of default or default under the existing credit facilities
or outstanding loans of the Company or any of its Subsidiaries, or (C) creation
or assumption by the Company or any of its Subsidiaries of any material Lien on
any material asset, other than Permitted Liens;
(vii) any change in any method of accounting or accounting principle
or practice used by the Company or any of its Subsidiaries, other than such
changes required by Law or a change in GAAP;
(viii) any material Tax election or the institution of or any
compromise or settlement of any proceeding or proposed adjustment with respect
to any material Tax liability of the Company and its Subsidiaries;
(ix) any material loan, advance, payment or capital contribution made
by the Company or any of its Subsidiaries to, or investment in, any Person
(including, but not limited to, any shareholder of the Company or any associated
entity of such shareholder) other than loans, advances or capital contributions
made to a Subsidiary of the Company or by a Subsidiary of the Company to the
Company;
19
(x) any amendment, alteration or modification in any material term of
any currently outstanding Company Options, warrants or other rights to purchase
any capital stock or other equity interests in the Company or any securities
exchangeable or exercisable for or convertible into the same;
(xi) adoption or material amendment of any Employee Benefit Plan,
Employee Agreement or other compensation or benefit plan, agreement or
arrangement with or for the benefit of any current or former director, officer
or employee of the Company or any of its Subsidiaries or material increase in
any manner of the compensation or pension, welfare or fringe benefits of any
such director, officer or employee, in each case, except as required by ERISA or
other applicable Law or by the express terms of any Employee Agreement;
(xii) (A) payment of any bonus or other incentive compensation or
award to any current or former director, officer or employee of the Company or
any of its Subsidiaries, except pursuant to the express terms of any Employee
Agreement, (B) entering into of any agreement, commitment or obligation to pay
any bonus or other incentive compensation, severance or other termination or
retirement benefit or payment to any current or former director, officer or
employee of the Company or any of its Subsidiaries or (C) entering into of any
Employee Agreement with any current or former director or officer of the Company
or any of its Subsidiaries or any Material Employee Agreement with any current
or former employee of the Company or any of its Subsidiaries; or
(xiii) any agreement to take any actions specified in this Section
4.8(b), except for this Agreement.
Section 4.9 Litigation. Except as set forth in Section 4.9 of the
Disclosure Letter, there is no action, suit, claim, investigation, arbitration
or proceeding pending or, to the Knowledge of the Company, threatened against or
affecting or relating to the Company or any of its Subsidiaries or their
respective assets or properties before any arbitrator or Governmental Authority
(a "Proceeding") that, if determined adversely to the Company or any of its
Subsidiaries, would result in an injunction against, or the payment of uninsured
damages in an amount in excess of $100,000 by, the Company or any of its
Subsidiaries, or that relates to exposure to asbestos. Neither the Company nor
any Subsidiary is subject to any outstanding order, writ, injunction or decree
that has had or is reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on the Company.
Section 4.10 Taxes.
(a) Except as set forth in Section 4.10 of the Disclosure Letter, all
federal, state, local and foreign income and other material Tax Returns required
to be filed by the Company or any of its Subsidiaries have been properly and
timely filed with the appropriate Governmental Authorities in all jurisdictions
in which such Tax Returns are required to be filed and all taxes shown as due on
such returns have been paid. To the Company's Knowledge, except as set forth in
Section 4.10 of the Disclosure Letter, all material taxes currently owed by the
Company or any of its Subsidiaries to any Governmental Authorities or to any
third party as a result of indemnification obligations have been paid or
adequately reserved or accrued in accordance with GAAP, except any which are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established on the books of the Company or any of its
Subsidiaries, as applicable, in accordance with GAAP.
20
(b) Except as set forth in Section 4.10 of the Disclosure Letter, the
Company and its Subsidiaries have not requested any extension of time within
which to file any Tax Return, which Tax Return has not since been filed. All Tax
Returns filed by or on behalf of the Company and its Subsidiaries on or prior to
the Closing Date accurately and fairly reflect, in all material respects, the
Taxes of the Company and its Subsidiaries for the periods covered thereby.
(c) All foreign, state and local jurisdictions where the Company files
material Tax Returns are set forth in Section 4.10 of the Disclosure Letter. To
the Knowledge of the Company, since January 1, 2000 no claim has been made by a
Governmental Authority in a jurisdiction where the Company and its Subsidiaries
do not file Tax Returns that it or they are or may be subject to material
taxation by that jurisdiction.
(d) Section 4.10 of the Disclosure Letter lists all federal, state,
local, and foreign income Tax Returns filed with respect to the Company and each
of its Subsidiaries for taxable periods ended after December 31, 1999, indicates
those Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. In addition to such lists, the Company has
made available to Parent correct and complete copies of all Tax Returns filed,
examination reports, and statements of deficiencies assessed against or agreed
to by the Company and its Subsidiaries since January 1, 2000.
(e) There is no material Tax deficiency or delinquency asserted or, to
the Knowledge of the Company, threatened against the Company and its
Subsidiaries.
(f) Except as set forth in Section 4.10 of the Disclosure Letter, no
audit, action or similar proceeding is pending or, to the Knowledge of the
Company, proposed by any Governmental Authority against the Company or any of
its Subsidiaries. No material adjustment relating to any Tax Return of the
Company or any of is Subsidiaries has been proposed in writing by any
Governmental Authority. Except as set forth in Section 4.10 of the Disclosure
Letter, the Company and its Subsidiaries have not granted any extension to any
Governmental Authority of the limitations period during which any Tax liability
may be assessed or collected.
(g) There are no liens or other encumbrances for Taxes upon the assets
of the Company and its Subsidiaries, except for current Taxes not yet due and
payable and for Taxes being contested in good faith by appropriate proceedings
and for which adequate reserves have been established on the books of the
Company or any of its Subsidiaries, as applicable, in accordance with GAAP.
(h) The Company and its Subsidiaries have withheld and paid all material
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, shareholder, or other
third party.
(i) Except as set forth on Section 4.10 of the Disclosure Letter,
neither the Company nor any of its Subsidiaries is a party to any Tax allocation
or sharing agreement that includes any Person other than the Company or its
Subsidiaries. Neither the Company nor any of its Subsidiaries (i) has been a
member of an Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Company) since January 1,
2000 and (ii) has liability for the Taxes of any person (other than any of the
Company and its Subsidiaries) under Reg. ss.1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise that has arisen since January 1, 2000.
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(j) Except as set forth in Section 4.10 of the Disclosure Letter, none
of the Company and its Subsidiaries will be required to include any material
item of income in, or exclude any material item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any: (i) change in method of accounting elected prior to the
Closing Date for a taxable period ending on or prior to the Closing Date; (ii)
"closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed prior to the Closing Date; (iii) intercompany transactions entered into
prior to the Closing Date or any excess loss account described in Treasury
Regulations under Section 1502 of the Code (or any corresponding or similar
provision of state, local or foreign income Tax law) accrued prior to the
Closing Date; (iv) installment sale or open transaction disposition made prior
to the Closing Date; or (v) prepaid amount received prior to the Closing Date.
(k) Since January 1, 1998 neither the Company nor any of its
Subsidiaries has distributed stock of another Person, or has had its stock
distributed by another Person, in a transaction that purported or was intended
to be governed in whole or in part by Section 355 or Section 361 of the Code.
Section 4.11 ERISA.
(a) Section 4.11(a) of the Disclosure Letter sets forth a list
identifying (i) each material Employee Benefit Plan and (ii) each Material
Employee Agreement. For purposes of this Agreement, the term "Employee Benefit
Plan" means each employee benefit plan (within the meaning of Section 3(3) of
ERISA), whether or not subject to ERISA, and each bonus, stock option, stock
purchase or other equity based, incentive, deferred compensation, supplemental
retirement, health, life, disability or other welfare, dependent care,
severance, change in control, retention, termination and other similar employee
or retiree compensation or benefit plan, program, policy or arrangement
maintained, contributed to or required to be contributed to by the Company or
any of its Subsidiaries or in respect of which the Company or any of its
Subsidiaries may have any material liability, whether absolute or contingent,
direct or indirect.
(b) Neither the Company nor any of its ERISA Affiliates sponsors,
maintains, contributes to or has an obligation to contribute to any
multiemployer plan (within the meaning of Section 3(37) of ERISA), whether or
not subject to ERISA, or any plan sponsored by more than one employer within the
meaning of Sections 4063 or 4064 of ERISA or Section 413(c) of the Code, whether
or not subject to ERISA.
(c) Except as otherwise set forth in Section 4.11(c) of the Disclosure
Letter, each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has received a determination letter from the Internal
Revenue Service regarding its tax qualified status and covering all Tax Laws
prior to the Economic Growth and Tax Relief Reconciliation Act of 2001, and the
Company has no Knowledge that anything has occurred since the date of such most
recent Internal Revenue Service determination letter or condition exists that
could be reasonably expected to adversely affect the tax-qualified status of any
such Plan. Each Employee Benefit Plan intended to qualify for any special tax
treatment under applicable Tax Laws other than the Code meets all requirements
for such treatment and, to the Company's Knowledge, has timely received all
required certificates and approvals of any Governmental Authority. Each Employee
Benefit Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all Laws that are applicable to such Employee
Benefit Plan, except for any failures to comply that, individually and in the
aggregate, would not have or result in any material liability to the Company and
its Subsidiaries.
22
(d) No Employee Benefit Plan or Employee Agreement provides for the
payment of any amount or benefit and there is no other contract, agreement, plan
or arrangement covering any current or former director, shareholder, officer or
employee of the Company or any of its Affiliates that, individually or
collectively, could give rise to the payment of any amount or benefit that would
not be deductible under Section 280G or 162(m) of the Code or the comparable
provisions of any Tax Law of a jurisdiction other than the United States.
(e) Except as disclosed in Section 4.11(e) of the Disclosure Letter, no
payment, accrual of additional compensation or benefits, acceleration of any
payments, compensation or benefits, vesting in any compensation or benefits or
funding of any compensation or benefits under any Employee Benefit Plan,
Employee Agreement or similar plan, contract, agreement or arrangement will be
caused, directly or indirectly, by the Company's entering into this Agreement or
by the consummation of the transactions contemplated by this Agreement (either
alone or together with any other event).
(f) Neither the Company nor any of its Subsidiaries or ERISA Affiliates
has incurred or reasonably expects to incur any material liability pursuant to
Title IV of ERISA or the comparable provisions of the Laws of any jurisdiction
other than the United States and, to the Company's Knowledge, no event,
transaction or condition exists or has occurred that could reasonably be
expected to result in the incurrence of any such liability. Neither the Company
nor any of its Subsidiaries or ERISA Affiliates has incurred or reasonably
expects to incur any liability pursuant to Title I of ERISA, the penalty or
excise tax provisions of the Code relating to employee benefit plans or the
comparable provisions of the Laws of any jurisdiction other than the United
States that remains outstanding that could reasonably be expected to have a
Material Adverse Effect on the Company. Neither the execution of this Agreement
nor the consummation of the transactions contemplated hereby will require (i)
notice to the Pension Benefit Guaranty Corporation or any Governmental Authority
with respect to employee benefits or other matters of any jurisdiction other
than the United States or (ii) consent of any union or works council or other
labor representative.
(g) All contributions, premiums and expenses required to be paid
pursuant to the terms of any Employee Benefit Plan, Employee Agreement or Law
prior to the date hereof have been timely paid, except where the failure to do
so would not be reasonably expected to result in any material liability to the
Company.
23
Section 4.12 Labor Matters. Except as set forth in Section 4.12 of the
Disclosure Letter, the Company is not party to any collective bargaining
agreements or other collective labor contracts or understandings. Except as
would not, individually and in the aggregate, be reasonably expected to result
in any material liability to the Company or any of its Subsidiaries:
(a) there is not pending or, to the Knowledge of the Company,
threatened, and there has not been since January 1, 2002, any labor strike,
dispute, slowdown, stoppage, lockout or similar labor action against the Company
or any of its Subsidiaries or involving their respective employees;
(b) none of the employees of the Company or any of its Subsidiaries are
represented by any labor organization except as set forth in Section 4.12 of the
Disclosure Letter, and, to the Knowledge of the Company, there are no current
union organizing activities among the employees of the Company or any of its
Subsidiaries;
(c) the Company and each of its Subsidiaries are in compliance in all
material respects with all applicable Laws relating to the employment,
termination of employment and terms and conditions of employment of their
respective employees and the requirements with respect to collective bargaining;
and
(d) there are no pending or, to the Knowledge of the Company, threatened
unfair labor practice charges or complaints or other labor grievances against
the Company or any of its Subsidiaries.
Section 4.13 Compliance with Laws.
(a) Except as set forth in Section 4.13 of the Disclosure Letter, the
Company and each of its Subsidiaries is, and within the preceding five years has
been, in compliance in all material respects with all Laws applicable to the
Company, its Subsidiaries and their respective businesses and activities. To the
Company's Knowledge, neither the Company nor any of its Subsidiaries is aware of
its being under investigation with respect to, or has it been threatened in
writing to be charged with or been given notice of any violation of, any
applicable Law which would reasonably be expected to result in any material
liability to the Company and its Subsidiaries.
(b) The Company and each of its Subsidiaries has and maintains in full
force and effect, and is in compliance in all material respects with, all
material Permits necessary for the Company and each of its Subsidiaries to carry
on their respective businesses as currently conducted and neither the Company
nor any of its Subsidiaries has received notice that the Person issuing or
authorizing any such material Permit intends to terminate or will refuse to
renew or reissue any such material Permit upon its expiration.
Section 4.14 Finders' Fees. Except as set forth in Section 4.14 of the
Disclosure Letter, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of the
Company or any of its Subsidiaries or its Affiliates and that might be entitled
to any fee or commission from the Company or any of its Affiliates in connection
with the transactions contemplated by this Agreement. The Company has provided
true and complete copies of all engagement letters or other agreements providing
for the payment of the fees and commissions described in Section 4.14 of the
Disclosure Letter, and no such letters or agreements have been amended or
superseded.
24
Section 4.15 Environmental Matters. Except as set forth in Section 4.15 of
the Disclosure Letter:
(a) the Company and its Subsidiaries are, and within the preceding five
years have been, in compliance in all material respects with all Environmental
Laws and with all material Permits issued by any Governmental Authority under
any Environmental Laws;
(b) there has been and currently is no actual or, to the Company's
Knowledge, threatened Release of Hazardous Substances at or from any real
property that is or, to the Company's Knowledge, has been owned, operated or
leased by the Company or its Subsidiaries that reasonably would, individually or
in the aggregate, be expected to give rise to a significant liability on the
part of the Company and its Subsidiaries under any Environmental Law;
(c) there is no written notice, demand, request for information,
citation, summons, claim, penalty, assessment, complaint, order, consent decree,
or settlement arising under or related to any Environmental Law pending or, to
the Knowledge of the Company, threatened by any Person against the Company or
any of its Subsidiaries;
(d) no written notice of an actual or alleged violation of any
Environmental Law or of any actual or potential penalty or other claim for
damages, personal injury or any other relief under any Environmental Law has
been served on, received by or assessed against the Company or any of its
Subsidiaries that has not been fully resolved such that neither the Company nor
any of its Subsidiaries are subject to any outstanding obligations;
(e) to the Company's Knowledge, neither the Company nor any of its
Subsidiaries has generated, transported, disposed or arranged for the disposal
of any Hazardous Substances at or to any off-site location that reasonably
would, individually or in the aggregate, be expected to give rise to or provide
a basis for a significant liability to the Company and its Subsidiaries as a
result of a demand for remediation, contribution, or cost recovery under any
Environmental Law; and
(f) the representations set forth in this Section 4.15 and in Section
4.16 below are the sole and exclusive representations of the Company with
respect to matters arising under Environmental Law.
Section 4.16 EINECS and TSCA. Except as set forth in Section 4.16 of the
Disclosure Letter:
(a) all chemicals that are currently, or within the preceding five years
have been, used, manufactured for commercial purposes or imported by the Company
and its Subsidiaries that are required to be registered or reported to the
United States Environmental Protection Agency for listing in the TSCA Inventory
have been so registered or reported. The Company and its Subsidiaries have
complied in all material respects with Section 8(c) of TSCA with respect to such
chemicals;
25
(b) no report of substantial risk under Section 8(e) of TSCA has been
made or is required to have been made by the Company or any of its Subsidiaries
and no effects have been recorded or required to be recorded or reported under
Section 8(c) of TSCA with respect to any chemicals manufactured by the Company
or any of its Subsidiaries. To the Company's Knowledge, no report of substantial
risk under Section 8(e) of TSCA has been made by a person or entity with respect
to any such chemicals; and
(c) to the Company's Knowledge, the Company and each of its Subsidiaries
have complied in all material respects with EINECS.
Section 4.17 Insurance. All Insurance Policies maintained by the Company or
any of its Subsidiaries are with reputable insurance carriers and are in
character and amount at least equivalent to that carried by persons engaged in
similar businesses and subject to the same or similar perils or hazards. All
Insurance Policies are in full force and effect and, to the Company's Knowledge,
no event has occurred which, with notice or the lapse of time, would constitute
a breach or default under any Insurance Policy, or which would permit
termination, material modification, or acceleration under any Insurance Policy.
All premiums payable with respect to such Insurance Policies that are due and
payable as of the date hereof have been paid. Except as set forth on in Section
4.17 of the Disclosure Letter, there is no material pending claim (excluding any
workers' compensation claim) under any Insurance Policy. The Company has not
received any written notice indicating that any insurance will not be renewed or
that the issuer of any Insurance Policy is not willing or able to perform its
obligations thereunder. To the Company's Knowledge, the Insurance Policies of
the Company are sufficient for compliance, in all material respects, with all
applicable legal requirements and contracts to which the Company is a party or
by which it is bound.
Section 4.18 Contracts.
(a) Except as set forth in Section 4.18(a) of the Disclosure Letter,
neither the Company nor any of its Subsidiaries is a party to or bound by, as of
the date hereof, any material contract, undertaking, commitment or agreement
(other than contracts, undertakings, commitments or agreements for employee
benefit matters set forth in Section 4.11(a) of the Disclosure Letter, real
property leases set forth in Section 4.22 of the Disclosure Letter and any
vendor contracts entered in the ordinary course of business) of the following
categories (collectively, the "Contracts"):
(i) contracts requiring annual expenditures by the Company and its
Subsidiaries in excess of $200,000, that have a remaining term in excess of one
year or that are not cancelable (without material penalty, cost or other
liability) within 180 days;
(ii) promissory notes, loans, agreements, indentures, evidences of
indebtedness or other instruments providing for the borrowing or lending of
money, whether as a borrower, lender or guarantor in excess of $100,000;
(iii) contracts containing covenants limiting in any material way the
freedom of the Company or any of its Subsidiaries to engage in any line of
business or compete with any Person in any product line or line of business, or
to operate at any location;
26
(iv) partnership or joint venture agreements;
(v) contracts for the acquisition or sale of a material business or
line of products, whether through the purchase of stock, assets or otherwise,
under which the Company or any of its Subsidiaries or any other party thereto
has material continuing rights or obligations; or
(vi) any other contract, agreement, arrangement or understanding that
is material to the Company or any of its Subsidiaries, in the case of this
clause (vi) the termination, or breach or default of which could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company.
(b) As of the date hereof, each of the Contracts is a valid and binding
obligation of the Company (or the Subsidiaries of the Company party thereto),
and to the Company's Knowledge, the other parties thereto, enforceable against
the Company and its Subsidiaries and, to the Company's Knowledge, the other
parties thereto in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium, reorganization, arrangement or
similar laws affecting creditors' rights generally and by general principles of
equity.
(c) Except as set forth in Section 4.18(c) of the Disclosure Letter, as
of the date hereof, neither the Company nor any of its Subsidiaries is, nor to
the Knowledge of the Company is any other party, in breach, default or violation
(and no event has occurred or not occurred through the Company's action or
inaction or, to the Knowledge of the Company, through the action or inaction of
any third parties, which with notice or the lapse of time or both could
constitute a breach, default or violation) of any term, condition or provision
of any Contract to which the Company or any of its Subsidiaries is now a party,
or by which any of them or any of their respective properties or assets may be
bound, except for breaches, defaults or violations that would not, individually
or in the aggregate, be reasonably expected to result in any material liability
to the Company and its Subsidiaries.
Section 4.19 Legal Matters. The Company has taken all action necessary to
exempt the Merger, this Agreement and the transactions contemplated hereby from
Section 203 of the Delaware Law, and, accordingly, neither such Section nor any
other antitakeover or similar statute or regulation in effect as of the date
hereof applies or purports to apply to any such transactions.
Section 4.20 Intellectual Property.
(a) Section 4.20(a) of the Disclosure Letter sets forth a complete and
correct list of the following categories of Owned Company IP: (i) all registered
Trademarks, pending Trademark applications and material unregistered Trademarks;
(ii) domain names; (iii) all issued Patents and pending Patent applications;
(iv) all registered Copyrights and registered mask works; and (v) all material
Software (excluding any off-the-shelf shrinkwrap, clickwrap or similar
commercially available non-custom software), in each case listing, as applicable
(A) for any Owned Company IP that are registrations or applications in the U.S.,
the name of the current owner of record, (B) the jurisdiction where the
application/registration is located and (C) the application or registration
number.
27
(b) Section 4.20(b) of the Disclosure Letter separately sets forth a
list of (i) all material agreements under which the Company or any of its
Subsidiaries uses any Licensed Company IP and (ii) all material agreements under
which the Company or any of its Subsidiaries has licensed to others the right to
use any of the Company IP.
(c) The Owned Company IP and the Licensed Company IP is all the
Intellectual Property necessary for the conduct of the business of the Company
and its Subsidiaries as it is currently conducted and as it has been conducted
during the past year.
(d) Except as set forth in Section 4.20(d) of the Disclosure Letter, the
Company and its Subsidiaries have all right, title and interest in, or the right
to use, all the Company IP free and clear of all Liens other than Permitted
Liens.
(e) Except as set forth in Section 4.20(e) of the Disclosure Letter, the
Company and each of its Subsidiaries has taken commercially reasonable and
appropriate steps to protect and maintain each item of material Owned Company
IP, and where the Company or any of its Subsidiaries has registered any Owned
Company IP, all such registrations which are material are currently in good
standing and subsisting.
(f) Except as set forth in Section 4.20(f) of the Disclosure Letter,
except where the assignment of such rights to the Company and its Subsidiaries
is ineffective under applicable Law or except as would not, individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect on the
Company, the Company and each of its Subsidiaries has secured and has a current
policy to secure written assignments from employees who contribute or have
contributed to the creation or development of any of the material Owned Company
IP, of the rights to such contributions that the Company or its Subsidiaries do
not already own by operation of law.
(g) Except as set forth in Section 4.20(g) of the Disclosure Letter,
there is no action, suit, claim, investigation, arbitration or proceeding
pending or, to the Company's Knowledge, threatened against the Company or any of
its Subsidiaries asserting that the Company's or any of its Subsidiaries' use or
exploitation of any Company IP or that the conduct of the business of the
Company and its Subsidiaries as currently conducted or has been conducted within
the preceding five years infringes upon, misappropriates, violates or conflicts
in any way with the Intellectual Property of any Person.
(h) Except as set forth in Section 4.20(h) of the Disclosure Letter,
there is no pending claim challenging the validity or enforceability of any item
of Owned Company IP.
(i) Except as set forth in Section 4.20(i) of the Disclosure Schedule,
to the Company's Knowledge, no person is infringing or misappropriating any
Owned Company IP.
Section 4.21 Related Party Transactions. Except as will not continue after
the Effective Time, none of (a) any beneficial owner of 5% or more of the
Company's outstanding capital stock, or (b) any officer, director or Affiliate
of the Company or (c) any Person (other than the Company) in which any such
beneficial owner, officer, director or Affiliate owns any beneficial interest
(other than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 5% of the
stock of which is beneficially owned by all such Persons) ((a) through (c)
collectively, "Related Parties") has any interest in: (i) any contract,
agreement, arrangement or understanding with, or relating to, the business or
operations of the Company or any of its Subsidiaries; (ii) any loan,
arrangement, understanding, agreement, contract or similar understanding for or
relating to indebtedness of the Company or any of its Subsidiaries or (iii) any
property (real, personal or mixed), tangible or intangible, used in the business
or operations of the Company or any of its Subsidiaries, excluding any such
contract, arrangement, understanding or agreement constituting an Employee Plan.
28
Section 4.22 Real Property. Except as set forth in Section 4.22 of the
Disclosure Letter and except as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on the Company, (x) as to
the real property owned in fee by the Company and/or its Subsidiaries (the
"Owned Real Property"), (i) the Company and/or its Subsidiaries has good and
valid fee title to the Owned Real Property; (ii) the Owned Real Property is not
subject to any Liens other than Permitted Liens; (iii) there are no options,
rights of first refusal or first offer or contracts of sale affecting the Owned
Real Property; and (iv) the Company and/or its Subsidiaries is in possession of
the Owned Real Property and there are no leases, tenancies or other occupancies
affecting the Owned Real Property and (y) as to the real property leased by the
Company and/or its Subsidiaries (the "Leased Real Properties"), (i) all of the
leases, licenses, tenancies, subleases and all other occupancy agreements under
which the Company or any of its Subsidiaries is a tenant, subtenant, landlord or
sublandlord, are in full force and effect; and (ii) neither the Company (or the
applicable Subsidiary of the Company), nor to the Knowledge of the Company, any
other party to any of the leases relating to the Leased Real Properties, is in
breach or violation of or default under such leases.
Section 4.23 Products.
(a) Except as set forth in Section 4.23 of the Disclosure Letter, there
is no notice, demand, claim, action, suit, inquiry, hearing, proceeding, notice
of violation or investigation from, by or before any Governmental Authority
relating to any product, including the packaging and advertising related
thereto, designed, formulated, manufactured, processed, sold or placed in the
stream of commerce by the Company or any of its Subsidiaries (a "Product"), or
claim or lawsuit involving a Product which is, to the Company's Knowledge,
pending or threatened, by any Person which would reasonably be expected to
result in any material liability to the Company and its Subsidiaries. There has
not been within the preceding five years, nor is there under consideration by
the Company or any of its Subsidiaries as of the date hereof, any Product recall
or post-sale warning of a material nature conducted by or on behalf of the
Company or any of its Subsidiaries concerning any Product. All Products complied
and comply in all material respects with applicable specifications, government
safety standards and Laws, and are or were substantially free from
contamination, deficiencies or defects.
(b) Except as set forth in Section 4.23 of the Disclosure Letter,
neither the Company nor any of its Subsidiaries has in the past twenty years,
and, to the Company's Knowledge, has ever designed, formulated, manufactured,
processed, sold or placed in the stream of commerce any Product that contains
asbestos or asbestos-containing materials.
29
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company that:
Section 5.1 Corporate Existence and Power. Each of Parent and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has all corporate powers and
authority required to execute and deliver this Agreement and to consummate the
Merger and the other transactions contemplated hereby.
Section 5.2 Corporate Authorization. The execution and delivery by Parent
and Merger Sub of this Agreement and the consummation by Parent and Merger Sub
of the transactions contemplated hereby are within the respective corporate
powers of Parent and Merger Sub and have been duly authorized by all necessary
corporate and shareholder action. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming the due and valid
execution and delivery of the Agreement by the Company, constitutes a valid and
binding agreement of each of Parent and Merger Sub, enforceable against Parent
and Merger Sub in accordance with its terms, except (i) as such enforceability
may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
Laws affecting the enforcement of creditors' rights generally and (ii) as the
remedy of specific performance and other forms of injunctive relief may be
subject to equitable defenses and subject to the discretion of any court before
which any proceeding therefor may be brought.
Section 5.3 Governmental Authorization. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation of
the Merger will not require any action by Parent or Merger Sub in respect of, or
filing by Parent or Merger Sub with, any Governmental Authority other than (i)
the filing of the certificate of merger in accordance with the Delaware Law,
(ii) compliance with any applicable requirements of the HSR Act and any
applicable Other Antitrust Law, (iii) compliance with any applicable
requirements of the Exchange Act, (iv) compliance with any applicable
requirements of the Securities Act, (v) compliance with any applicable foreign
or state securities or Blue Sky laws and (vi) such other items the failure of
which to do or be obtained would not, individually or in the aggregate,
reasonably be expected to adversely affect in any material respect, or
materially to delay, Parent's or Merger Sub's ability to observe and perform the
respective obligations of each hereunder.
Section 5.4 Non-Contravention. The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby do not and will not (i)
contravene or conflict with the organizational or governing documents of Parent
or Merger Sub, (ii) assuming compliance with the items specified in Section 5.3,
contravene, conflict with or constitute a violation of any provision of Law
binding upon Parent or Merger Sub or (iii) constitute a default under or give
rise to any right of termination, cancellation or acceleration of any right or
obligation of Parent or Merger Sub or to a loss of any material benefit to which
Parent or Merger Sub is entitled under any agreement, contract or other
instrument.
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Section 5.5 Finders' Fees. Except as otherwise disclosed in writing to the
Company, there is no investment banker, broker, finder or other intermediary
that has been retained by or is authorized to act on behalf of Parent or Merger
Sub or any of their respective Affiliates and that would be entitled to any fee
or commission from the Company, any Subsidiary of the Company or from any of
their respective Affiliates in connection with the transactions contemplated by
this Agreement.
Section 5.6 Adequate Funds. Parent will have at the Effective Time
sufficient funds for the payment of the aggregate Merger Consideration and to
perform its obligations under this Agreement.
Section 5.7 No Other Information. Parent and Merger Sub acknowledge that
neither the Company nor any other Person has made or makes any representation or
warranty except as expressly set forth in this Agreement, and specifically that
neither the Company nor any other Person has made or makes any representation or
warranty with respect to (i) any projections, estimates or budgets delivered to
or made available to Parent or Merger Sub or to any of their respective
Affiliates or Representatives of future revenues, future results of operations
(or any component thereof), future cash flows or future financial condition (or
any component thereof) of the Company and its Subsidiaries or of the future
business and operations of the Company and its Subsidiaries or (ii) any other
information or documents made available to Parent or Merger Sub or to any of
their respective Affiliates or Representatives with respect to the Company and
its Subsidiaries or their respective businesses or operations (except as
expressly set forth in this Agreement).
ARTICLE VI.
COVENANTS OF THE COMPANY
Section 6.1 Conduct of the Company and Its Subsidiaries. Except for matters
set forth in Section 6.1 of the Disclosure Letter or as specifically provided in
this Agreement, unless Parent shall otherwise consent in writing (which consent
shall not be unreasonably withheld, conditioned or delayed), from the date of
this Agreement to the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, conduct their respective businesses in all material
respects in the ordinary and usual course of business consistent with past
practice and shall use its reasonable best efforts to (i) preserve intact the
present business organization of the Company and its Subsidiaries, (ii) maintain
in effect all material Permits that are required for the Company or any of its
Subsidiaries to carry on their respective businesses, (iii) keep available the
services of present officers and key employees (as a group) of the Company and
its Subsidiaries, (iv) maintain the current relationships with its lenders,
suppliers and other Persons with which the Company or its Subsidiaries have
significant business relationships and (v) keep or cause to be kept Insurance
Policies in such amounts and of such kinds comparable to that in effect on the
date hereof (with insurers of substantially the same or better financial
condition), and the Company shall give Parent notice of any material change to
any Insurance Policy. Without limiting the generality of the foregoing, and
except for matters set forth in Section 6.1 of the Disclosure Letter as
expressly contemplated or permitted by this Agreement, without the prior written
consent of Parent (which consent shall not be unreasonably withheld), the
Company shall not, and shall not permit any of its Subsidiaries to:
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(a) enter into any new line of business, discontinue any line of
business or change, adopt, or propose to adopt any amendment or other alteration
to its organizational or governing documents;
(b) (i) acquire or offer to acquire (by merger, consolidation,
acquisition of stock or assets, joint venture or otherwise) any Person,
business, securities or a material amount of assets, or sell, lease or otherwise
dispose of a material amount of assets (other than the purchase and sale of
inventory and raw materials in the ordinary course of business consistent with
past practice), (ii) waive, release, grant, or transfer any rights of material
value, (iii) modify or change in any material respect, allow to expire or lapse
or fail to renew any material Permit or material Insurance Policy, (iv) incur,
assume or prepay any indebtedness for borrowed money except pursuant to its
existing credit facilities, (v) assume, guarantee, endorse or take any action to
otherwise become liable or responsible (whether directly, contingently or
otherwise) for any indebtedness for borrowed money or trade payables of any
other Person, except with respect to Subsidiaries in the ordinary course of
business consistent with past practice, (vi) make any loans, advances, payments
or capital contributions to, or investments in, any other Person (including, but
not limited to, any shareholder of the Company or any associated entity of such
shareholder), except to a Subsidiary in the ordinary course of business
consistent with past practice or as required by existing contracts to which the
Company or any of its Subsidiaries is a party ("Existing Contracts"), (vii)
authorize any material capital expenditures not included in its current capital
expenditure budget (which budget has been provided to Parent prior to the date
hereof), (viii) pledge or otherwise encumber shares of capital stock or other
voting securities of any of the Company's Subsidiaries, (ix) mortgage or pledge
any of its material assets, tangible or intangible, or create any Lien thereupon
(other than Permitted Liens), (x) enter into any contract or agreement other
than in the ordinary course of business consistent with past practice that would
be material to the Company and its Subsidiaries, taken as a whole or (xi) amend,
modify or waive in any material respects any material right under any material
Existing Contract;
(c) (i) split, combine or reclassify any Company Securities or shares of
capital stock of any Subsidiary or amend the terms of any Company Securities or
shares of capital stock of any Subsidiary, (ii) declare, set aside or pay any
dividend or other distribution or capital return (whether in cash, stock or
property or any combination thereof) in respect of Company Securities or shares
of capital stock of any Subsidiary other than any distribution by a wholly owned
Subsidiary of the Company to its parent corporation in the ordinary course of
business, or (iii) redeem, repurchase or otherwise acquire or offer to redeem,
repurchase, or otherwise acquire any Company Securities or shares of capital
stock of any Subsidiary, or issue any Company Options or other Company
Securities or shares of capital stock of any Subsidiary, other than in
connection with the exercise of Company Options outstanding on the date hereof
or the conversion of shares of Non-Voting Stock outstanding on the date hereof
into share of Voting Stock;
(d) adopt or materially amend any Employee Benefit Plan, Employee
Agreement or any other compensation or benefit plan, agreement or arrangement
with or for the benefit of any current or former director, officer or employee
of the Company or any of its Subsidiaries or materially increase in any manner
the compensation or pension, welfare or fringe benefits of any such director,
officer or employee, in each case, except as required by ERISA or other
applicable Law or by the express terms of an Employee Agreement as in effect as
of the date hereof;
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(e) pay any bonus or other incentive compensation or award to any
current or former director, officer or employee of the Company or any of its
Subsidiaries, except pursuant to the express terms of any Employee Agreement as
in effect as of the date hereof, (ii) enter into any agreement, commitment or
obligation to pay any bonus, other incentive compensation, severance or other
termination or retirement benefit or payment to any current or former director,
officer or employee of the Company or any of its Subsidiaries or (iii) enter
into any Employee Agreement with any director or officer of the Company or any
of its Subsidiaries or any Material Employee Agreement with any current or
former employee of the Company or any of its Subsidiaries;
(f) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) except as permitted by clause (j) below;
(g) make any election relating to Taxes or settle or compromise any
material Tax liability;
(h) make any change in accounting methods, principles or practices
affecting the reported consolidated assets, liabilities or results of operations
of the Company and its Subsidiaries, except insofar as may have been required by
a change in GAAP or Regulation S-X of the Exchange Act and after consulting with
independent accountants;
(i) alter the corporate structure or ownership of any of its
Subsidiaries, through merger, liquidation, reorganization, restructuring or any
other fashion;
(j) settle, pay or discharge, or agree to settle, pay or discharge, any
litigation, investigation, arbitration, proceeding or other claim, liability or
obligation arising from the conduct of business except in the ordinary course of
business consistent with past practice;
(k) knowingly or recklessly take, or agree to commit to take, or
knowingly or recklessly fail to take any action that would result or is
reasonably likely to result in any of the conditions to the Merger set forth in
Article IX not being satisfied, or would make any representation or warranty of
the Company contained herein inaccurate in any material respect at, or as of any
time prior to, the Effective Time, or that would impair the ability of the
Company to consummate the Merger in accordance with the terms hereof or
materially delay such consummation; or
(l) authorize, agree or commit to do any of the foregoing.
Notwithstanding the foregoing, the Company or a Subsidiary of the Company
shall be permitted to pay at the Effective Time any Transaction Costs and
Transactions Bonuses.
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Section 6.2 Access to Information; Right of Inspection. The Company will
provide and will cause its Subsidiaries and its and their respective
Representatives to provide Parent and Merger Sub and their respective authorized
Representatives, during normal business hours and upon reasonable advance notice
(i) access to all employees, offices, properties, books and records of the
Company (so long as such access does not unreasonably interfere with the
operations of the Company) as Parent or Merger Sub may reasonably request, (ii)
all documents that Parent or Merger Sub may reasonably request relating to the
existence of the Company and the authority of the Company for this Agreement and
(iii) such financial and operating data and other information with respect to
the business, properties and personnel of the Company and its Subsidiaries as
Parent or Merger Sub may reasonably request. Notwithstanding the foregoing,
Parent, Merger Sub and their Representatives shall not have access to any books,
records and other information the disclosure of which would, in the Company's
good faith opinion after consultation with legal counsel, result in the loss of
attorney-client privilege with respect to such books, records and other
information or cause the Company or any of its Subsidiaries or Representatives
to violate Law or any contracts to which they are party.
Section 6.3 Other Potential Acquirers.
(a) The Company shall immediately terminate, and shall cause its
Affiliates and Subsidiaries and its and their respective officers, directors,
employees, attorneys, accountants, advisors, representatives and agents
(collectively, "Representatives") to immediately terminate, all existing
activities, discussions or negotiations, if any, with any Person (other than
Parent and Merger Sub) with respect to, or that could reasonably be expected to
lead to, a Third Party Acquisition.
(b) Neither the Company nor any of its Subsidiaries or controlled
Affiliates shall, nor shall the Company authorize or permit any of its or their
respective officers and directors to, and the Company shall use its reasonable
best efforts to cause its and their respective non-controlled Affiliates,
employees, representatives and agents not to, directly or indirectly, encourage,
solicit, initiate, participate or engage in any way in discussions or
negotiations with or provide any non-public information to, or afford access to
any of the properties, books or records of the Company or its Subsidiaries to,
or otherwise take any action or to assist or facilitate, any Third Party or its
representatives concerning any Third Party Acquisition. The Company shall
promptly (and in any event within 24 hours) notify Parent and Merger Sub in the
event it receives any proposal, inquiry, request or communication concerning (or
that could reasonably be expected to lead to) a Third Party Acquisition,
including the material terms and conditions thereof and the identity of the
party making such proposal or inquiry, and shall keep Parent and Merger Sub
apprised on a current basis as to the status and any material developments
concerning the same.
Section 6.4 Resignation of Directors. Prior to the Effective Time, the
Company shall deliver to Parent and Merger Sub evidence reasonably satisfactory
to Parent and Merger Sub of the resignations (effective as of the Effective
Time) of (i) all directors of the Company and each of its Subsidiaries and (ii)
the officers of the Company and each of its Subsidiaries, as shall be requested
by Parent prior to the Effective Time.
Section 6.5 Certificates.
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(a) Prior to the Effective Time, (i) the Company shall deliver to Parent
and Merger Sub a certificate signed under penalties of perjury by an officer of
the Company to the effect that the Company is not or has not been a United
States real property holding company, as defined in Section 897(c)(2) of the
Code, during the applicable period described in Section 897(c)(1)(A)(ii) of the
Code.
(b) The Company shall deliver to Parent at least three Business Days
prior to Closing a certificate from the chief financial officer of the Company
certifying as to the total amount of the Transaction Costs and the Transaction
Bonuses.
Section 6.6 Subsequent Filings. Until the Effective Time, the Company will
timely file with the SEC each form, report and document required to be filed by
the Company under the Exchange Act and will promptly deliver to Parent and
Merger Sub copies of each such report filed with the SEC. As of their respective
dates, none of such reports shall contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of the Company included in such reports
shall be prepared in accordance with GAAP applied on a consistent basis (except
as may be permitted by the rules and regulations of the SEC and as indicated in
the notes thereto) and shall fairly present, in all material respects, the
financial position of the Company and its consolidated Subsidiaries as at the
dates thereof and the consolidated results of their operations for the periods
involved (subject, in the case of unaudited statements, to normal year-end audit
adjustments, none of which are anticipated to be, individually or in the
aggregate, material in amount).
Section 6.7 Notice under the Delaware Law. As soon as practicable and, in
any event, no later than 15 Business Days after the date of this Agreement, the
Company shall prepare and mail to all holders of Common Shares a notice in
accordance with Section 262(d)(2) of the Delaware Law, notifying such holders of
the approval of the Merger and that appraisal rights are available. The Company
shall take such other steps as are necessary under such Section, including the
sending of any subsequent notice required under such Section, so that any demand
or exercise of the right to dissent provided in Section 262, to be effective,
will be received by the Company prior to the Effective Time.
Section 6.8 Intellectual Property.
(a) The Company shall use reasonable efforts to identify other
Intellectual Property that are patents, patent applications, trademark
applications and trademark registrations registered or pending in Belgium,
Canada, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway,
Spain, Sweden, Switzerland, the United States or the U.K. that are owned in the
name of the Company or any of its Subsidiaries that are not listed in subsection
(a)(i) or (a)(iii) of Section 4.20 of the Disclosure Letter and shall provide
copies of any resulting material identifying such Intellectual Property to
Parent at or prior to Closing.
(b) With regard to the domain name registrations listed in subsection
(a)(ii) of Section 4.20 of the Disclosure Letter for which the registrant is not
the Company or any of its Subsidiaries, the Company shall take commercially
reasonable steps to transfer ownership of such domain name registrations to the
Company or any of its subsidiaries prior to Closing.
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(c) With regard to the POLYSEAMSEAL U.K. trademark (No. B-858,934)
listed under Section 4.20(a)(i) of the Disclosure Letter, the Company will use
reasonable efforts to provide Parent with an original signed copy of the
assignment document that assigns ownership of such trademark to the Company or
one of its Subsidiaries. With respect to the PL Mexico trademark (No. 508,329)
listed under Section 4.20(a)(i) of the Disclosure Letter, the Company will use
reasonable efforts to obtain an assignment document in recordable form that
assigns ownership of such trademark to the Company or one of its Subsidiaries
and shall promptly provide Parent with a copy of such document once it is
obtained by the Company.
ARTICLE VII.
COVENANTS OF PARENT AND MERGER SUB
Section 7.1 Director and Officer Liability.
(a) The Surviving Corporation shall, and after the Effective Time Parent
shall cause the Surviving Corporation to, comply with all of the Company's and
its respective Subsidiaries' obligations to indemnify and hold harmless
(including any obligations to advance funds for expenses) the present and former
officers and directors thereof in respect of acts or omissions occurring prior
to the Effective Time to the extent provided under the Company's or such
Subsidiaries' respective organizational and governing documents in effect on the
date hereof, and such obligations shall survive the Merger and shall continue in
full force and effect in accordance with the terms of the Surviving
Corporation's certificate of incorporation and bylaws from the Effective Time
until the expiration of the applicable statue of limitations with respect to any
claims against such directors or officers arising out of such acts or omissions.
Any determination required to be made with respect to whether the conduct of an
individual seeking indemnification has complied with the standards set forth
under applicable Law shall be made by independent counsel mutually acceptable to
the Surviving Corporation and such individual. For a period of six years after
the Effective Time, the Surviving Corporation shall cause to be maintained in
effect the current policies of officers' and directors' liability insurance
maintained by the Company and its respective Subsidiaries (the "Current
Policies"); provided however, that the Surviving Corporation may, and in the
event of the cancellation or termination of such policies the Surviving
Corporation shall, substitute such policies with equally reputable and
financially sound carriers and that are reasonably satisfactory to the covered
persons providing at least the same coverage and amount and containing terms and
conditions that are no less favorable to the covered persons (the "Replacement
Policies") in respect of claims arising from facts or events that existed or
occurred prior to the Effective Time under the Current Policies; provided
further however, that in no event will the Surviving Corporation be required to
expend annually in excess of 300% of the annual premium currently paid by the
Company for such coverage (or to provide more than that amount of coverage as is
available for no more than 300% of such current annual premium); provided
further however, that in lieu of the foregoing insurance coverage, with the
consent of Parent (which consent shall not be unreasonably withheld), the
Company may purchase "tail" insurance coverage that provides coverage no less
favorable than the coverage described above.
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(b) This Section 7.1 shall survive the consummation of the Merger and is
intended to be for the benefit of, and shall be enforceable by, present or
former directors or officers of the Company or its Subsidiaries, their
respective heirs and personal representatives and shall be binding on the
Surviving Corporation, Parent and their respective successors and assigns, and
the agreements and covenants contained herein shall not be deemed to be
exclusive of any other rights to which any such present or former director or
officer is entitled, whether pursuant to Law, contract or otherwise. Nothing in
this Agreement is intended to, shall be construed to or shall release, waive or
impair any rights to directors' and officers' insurance claims under any policy
that is or has been in existence with respect to the Company or any of its
Subsidiaries or their respective officers, directors and employees, it being
understood and agreed that the indemnification provided for in this Section 7.1
is not prior to or in substitution for any such claims under any such policies.
(c) If Parent or the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity or (ii) transfers or conveys
substantially all of its properties and assets to any person, then and in each
case to the extent reasonably necessary, proper provision shall be made so that
the successors and assigns of Parent or the Surviving Corporation shall assume
the obligations set forth in this Section 7.1.
ARTICLE VIII.
COVENANTS OF THE PARTIES
The parties hereto agree that:
Section 8.1 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each party will (and will cause its Affiliates to) use its
reasonable best efforts to take, or cause to be taken, all actions, to file, or
cause to be filed, all documents and to do, or cause to be done, all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement, including but not limited to obtaining all necessary consents,
waivers, approvals, authorizations, Permits or orders from all Governmental
Authorities or other Persons or as required under the terms of the agreements
set forth in Section 4.4(iii) of the Disclosure Letter (other than the Company's
Existing Credit Facilities and the Senior Subordinated Notes); provided that in
no event shall the Company or any of its Affiliates be required to pay prior to
the Effective Time any material fee, penalties or other consideration to any
third party to obtain any consent or approval required for the consummation of
the Merger under any material contracts. Each party shall also (and will cause
its Affiliates to) refrain from knowingly taking, directly or indirectly, any
action (including making acquisitions), that would be reasonably likely to
result in a failure of any of the conditions to the Merger in this Agreement
being satisfied or restrict such party's ability to consummate the Merger and
the other transactions contemplated hereby. Without limiting the foregoing, the
Company shall use its reasonable best efforts (i) to take all action necessary
so that no takeover, anti-takeover, moratorium, "fair price," "control share" or
other similar statute or regulation is or becomes applicable to the Merger or
any of the other transactions contemplated by this Agreement and (ii) if any
such Law is or becomes applicable to any of the foregoing, to take all action
necessary so that the Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger and the other transactions contemplated by
this Agreement.
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Section 8.2 Certain Filings.
(a) The parties shall cooperate with one another (i) in promptly
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals, permits
or waivers are required to be or should be obtained from any parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement and (ii) in seeking and obtaining any such
actions, consents, approvals, permits or waivers or making any such filings,
furnishing in a timely manner information required in connection therewith;
provided that the conditions to the parties' respective obligations to
consummate the transactions contemplated hereby shall be limited to those
conditions specified in Article IX. The parties shall have the right to review
in advance, and to the extent reasonably practicable each will consult the other
on, all the material information relating to the other and each of their
respective Subsidiaries that appears in any filing made with, or written
materials submitted to, any Governmental Authority in connection with the Merger
and the other transactions contemplated by this Agreement. Each of the Company
and Parent shall promptly notify and provide a copy to the other party of any
written communication received from any Governmental Authority with respect to
any filing or submission or with respect to the Merger and the other
transactions contemplated by this Agreement. Each of the Company and Parent
shall give the other reasonable prior notice of any communication with, and any
proposed understanding, undertaking or agreement with, any Governmental
Authority regarding any such filing or any such transaction. Neither the Company
nor Parent shall, nor shall they permit their respective Representatives to,
participate independently in any meeting or engage in any substantive
conversation with any Governmental Authority in respect of any such filing,
investigation or other inquiry without giving the other party prior notice of
such meeting or conversation and without giving, unless prohibited by such
Governmental Authority, the opportunity of the other party to attend or
participate. The parties to this Agreement will consult and cooperate with one
another in connection with any analyses, appearance, presentations, memoranda,
briefs, arguments, opinions, and proposals made or submitted by or on behalf of
any party to this Agreement in connection with proceedings under or related to
the HSR Act or Other Antitrust Laws.
(b) The parties (i) shall use their respective reasonable best efforts
to take or cause to be taken such actions as may be required to be taken under
the Exchange Act and state securities or applicable Blue Sky laws in connection
with the Merger and (ii) shall promptly prepare and file all necessary
documentation, effect all necessary applications, notices, petitions and
filings, and use all reasonable efforts to obtain all necessary consents from
any Governmental Authorities necessary to consummate the Merger (including,
without limitation, any filing under the HSR Act or any applicable Other
Antitrust Law).
(c) If required, each of the Company, Parent and Merger Sub shall take
all action necessary (i) to file as soon as practicable notifications or other
required items under the HSR Act and any applicable Other Antitrust Law, (ii) to
respond as promptly as practicable to any inquiries from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation, (iii) to comply with the requirements
of, and respond as promptly as reasonably practicable to all inquiries and
requests for additional information received from any Governmental Authority in
connection with, the HSR Act or Other Antitrust Laws related to the Merger or
the other transactions contemplated by this Agreement and (iv) to use reasonable
best efforts to avoid or eliminate each and every impediment under the HSR Act
or any Other Antitrust Law that may be asserted by any Governmental Authority
with respect to the Merger.
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Section 8.3 Public Announcements. So long as this Agreement is in effect,
the parties will consult with each other before issuing any press release or
making any public statement with respect to this Agreement or the transactions
contemplated hereby and, except for any press release or public statement a
party determines may be required by applicable Law or national securities
exchange, will not issue any such press release or make any such public
statement without the consent of the other parties (not to be unreasonably
delayed, conditioned or withheld).
Section 8.4 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets of the Company.
Section 8.5 Notices of Certain Events. Each of the parties hereto shall
reasonably promptly notify the other party of:
(a) the receipt by such party of any notice or other communication from
any Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) the receipt by such party of any notice or other communication from
any Governmental Authority in connection with the transactions contemplated by
this Agreement;
(c) its learning of any actions, suits, claims, investigations or
proceedings (or communications indicating that the same may be contemplated)
commenced or threatened against, or affecting such party that, if they were
pending on the date of this Agreement, would have been required to be disclosed
pursuant to this Agreement or which relate to the consummation of the Merger or
the other transactions contemplated by this Agreement;
(d) its learning of the occurrence or non-occurrence of any events,
circumstances, developments or facts that would be likely to make any of the
representations and warranties of such party contained in this Agreement untrue
or any of the covenants or conditions contained in this Agreement incapable of
being complied with or satisfied; and
(e) any event or occurrence that causes, or would reasonably be likely
to cause, a Material Adverse Effect on the Company.
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The delivery of any notice pursuant to this Section 8.5 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 8.6 Disposition of Litigation. The Company will consult with Parent
and Merger Sub with respect to any action by any Third Party to restrain or
prohibit or otherwise oppose the Merger or the other transactions contemplated
by this Agreement and will use reasonable best efforts to resist any such effort
to restrain or prohibit or otherwise oppose the Merger or the other transactions
contemplated by this Agreement. In addition, the Company will not encourage or
cooperate with any Third Party to restrain or prohibit or otherwise oppose the
Merger or the other transactions contemplated by this Agreement, and the Company
will reasonably cooperate with Parent and Merger Sub to resist any such effort
to restrain or prohibit or otherwise oppose the Merger or the other transactions
contemplated by this Agreement.
Section 8.7 Employee Matters.
(a) From and after the Effective Time, Parent shall cause the Company
and its Subsidiaries to honor all Employee Benefit Plans and all Employee
Agreements in accordance with their terms as in effect immediately before the
Effective Time, as the same may be amended from time to time thereafter in
accordance with such terms. For a period of not less than one year following the
Effective Time, Parent shall cause to be provided to current employees of the
Company and its Subsidiaries (the "Company Employees") employee benefits that
are, in the aggregate, substantially comparable to those provided to the Company
Employees immediately before the Effective Time, with the exception of those
changes collectively bargained with authorized union representatives. The
foregoing shall not be construed to prevent (i) the amendment or termination of
any particular Employee Benefit Plan or Employee Agreement to the extent
permitted by, and in accordance with, its terms and the terms of any contract
related thereto, as in effect immediately before the Effective Time, as the same
may be amended from time to time thereafter in accordance with such terms, or
(ii) the termination of employment of any Company Employee.
(b) For all purposes (other than for purposes of benefit accrual) under
the employee benefit plans of Parent and its Subsidiaries providing benefits to
any Company Employees after the Effective Time (the "New Plans"), except as
would result in a duplication of benefits, each Company Employee shall be
credited with all years of service for which such Company Employee was credited
before the Effective Time under any similar Employee Benefit Plan. In addition
and without limiting the generality of the foregoing: (i) each Company Employee
shall be immediately eligible to participate, without any waiting time or
satisfaction of any other eligibility requirements, in any and all New Plans to
the extent coverage under such New Plan replaces coverage under an Employee
Benefit Plan in which such Company Employee participated immediately before the
Effective Time (such plans, collectively, the "Old Plans") and (ii) for purposes
of each New Plan providing medical, dental, pharmaceutical and/or vision
benefits to any Company Employee, Parent shall use commercially reasonable
efforts to cause all pre-existing condition exclusions and actively-at-work
requirements of such New Plan to be waived for such employee and his or her
eligible dependents to the extent such exclusions or requirements would have
been satisfied or inapplicable to such employee or dependent under the similar
Old Plan in which such employee or dependent was a participant immediately prior
to commencement of participation in such New Plan, and any expenses incurred by
any Company Employee and his or her eligible dependents during the portion of
the plan year of the Old Plan ending on the date such employee's participation
in the corresponding New Plan begins to be taken into account under such New
Plan for purposes of satisfying all deductible, coinsurance and maximum
out-of-pocket requirements applicable to such employee and his or her covered
dependents for the applicable plan year as if such amounts had been paid in
accordance with such New Plan.
40
(c) Effective as of the Effective Time, Parent shall amend, or shall
cause to be amended, the Sovereign Specialty Chemicals, Inc. 401(k) Retirement
Plan and the Sovereign Specialty Chemicals, Inc. 401(k) Retirement Plan for
Union Employees (collectively, the "401(k) Plans") to provide for full,
accelerated vesting of all Company contributions under the 401(k) Plans made
with respect to an employee participating in either of the 401(k) Plans upon a
termination of the employment of any such employee occurring on or after the
Closing Date and on or prior to December 31, 2005, other than a termination for
cause by the Company or by such employee's resignation other than for good
cause. The Company may amend the 401(k) Plans to effectuate the foregoing prior
to the Effective Time.
(d) Parent agrees that the Company's Cash Incentive Plan (the "CIP")
shall remain in full force and effect for the year ended December 31, 2004, and
further agrees that payments for participants whose employment terminates, other
than termination by the Company for cause or by the participant's resignation
other than for good reason, (i) on or prior to December 31, 2004, shall be paid,
upon termination, at an amount equal to 150% of such terminated participant's
target bonus, with such amount being prorated to the nearest half-month to the
date of such participant's termination or (ii) after December 31, 2004 and prior
to the payment of the 2004 amounts earned under the CIP, shall be paid, at the
time payments are made to active employees under the CIP for 2004, an amount
equal to the full year bonus earned by such terminated participant for 2004, it
being understood that any payment pursuant to this Section 8.7(d) to a
terminated participant in respect of the CIP shall, to the extent of such
payment, be in satisfaction of any amount to which such participant may
otherwise be entitled in respect of the CIP upon his or her termination of
employment pursuant to the terms of the CIP, any Employee Benefit Plan, Employee
Agreement or other employment or severance agreement or otherwise. Parent also
agrees that the Company's Sales Incentive Plan (the "SIP") shall remain in full
force and effect for the year ended December 31, 2004, and further agrees that
participants whose employment terminates, other than termination by the Company
for cause or by the participant's resignation, will be paid all amounts
projected to be due under the SIP through the last full calendar month in 2004
completed prior to such participant's termination. The Company may amend the CIP
and the SIP to effectuate the foregoing prior to the Effective Time.
Section 8.8 Confidentiality Agreement.
(a) The Company and Parent shall use their reasonable best efforts to
cause the Confidentiality Agreement to terminate as of the date hereof.
Subsequent to such termination, the Confidentiality Agreement shall be void and
shall have no further effect, and none of the parties thereto shall have any
liability to the other parties thereto or its Affiliates, directors, officers or
employees, except that nothing in this Section 8.8(a) shall relieve any party
from liability for any willful or intentional breach of the Confidentiality
Agreement prior to the date hereof. Notwithstanding the foregoing, the
obligations contained in paragraph 2 of the Confidentiality Agreement shall
survive until the Effective Date.
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(b) From and after the date hereof, the Company shall, and shall cause
its Affiliates and its and their employees, counsel, financial advisors and
other representatives to, treat as confidential and safeguard any and all
information, knowledge and data of the Parent and its Affiliates that becomes
known to the Company or its Affiliates as a result of the transactions
contemplated hereby except as otherwise agreed to by Parent in writing, in each
case by using the standard of care necessary to prevent the unauthorized use,
dissemination or disclosure of such information, knowledge and data.
(c) From and after the date hereof until the Closing, Parent shall, and
shall cause its Affiliates and its and their employees, counsel, financial
advisors and other representatives to, treat as confidential and safeguard any
and all information, knowledge and data of the Company and its Affiliates that
becomes known to Parent or its Affiliates as a result of the transactions
contemplated hereby except as otherwise agreed to by the Company in writing, in
each case by using the standard of care necessary to prevent the unauthorized
use, dissemination or disclosure of such information, knowledge and data.
(d) Parent and the Company acknowledge that the confidentiality
obligations set forth herein shall not extend to information, knowledge and data
that is publicly available or becomes publicly available other than through an
act or omission of the party owing a duty of confidentiality, or becomes
available on a non-confidential basis from a source other than the party owing a
duty of confidentiality so long as such source is not known by such party to be
bound by a confidentiality agreement with or other obligations of secrecy to the
other party. In the event either Parent or the Company or their respective
Affiliates or employees, counsel, financial advisors or other representatives
(i) is requested or required to disclose information, knowledge or data that is
subject to a duty of confidentiality hereunder in connection with any judicial
or administrative proceedings or (ii) receives an opinion of outside counsel
that disclosure of information, knowledge or data that is subject to a duty of
confidentiality hereunder is necessary to avoid violating applicable Law, then
Parent or the Company, as applicable, shall provide the other party with prompt
notice of such requirement in advance of any such disclosure, and shall
cooperate with such other party to the extent it may seek to limit such
disclosure. In such case, in the absence of a protective order or the receipt of
a waiver from the non-disclosing party after a request in writing therefor is
made by the disclosing party, the disclosing party may disclose such
information, knowledge or data without liability hereunder, but such disclosing
party shall disclose only such information as is required to be disclosed and
shall use its reasonable best efforts to obtain a confidentiality order or
undertaking with respect to such information.
(e) In the event of a breach of the obligations hereunder by Parent or
the Company, the non-breaching party, in addition to all other available
remedies, will be entitled to injunctive relief to enforce the provisions of
this Section 8.8.
(f) Notwithstanding the foregoing or anything herein or in the
Confidentiality Agreement to the contrary, any party to this Agreement (and
their employees, representatives or other agents) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transactions contemplated by this Agreement; provided however, that this
sentence shall not permit any disclosure that otherwise is prohibited by this
Agreement or any other confidentiality agreement between or among the parties as
of the date hereof or where such disclosure would result in a violation of
federal or state securities Laws or to the extent not related to the tax aspects
of the transactions contemplated hereby. Moreover, nothing in this Agreement
shall be construed to limit in any way any party's ability to consult any tax
advisor regarding the tax treatment or tax structure of the transactions
contemplated hereby, provided that any such advisor agrees to treat such
information confidentially.
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ARTICLE IX.
CONDITIONS TO THE MERGER
Section 9.1 Conditions to the Obligations of Each Party. The respective
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or, where permitted by applicable law, waiver, at or
prior to the Effective Time, of the following conditions:
(a) any applicable waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have expired or been terminated and any
other consents, approvals or authorizations applicable to the Merger under the
Other Antitrust Laws specified in Section 9.1 of the Disclosure Letter shall
have been received or waived by the appropriate Governmental Authority or the
applicable waiting period shall have expired or been terminated; and
(b) no Law shall have been enacted, adopted, promulgated, issued,
entered or enforced which is then in effect and which prohibits, enjoins or
renders illegal the consummation of the Merger.
Section 9.2 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or waiver, at or prior to the Effective Time, of the following
further conditions:
(a) (i) the Company shall have performed or complied with in all
material respects all of its obligations and covenants hereunder required to be
performed or complied with by it at or prior to the Effective Time, (ii) the
representations and warranties of the Company contained herein shall be true and
correct (without giving effect to any qualification therein as to "materiality"
or as to whether any matter would or would be expected to have a Material
Adverse Effect on the Company) as of the Closing Date (except that
representations and warranties made as of a specific date are required to be
true and correct only as of such date), except where the failure to be so true
and correct would not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on the Company and (iii) Parent and
Merger Sub shall have received a certificate , dated the date of the Closing,
signed by the Chief Executive Officer of the Company, certifying as to the
fulfillment of the conditions specified in this Section 9.2(a);
43
(b) since the date of this Agreement, no state of facts, circumstance,
effect, condition, event, change, development or occurrence shall have occurred
that, individually or in the aggregate, has had or is reasonably likely to have
a Material Adverse Effect on the Company, and Parent and Merger Sub shall have
received a certificate, dated the date of the Closing signed by the Chief
Executive Officer of the Company, certifying as to the fulfillment of the
conditions specified in this Section 9.2(b);
(c) the Management Agreement shall have been terminated and evidence of
such termination shall have been provided to Parent and Merger Sub; and
(d) Parent shall have received in accordance with Section 6.5(b) a
certificate from the chief financial officer of the Company certifying as to the
total amount and details of the Transaction Costs (the "Transaction Cost
Certification") and the total amount of the Transaction Bonuses;
(e) there shall not be pending any suit, action or proceeding that is
reasonably likely to be adversely determined and that (A) seeks to restrain or
prohibit the consummation of the Merger or to unwind the Merger after it has
been consummated or (B) seeks to obtain from the Company or any of its
Subsidiaries any damages that could reasonably be expected to have a Material
Adverse Effect on the Company;
(f) the Indemnification and Escrow Agreement shall have been executed by
shareholders of the Company representing at least 94% of the Common Shares
outstanding immediately prior to the Effective Time; and
(g) as of the Effective Time, the aggregate number of Dissenting Shares
shall be no more than 6% of the total number of Common Shares outstanding.
Section 9.3 Conditions to the Obligations of the Company. The obligation of
the Company to consummate the Merger is subject to the satisfaction or waiver,
at or prior to the Effective Time, of the following further conditions:
(a) Each of Parent and Merger Sub shall have performed or complied with
in all material respects all of its respective obligations and covenants
hereunder required to be performed by it at or prior to the Effective Time;
(b) the representations and warranties of Parent and Merger Sub
contained herein that are qualified as to materiality shall be true and correct
in accordance with their terms as of the Closing Date, and those that are not
qualified as to materiality will be true and correct in all material respects as
of the Closing Date as if made at and as of such date (provided that
representations made as of a specific date shall be required to be true as of
such date only); and
(c) the Company shall have received a certificate , dated the date of
the Closing, signed by a senior officer of each of Parent and Merger Sub
certifying as to the fulfillment of the conditions specified in Sections 9.3(a)
and 9.3(b).
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ARTICLE X.
TERMINATION
Section 10.1 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
prior approval of this Agreement by the shareholders of the Company):
(a) by mutual written consent of the Company, on the one hand, and
Parent and Merger Sub, on the other hand;
(b) by any of the Company, Parent or Merger Sub, if:
(i) the Merger has not been consummated by the End Date, provided
that no party may terminate this Agreement prior to the date which is nine
months after the date of this Agreement if any Governmental Antitrust Authority
has not completed its review of the transactions contemplated hereby by such
date; provided further that the failure of the Merger to be consummated by the
End Date (or, if extended in accordance with the preceding proviso, such later
date) is not the result of, or caused by, the failure of the party seeking to
exercise such termination right to fulfill any of its obligations under this
Agreement; or
(ii) there shall be any Law that makes consummation of the Merger
illegal or otherwise permanently prohibited, provided that, in the case of any
such Law issued by a court, it shall be final and non-appealable; provided
however, that the right to terminate this Agreement pursuant to this Section
10.1(b)(ii) shall not be available to any party whose breach of any provision of
this Agreement results in the application or imposition of such Law;
(c) by the Company, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of Parent or Merger
Sub set forth in this Agreement shall have occurred which would cause any of the
conditions set forth in Sections 9.3(a) or (b) to be unable to be satisfied by
the End Date; provided however, that the Company is not then in material breach
of this Agreement; or
(d) by Parent or Merger Sub, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement shall have occurred which would cause the condition set
forth in Section 9.2(a) to be unable to be satisfied by the End Date; provided
however, that Parent or Merger Sub is not then in material breach of this
Agreement.
The party desiring to terminate this Agreement pursuant to Sections 10.1(b)
through (d) shall give written notice of such termination to the other party in
accordance with Section 11.1 of this Agreement.
Section 10.2 Effect of Termination. If this Agreement is terminated and the
Merger abandoned pursuant to Section 10.1, this Agreement shall forthwith become
null and void, and there shall be no liability or obligation on the part of the
Company, Parent, Merger Sub or their respective Subsidiaries or Affiliates,
except (i) Sections 8.8, 10.2 and Article XI (other than Sections 11.2, 11.9 and
11.10) will survive the termination hereof and (ii) with respect to any
liabilities for damages incurred or suffered by a party as a result of the
willful breach by any other party of any of its representations, warranties,
covenants or other agreements set forth in this Agreement.
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ARTICLE XI.
MISCELLANEOUS
Section 11.1 Notices. All notices, requests and other communications
hereunder shall be in writing (including facsimile or similar writing) and shall
be given:
if to Parent or Merger Sub, to:
Xxxxxx Corporation
The Triad, Suite 200
0000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Chief Legal Officer
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx KGaA
Xxxxxxxxxxxxx 00
00000 Xxxxxxxxxx
Xxxxxxx
Attention: General Counsel
Facsimile: x00 000 000 00000
and a copy (which shall not constitute notice) to:
Cleary, Gottlieb, Xxxxx and Xxxxxxxx
City Place House
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attention: Xxxxxxx X. Xxxxx
Facsimile: + 44 207 600 1698
if to the Company, to:
Sovereign Specialty Chemicals, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 0000
Attention: Xxxxxxxxxxx Xxxx, Esq.
Facsimile: (000) 000-0000
46
or to such other address or facsimile number as such party may hereafter specify
for by notice to the other parties hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such telecopy
is transmitted to the telecopy number specified above and the appropriate
facsimile confirmation is received or (ii) if given by any other means, when
delivered at the address specified in this Section 11.1.
Section 11.2 Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall survive until the date eighteen months
after the date on which the Effective Time occurs, it being understood that in
the event a notice of any claim for indemnification has been given under the
Indemnification and Escrow Agreement within such survival period, the
representations and warranties that are the subject of such indemnification
claim shall survive with respect to such claim until such time as such claim is
finally resolved. This Section 11.2 shall not limit any covenant or agreement of
the parties that by its terms contemplates performance in whole or in part after
the Effective Time. For the avoidance of doubt, the parties agree that the
shareholders of the Company will have no liability to Parent or its Affiliates
with respect to breach of any representation or warranty other than pursuant to
the Indemnification and Escrow Agreement.
Section 11.3 Amendments No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to
the Effective Time only by amendment or waiver in writing and signed: (i) in the
case of an amendment to this Agreement, by the Company, Parent and Merger Sub or
(ii) in the case of a waiver, by the party against whom the waiver is to be
effective; provided however, that after the approval of the Agreement by the
shareholders of the Company any proposed amendment that by Law requires further
approval by the shareholders of the Company shall not be effective without such
further shareholder approval.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any other rights or remedies
herein provided or available at Law or in equity.
Section 11.4 Expenses. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
Section 11.5 Transfer Taxes. Subject to Section 2.4(c), all stock transfer,
real estate transfer, documentary, stamp, recording and other similar taxes
(including interest, penalties and additions to any such taxes) ("Transfer
Taxes") incurred in connection with the transactions contemplated by this
Agreement shall be paid by either Parent, Merger Sub or the Surviving
Corporation.
47
Section 11.6 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto, and provided further that
Parent or Merger Sub may assign, without consent and in its sole discretion, any
or all of its rights or obligations under this Agreement to any direct, wholly
owned Subsidiary of Parent, but no such assignment shall relieve Parent or
Merger Sub of its obligations hereunder if such assignee does not perform such
obligations. Any purported assignment in violation of this provisions shall be
null and void ab initio.
Section 11.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without giving
effect to the conflicts or choice of law principles thereof.
Section 11.8 Counterparts; Effectiveness; Third Party Beneficiaries. This
Agreement may be executed by facsimile signatures and in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective only when actually signed by each party hereto and each
such party has received counterparts hereof signed by all of the other parties
hereto. No provision of this Agreement is intended to or shall confer upon any
Person other than the parties hereto any rights or remedies hereunder or with
respect hereto, except with respect to the matters provided in Section 2.4 and
Section 7.1.
Section 11.9 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by virtue of any Law, or due
to any public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner so that the transactions contemplated hereby are fulfilled to the extent
possible.
Section 11.10 Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to consummate the Merger, will cause irreparable injury to the other
parties, for which damages, even if available, will not be an adequate remedy.
Accordingly, each party hereby consents to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of such party's
obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder, in addition to any other rights or
remedies available hereunder or at law or in equity.
Section 11.11 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to its subject matter and
supersedes all oral or written prior or contemporaneous agreements and
understandings among the parties with respect to such subject matter.
48
Section 11.12 Jurisdiction; Waiver of Jury Trial. Except as otherwise
expressly provided in this Agreement, the parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought exclusively in the Court of Chancery of the
State of Delaware, County of New Castle or, if such court does not have
jurisdiction over the subject matter of such proceeding or if such jurisdiction
is not available, in the United State District Court for the District of
Delaware, and each of the parties hereby irrevocably consents to the exclusive
jurisdiction of those courts (and of the appropriate appellate courts therefrom)
in any suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by Law, any objection that such party may now or hereafter have to the
laying of the venue of any suit, action or proceeding in any of those courts or
that any suit, action or proceeding that is brought in any of those courts has
been brought in an inconvenient forum. Process in any suit, action or proceeding
may be served on any party at the applicable address provided in Section 11.1,
whether within or without the jurisdiction of any of the named courts. Without
limiting the foregoing, each party agrees that service of process on it by
notice as provided in Section 11.1 shall be deemed effective service of process.
Each of the parties to this Agreement hereby irrevocably waives any right it may
have to trial by jury in any court or jurisdiction in respect to any matter
arising out of or relating to this Agreement or the transactions contemplated
hereby.
Section 11.13 Authorship. The parties agree that the terms and language of
this Agreement were the result of negotiations between the parties, and as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against any party. Any controversy over construction of this
Agreement shall be decided without regard to events of authorship.
[signature page follows]
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
THE COMPANY
SOVEREIGN SPECIALTY CHEMICALS, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman and CEO
PARENT
XXXXXX CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief Financial and
Administrative Officer
MERGER SUB
HENKEL MERGER CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman of the Board and President
50
