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PURCHASE AGREEMENT
dated as of September 19, 2004
between
JARDEN CORPORATION
and
WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
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TABLE OF CONTENTS
Page
Recitals..........................................................................................................1
ARTICLE I
Purchase; Closings
1.1 Purchase...............................................................................................1
1.2 Funding................................................................................................1
1.3 Closing................................................................................................2
1.4 Transfer to Affiliates.................................................................................3
ARTICLE II
Representations and Warranties
2.1 Disclosure.............................................................................................3
2.2 Representations and Warranties of the Company..........................................................4
(a) Organization and Authority....................................................................4
(b) Company's Subsidiaries........................................................................5
(c) Capitalization................................................................................5
(d) Authorization; No Default.....................................................................6
(e) Knowledge as to Conditions....................................................................7
(f) Company Financial Statements..................................................................7
(g) Reports.......................................................................................7
(h) Properties and Leases.........................................................................8
(i) Taxes.........................................................................................8
(j) No Material Adverse Effect....................................................................8
(k) Commitments and Contracts.....................................................................9
(l) Litigation and Other Proceedings.............................................................10
(m) Insurance....................................................................................10
(n) Compliance with Laws.........................................................................10
(o) Labor........................................................................................10
(p) Company Benefit Plans........................................................................11
(q) No Defaults..................................................................................12
(r) Environmental Liability......................................................................12
(s) Anti-takeover Provisions Not Applicable......................................................13
(t) AHI Acquisition..............................................................................14
(u) Board Approvals..............................................................................14
(v) Brokers and Finders..........................................................................14
2.3 Representations and Warranties of the Investor........................................................14
(a) Organization and Authority...................................................................15
(b) Authorization................................................................................15
(c) Knowledge as to Conditions...................................................................15
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(d) Purchase for Investment......................................................................16
(e) Financial Capability.........................................................................16
(f) Brokers and Finders..........................................................................16
ARTICLE III
Covenants
3.1 Filings; Other Actions................................................................................16
3.2 Expenses..............................................................................................18
3.3 Access, Information and Confidentiality...............................................................18
3.4 Consent of Lenders....................................................................................19
3.5 Conduct of the Business...............................................................................19
ARTICLE IV
Additional Agreements
4.1 Standstill Agreement..................................................................................19
4.2 Registration Rights...................................................................................21
4.3 Preemptive Rights.....................................................................................21
(a) Sale of New Stock............................................................................21
(b) Notice.......................................................................................22
(c) Purchase Mechanism...........................................................................22
(d) Failure of Purchase..........................................................................23
4.4 Governance Matters....................................................................................24
4.5 Legend................................................................................................25
4.6 Reservation for Issuance..............................................................................25
4.7 Certain Transactions..................................................................................26
4.8 Extension Periods.....................................................................................26
4.9 Restrictions on Transfers.............................................................................26
4.10 Proxy.................................................................................................26
4.11 Withholding...........................................................................................27
4.12 Liquidity Rights......................................................................................27
ARTICLE V
Termination
5.1 Termination...........................................................................................28
5.2 Effects of Termination................................................................................28
ARTICLE V
Miscellaneous
6.1 Survival of Representations, Warranties, Agreements, Etc..............................................28
6.2 Amendment.............................................................................................28
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6.3 Waiver................................................................................................28
6.4 Counterparts and Facsimile............................................................................28
6.5 Governing Law; Jurisdiction...........................................................................29
6.6 WAIVER OF JURY TRIAL..................................................................................29
6.7 Notices...............................................................................................29
6.8 Entire Agreement, Etc.................................................................................30
6.9 Definitions of "subsidiary," "Affiliate" and "knowledge"..............................................30
6.10 Captions..............................................................................................30
6.11 Severability..........................................................................................31
6.12 No Third Party Beneficiaries..........................................................................31
6.13 Time of Essence.......................................................................................31
6.14 Specific Performance..................................................................................31
6.14 Certain Adjustments...................................................................................31
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LIST OF EXHIBITS
Form of Series B Convertible Participating Preferred Stock Certificate of Designations............................1
Form of Series C Mandatory Convertible Participating Preferred Stock Certificate of Designations..................2
SEC Registration -- Related Provisions.............................................................................3
Escrow Agreement..................................................................................................4
Charter Amendment.................................................................................................5
Form of Proxy.....................................................................................................6
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INDEX OF DEFINED TERMS
Location of
Term Definition
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Acquisition Termination Event........................................3.1(c)
Affiliate............................................................6.9(b)
Agreement............................................................Preamble
AHI..................................................................2.2(t)(1)
AHI Acquisition......................................................2.2(t)(1)
AHI Acquisition Agreement............................................2.2(t)(1)
Bank Consents .......................................................1.2(b)
beneficial ownership.................................................2.2(b)
Benefit Plan.........................................................2.2(k)(4)
Board of Directors...................................................2.2(d)
Board Representative.................................................4.4(a)
Cash Proceeds........................................................1.2(a)(3)
CEO..................................................................4.4(d)
CFO..................................................................4.4(d)
Certificate of Incorporation.........................................2.2(d)
Certificates of Designations.........................................Recital
Charter Amendment....................................................2.2(d)
Charter Amendment Approval...........................................2.2(d)
Closing..............................................................1.3(a)
Closing Date.........................................................1.3(a)
Code.................................................................2.2(p)(1)
Common Stock/Common Shares...........................................Recitals
Company..............................................................Preamble
Company Competitor ..................................................4.9
Company Financial Statements.........................................2.2(f)
Company Reports......................................................2.2(g)
Company Stock Option.................................................2.2(c)
Company Subsidiary/Company Subsidiaries..............................2.2(b)
Company 10-K.........................................................2.2(f)
control..............................................................6.9(b)
Conversion Approval..................................................2.2(d)
Disclosure Schedule..................................................2.1(a)
ERISA................................................................2.2(p)(1)
Environmental Claim..................................................2.2(r)(5)
Environmental Laws...................................................2.2(r)(6)
Escrow Account.......................................................1.2(a)(3)
Escrow Agent.........................................................1.2(a)(1)
Escrow Agreement ....................................................1.2(a)(1)
Exchange Act.........................................................2.2(b)
Extension Period.....................................................4.8
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Funding..............................................................1.2
Governmental Entities................................................1.3(b)(1)
Hazardous Materials..................................................2.2(r)(7)
HSR Act..............................................................2.2(d)
Information..........................................................3.3(b)
Investor.............................................................Preamble
IRS..................................................................2.2(i)
knowledge............................................................6.9(c)
Liquidity Request....................................................4.12(a)
Material Adverse Effect..............................................2.1(b)
Meeting..............................................................3.1(c)
New Stock............................................................4.3(a)
Nominating Committees................................................4.4(b)
Observer.............................................................4.4(b)
Permitted Transfer...................................................4.9
Preferred Stock/Preferred Share......................................Recitals
Previously Disclosed.................................................2.1(c)
Private Placement....................................................4.3(b)(2)
Purchase.............................................................1.3(a)
Qualifying Ownership Interest........................................3.3(a)
Recapitalization.....................................................4.12(a)
Remarketing..........................................................4.12(a)
Registrable Securities...............................................4.2
Registration Statement...............................................4.2
SEC..................................................................2.2(f)
Section 16(b) Period.................................................4.8
Securities...........................................................Recitals
Securities Act.......................................................2.3(d)
Series B Preferred Stock/Series B Preferred Shares...................Recitals
Series C Preferred Stock/Series C Preferred Shares...................Recitals
Share Base...........................................................3.3(a)
Shareholder Approvals................................................2.2(d)
subsidiary...........................................................6.9(a)
Transaction Documents................................................Recitals
Transfer.............................................................4.9
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PURCHASE AGREEMENT, dated as of September 19, 2004 (this
"Agreement"), between Jarden Corporation, a Delaware corporation (the
"Company"), and Warburg Pincus Private Equity VIII, L.P. (the "Investor").
RECITALS:
A. The Investment. The Company intends to sell to the
Investor, and the Investor intends to purchase from the Company, as an
investment in the Company, the securities as described herein. The securities to
be purchased are Series B Convertible Participating Preferred Stock of the
Company (the "Series B Preferred Stock" or "Series B Preferred Shares"), Series
C Mandatory Convertible Participating Preferred Stock of the Company (the
"Series C Preferred Stock" or "Series C Preferred Shares" and, together with the
Series B Preferred Stock, the "Preferred Stock" or "Preferred Shares") and
common stock, par value $0.01 per share, of the Company (the "Common Stock" or
"Common Shares") and are to be purchased at the Closing, as defined below,
subject to the terms and conditions set forth herein. The Series B Preferred
Stock and Series C Preferred Stock will have the designations, relative rights,
preferences and limitations set forth in the certificates of designations
substantially in the form attached as Exhibit 1 and Exhibit 2, respectively (the
"Certificates of Designations").
B. The Securities. The term "Securities" refers collectively
to (1) the Preferred Stock and Common Stock purchased under this Agreement, and
(2) any securities into which any of the foregoing Preferred Shares are
converted, exchanged or exercised in accordance with the terms thereof and of
this Agreement.
C. Transaction Documents. The term "Transaction Documents"
refers collectively to this Agreement, the Certificates of Designations, and the
registration-related provisions contained in Exhibit 3.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I
PURCHASE; CLOSINGS
1.1 Purchase. On the terms and subject to the conditions set
forth herein, the Investor will purchase from the Company, and the Company will
sell to the Investor the Securities as set forth in Section 1.3.
1.2 Funding. (a) On the later of (i) ten business days
following the date hereof and (ii) receipt of the Bank Consents (such date on
which the actions set forth in this Section 1.2 are taken, the "Funding"):
(1) the Company, the Investor and National City Bank, as
escrow agent (the "Escrow Agent"), will enter into an Escrow Agreement
substantially in the form of Exhibit 4 attached hereto, subject to
such reasonable changes as may be requested by the
Escrow Agent provided that parties to this Agreement consent to such
changes (each party hereby agrees that it will not unreasonably
withhold or delay such consent) (the "Escrow Agreement");
(2) the Company will deposit with the Escrow Agent pursuant to
the Escrow Agreement certificates representing, respectively, the
number of Preferred Shares and Common Shares to be purchased by the
Investor; and
(3) the Investor shall deliver by wire transfer of immediately
available United States funds into an escrow account (the "Escrow
Account") with the Escrow Agent the purchase price thereof in the
amount of $350,000,000 (the "Cash Proceeds"). The Cash Proceeds shall
be held, invested and disbursed, in accordance with the terms and
conditions of the Escrow Agreement.
(b) The obligation of the Investor to consummate the Funding
is subject to the Investor having received evidence, which evidence shall be
reasonably satisfactory to the Investor, that all consents required under that
certain Second Amended and Restated Credit Agreement, dated as of June 11, 2004,
among the Company, Canadian Imperial Bank of Commerce, as administrative agent,
Citicorp North America, Inc., as syndication agent, National City Bank of
Indiana and Bank of America, N.A., as co-documentation agents and the lenders
party thereto relating to the Purchase and confirming that the lenders under
such credit agreement shall have no rights to or interest in the Escrow Deposit
(as defined in the Escrow Agreement) unless (a) the Company has right to such
Escrow Deposit and (b) the Investor becomes the beneficial owner and has
possession of the issued certificate relating to the Common Stock and the
Preferred Stock, pursuant to the terms of the Escrow Agreement (the "Bank
Consents") have been received.
1.3 Closing. (a) At the closing (the "Closing"), the Investor
and the Company will make the deposits into the Escrow Account required by the
Escrow Agreement and, upon the release of such deposits from the Escrow Account
pursuant to Section 4 of the Escrow Agreement, the Investor will purchase from
the Company, and the Company will sell to the Investor, (A) 128,571 Series B
Preferred Shares at a price of $1,000.00 per share, (B) 200,000 Series C
Preferred Shares at a price of $1,000.00 per share and (C) 714,286 Common Shares
at a price of $30.00 per share (the "Purchase"). The Closing will take place at
the offices of Xxxxxxx Xxxx & Xxxxxxxxx LLP located at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 at 10:00 a.m., New York time, on the date of the Funding
(the "Closing Date") or at such later time as the last of the conditions
specified in Section 1.3(b) is satisfied or waived.
(b)(1) The respective obligation of each of the Investor and
the Company to consummate the Closing is subject to the fulfillment or written
waiver by the Investor and the Company prior to the Closing of the following
conditions: (A) all approvals and authorizations of, filings and registrations
with, and notifications to, all governmental or regulatory authorities,
agencies, courts, commissions or other entities (collectively, "Governmental
Entities") required for the Purchase shall have been obtained or made and shall
be in full force and effect and all other waiting periods shall have expired, in
each case without imposing or the Company agreeing to any restriction or
condition that would have a Material Adverse Effect on the Company; and (B) no
provision of any applicable law or
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regulation and no judgment, injunction, order or decree shall prohibit the
Purchase or shall prohibit or restrict Investor or its Affiliates from owning or
voting any Securities.
(2) The obligation of the Company to consummate the
Closing is also subject to the fulfillment or written waiver prior to
the Closing of the following conditions: the Investor shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing and
the Company shall have received a certificate dated as of the Closing
Date signed on behalf of the Investor by a senior officer or general
partner certifying compliance with Section 1.3(b)(2) hereof.
(3) The obligation of the Investor to consummate the Closing
is also subject to the fulfillment or written waiver prior to the
Closing of each of the following conditions: the Company shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing and
the Investor shall have received a certificate dated as of the Closing
Date signed on behalf of the Company by a senior officer certifying
compliance with Section 1.3(b)(3) hereof.
1.4 Transfer to Affiliates. The parties acknowledge that the
Investor intends to assign a portion of its rights and obligations to acquire
the Securities in accordance with this Agreement to one or more of its Affiliate
funds and may do so concurrently with the Closing, provided, that, as a
condition to such transfer, any such Affiliate must execute and deliver to the
Company a joinder agreement pursuant to which such Affiliate shall agree to be
bound (severally, but not jointly and severally) by this Agreement as if it were
a party hereto and in such case such Affiliate shall become responsible for its
pro rata share of all obligations of Investor hereunder, and the transferor
Investor shall be relieved of such acquired obligations. The parties agree to
cooperate in this regard. The term "Investor" will be deemed to include such
Affiliate funds that acquire Securities pursuant to this Agreement or that have
been transferred Securities that were acquired pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Disclosure. (a) On or prior to the date hereof, the
Company delivered to the Investor a schedule ("Disclosure Schedule") setting
forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more of the Company's
representations or warranties contained in Section 2.2 or to one or more of its
covenants contained in Article III; provided that the mere inclusion of an item
in a Disclosure Schedule as an exception to a representation or warranty will
not be deemed an admission by the Company that such item represents a material
exception or fact, event or circumstance or that such item is reasonably likely
to result in a Material Adverse Effect.
(b) "Material Adverse Effect" means, with respect to the
Investor only clause (2) that follows, or, with respect to the Company, both
clauses (1) and (2) that follow, any circumstance, event, change or effect that:
(1) is material and adverse to the financial position,
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results of operations, business, assets or liabilities of the Company and its
subsidiaries taken as a whole or (2) would materially impair the ability of
either the Investor or the Company, respectively, to perform its obligations
under this Agreement or otherwise materially threaten or materially impede the
consummation of the Purchase and the other transactions contemplated by this
Agreement; provided, however, that Material Adverse Effect, under clause (1) or
(2), shall be deemed not to include the impact of (A) changes in generally
accepted accounting principles generally, (B) changes in laws of general
applicability or interpretations thereof by Governmental Entities, (C) actions
or omissions of either party taken with the prior written consent of the other
party in contemplation of the transactions contemplated hereby, (D) changes or
conditions (including changes in economic, financial market, regulatory or
political conditions, whether resulting from acts of war or terrorism, an
escalation of hostilities or otherwise) affecting the U.S. economy or foreign
economies (so long as any such change in condition does not disproportionately
affect the business of the Company and its subsidiaries) and (E) this Agreement
and/or the AHI Acquisition Agreement, the transactions contemplated hereby and
thereby or the announcement thereof. References to a Material Adverse Effect
with respect to AHI mean any circumstance, event, change or effect that: (1) is
material and adverse to the financial position, results of operations, business,
assets or liabilities of AHI and its subsidiaries taken as a whole or (2) would
materially impair the ability of AHI to perform its obligations under the AHI
Acquisition Agreement; provided, however, that for these purposes Material
Adverse Effect with respect to AHI shall not be deemed to include the impact of
(A) changes in generally accepted accounting principles generally, (B) changes
in laws of general applicability or interpretations thereof by Governmental
Entities, (C) actions or omissions of AHI taken with the prior written consent
of the Company and the Investor in contemplation of the transactions
contemplated by the AHI Acquisition Agreement, (D) changes or conditions
(including changes in economic, financial market, regulatory or political
conditions, whether resulting from acts of war or terrorism, an escalation of
hostilities or otherwise) affecting the U.S. economy or foreign economies and
(E) this Agreement and/or the AHI Acquisition Agreement, the transactions
contemplated hereby and thereby or the announcement thereof.
(c) "Previously Disclosed" means information set forth on the
section of its Disclosure Schedule corresponding to the provision of this
Agreement to which such information relates; provided that information which, on
its face, reasonably should indicate to the reader that it relates to another
provision of this Agreement shall also be deemed to be Previously Disclosed with
respect to such other provision, or with respect to clauses (h), (j), (l), (m),
(n), (o) and (q) of Section 2.2, as otherwise disclosed on a Company Report
filed prior to the date hereof (other than as set forth in the risk factors or
forward looking statements of such Company Report).
2.2 Representations and Warranties of the Company. Except as
Previously Disclosed, the Company represents and warrants to the Investor that:
(a) Organization and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware, is duly qualified to do business and is in
good standing in all jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified
and failure to be so qualified would have a Material Adverse Effect on
the Company and has
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corporate power and authority to own its properties and assets and to
carry on its business as it is now being conducted. The Company has
furnished to the Investor true and correct copies of the Certificate
of Incorporation and by-laws as amended through the date of this
Agreement.
(b) Company's Subsidiaries. The Company has Previously
Disclosed a complete and correct list of all of its subsidiaries as of
the date hereof, all shares of the outstanding capital stock of each
of which are owned directly or indirectly by the Company. The material
subsidiaries of the Company are referred to herein individually as a
"Company Subsidiary" and collectively as the "Company Subsidiaries."
No equity security of any Company Subsidiary is or may be required to
be issued by reason of any option, warrant, scrip, preemptive right,
right to subscribe to, call or commitment of any character whatsoever
relating to, or security or right convertible into, shares of any
capital stock of such subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Company
Subsidiary is bound to issue additional shares of its capital stock,
or any option, warrant or right to purchase or acquire any additional
shares of its capital stock. All of such shares so owned by the
Company are fully paid and nonassessable and are owned by it free and
clear of any lien, claim, charge, option, encumbrance or agreement
with respect thereto. Each Company Subsidiary is a corporation duly
organized, validly existing, duly qualified to do business and in good
standing under the laws of its jurisdiction of incorporation, and has
corporate power and authority to own or lease its properties and
assets and to carry on its business as it is now being conducted.
Other than the Company Subsidiaries or as Previously Disclosed, the
Company does not own beneficially (the concept of "beneficial
ownership" having the meaning assigned thereto in Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and the rules
and regulations thereunder), directly or indirectly, more than 5% of
any class of equity securities or similar interests of any corporation
or other entity, and is not, directly or indirectly, a partner in any
partnership or party to any joint venture.
(c) Capitalization. The authorized capital stock of the
Company consists of (1) 5 million shares of Preferred Stock, of which
no shares were outstanding as of the date of this Agreement, and (2)
50 million shares of Common Stock, of which 27,447,959 shares were
outstanding as of the date of this Agreement. As of the date hereof,
there are outstanding options (each, a "Company Stock Option") to
purchase an aggregate of not more than 2,652,763 shares of Common
Stock, all of which options are outstanding under the Benefit Plans.
The maximum number of shares of Common Stock that would be outstanding
as of the Closing Date if all options, warrants, conversion rights and
other rights with respect thereto (excluding those to be issued
pursuant hereto) outstanding as of the date hereof were exercised is
not more than 30,100,722. All of the outstanding shares of capital
stock of the Company have been duly and validly authorized and issued
and are fully paid and nonassessable. The shares of Common Stock and
Preferred Stock and the shares of Common Stock and Series B Preferred
Stock to be issued in respect of or upon conversion of such Preferred
Stock to be issued in accordance with the terms of this Agreement and
the respective Certificate of Designations, upon such issuance or
conversion, as the case may be, will be duly and validly authorized
and issued and fully paid and nonassessable. The Common Stock to be
purchased under this Agreement and
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the Common Stock to be issued upon conversion of shares of the Series
B Preferred Stock and the Common Stock to be issued upon conversion of
the Series C Preferred Stock, subject to the Conversion Approval as
set forth in this Agreement and in the Certificate of Designations
relating to the Series C Preferred Stock, has been approved for
listing on the New York Stock Exchange. Except (A) as Previously
Disclosed, (B) for the rights granted pursuant to the Transaction
Documents, or (C) under or pursuant to the Benefit Plans, as of the
date hereof there are no outstanding subscriptions, contracts,
conversion privileges, options, warrants, calls, preemptive rights or
other rights obligating the Company or any Company Subsidiary to
issue, sell or otherwise dispose of, or to purchase, redeem or
otherwise acquire, any shares of capital stock of the Company or any
Company Subsidiary.
(d) Authorization; No Default. The Company has the power and
authority to enter into the Transaction Documents and to carry out its
obligations hereunder and thereunder. The execution, delivery and
performance of the Transaction Documents by the Company and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by the board of directors of the Company (the
"Board of Directors"). Subject to such approvals of Governmental
Entities as may be required by statute or regulation, the Transaction
Documents are valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms.
Neither the execution, delivery and performance by the Company
of the Transaction Documents or the AHI Acquisition Agreement and any
documents ancillary thereto, nor the consummation of the transactions
contemplated hereby and thereby, including the AHI Acquisition and the
use of the Cash Proceeds exclusively to pay consideration to sellers
pursuant to the AHI Acquisition Agreement, nor compliance by the
Company with any of the provisions thereof, will (1) violate, conflict
with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration of, or result in the creation of, any
lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any Company Subsidiary under
any of the material terms, conditions or provisions of (A) its
Certificate of Incorporation or by-laws or (B) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any Company
Subsidiary is a party or by which it may be bound, or to which the
Company or any Company Subsidiary or any of the properties or assets
of the Company or any Company Subsidiary may be subject, or (2)
subject to compliance with the statutes and regulations and votes
referred to in the next paragraph, violate any statute, rule or
regulation or, to the knowledge of the Company, any judgment, ruling,
order, writ, injunction or decree applicable to the Company or any
Company Subsidiary or any of their respective properties or assets;
except, in the case of clauses (1)(B) and (2), as would not reasonably
be likely to have a Material Adverse Effect on the Company.
Other than (1) the shareholder votes (x) relating to the
proposed amendment to the Company's Certificate of Incorporation (the
"Certificate of Incorporation") set forth as Exhibit 5 hereto (the
"Charter Amendment" and such approval the "Charter Amendment
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Approval") and (y) to provide any and all shareholder approvals as may
be necessary so that the Series C Preferred Stock shall be immediately
convertible into Series B Preferred Stock and Common Stock pursuant to
the terms of the Certificate of Designations relating to the Series C
Preferred Stock (the "Conversion Approval" and together with the
Charter Amendment Approval, the "Shareholder Approvals"), (2) the
filing of the Certificates of Designations with the Delaware Secretary
of State and (3) in connection or in compliance with the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ("HSR Act" ), no
notice to, filing with, exemption or review by, or authorization,
consent or approval of, any Governmental Entity or any other person is
necessary for the consummation by the Company of the transactions
contemplated by the Transaction Documents.
(e) Knowledge as to Conditions. As of the date of this
Agreement, the Company knows of no reason why any regulatory approvals
and, to the extent necessary, any other material approvals,
authorizations, filings, registrations, and notices required or
otherwise a condition to the consummation of the transactions
contemplated by the Transaction Documents cannot, or should not, be
obtained.
(f) Company Financial Statements. The consolidated balance
sheets of the Company and its subsidiaries as of December 31, 2003 and
2002 and related consolidated statements of income, stockholders'
equity and cash flows for the three years ended December 31, 2003,
together with the notes thereto, certified by Ernst & Young LLP and
included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2003 (the "Company 10-K") as filed with the
Securities and Exchange Commission (the "SEC"), and the unaudited
consolidated balance sheets of the Company and its subsidiaries as of
June 30, 2004 and related consolidated statements of income,
stockholders' equity and cash flows for the quarter then ended,
included in the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 2004 (collectively, the "Company Financial Statements")
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and present fairly the
consolidated financial position of the Company and its subsidiaries at
the dates and the consolidated results of operations and cash flows of
the Company and its subsidiaries for the periods stated therein
(subject to the absence of notes and year-end audit adjustments in the
case of interim unaudited statements).
(g) Reports. Since December 31, 2001, the Company and each
Company Subsidiary have filed all material reports, registrations and
statements, together with any required amendments thereto, that it was
required to file with the SEC, including, but not limited to, Forms
10-K, Forms 8-K, Forms 10-Q and proxy statements and any documents
incorporated by reference therein. All such reports and statements
filed with any such regulatory body or authority are collectively
referred to herein as the "Company Reports". As of their respective
dates, the Company Reports (1) complied in all material respects with
all the rules and regulations promulgated by the SEC and (2) did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading. Copies of all the Company
Reports (other than those which have been filed with the SEC
-7-
and are publicly available on XXXXX) have been made available to the
Investor by the Company.
(h) Properties and Leases. Except for any lien for current
taxes not yet delinquent or which are being contested in good faith
and by appropriate proceedings, the Company and each Company
Subsidiary have good title free and clear of any material liens,
claims, charges, options, encumbrances or similar restrictions to all
the real and personal property reflected in the Company's consolidated
balance sheet as of December 31, 2003 included in the Company 10-K for
the period then ended, and all real and personal property acquired
since such date, except such real and personal property as has been
disposed of in the ordinary course of business. Except as is not
reasonably likely to have a Material Adverse Effect on the Company,
all leases of real property and all other leases material to the
Company or any Company Subsidiary pursuant to which the Company or
such Company Subsidiary, as lessee, leases real or personal property
are valid and effective in accordance with their respective terms, and
there is not, under any such lease, any material existing default by
the Company or such Company Subsidiary or any event which, with notice
or lapse of time or both, would constitute such a material default.
(i) Taxes. Each of the Company and the Company Subsidiaries
has filed all material federal, state, county, local and foreign tax
returns, including information returns, required to be filed by it,
and paid all material taxes owed by it, including those with respect
to income, withholding, social security, unemployment, workers
compensation, franchise, ad valorem, premium, excise and sales taxes,
and no taxes shown on such returns to be owed by it or assessments
received by it are delinquent. The federal income tax returns of the
Company and the Company Subsidiaries for the fiscal year ended
December 31, 2003, and for all fiscal years prior thereto, are for the
purposes of routine audit by the Internal Revenue Service (the "IRS")
closed because of the statute of limitations, and no claims for
additional taxes for such fiscal years are pending. Neither the
Company nor any Company Subsidiary is a party to any pending action or
proceeding, nor to the Company's knowledge has any such action or
proceeding been threatened by any Governmental Entity, for the
assessment or collection of taxes, interest, penalties, assessments or
deficiencies that would reasonably be likely to have a Material
Adverse Effect on the Company and, to the knowledge of the Company, no
issue has been raised by any federal, state, local or foreign taxing
authority in connection with an audit or examination of the tax
returns, business or properties of the Company or any Company
Subsidiary which has not been settled, resolved and fully satisfied,
or adequately reserved for (other than those issues that are not
reasonably likely to have a Material Adverse Effect on the Company).
Each of the Company and the Company Subsidiaries has withheld all
material taxes that it is required to withhold from amounts owing to
employees, creditors or other third parties.
(j) No Material Adverse Effect. Since December 31, 2003, no
change has occurred and no circumstances exist which have had or are
reasonably likely to have a Material Adverse Effect on the Company.
-8-
(k) Commitments and Contracts. The Company has Previously
Disclosed or has filed as an exhibit to a Company Report filed prior
to the date hereof (or with respect to clause (4) below only, made
available to the Investor or its representative) each of the following
to which the Company or any Company Subsidiary is a party or subject
(whether written or oral, express or implied):
(1) any material contract, agreement or arrangement
(including severance arrangements) the terms of which would be
subject to violation, breach, default, termination,
acceleration of performance, or which would result in the
creation of any lien, security interest, charge or
encumbrance, as a result of the execution, delivery and
performance by the Company of the Transaction Documents or the
AHI Acquisition Agreement or any documents ancillary thereto,
or the consummation of the transactions contemplated hereby or
thereby, including the AHI Acquisition;
(2) any material contract, agreement or arrangement
providing for "earn-outs," "savings guarantees," "performance
guarantees," or other contingent payments (other than in the
ordinary course of the operating businesses of the Company,
such as rebates and obligations under operating leases, triple
net leases and indemnification arrangements in favor of
directors and employees) by the Company or any Company
Subsidiary other than those with respect to which there are no
further material obligations under such provisions;
(3) any employment contract or understanding
(including any understandings or obligations with respect to
severance or termination pay, liabilities or fringe benefits)
with any present or former director or executive officer or
officer or other employee who receives cash compensation in
excess of $200,000 per annum (other than those that are
terminable at will by the Company or such Company Subsidiary
on less than 90 days notice without payment or penalty or
those that otherwise no longer impose any material obligations
on the Company);
(4) any plan, contract or understanding providing for
any bonus, pension, option, deferred compensation, retirement
payment, profit sharing welfare benefits or other compensation
with respect to any present or former officer, director,
employee or consultant of the Company or any Company
Subsidiary (each a "Benefit Plan"), in each case, requiring
aggregate annual payments or contributions by the Company or a
Company Subsidiary in an aggregate amount in excess of
$1,000,000 or which has aggregate unfunded liabilities in an
amount in excess of $1,000,000 individually provided that the
aggregate unfunded liabilities of the Benefit Plans not
Previously Disclosed or filed with the SEC do not exceed
$3,000,000;
(5) any contract purporting to, or containing
covenants that, materially limit the ability of the Company or
any Company Subsidiary to compete in any line of business or
with any person or which involve any material restriction of
the geographical area in which, or method by which or with
whom, the Company
-9-
or any Company Subsidiary may carry on its business (other
than as may be required by law or applicable regulatory
authorities);
(6) any contract purporting to limit in any material
respect, or containing covenants that would have the effect of
limiting in any material respect, the ability of any Affiliate
of the Company (other than Company Subsidiaries) to compete in
any line of business or with any person or which involve any
restriction of the geographical area in which, or method by
which or with whom, such Affiliate may carry on its business
(other than as may be required by law or applicable regulatory
authorities); or
(7) any real property lease and any other lease which
commits the Company or any Company Subsidiary to make at any
time after the date hereof payments aggregating $5,000,000 or
more.
(l) Litigation and Other Proceedings. There is no pending or,
to the knowledge of the Company, threatened, claim, action, suit,
investigation or proceeding, against the Company or any Company
Subsidiary, nor is the Company or any Company Subsidiary subject to
any order, judgment or decree, except for matters that have not had a
Material Adverse Effect or are not reasonably likely to have a
Material Adverse Effect.
(m) Insurance. The Company and each Company Subsidiary is
presently insured, and during each of the past five calendar years (or
during such lesser period of time as the Company has owned such
Company Subsidiary) has been insured, for reasonable amounts with
financially sound and reputable insurance companies against such risks
as companies engaged in a similar business would, in accordance with
good business practice, customarily be insured.
(n) Compliance with Laws. The Company and each Company
Subsidiary have all permits, licenses, authorizations, orders and
approvals of, and have made all filings, applications and
registrations with, Governmental Entities that are required in order
to permit them to own or lease their properties and assets and to
carry on their business as presently conducted and that are material
to the business of the Company and the Company Subsidiaries, taken as
a whole; and all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the
knowledge of the Company, no suspension or cancellation of any of them
is threatened, and all such filings, applications and registrations
are current. Except as is not reasonably likely to have a Material
Adverse Effect on the Company, (A) the conduct by the Company and each
Company Subsidiary of their business and the condition and use of
their properties does not violate or infringe any applicable domestic
(federal, state or local) or foreign law, statute, ordinance, license
or regulation, and (B) neither the Company nor any Company Subsidiary
is in default under any order, license, regulation, demand, writ,
injunction or decree of any Governmental Entity.
(o) Labor. No material work stoppage involving the Company or
any Company Subsidiary is pending or, to the knowledge of the Company,
threatened. Neither the Company nor any Company Subsidiary is involved
in, or threatened with or affected by,
-10-
any labor dispute, arbitration, lawsuit or administrative proceeding
that is reasonably likely to have a Material Adverse Effect on the
Company.
(p) Company Benefit Plans.
(1) With respect to each Benefit Plan, the Company
and the Company Subsidiaries have complied, and are now in
compliance, in all material respects, with all provisions of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Internal Revenue Code of 1986, as
amended (the "Code") and all laws and regulations applicable
to such Benefit Plans, including the receipt of any applicable
determination letters under the Code. Each Benefit Plan has
been administered in all material respects in accordance with
its terms including all requirements to make contributions.
There is not now, nor do any circumstances exist that are
likely to give rise to, any requirement for the posting of
security with respect to a Benefit Plan or the imposition of
any material lien on the assets of the Company or any Company
Subsidiary under ERISA or the Code, and no material liability
(other than for premiums to the Pension Benefit Guaranty
Corporation) under Title IV of ERISA or under Sections 412,
4971 or 4980B of the Code has been or is reasonably expected
to be incurred by the Company or any Company Subsidiary.
(2) No Benefit Plan is a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA.
(3) The Company and each Company Subsidiary have
reserved the right to amend, terminate or modify at any time
all plans or arrangements providing for retiree health or life
insurance coverage, and there have been no communications to
employees or former employees which could reasonably be
interpreted to promise or guarantee such employees or former
employees retiree health or life insurance or other retiree
death benefits on a permanent basis, other than those
retirement benefits provided for under the Company's
collective bargaining agreements.
(4) Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby (or any related termination of employment)
will (A) result in any material payment (including, without
limitation, severance or "excess parachute payments" (within
the meaning of Section 280G of the Code), or forgiveness of
indebtedness) becoming due to any current or former employee,
officer or director of the Company or any Company Subsidiary
under any Benefit Plan or otherwise, or(B) materially increase
or accelerate or require the funding of any benefits otherwise
payable under any Benefit Plan.
(5) There are no pending or, to the Company's
knowledge, threatened claims (other than claims for benefits
in the ordinary course), lawsuits or arbitrations which have
been asserted or instituted, and, to the Company's knowledge,
no set of circumstances exists which may reasonably give rise
to a
-11-
claim or lawsuit, against the Benefit Plans, any fiduciaries
thereof with respect to their duties to the Benefit Plans or
the assets of any of the trusts under any of the Benefit
Plans, which, in each case, would reasonably be expected to
result in any material liability of the Company or any Company
Subsidiary.
(6) The Company has adopted or, prior to the Closing,
will adopt the executive compensation arrangements referred to
on Attachment 2.2(p)(6) in a form consistent with the items
set forth on such Attachment and no arrangements inconsistent
with or additional thereto exist with respect to the subject
matters therein.
(q) No Defaults. Neither the Company nor any Company
Subsidiary is in default, nor has any event occurred that, with the
passage of time or the giving of notice, or both, would constitute a
default, under any material agreement, indenture, loan agreement or
other instrument to which it is a party or by which it or any of its
assets is bound or to which any of its assets is subject, the result
of which is reasonably likely to have a Material Adverse Effect on the
Company. To the Company's knowledge, all parties with whom the Company
or any Company Subsidiary has material leases, agreements or contracts
or who owe to the Company or any Company Subsidiary material
obligations are in compliance therewith in all material respects.
(r) Environmental Liability. Except as is not reasonably
likely to have a Material Adverse Effect on the Company:
(1) The Company and each Company Subsidiary is in
material compliance with all applicable Environmental Laws and
has no written notice of any unresolved potential liability
with respect to any Environmental Law from any governmental
authority or other person. To the knowledge of the Company, no
such potential liability has been threatened against the
Company or any Company Subsidiary. There is no pending or, to
the knowledge of the Company, threatened Claim against the
Company or any Company Subsidiary. None of the properties of
the Company or any Company Subsidiary, is subject to any
material claim, judgment, decree, order, arbitration award,
lien or deed restriction by any federal, state or local
governmental, regulatory or administrative authority relating
to Environmental Laws.
(2) To the knowledge of the Company, there are no
past or present actions, activities, circumstances,
conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or
disposal of any Hazardous Materials, that would reasonably be
expected to form the basis of any Environmental Claim relating
to the business or any of the properties of the Company or any
Company Subsidiary or against the Company or any Company
Subsidiary.
(3) To the knowledge of the Company, none of the
Company or the Company Subsidiaries is or will be required to
incur material capital cost or
-12-
expense in order to cause its current operations or properties
to achieve or maintain compliance with applicable
Environmental Laws.
(4) Neither the Company nor any Company Subsidiary
has, either expressly or by operation of law, assumed or
undertaken under any agreement any liability, including but
not limited to personal injury, property damage, natural
resources damages or corrective, investigatory or remedial
obligation of any other person relating to any Environmental
Law.
(5) "Environmental Claim" means any action, suit,
proceeding, arbitration, claim, complaint, decree, lawsuit or
any notice of violation or notice of investigation by any
Governmental Entity or involving any person alleging personal
injury, property damage or other potential liability,
including, without limitation, any cleanup liability, arising
out of, based on, or resulting from any actual or threatened
(a) release or disposal or the presence in the environment,
including, without limitation, the indoor environment, of any
Hazardous Materials by or attributable to the Company or any
Company Subsidiary, or any of their respective predecessors,
at any location, (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Laws by
or attributable to the Company or any Company Subsidiary or
(c) exposure to any Hazardous Materials attributable to the
Company, any Company Subsidiary or any of their respective
predecessors.
(6) "Environmental Laws" means all applicable
federal, state, local or foreign laws, statutes, regulations,
environmental permits, orders, ordinances, judgments or
decrees (a) related to releases or threatened releases of any
Hazardous Materials in soil, surface water, groundwater or
air, (b) governing the use, treatment, storage, disposal,
transport, or handling of Hazardous Materials or (c) related
to the protection of the environment, human health or natural
resources. Such Environmental Laws shall include, but are not
limited to, the Resource Conservation and Recovery Act, and
the Comprehensive Environmental Response, Compensation and
Liability Act, the Toxic Substances Control Act, the
Occupational Safety and Health Act, the Clean Water Act, the
Clean Air Act, the Safe Drinking Water Act, and the Emergency
Planning and Community Right-to-Know Act, and their respective
state, local or foreign analogs.
(7) "Hazardous Materials" means any product,
substance, gas, chemical, material, waste, mold, fungi or
toxic growth whose presence, nature, quantity or
concentration, either by itself or in combination with other
materials is (a) potentially injurious to human health or
safety, the environment or natural resources; (b) regulated,
monitored or subject to reporting by any Governmental Entity;
or (c) a basis for potential liability to any Governmental
Entity or third party under any statute or common law theory.
(s) Anti-takeover Provisions Not Applicable. The provisions of
Section 203 of the Delaware General Corporation Law as they relate to
the Company do not and will not
-13-
apply to the Transaction Documents or to any of the transactions
contemplated hereby or thereby.
(t) AHI Acquisition.
(1) The Company has made available to the Investor or
its representatives (i) the definitive documentation relating
to the AHI Acquisition, including the AHI Acquisition
Agreement; and (ii) all material due diligence materials,
presentations and other materials furnished by AHI to the
Company in contemplation of the AHI Acquisition or prepared by
the Company's representatives (or by the Company and provided
to the Board of Directors) in contemplation of the AHI
Acquisition. To the knowledge of the Company, there are no
material due diligence materials relating to the AHI
Acquisition which were prepared by the Company and were not
provided to the Board of Directors. "AHI" means American
Household, Inc. "AHI Acquisition" means the closing of the
acquisition by the Company of AHI, in accordance with the
terms of the AHI Acquisition Agreement. "AHI Acquisition
Agreement" means the Securities Purchase Agreement, dated as
of the date hereof, among the Company and the Sellers
identified therein in the form in which it exists on the date
hereof as such may be amended in accordance with Section
3.1(d) hereof.
(2) To the knowledge of the Company, as of the date
hereof, since December 31, 2003, no change has occurred and no
circumstances exist which have had or are reasonably likely to
have a Material Adverse Effect on AHI.
(u) Board Approvals. The transactions contemplated by the
Transaction Documents, including without limitation the issuance of
the Preferred Stock and the compliance with the terms thereof and the
compliance with the terms of this Agreement, have been approved
unanimously by the Board of Directors. Such approval is sufficient for
the purpose of Article VIII of the Certificate of Incorporation. The
Board of Directors has unanimously (i) adopted, approved and declared
advisable each of the Charter Amendment and the Conversion Approval,
(ii) directed that the Charter Amendment and the Conversion Approval
be submitted to the stockholders of the Company for their approval and
adoption and (iii) recommended that the stockholders of the Company
approve and adopt the Charter Amendment and the Conversion Approval.
(v) Brokers and Finders. Neither the Company nor any Company
Subsidiary nor any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or
indirectly for the Company or any Company Subsidiary, in connection
with the Transaction Documents or the transactions contemplated hereby
and thereby.
2.3 Representations and Warranties of the Investor. The
Investor hereby represents and warrants to the Company that:
-14-
(a) Organization and Authority. The Investor is a limited
partnership duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, is duly
qualified to do business and is in good standing in all jurisdictions
where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so qualified
would have a Material Adverse Effect on the Investor and has
partnership power and authority to own its properties and assets and
to carry on its business as it is now being conducted. The Investor
has furnished the Company with a true and correct copy of its
certificate of limited partnership through the date of this Agreement.
(b) Authorization. The Investor has the partnership power and
authority to enter into the Transaction Documents and to carry out its
obligations hereunder and thereunder. The execution, delivery and
performance of the Transaction Documents by the Investor and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by the Investor's partnership and no further
approval or authorization by any of the partners is required. Subject
to such approvals of Governmental Entities as may be required by
statute or regulation, the Transaction Documents are valid and binding
obligations of the Investor enforceable against the Investor in
accordance with their respective terms.
Neither the execution, delivery and performance by the
Investor of the Transaction Documents, nor the consummation of the
transactions contemplated hereby and thereby, nor compliance by the
Investor with any of the provisions thereof, will (1) violate,
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result
in a right of termination or acceleration of, or result in the
creation of, any lien, security interest, charge or encumbrance upon
any of the properties or assets of the Investor under any of the
material terms, conditions or provisions of (A) its certificate of
limited partnership or partnership agreement or (B) any material note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Investor is a party or by
which it may be bound, or to which the Investor or any of the
properties or assets of the Investor may be subject, or (2) subject to
compliance with the statutes and regulations referred to in the next
paragraph, materially violate any statute, rule or regulation or, to
the knowledge of the Investor, any judgment, ruling, order, writ,
injunction or decree applicable to the Investor or any of their
respective properties or assets.
Other than in connection or in compliance with the HSR Act, no
notice to, filing with, exemption or review by, or authorization,
consent or approval of, any Governmental Entity or any other person is
necessary for the consummation by the Investor of the transactions
contemplated by the Transaction Documents.
(c) Knowledge as to Conditions. As of the date of this
Agreement, it knows of no reason why any regulatory approvals and, to
the extent necessary, any other approvals, authorizations, filings,
registrations, or notices required or otherwise a condition to the
consummation of the transactions contemplated by the Transaction
Documents cannot, or should not, be obtained.
-15-
(d) Purchase for Investment. The Investor acknowledges that
the Securities have not been registered under the Securities Act of
1933 and the rules and regulations thereunder (the "Securities Act")
or under any state securities laws and that there is no public or
other market for the Preferred Shares. The Investor (1) is acquiring
the Securities for its own account pursuant to an exemption from
registration under the Securities Act solely for investment and not
with a view to distribution in violation of the securities laws, (2)
will not sell or otherwise dispose of any of the Securities, except in
compliance with the registration requirements or exemption provisions
of the Securities Act and any other applicable securities laws, (3)
has such knowledge and experience in financial and business matters
and in investments of this type that it is capable of evaluating the
merits and risks of its investment in the Securities and of making an
informed investment decision and (4) is an Accredited Investor (as
that term is defined by Rule 501 of the Securities Act).
(e) Financial Capability. The Investor will have available
funds to make the Purchase on the terms and conditions contemplated by
this Agreement.
(f) Brokers and Finders. Neither the Investor nor its
Affiliates or any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's fees,
and no broker or finder has acted directly or indirectly for the
Investor, in connection with the Transaction Documents or the
transactions contemplated hereby and thereby.
ARTICLE III
COVENANTS
3.1 Filings; Other Actions. (a) Each of the Investor and the
Company will cooperate and consult with the other and use commercially
reasonable best efforts to prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings and other
documents, and to obtain all necessary permits, consents, orders, approvals and
authorizations of, or any exemption by, all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement. In particular, the Investor will use its commercially reasonable
best efforts to obtain, and the Company will use its commercially reasonable
best efforts to help the Investor obtain, as promptly as practicable, all
approvals, authorizations, consents or exemptions from all necessary
Governmental Entities, including the Federal Trade Commission and the Antitrust
Division of the Department of Justice, for the transactions contemplated by the
Transaction Documents, including, but not limited to, any approvals (and
applicable waiting period) required under the HSR Act. Each of the Investor and
the Company will have the right to review in advance, and to the extent
practicable each will consult with the other, in each case subject to applicable
laws relating to the exchange of information, with respect to all the
information relating to the other party, and any of their respective
subsidiaries, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement (including any proxy materials in
connection with the Shareholder Approvals). In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as
-16-
promptly as practicable. Each party hereto agrees to keep the other party
apprised of the status of matters relating to completion of the transactions
contemplated hereby.
(b) Each party agrees, upon request, to furnish the other
party with all information concerning itself, its subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the proxy
statement in connection with the Meeting and any other statement,
filing, notice or application made by or on behalf of such other party
or any of its subsidiaries to any Governmental Entity in connection
with the Purchase and the other transactions contemplated by the
Transaction Documents.
(c) The Company agrees to use its commercially reasonable best
efforts (i) to consummate the AHI Acquisition in accordance with the
terms of the AHI Acquisition Agreement and not later than March 15,
2005 and (ii) to obtain, as promptly as practicable after the
consummation of the AHI Acquisition, the Shareholder Approvals.
Without limiting the generality of the foregoing, the Board of
Directors will continue to unanimously recommend that the shareholders
of the Company approve, and after the consummation of the AHI
Acquisition will call and hold a meeting of the stockholders of the
Company (the "Meeting") seeking the approval of, inter alia, the
matters subject to the Shareholder Approvals; provided that if the
Shareholder Approvals are not received at the first Meeting, at least
once per calendar year after such Meeting, the Company will use its
commercially reasonable efforts to call and hold a meeting of the
stockholders of the Company in order to obtain the Shareholder
Approvals (it being agreed that the inclusion in the proxy materials
relating to the Annual Meeting of the stockholders of the Company
which includes the preceding recommendation shall satisfy this
requirement). The directors' recommendation described in the previous
sentence shall be included in the proxy statement filed in connection
with the Shareholder Approvals, except that the Board of Directors may
withdraw or modify such recommendation if the Board of Directors
determines, in good faith, after consultation with outside legal
counsel, that such action is required in order for the Board of
Directors to comply with their fiduciary duties to the Company's
shareholders under applicable law. Notwithstanding the foregoing, the
Company shall not be obligated to use its commercially reasonable best
efforts to consummate the AHI Acquisition if the Company determines in
good faith that an Acquisition Termination Event is reasonably likely
to occur. "Acquisition Termination Event" means termination for any
reason of the AHI Acquisition Agreement; provided, however, that an
Acquisition Termination Event shall not be deemed to have occurred
until the 30th day following such termination, and shall not be deemed
to have occurred if within such 30 day period the Company or any of
the Company Subsidiaries shall have agreed to acquire a majority of
the voting stock of AHI or all or substantially all of the assets of
AHI or the Company or AHI shall have publicly announced an interest in
making or pursuing such a transaction after such termination.
(d) Prior to the consummation of the AHI Acquisition, the
Company will keep the Investor apprised of all material developments
in the AHI Acquisition, including with respect to communications,
satisfaction and waiver of conditions, and all other matters pertinent
to the AHI Acquisition. Without the prior written consent of the
Investor, which shall not be unreasonably withheld or delayed, the
Company will not waive or amend any provision contained in the AHI
Acquisition Agreement.
-17-
3.2 Expenses. The Company will, promptly upon periodic request
and receipt of reasonable supporting documentation, reimburse the Investor for
all out-of-pocket expenses reasonably incurred by it in connection with the
Investor's and its Affiliates' due diligence on the Company and AHI and the
proposed AHI Acquisition, the negotiation and preparation of the Transaction
Documents and the undertaking of the transactions contemplated by the
Transaction Documents (including reasonable fees and expenses of counsel and
accounting fees and all HSR filing fees incurred by or on behalf of the Investor
or its Affiliates in connection with the transactions contemplated hereby).
Without limiting the foregoing, the Company will pay and will hold harmless the
Investor against all costs and expenses of the Escrow Agreement including, costs
and expenses related to the indemnification of the Escrow Agent. In addition,
the Company agrees to reimburse the Board Representative appointed by the
Investor for reasonable out-of-pocket expenses incurred in connection with Board
of Directors participation (consistent with Company policies), and agrees to pay
such Board Representative the same outside director compensation paid to other
non-executive directors of the Company.
3.3 Access, Information and Confidentiality.
(a) From the date hereof until the date when the Securities
owned by the Investor represent less than 25% of the Share Base (a
"Qualifying Ownership Interest"), the Company will ensure that upon
reasonable notice, the Company and its subsidiaries will afford to
Investor and its representatives (including, without limitation,
officers and employees of the Investor, and counsel, accountants and
other professionals retained by the Investor) such access during
normal business hours to its books, records (including, without
limitation, tax returns and appropriate work papers of independent
auditors under normal professional courtesy), properties and personnel
and to such other information as Investor may reasonably request,
including access to any such materials pertaining to AHI or the AHI
Acquisition. All requests for access and information shall be
coordinated through senior corporate officers of the Company. The
"Share Base" equals the number of Series B Preferred Shares that would
have been purchased at the Closing if the mandatory conversion of the
shares of Series C Preferred Stock would have occurred prior to the
Closing (or such number of Common Shares represented by such Series B
Preferred Shares on an as converted basis) without regard to any
limitation on such conversion.
(b) The Investor will hold, and will cause its respective
subsidiaries and their directors, officers, employees, agents,
consultants and advisors to hold, in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the
written opinion of its counsel, by other requirement of law or the
applicable requirements of any regulatory agency or relevant stock
exchange, all non-public records, books, contracts, instruments,
computer data and other data and information (collectively,
"Information") concerning the Company or any of its subsidiaries or
AHI or any of its subsidiaries or the AHI Acquisition, in each case,
furnished to it by such the Company or its representatives pursuant to
this Agreement (except to the extent that such information can be
shown to have been (1) previously known by the Investor on a
non-confidential basis, (2) in the public domain through no fault of
the Investor or (3) later lawfully acquired from other sources by the
Investor), and the Investor shall not release or disclose such
Information to any other person, except its to auditors, attorneys,
financial advisors, and other consultants and advisors.
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3.4 Consent of Lenders. The Company shall use its commercially
reasonable best efforts to obtain the Bank Consents within ten business days of
the date hereof, and if such Consents are not obtained within ten business days,
the Company shall continue to use its commercially reasonable best efforts to
obtain the Bank Consents as promptly as practicable thereafter.
3.5 Conduct of the Business.
Prior to the Funding,
(a) if the Company shall (i) declare or pay any dividend or
distribution on, any shares of Company capital stock, (ii) undergo a Change in
Control (as defined in the Certificate of Designations relating to the Series B
Preferred Stock) or (iii) take any action that would require any adjustment to
be made under Section 7(c) of the Certificate of Designations relating to the
Series B Preferred Stock or Section 7(c) or 8(c) of the Certificate of
Designations relating to the Series C Preferred Stock, appropriate adjustments
shall be made with respect to the Investor such that the Investor will receive
the benefit of such transaction as if the securities to be purchased by Investor
had been outstanding as of the date of such action; and
(b) without the prior written consent of the Investor, the
Company shall not take any action that, if taken after the issuance of the
Preferred Shares, would require the written consent of or vote by holders of
such shares pursuant to Section 9(c) of the Certificate of Designations relating
to the Series B Preferred Stock or Section 10(c) of the Certificate of
Designations relating to the Series C Preferred Stock, as the case may be.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Standstill Agreement. (a) Subject to paragraph (b) below,
the Investor agrees that until the fifth anniversary of the Closing Date,
without the prior approval of the Company, the Investor will not, directly or
indirectly, through its Affiliates or associates or any other persons, or in
concert with any person, (i) purchase or otherwise acquire beneficial ownership
(as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) that would
result in the Investor and its Affiliates having beneficial ownership of more
than 35% of the outstanding shares of voting stock or Common Stock of the
Company, assuming the conversion into Common Stock of the Preferred Stock of the
Company (it being agreed that the foregoing shall not restrict the Investor from
receiving shares as a result of a dividend or distribution in respect of
previously owned shares), (ii) enter into or publicly propose to enter into,
directly or indirectly, any merger or other business combination, acquisition of
assets or similar transaction or change or control involving the Company or any
Company Subsidiary, (iii) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the Commission) to vote, or seek to advise or influence any
person with respect to the voting of, any securities of the Company or any
Company Subsidiary, (iv) call, or seek to call, a meeting of the Company's
stockholders or initiate any stockholder proposal for action by stockholders of
the Company, (v) bring any action or otherwise act to contest the validity of
this
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Section 4.1 or seek a release of the restrictions contained herein, (vi)
form, join or in any way participate in a "group" (within the meaning of
Sections 13(d)(3) of the Exchange Act) with respect to any securities of the
Company or any Company Subsidiary, (vii) seek the removal of any directors from
the Board of Directors or a change in the size or composition of the Board of
Directors (including, without limitation, voting for any directors not nominated
by the Board of Directors), (viii) propose or enter into any discussions,
negotiations, arrangements, understandings or agreements (whether written or
oral) with any other person regarding any possible purchase or sale of any
securities or assets of the Company or any Company Subsidiary (other than
Securities owned by the Investor or any of its Affiliates), (ix) disclose any
intention, plan or arrangement inconsistent with the foregoing, (x) take, or
solicit, propose to or agree with any other person to take, any similar actions
designed to influence the management or control of the Company, (xi) advise,
assist or encourage any other persons in connection with any of the foregoing or
(xii) make, or take any action that would reasonably be expected to cause, the
Company to make a public announcement regarding any intention of the Investor to
take an action that would be prohibited by the foregoing. Notwithstanding the
foregoing, the parties hereby agree that nothing in Section 4.1(a) shall apply
to any portfolio company in which the Investor has less than 50% voting control,
provided that the Investor does not provide to such entity any non-public
information concerning the Company or any Company Subsidiary and such portfolio
company is not acting at the request or direction of the Investor. In the event
that the Company shall fail to comply with any of its dividend or other payment
obligations under the Certificate of Designations relating to the Series B
Preferred Stock or the Certificate of Designations relating to the Series C
Preferred Stock and the Company fail to comply with such obligation within three
business days after the Investor shall have notified the Company in writing of
such non-compliance, this Section 4.1(a) shall forthwith become wholly void and
of no further force and effect, and the rest of this Agreement shall remain in
full force and effect.
(b) Nothing in Section 4.1(a) shall (i) limit any action
taken by a Board Representative or Observer as a member or Observer of the
Board of Directors acting in such capacity, (ii) prohibit or restrict any
Investor or any Affiliate of any Investor from responding to any inquiries
from any shareholders of the Company as to such person's intention with
respect to the voting of Common Stock or Preferred Stock of the Company
beneficially owned by such person so long as such response is consistent
with the terms of this Agreement, (iii) prohibit or restrict a purchase,
sale, merger, consolidation or other business combination transaction
involving any portfolio company of the Investor or any Affiliate thereof so
long as the purpose of such transaction is not the acquisition of voting
securities or assets of the Company or any Company Subsidiary, (iv)
prohibit or restrict any Investor or any Affiliate of any Investor from
participating in any process initiated by the Company with respect to the
sale of any assets or securities of the Company or any Company Subsidiary,
(v) prohibit the purchase or other acquisition of beneficial ownership of
any (A) Securities pursuant to this Agreement or upon conversion of any of
the Preferred Shares or (B) any New Stock in accordance with Section 4.4 of
this Agreement, (vi) prohibit or restrict any agreement, arrangement,
understanding, negotiation, discussion, disclosure or other action
exclusively involving the Investor, its Affiliates and any employee,
officer or director thereof, (vii) prohibit any notice to limited partners
of any Investor or any Affiliate of any Investor in respect of a proposed
distribution of securities of the Company or any Company Subsidiary to such
limited partners, or (viii) prohibit or restrain any sale or other
disposition by the Investor
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or any limited partner thereof or of any Affiliate thereof of any
securities owned by them (or any proposals or discussions related thereto).
4.2 Registration Rights. The Company shall use its
commercially reasonable best efforts to file with the SEC, on behalf of the
Investor and its Affiliates and any subsequent transferee, a registration
statement (the "Registration Statement") covering the Registrable Securities
purchased hereunder and the Registrable Securities that would be required to be
delivered upon conversion of the Preferred Stock purchased hereunder by the 60
day following the AHI Acquisition; provided that in no event shall the Company
fail to file the Registration Statement later than the 90th day following the
AHI Acquisition. The expenses of the preparation and filing of such Registration
Statement shall be borne by the Company. Upon filing the Registration Statement,
the Company will use its commercially reasonable best efforts to have declared
effective as soon as reasonably practicable following the filing thereof and to
keep the Registration Statement effective with the SEC at all times until the
Investor or any transferee who would require such registration to effect a sale
of the Registrable Securities no longer holds the Registrable Securities, unless
all such Registrable Securities then held by such holder can immediately be sold
and for at least 30 of the past 60 trading days could have been sold by such
holder pursuant to Rule 144 under the Securities Act. Provisions relating to the
registration rights discussed in this Section are included in Exhibit 3 hereto.
"Registrable Securities" means all shares of Common Stock acquired by the
Investor hereunder, all shares of Common Stock issuable upon conversion of the
Preferred Shares and all securities that may be issued in respect thereof other
than the Series B Preferred Stock.
4.3 Preemptive Rights.
(a) Sale of New Stock. As long as the Investor owns
Securities representing the Qualifying Ownership Interest (before giving
effect to issuances triggering this Section), if at any time after the
Closing, the Company at any time or from time to time makes any public or
non-public offering of Common Stock (or securities convertible or
exchangeable into Common Stock) ("New Stock"), other than (i) pursuant to
the granting or exercise of employee stock options or other stock
incentives pursuant to the Company's stock incentive plans or the issuance
of stock pursuant to the Company's employee stock purchase plan or (ii)
issuances for the purposes of consideration in merger or acquisition
transactions the Investor shall be afforded the opportunity to acquire from
the Company for the same price (net of any underwriting discounts or sales
commissions) and on the same terms (except that, to the extent permitted by
law, the Investor may elect to receive such securities in nonvoting form,
convertible into voting securities in a widely dispersed offering) as such
securities are proposed to be offered to others, up to the amount of New
Stock required to enable it to maintain its proportionate Common
Stock-equivalent interest in the Company. The amount of New Stock that the
Investor shall be entitled to purchase shall be determined by multiplying
(x) the total number of such offered shares of New Stock by (y) a fraction,
the numerator of which is the number of shares of Common Stock held by the
Investor, and the denominator of which is the number of shares of Common
Stock then outstanding; provided, however, that for purposes of determining
the number of shares of Common Stock outstanding or held by the Investor,
such amount shall assume the exercise of all outstanding in the money
warrants to purchase capital stock of the Company and the conversion of all
in the money convertible equity securities of the Company outstanding
(whether or not then exercisable or convertible).
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(b) Notice.
(1) In the event the Company intends to offer New Stock in an
underwritten public offering or a private offering made to financial
institutions for resale pursuant to Rule 144A, no later than five
business days after the initial filing of a registration statement with
respect to such underwritten public offering or the commencement of such
Rule 144A offering, it shall give the Investor written notice of its
intention (including, in the case of a registered public offering and to
the extent possible, a copy of the draft prospectus to be included in the
registration statement to be filed in respect of such offering)
describing, to the extent possible, the anticipated amount of securities,
range of price, timing and other terms of such offering. The Investor
shall have five business days from the date of receipt of any such notice
to notify the Company in writing that it intends to exercise such
preemptive purchase rights and as to the amount of New Stock the Investor
desires to purchase, up to the maximum amount calculated pursuant to
Section 4.3(a). Such notice shall constitute a non-binding indication of
interest of the Investor to purchase the amount of New Stock. The failure
to respond during such five business day period shall constitute a waiver
of the preemptive rights in respect of such offering.
(2) If the Company proposes to offer New Stock in a
transaction that is not an underwritten public offering or Rule 144A
offering (a "Private Placement"), the Company shall (a) give the Investor
written notice of its intention, describing the anticipated amount of
securities, price and other terms upon which the Company proposes to
offer the same and (b) promptly provide the Investor with an updated
notice reflecting any changes to such anticipated amount of securities,
price or other material terms. The Investor shall have ten business days
from the date of receipt of the last notice required by the immediately
preceding sentence to notify the Company in writing that it intends to
exercise such preemptive purchase rights and as to the amount of New
Stock the Investor desires to purchase, up to the maximum amount
calculated pursuant to Section 4.3(a). Such notice shall constitute the
binding agreement of the Investor to purchase the amount of New Stock so
specified upon the price and other terms set forth in the Company's
notice to it; provided, that the closing of the Private Placement with
respect to which such right has been exercised takes place within 15
calendar days after the giving of notice of such exercise by the
Investor. The failure of the Investor to respond during the ten business
day period referred to in the second preceding sentence shall constitute
a waiver of the preemptive rights in respect of such offering.
(c) Purchase Mechanism.
(1) Private Placement. If the Investor exercises its
preemptive purchase rights provided in Section 4.3(b)(2)(above), the
closing of the purchase of the New Stock with respect to which such right
has been exercised shall be conditioned on the consummation of the sale
of securities pursuant to the Private Placement with respect to which
such right has been exercised and shall take place within ten business
days after the closing of the Private Placement; provided, that such time
period shall be extended for a maximum of 95 days in order to comply with
applicable laws and regulations; provided, further that the actual amount
of securities to be sold to the Investor pursuant to its exercise of
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preemptive rights hereunder shall be reduced if the aggregate amount of
New Stock sold in the Private Placement is reduced and, at the option of
the Investor, shall be increased if such aggregate amount of New Stock
sold in the Private Placement is increased. Each of the Company and the
Investor agrees to use its commercially reasonable efforts to secure any
regulatory approvals or other consents, and to comply with any law or
regulation necessary in connection with the offer, sale and purchase of,
such New Stock.
(2) Underwritten Public Offering or Rule 144A Offering. If the
Investor exercises its preemptive purchase rights provided in Section
4.3(b)(1)(above), the Company shall offer the Investor the amount of New
Stock determined in accordance with Section 4.3(b)(1) (as adjusted to
reflect the actual size of such offering when priced) on the same terms
as the New Stock is offered to the underwriters. The Investor shall
further enter into an agreement to purchase the New Stock to be acquired
contemporaneously with the execution of any underwriting agreement or
purchase agreement entered into between the Company and the underwriters
or initial purchasers of such underwritten public offering or Rule 144A
offering, and the failure to enter into such an agreement at or prior to
such time shall constitute a waiver of the preemptive rights in respect
of such offering. Any offers and sales pursuant to this Section 4.3 in
the context of a registered public offering shall be conditioned on
reasonably acceptable representations and warranties of the Investor
regarding its status as the type of offeree to whom a private sale can be
made concurrently with a registered public offering in compliance with
applicable securities laws.
(d) Failure of Purchase. In the event the Investor fails to
exercise its preemptive purchase rights provided in this Section 4.3 within the
applicable period or, if so exercised, the Investor is unable to consummate such
purchase within the time period specified in Section 4.3(c) above because of its
failure to obtain any required regulatory consent or approval, the Company shall
thereafter be entitled during the period of 120 days following the conclusion of
the applicable period to sell or enter into an agreement (pursuant to which the
sale of the New Stock covered thereby shall be consummated, if at all, within 30
days from the date of said agreement) to sell the New Stock not elected to be
purchased pursuant to this Section 4.3 or which the Investor is unable to
purchase because of such failure to obtain any such consent or approval, at a
price and upon terms no more favorable to the purchasers of such securities in
the Private Placement, the underwritten public offering or Rule 144A offering,
as the case may be, or than were specified in the Company's notice to the
Investor. Notwithstanding the foregoing, if such sale is subject to the receipt
of any regulatory approval or expiration of any waiting period, the time period
during which such sale may be consummated may be extended until the expiration
of five business days after all such approvals have been obtained or waiting
periods expired, but in no event shall such time period exceed 180 days from the
date of the applicable agreement with respect to such sale. In the event the
Company has not sold the New Stock or entered into an agreement to sell the New
Stock within said 120-day period (or sold and issued New Stock in accordance
with the foregoing within 30 days from the date of said agreement (as such
period may be extended in the manner described above for a period not to exceed
180 days from the date of said agreement)), the Company shall not thereafter
offer, issue or sell such New Stock without first offering such securities to
the Investor in the manner provided above.
-23-
(e) The Investor shall not have any rights to participate in
the negotiation of the proposed terms of any Private Placement,
underwritten public offering or Rule 144A offering. Subject to the
restrictions set forth in Section 4.1 hereof, the Investor shall receive
the same rights (including, without limitation, preemptive rights, rights
relating to closing conditions and indemnification and pro rata voting
rights, if any) as other purchasers in the Private Placement.
(f) The Company and the Investor shall cooperate in good
faith to facilitate the exercise of the Investor's preemptive rights
hereunder in a manner that does not jeopardize the timing, marketing,
pricing or execution of any offering of the Company's securities.
(g) In the case of the offering of Common Stock for a
consideration in whole or in part other than cash, including securities
acquired in exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed to be the
fair value thereof as determined by the Board of Directors; provided,
however, that such fair value as determined by the Board of Directors shall
not exceed the aggregate market price of the Common Shares being offered as
of the date the Board of Directors authorizes the offering of such shares.
4.4 Governance Matters. (a) The Company will cause one person
nominated by the Investor (the "Board Representative") to be elected or
appointed, subject to satisfaction of all legal and governance requirements
regarding service as a director of the Company, to the Company's Board of
Directors as promptly as practicable following the Closing. The Company and the
Investor agree that the initial Board Representative shall be Xxxxxxx Xxxx.
(b) Subject to the further provisions of this Section 4.4,
the Company's Governance and Nominating Committees (or any other committee
exercising a similar function) (the "Nominating Committees") shall
recommend to the Board of Directors that such person (or any successor
designated by the Investor and reasonably acceptable to the Company (it
being agreed that any managing director of the entity that manages the
Investor is hereby deemed to be acceptable to the Company provided that the
Investor consults with the Company prior to designating any such person),
subject to Section 4.4(c) below) be included in the slate of nominees
recommended by the Board of Directors to stockholders for election as
directors at each annual meeting of stockholders of the Company at which
such person's term expires. Notwithstanding anything else contained in this
Agreement, in the event that the Board Representative is not elected as a
director of the Company, the standstill restrictions contained in Section
4.1 shall immediately lapse and be of no further force or effect. The Board
Representative, when serving on the Board of Directors, shall be entitled
to serve on all major committees and subcommittees of the Board, except to
the extent prohibited by applicable law or stock exchange regulation. In
addition to the Board Representative, the Investor will have the right to
have one of its employees attend meetings of the Board of Directors
(including any meeting of any committees thereof) as an observer (the
"Observer") without authority to vote.
(c) If the Board Representative shall cease to serve as a
director for any reason, the Board of Directors will use its commercially
reasonable best efforts to take all action required to fill the vacancy
resulting therefrom with a person designated by the Investor and
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reasonably acceptable to the Company (it being agreed that any managing
director of the entity that manages the Investor is hereby deemed to be
acceptable to the Company provided that the Investor consults with the
Company prior to designating any such person), subject to satisfaction of
all legal and governance requirements regarding service as a director of
the Company.
(d) Without the approval of the Investor (as evidenced by a
written consent signed by senior officer or general partner of the
Investor), the Company shall not appoint a new permanent Chief Executive
Officer ("CEO"), Chief Financial Officer ("CFO") or person to perform the
duties of either such position and the Investor shall act in good faith in
granting or withholding such approval.
(e) If the Investor at any time beneficially owns less than
one-third of the Share Base, the Investor will have no further rights under
Sections 4.4(a) through (d) other than to have one Observer under the last
sentence of Section 4.4(b) and, if so requested by the Company, shall
promptly cause to resign, and take all other action reasonably necessary,
or reasonably requested by the Company, to cause the prompt removal of, the
Board Representative. If the Investor ceases to beneficially own Securities
representing at least the Qualifying Ownership Interest, the Investor's
right to have any Observer shall terminate.
4.5 Legend. (a) The Investor agrees that all certificates or
other instruments representing the Securities subject to this Agreement will
bear a legend substantially to the following effect:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES
LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS
IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
(b) Upon request of the Investor to effect a sale of any
Securities, upon receipt by the Company of an opinion of counsel reasonably
satisfactory to the Company to the effect that the Investor or its
transferee is not an "affiliate" and has not been an "affiliate" (within
the meaning of Rule 144 promulgated under the Securities Act) for the
preceding three months, the Company shall promptly cause any legend to be
removed from any certificate for any Securities so to be Transferred. The
Investor acknowledges that the Securities have not been registered under
the Securities Act or under any state securities laws and agrees that it
will not sell or otherwise dispose of any of the Securities, except in
compliance with the registration requirements or exemption provisions of
the Securities Act and any other applicable securities laws.
4.6 Reservation for Issuance. The Company will reserve that
number of (x) Common Shares sufficient for issuance upon conversion of Preferred
Shares owned at any time by the Investor and (y) Series B Preferred Shares
sufficient for issuance upon conversion of
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Series C Preferred Shares owned at any time by the Investor without regard to
any limitation on such conversion.
4.7 Certain Transactions. The Company will not merge or
consolidate into, or sell, transfer or lease all or substantially all of its
assets to, any other party unless the successor, transferee or lessee party, as
the case may be (if not the Company), expressly assumes the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
4.8 Extension Periods. Notwithstanding anything to the
contrary contained in the Transaction Documents, if there exists a period (the
"Section 16(b) Period") during which the Investor's purchase, sale, exercise,
exchange or conversion of any Security pursuant to any Transaction Document
would result in liability under Section 16(b) of the Exchange Act, as amended,
or the rules and regulations promulgated thereunder, the period during which
such Security may be purchased, sold, exercised, exchanged or converted, as the
case may be, if prescribed by such Transaction Document, shall be extended for
the equivalent number of days of such Section 16(b) Period (the "Extension
Period"), with such Extension Period beginning on the later of (a) the
expiration date of such Security, if any, or (b) the date of the end of such
Section 16(b) Period.
4.9 Restrictions on Transfers. The Investor shall not Transfer
any Preferred Stock to any person if such person (i) is a Company Competitor or
(ii) has not executed a joinder agreement pursuant to which it has agreed to be
bound by this Agreement as if it were a party hereto; provided that the
foregoing transfer restrictions shall not apply to Transfers (1) pursuant to a
merger, tender offer or other business combination, acquisition of assets or
similar transaction or change or control involving the Company or any Company
Subsidiary, provided that such transaction described in this clause (1) has been
approved by the Company's Board of Directors or (2) a bona fide pledge to a
financial institution which does not permit the financial institution to
foreclose on such to shares of Preferred Stock without conversion (each, a
"Permitted Transfer"). For purposes of this Section 4.9, (i) "Transfer" shall
mean any sale, transfer, assignment, pledge or other disposition or encumbrance
and (ii) "Company Competitor" shall mean any person that derives more than 10%
of such persons' total annual revenues for its most recently completed fiscal
year from a business that competes in a material way with a business that
represents more than 5% of the consolidated revenues of the Company and its
subsidiaries for its most recently completed fiscal year.
4.10 Proxy. At the Closing, the Investor and any Affiliate
funds purchasing Securities at the Closing shall execute a deliver to the
Company a proxy, substantially in the form of Exhibit 6 hereto, to vote all such
Securities at the Meeting or at any adjournment or postponement thereof or at
any subsequent meeting at which the stockholders shall vote to approve the
Shareholder Approvals, in favor of the matters subject to the Shareholder
Approvals and increasing the Company's authorized common stock to a number not
more than 100,000,000 shares. The Investor acknowledges that the Company intends
to propose a 2005 stock incentive plan (the terms of which have not been
developed) for shareholder approval at the Meeting. The Investor and any such
Affiliate funds shall not transfer such Securities without the transferee
executing and delivering a similar proxy to the Company.
-26-
4.11 Withholding. The Company shall be entitled to deduct and
withhold from amounts payable to the Investor or any of its Affiliate funds in
respect of the Securities such amounts as it is required to deduct and withhold
under applicable law. To the extent that amounts are so withheld by the Company,
such withheld amounts shall be treated for all purposes as having been paid to
the Investor or any such Affiliate fund in respect of which such deduction and
withholding was made by the Company. Prior to the Investor or any of its
Affiliate funds receiving any Securities, the Investor shall, and cause such
Affiliate fund to, deliver to the Company a duly executed IRS Form W-9 or the
appropriate IRS Form W-8, as applicable, and such other IRS forms as may
reasonably requested by the Company from time to time. The Investor shall, and
cause such Affiliate fund to, update all such IRS Forms, as appropriate, from
time to time.
4.12 Liquidity Rights.
(a) At any time from and after the fifth anniversary of the
Funding, holders of at least 75% of the then outstanding shares of Series B
Preferred Stock and shares of Series C Preferred Stock, considered as a
single class, shall have the right to submit a request in writing (a
"Liquidity Request") that the Company initiate a Recapitalization. The
Company shall complete a Recapitalization, or at its sole election, a
Remarketing within 120 days of receipt of a Liquidity Request. The Company
shall notify the holders of the Series B Preferred Stock within 30 days of
receipt of a Liquidity Request whether it has elected to complete a
Recapitalization or a Remarketing. "Recapitalization" means a
recapitalization of the Company in which each share of Series B Preferred
Stock and Series C Preferred Stock outstanding as of the date of
consummation of such transaction shall be reclassified and repaid in an
amount equal to or in excess of the Liquidation Value (as defined in the
Certificate of Designations relating to the Series B Preferred Stock)then
in effect. "Remarketing" shall have the meaning set forth in Section 6(b)
of the Certificate of Designations relating to the Series B Preferred Stock
and shall be conducted in accordance with the terms of such section;
provided that all references therein to the "Redemption Request" shall be
deemed to be changed to "Liquidity Request".
(b) From and after the time, if any, that a Liquidity
Request has been submitted, (a) no dividends shall be declared or paid or
set apart for payment, or other distribution declared or made, upon any
Junior Securities (as defined in the Certificate of Designations), nor
shall any Junior Securities be redeemed, purchased or otherwise acquired
(other than a redemption, purchase or other acquisition of shares of Common
Stock made for purposes of any employee or director incentive or benefit
plans or arrangements or the employee stock purchase plan of the Company or
any subsidiary of the Company or the payment of cash in lieu of fractional
shares in connection therewith) for any consideration (nor shall any moneys
be paid to or made available for a sinking fund for the redemption of any
shares of any such Junior Securities) by the Company, directly or
indirectly (except by conversion into or exchange for Junior Securities or
the payment of cash in lieu of fractional shares in connection therewith)
and (b) the Company shall not, directly or indirectly, make any payment on
account of any purchase, redemption, retirement or other acquisition of any
Parity Securities (as defined in the Certificate of Designations) (other
than redemption of shares of Series C Preferred Stock on a pro rata basis
with shares of Series B Preferred Stock or the redemption of shares of
Series B Preferred Stock on a pro rata basis with shares of
-27-
Series C Preferred Stock, and other than for consideration payable solely
in Junior Securities or the payment of cash in lieu of fractional shares in
connection therewith) until no shares of Series B Preferred Stock or Series
C Preferred Stock remain outstanding.
(c) Notwithstanding anything else contained in this
Agreement, the rights contained in this Section 4.12 shall be freely
transferrable to any person to whom Preferred Stock is Transferred as
permitted by this Agreement.
ARTICLE V
TERMINATION
5.1 Termination. This Agreement shall be terminated (a) if the
Escrow Deposit (as defined in the Escrow Agreement) shall have been released in
accordance with the terms of Section 5 or Section 14(b) of the Escrow Agreement
or (b) by mutual agreement.
5.2 Effects of Termination. In the event of any termination of
this Agreement as provided in Section 5.1, this Agreement (other than Section
3.2, Section 3.3(b) and Article VI) shall forthwith become wholly void and of no
further force and effect, and the rest of this Agreement shall remain in full
force and effect.
ARTICLE VI
MISCELLANEOUS
6.1 Survival of Representations, Warranties, Agreements, Etc.
Each of the representations and warranties set forth in this Agreement and the
other Transaction Documents shall survive the Closing but only for a period of
18 months following the Closing Date and thereafter shall expire and have no
further force and effect; provided that the representations and warranties in
Section 2.2(c) and (d), shall survive indefinitely. Except as otherwise provided
herein, all covenants and agreements contained herein shall survive for the
duration of any statutes of limitations applicable thereto or until, by their
respective terms, they are no longer operative.
6.2 Amendment. No amendment or waiver of any provision of this
Agreement will be effective with respect to any party unless made in writing and
signed by an officer of a duly authorized representative of such party.
6.3 Waiver. The conditions to each party's obligation to
consummate the Purchase are for the sole benefit of such party and may be waived
by such party in whole or in part to the extent permitted by applicable law. No
waiver will be effective unless it is in a writing signed by a duly authorized
officer of the waiving party that makes express reference to the provision or
provisions subject to such waiver.
6.4 Counterparts and Facsimile. For the convenience of the
parties hereto, this Agreement may be executed in any number of separate
counterparts, each such counterpart being
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deemed to be an original instrument, and all such counterparts will together
constitute the same agreement. Executed signature pages to this Agreement may be
delivered by facsimile and such facsimiles will be deemed as sufficient as if
actual signature pages had been delivered.
6.5 GOVERNING LAW; JURISDICTION. THIS AGREEMENT WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. THE
PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENT TO SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF
NEW YORK FOR ANY ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY
6.6 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
6.7 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the other will be in writing and
will be deemed to have been duly given (a) on the date of delivery if delivered
personally or by telecopy or facsimile, upon confirmation of receipt, (b) on the
first business day following the date of dispatch if delivered by a recognized
next-day courier service, or (c) on the third business day following the date of
mailing if delivered by registered or certified mail, return receipt requested,
postage prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.
(a) If to the Investor:
Warburg, Xxxxxx Private Equity VIII, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Telecopy: (000) 000-0000
Attn: Xxxxxxx Xxxx
Xxxxx Xxxx
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxxx, Esq.
Xxxxx X. Silk, Esq.
(b) If to the Company:
Jarden Corporation
555 Xxxxxxxx Xxxxx Xxxxxx
Xxxxx X-000
-00-
Xxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Xx.
Xxxxxxx X. Xxxxxxx
6.8 Entire Agreement, Etc. (a) This Agreement (including the
Exhibits and Disclosure Schedules hereto) and the Escrow Agreement constitute
the entire agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, between the parties, with
respect to the subject matter hereof, and (b) except as contemplated by Section
1.4, this Agreement will not be assignable by operation of law or otherwise (any
attempted assignment in contravention hereof being null and void).
6.9 Definitions of "subsidiary," "Affiliate" and "knowledge".
(a) When a reference is made in this Agreement to a subsidiary of a person, the
term "subsidiary" means those corporations and other entities of which such
person owns or controls more than 50% of the outstanding equity securities
either directly or through an unbroken chain of entities as to each of which
more than 50% of the outstanding equity securities is owned directly or
indirectly by its parent; provided, however, that there shall not be included
any such entity to the extent that the equity securities of such entity were
acquired in satisfaction of a debt previously contracted in good faith or are
owned or controlled in a bona fide fiduciary capacity.
(b) The term "Affiliate" means, with respect to any person,
any person directly or indirectly controlling, controlled by or under
common control with, such other person. For purposes of this definition,
"control" when used with respect to any person, means the possession,
directly or indirectly, of the power to cause the direction of management
and/or policies of such person, whether through the ownership of voting
securities by contract or otherwise.
(c) The term "knowledge" or any similar formulation of
knowledge shall mean, (i) in the case of the Company, the actual knowledge
after due inquiry of an executive officer of the Company (which due inquiry
shall include reasonable inquiry of the direct reports to such executive
officer and appropriate senior executives of the Company Subsidiaries) and
(ii) in the case of the Investor, the actual knowledge after due inquiry of
a managing director of the entity that manages the Investor.
6.10 Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and will not be deemed to limit or otherwise affect any of the
provisions hereof.
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6.11 Severability. If any provision of this Agreement or the
application thereof to any person (including, without limitation, the officers
and directors of the Investor and the Company) or circumstance is determined by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, 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, the parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.
6.12 No Third Party Beneficiaries. Nothing contained in this
Agreement, expressed or implied, is intended to confer upon any person or entity
other than the parties hereto or permitted transferees of the Investor, any
benefit right or remedies, except that the provisions of Section 4.2 and Section
4.12 shall inure to the benefit of the persons referred to in those Sections.
6.13 Time of Essence. Time is of the essence in the
performance of each and every term of this Agreement.
6.14 Specific Performance. The transactions contemplated by
this Agreement are unique. Accordingly, the Company and the Investor acknowledge
and agree that, in addition to all other remedies to which it may be entitled,
each of the parties hereto is entitled to a decree of specific performance,
provided that such party hereto is not in material default hereunder. The
parties hereto agree that, if for any reason a party shall have failed to
perform its obligations under this Agreement, then the party seeking to enforce
this Agreement against such nonperforming party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable relief.
This provision is without prejudice to any other rights that any party may have
against another party for any failure to perform its obligations under this
Agreement including the right to seek damages for a material breach of any
provision of this Agreement.
6.15 Certain Adjustments. The parties recognize that the terms
of the Securities and this Agreement provide for a variety of antidilution,
preemptive and other similar rights and adjustments. It is the parties'
intention that these rights and adjustments shall be given effect in a manner
that produces fair and equitable results in the circumstances. In the event the
Company shall at any time after the date of this Agreement (A) declare a
dividend on the Common Shares payable in Common Shares, (B) subdivide the
outstanding Common Shares, (C) combine the outstanding Common Shares into a
smaller number of Common Shares or (D) issue any shares of its capital stock in
a reclassification of the Common Shares (including any such reclassification in
connection with a share exchange, consolidation or merger in which the Company
is the continuing or surviving corporation)(whether or not permitted by this
Agreement), except as otherwise set forth herein, the prices, price ranges and
trigger points in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the Investor after such time shall be entitled
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to purchase the aggregate number and kind of shares of capital stock which, had
the respective transaction contemplated by this Agreement taken place
immediately prior to such date, the Investor would have entitled to acquire upon
consummation of such transaction or been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification.
* * *
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first herein above written.
JARDEN CORPORATION
By: /s/ Xxxxxxx XxXxxxxxx
------------------------------
Name: Xxxxxxx XxXxxxxxx
Title: Senior Vice President
WARBURG PINCUS
PRIVATE EQUITY VIII, L.P.
By: Warburg, Xxxxxx & Co.,
its General Partner
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxx X. Xxxx
Title: Partner
