EXHIBIT 2.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND AMONG
AMKOR TECHNOLOGY, INC.,
UNITIVE INC.,
CERTAIN OF THE STOCKHOLDERS OF UNITIVE INC.,
CERTAIN OPTION HOLDERS OF UNITIVE, INC.,
ONEX AMERICAN HOLDINGS II LLC AS THE ONEX STOCKHOLDER
REPRESENTATIVE,
XXXXX XXXXX AS THE MCNC STOCKHOLDER
REPRESENTATIVE,
XXXXXX XXXXX AS THE TAT STOCKHOLDER REPRESENTATIVE,
XXXXXXX XXXXXXX AS THE ADDITIONAL INDEMNIFYING STOCKHOLDER
REPRESENTATIVE,
AND WITH RESPECT TO ARTICLE VIII AND ARTICLE X HEREOF ONLY,
U.S. BANK NATIONAL ASSOCIATION AS ESCROW AGENT.
DATED AS OF JULY 19, 2004
TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE OF STOCK..................................................... 2
1.1 Sale of Stock.......................................................... 2
1.2 Closing................................................................ 2
1.3 Purchase Price and Payment............................................. 2
1.4 Contingent Earn-Out Payments........................................... 4
1.5 Calculation of Distribution Amounts.................................... 10
1.6 Withholding Taxes...................................................... 10
1.7 Company Options........................................................ 10
1.8 Fractional Shares...................................................... 10
1.9 Releases............................................................... 10
1.10 Lost, Stolen or Destroyed Certificates................................. 11
1.11 Taking of Necessary Action; Further Action............................. 11
1.12 Acknowledgment......................................................... 11
1.13 Definitions............................................................ 11
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................. 23
2.1 Organization of the Company............................................ 23
2.2 Company Capital Structure.............................................. 23
2.3 Subsidiaries........................................................... 26
2.4 Authority.............................................................. 26
2.5 No Conflict............................................................ 26
2.6 Governmental Consents.................................................. 27
2.7 Company Financial Statements........................................... 27
2.8 No Undisclosed Liabilities............................................. 27
2.9 No Changes............................................................. 28
2.10 Tax Matters............................................................ 30
2.11 Restrictions on Business Activities.................................... 33
2.12 Title to Properties; Absence of Liens and Encumbrances;
Condition of Equipment; Customer Information........................... 34
2.13 Intellectual Property.................................................. 35
2.14 Agreements, Contracts and Commitments.................................. 40
2.15 Interested Party Transactions.......................................... 42
2.16 Governmental Authorization............................................. 42
2.17 Litigation............................................................. 42
2.18 Minute Books........................................................... 42
2.19 Environmental Matters.................................................. 42
2.20 Brokers' and Finders' Fees; Third Party Expenses....................... 43
2.21 Employee Benefit Plans and Compensation................................ 43
2.22 Insurance.............................................................. 47
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TABLE OF CONTENTS
(CONTINUED)
PAGE
2.23 Compliance with Laws................................................... 47
2.24 Complete Copies of Materials........................................... 47
2.25 Information Statement.................................................. 47
2.26 Bank Accounts, Letters of Credit and Powers of Attorney................ 48
2.27 Foreign Corrupt Practices Act.......................................... 48
2.28 Inventory.............................................................. 48
2.29 Representations Complete............................................... 48
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLING STOCKHOLDERS....................... 49
3.1 Organization and Share Holdings........................................ 49
3.2 Authority; No Conflict................................................. 49
3.3 Legal Proceedings; Orders.............................................. 50
3.4 Tax and Legal Matters.................................................. 50
3.5 Investment Intent...................................................... 51
3.6 Non-U.S. Person........................................................ 52
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER....................................... 52
4.1 Organization and Good Standing......................................... 52
4.2 Authority.............................................................. 52
4.3 Capitalization......................................................... 53
4.4 Consents............................................................... 53
4.5 Buyer Common Stock..................................................... 53
4.6 Noncontravention....................................................... 53
4.7 Buyer Reports.......................................................... 54
4.8 Buyer Reports; Financial Statements.................................... 54
4.9 Absence of Certain Changes or Events................................... 54
4.10 Litigation............................................................. 54
4.11 Compliance with Laws................................................... 55
4.12 Commissions and Fees................................................... 55
ARTICLE V ADDITIONAL AGREEMENTS.......................................................... 55
5.1 Information Statement.................................................. 55
5.2 Reserved............................................................... 56
5.3 Access to Information.................................................. 56
5.4 Required Approvals and Exemptions; Reasonable Efforts.................. 56
5.5 Confidentiality........................................................ 56
5.6 Public Disclosure...................................................... 57
5.7 Expenses............................................................... 57
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.8 Termination of Benefit Plans........................................... 58
5.9 Release of Liens....................................................... 58
5.10 Delivery of Additional Information..................................... 58
5.11 Notification of Certain Matters........................................ 58
5.12 Additional Documents and Further Assurances............................ 58
5.13 Section 338 Election................................................... 59
5.14 Directors and Officers' Indemnification................................ 59
5.15 Certain Actions by Buyer............................................... 60
5.16 280G Approval.......................................................... 60
5.17 Registration Obligations; Restrictions on Transfer..................... 60
5.18 Delivery of Financial Statements....................................... 67
5.19 Payment of Investment Banking Fee...................................... 67
ARTICLE VI CONDUCT PRIOR TO THE EFFECTIVE TIME........................................... 67
6.1 Conduct of Business of the Company..................................... 67
6.2 No Solicitation........................................................ 70
6.3 Procedures for Requesting Buyer Consent................................ 71
ARTICLE VII CONDITIONS TO THE ACQUISITION................................................ 71
7.1 Conditions to Obligations of Each Party to Effect the Acquisition...... 71
7.2 Conditions to the Obligations of Buyer................................. 72
7.3 Conditions to Obligations of the Company and the Selling Stockholders.. 75
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW.......................... 77
8.1 Survival............................................................... 77
8.2 Indemnification........................................................ 77
8.3 Escrow Arrangements; Claims for Indemnification........................ 78
8.4 Stockholder Representatives............................................ 87
8.5 Deductible; Maximum Payments; Remedy................................... 90
ARTICLE IX AMENDMENT AND WAIVER.......................................................... 92
9.1 Amendment.............................................................. 92
9.2 Extension; Waiver...................................................... 92
9.3 Termination............................................................ 92
ARTICLE X GENERAL PROVISIONS............................................................. 94
10.1 Notices................................................................ 94
10.2 Interpretation......................................................... 97
10.3 Counterparts........................................................... 97
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TABLE OF CONTENTS
(CONTINUED)
PAGE
10.4 Entire Agreement; Assignment.......................................... 97
10.5 Severability.......................................................... 98
10.6 Other Remedies........................................................ 98
10.7 Governing Law......................................................... 98
10.8 Rules of Construction................................................. 98
10.9 Waiver of Jury Trial.................................................. 98
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INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
Exhibit A Selling Stockholders
Exhibit B Surrendering Optionees
Exhibit C Form of Employment Agreement
Exhibit D Earn-Out Operations Parameters
Exhibit E Option Termination Agreement
Exhibit F Skipped
Exhibit G Opinion of Counsel to the Company
Exhibit H Form of Regulation S Agreement
Exhibit I Investor Questionnaire
Exhibit J MCNC Indemnification Language
Exhibit K Opinion of Counsel to the Buyer
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SCHEDULES
Consideration Schedules A - I
Company Disclosure Schedule
Buyer Disclosure Schedule
Selling Stockholders Disclosure Schedule
Schedule 1.7 Outstanding Company Options
Schedule 1.13(fffff) List of MCNC Stockholders
Schedule 1.13(kkkkk) List of Onex Stockholders
Schedule 1.13(ooooooo) List of TAT Stockholders
Schedule 2.1 Organization of Company
Schedule 2.2 Company Capital Structure
Schedule 2.3 Subsidiaries
Schedule 2.4 Authority
Schedule 2.5 No Conflict
Schedule 2.6 Governmental Consents
Schedule 2.7 Company Financial Statements
Schedule 2.8 No Undisclosed Liabilities
Schedule 2.9 No Changes
Schedule 2.10 Tax Matters
Schedule 2.11 Restrictions on Business Activities
Schedule 2.12 Title to Properties; Absence of Liens and Encumbrances; Condition of
Equipment; Customer Information
Schedule 2.13 Intellectual Property
Schedule 2.14 Agreements, Contracts and Commitments
Schedule 2.15 Interested Party Transactions
Schedule 2.16 Governmental Authorization
Schedule 2.17 Litigation
Schedule 2.19 Environmental Matters
Schedule 2.20 Brokers' and Finders' Fees; Third Party Expenses
Schedule 2.21 Employee Benefit Plans and Compensation
Schedule 2.22 Insurance
Schedule 2.23 Compliance with Laws
Schedule 2.24 Complete Copies of Materials
Schedule 2.25 Information Statement
Schedule 2.26 Bank Accounts, Letters of Credit and Powers of Attorney
Schedule 2.27 Foreign Corrupt Practices Act
Schedule 2.28 Inventory
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Schedule 2.29 Representations Complete
Schedule 3.1 Organization and Share Holdings
Schedule 3.2 Authority; No Conflict
Schedule 3.3 Legal Proceedings; Orders
Schedule 5.9 Release of Liens
Schedule 6.1 Conduct of Business of the Company
Schedule 7.2(l)(i) Employees; Employment and Noncompetition Agreements
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of July 19, 2004 (this
"AGREEMENT"), is entered into by and among Amkor Technology, Inc., a Delaware
corporation ("BUYER"), Unitive Inc., a Delaware corporation (the "COMPANY"), the
stockholders of the Company that are a party hereto set forth on EXHIBIT A (the
"SELLING STOCKHOLDERS"), the holders of Company Options that are a party hereto
listed on EXHIBIT B (the "SURRENDERING OPTIONEES"), Onex American Holdings II
LLC as the representative for the Onex Stockholders (the "ONEX STOCKHOLDER
REPRESENTATIVE"), Xxxxx Xxxxx as the representative for the MCNC Stockholders
(the "MCNC STOCKHOLDER REPRESENTATIVE"), Xxxxxx Xxxxx as the representative for
the TAT Stockholders (the "TAT STOCKHOLDER REPRESENTATIVE"), Xxxxxxx Xxxxxxx as
the representative for the Additional Indemnifying Stockholders (the "ADDITIONAL
INDEMNIFYING STOCKHOLDER REPRESENTATIVE," and collectively with the MCNC
Stockholder Representative and the TAT Stockholder Representative, the "NON-ONEX
STOCKHOLDER REPRESENTATIVE COMMITTEE"), and U.S. Bank National Association as
escrow agent (the "ESCROW AGENT").
RECITALS
A.The Selling Stockholders believe it is in their best interests and the
boards of directors of each of the Company and Buyer believe it is advisable and
in the best interests of each company and their respective stockholders that
Buyer acquire all shares of the Company Capital Stock held by the Selling
Stockholders, in accordance with the terms and conditions of this Agreement (the
"ACQUISITION") and, in furtherance thereof, have approved the transactions
contemplated hereby.
B.The Selling Stockholders are the owners of and have good and valid title
to the respective shares of Company Capital Stock owned by them.
C.Subject to the terms and conditions of this Agreement, Buyer will
purchase and the Selling Stockholders will sell all of the Company Capital Stock
held by them in consideration for cash and/or stock payments.
D.The Selling Stockholders, the Company and Buyer desire to make certain
representations and warranties and other agreements in connection with the
Acquisition.
E.A portion of the consideration otherwise payable by Buyer in connection
with the Acquisition shall be placed in escrow, the release of which amount
shall be contingent upon certain events and conditions, all as set forth in
ARTICLE VIII hereof.
F.Concurrently with the execution of this Agreement, and as a condition
and inducement to Buyer to enter into this Agreement, certain key employees of
the Company are entering into employment, non-competition and non-solicitation
agreements with Buyer in substantially the form attached hereto as EXHIBIT C
(the "EMPLOYMENT AGREEMENTS").
NOW, THEREFORE, in consideration of the mutual agreements, covenants and
other promises set forth herein, the mutual benefits to be gained by the
performance thereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and accepted, the
parties hereby agree as follows (provided that the Escrow Agent is a party
hereto solely for purposes of Article VIII and Article X):
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 SALE OF STOCK. At the Closing (as defined in Section 1.2 hereof) and
subject to and upon the terms and conditions of this Agreement including without
limitation satisfaction of the conditions found in ARTICLE VII hereof, each of
the Selling Stockholders will sell, transfer, convey and deliver to Buyer and
Buyer will purchase and acquire from each of the Selling Stockholders, good and
valid title to the shares of Company Capital Stock owned at the Closing by such
Selling Stockholders, free and clear of any Liens (other than Liens arising by
reason of restrictions on transfer under federal and state securities laws).
1.2 CLOSING. The closing of the purchase and sale of the Company Capital
Stock and the transfer of title to the Company Capital Stock by the Selling
Stockholders to Buyer (the "CLOSING") will take place as promptly as
practicable, but no later than five (5) Business Days, following satisfaction or
waiver of the conditions set forth in ARTICLE VII hereof, at the offices of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 00000 Xxxxxxx Xxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxx, 00000-0000, unless another place or time is agreed
to by Buyer, the Company and the Onex Stockholder Representative (such time, the
"EFFECTIVE TIME"). The date upon which the Closing actually occurs is herein
referred to as the "CLOSING DATE." At the Closing, the parties hereto shall
deliver the documents contemplated by ARTICLE VII hereof together with such
other customary documents as may be reasonably requested, and the Buyer shall
make the payments to the Selling Stockholders and the Surrendering Optionees as
set forth in Section 1.3(a).
1.3 PURCHASE PRICE AND PAYMENT. All cash payments made under this
Agreement shall be in United States dollars and shall be made by bank, certified
check or, at the option of a Selling Stockholder, by wire transfer of
immediately available funds for any payments in excess of $10,000.00, to an
account or accounts specified in writing to Buyer prior to the Closing Date by
the party entitled to receive such payment hereunder. "Cash," "$," and "dollars"
shall each mean United States dollars.
(a) AMOUNT OF PAYMENT AT THE CLOSING. In consideration of the sale,
assignment and transfer of the Company Capital Stock and the agreements of the
Selling Stockholders and Surrendering Optionees made in connection with the
transactions contemplated hereby, at the Closing, Buyer shall pay to each
Selling Stockholder and Surrendering Series A-1 Optionee a cash amount equal to
the product of (x) such Selling Stockholder's or Surrendering Series A-1
Optionee's applicable Closing Consideration Percentage, multiplied by (y) the
total of (A) $12,500,000, plus (B) the Aggregate Paid-In Exercise Price, plus
(C) the aggregate Initial Series A-1 Exercise Prices for all Surrendering
Optionees referenced on Consideration Schedule A minus (D) the Closing Excess
Expenses, if any, and minus, (z) solely with respect to each Surrendering Series
A-1 Optionee, the amount of Initial Series A-1 Exercise Price for such
Surrendering Series A-1 Optionee referenced on Consideration Schedule A (the
difference between (y) and (z) shall be deemed collectively, the "CLOSING
CONSIDERATION").
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(b) AMOUNT OF PAYMENT AT ONE-YEAR ANNIVERSARY OF THE CLOSING.
Subject to Section 1.3(c), in consideration of the sale, assignment and transfer
of the Company Capital Stock and the agreements of the Selling Stockholders and
Surrendering Optionees made in connection with the transactions contemplated
hereby, on the first Business Day after the one year anniversary of the Closing
(such date, the "ONE YEAR ANNIVERSARY DATE"), Buyer shall pay to each Selling
Stockholder and Surrendering Series A-1 Optionee that amount equal to the
product of (x) such Selling Stockholder's or Surrendering Series A-1 Optionee's
applicable First Anniversary Consideration Percentage, multiplied by (y) the
total of (A) $15,500,000, plus (B) the aggregate Initial Series A-1 Exercise
Prices for all Surrendering Optionees referenced on Consideration Schedule B,
minus (C) any Excess Third Party Expenses and minus (D) solely with respect to
each Surrendering Series A-1 Optionee, the amount of Initial Series A-1 Exercise
Price for such Surrendering Series A-1 Optionee referenced on Consideration
Schedule B (collectively, the "FIRST ANNIVERSARY CONSIDERATION").
Notwithstanding anything in this Section 1.3(b) to the contrary, Buyer, in its
sole discretion, may pay all or any portion of the First Anniversary
Consideration to each Selling Stockholder and Surrendering Optionee in shares of
its Common Stock, par value $0.001 per share (the "BUYER COMMON STOCK"), the
value of which shall be deemed to be the average of the closing prices of Buyer
Common Stock for the 15-trading day period immediately prior to the date of
issuance, as equitably adjusted for stock splits, combinations, dividends and
the like; provided, however, that Buyer shall not have the right to pay any
portion of the First Anniversary Consideration in shares of Buyer Common Stock
unless (i) such shares (A) have been duly authorized, (B) are validly issued,
fully paid and nonassessable and (C) are issued in compliance in all material
respects with all applicable federal and state securities laws and (ii) the
issuance of such shares does not and will not (1) violate any provision of the
Organizational Documents of Buyer or (2) result in a Conflict (as defined in
Section 2.5) of or under any material contract to which Buyer is a party or any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Buyer or any of its subsidiaries or any of their respective properties or
assets, except for such Conflicts as to which requisite waivers or consents have
been obtained; provided further that Buyer shall not have the right to pay any
of the First Anniversary Consideration in shares of Buyer Common Stock unless
(i) Buyer shall have provided written notice to each of the Stockholder
Representatives at least 30 days prior to the payment thereof of the aggregate
amount of such payment that will consist all or in part of shares of Buyer
Common Stock, (ii) the value of the Buyer Common Stock as determined pursuant to
this Section 1.3(b) shall not be less than $5.00 per share, as equitably
adjusted for stock splits, combinations, dividends and the like, and (iii) Buyer
shall have complied with the provisions set forth in Section 5.17(a) hereto
regarding registration of the Buyer Common Stock, to the extend applicable. Any
such distribution of Buyer Common Stock to the Selling Stockholders or the
Surrendering Optionees pursuant to this Section 1.3(b) shall be proportional
among all Selling Stockholders and Surrendering Optionees that are either
Accredited Investors or that will be receiving such shares of Buyer Common Stock
pursuant to Regulation S promulgated under the Securities Act. Buyer shall pay
cash to those Selling Stockholders and Surrendering Optionees who are both (i)
not Accredited Investors and (ii) "U.S. Persons" as that term is defined in
Regulation S promulgated under the Securities Act.
(c) ESCROW. Buyer shall withhold in cash $1,250,000 of the First
Anniversary Consideration to be issued to the Indemnifying Stockholders (such
amount to be withheld based on the relative Indemnity Pro Rata Portion of each
Indemnifying Stockholder), and such cash shall be delivered
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to the Escrow Agent and held and distributed by the Escrow Agent on the terms
and conditions contained in ARTICLE VIII.
1.4 CONTINGENT EARN-OUT PAYMENTS. Buyer shall pay to the Selling
Stockholders and Surrendering Optionees a payment (the "EARN-OUT PAYMENT"), if
any, at such time and under such conditions as the Earn-Out Payment is payable
in accordance with this Section 1.4 and in the aggregate amount (such amount,
the "EARN-OUT AMOUNT") of the lesser of (A) $55,000,000, and (B) (x) the Initial
Earn-Out Amount (defined below) less (y) the product of (i) the quotient
obtained by dividing the Initial Earn-Out Amount by $55,000,000, multiplied by
(ii) $750,000. The "INITIAL EARN-OUT AMOUNT" shall be (1) the product of seven
multiplied by the Trailing EBITDA, less (2) the amount of Excess Capital
Expenditures (as such terms are defined below), provided that if the resultant
amount of this clause (2) would otherwise be less than zero, then such amount
shall be zero.
(a) TRAILING EBITDA. For the purposes of this Section 1.4, "TRAILING
EBITDA" shall be computed using the following formula, provided that if Trailing
EBITDA would otherwise be less than zero, then such amount shall be zero:
(4/5 * ((1 * A) + (2 * B) + (2 * C))) - $3,600,000
Where:
A = The Company's earnings before interest, taxes, depreciation
and amortization for the three months ended September 30,
2004, as determined in accordance with GAAP and the
assumptions set forth in the Earn-Out Operating Parameters,
and subject to Sections 1.4(f) and 1.4(g).
B = The Company's earnings before interest, taxes, depreciation
and amortization for the three months ended December 31, 2004,
as determined in accordance with GAAP and the assumptions set
forth in the Earn-Out Operating Parameters, and subject to
Sections 1.4(f) and 1.4(g).
C = The Company's earnings before interest, taxes, depreciation
and amortization for the three months ended March 31, 2005, as
determined in accordance with GAAP and the assumptions set
forth in the Earn-Out Operating Parameters, and subject to
Sections 1.4(f) and 1.4(g).
For the purposes of the determination of the Company's earnings in
A, B and C above, the selling, general and administrative expenses (the "SG&A
EXPENSES") and research and development expenses (the "R&D EXPENSES") shall be
the lower of (i) $1,193,401, $1,151,641, and $1,286,065 for SG&A Expenses for
the three months ended September 30, 2004, December 31, 2004 and March 31, 2005,
respectively and $126,242, $125,282, and $123,687 for R&D Expenses for the three
months ended September 30, 2004, December 31, 2004 and March 31, 2005,
respectively and (ii) the actual SG&A Expenses and R&D Expenses for the
referenced periods as determined in accordance with GAAP and the assumptions set
forth in the Earn-Out Operating Parameters, and subject to Sections 1.4(f) and
1.4(g).
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(b) EXCESS CAPITAL EXPENDITURES. For the purposes of this Section
1.4, "EXCESS CAPITAL EXPENDITURES" shall be equal to (A) the amount of capital
expenditures incurred by the Company during the period beginning July 1, 2004
and ending March 31, 2005, as determined in accordance with GAAP, less (B) an
amount equal to (x) $4,000,000 plus (y) the amount, if any, by which capital
expenditures incurred by the Company during the period beginning April 1, 2004
and ending June 30, 2004, as determined in accordance with GAAP (subject to
Section 1.4(f) and 1.4(g)), are less than $2,516,000; provided that if the
Excess Capital Expenditures amount would otherwise be less than zero, then such
amount shall be zero.
(c) PAYMENT IN BUYER COMMON STOCK. Notwithstanding the foregoing,
Buyer, in its sole discretion, may pay a portion or all of the Earn-Out Payment
in shares of Buyer Common Stock, the value of which shall be deemed to be the
average of the closing prices of Buyer Common Stock for the 15-trading day
period immediately prior to issuance, as equitably adjusted for stock splits,
combinations, dividends and the like; provided, however, that Buyer shall not
have the right to pay any portion of the Earn-Out Payment in shares of Buyer
Common Stock unless (i) such shares (A) have been duly authorized, (B) are
validly issued, fully paid and nonassessable and (C) are issued in compliance in
all material respects with all applicable federal and state securities laws and
(ii) the issuance of such shares does not and will not (1) violate any provision
of the Organizational Documents of Buyer or (2) result in a Conflict of or under
any material contract to which Buyer is a party or any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Buyer or any of its
subsidiaries or any of their respective properties or assets, except for such
Conflicts as to which requisite waivers or consents have been obtained; provided
further that Buyer shall not have the right to pay any of the Earn-Out Payment
in shares of Buyer Common Stock unless (i) Buyer shall have provided written
notice to each of the Stockholder Representatives at least 30 days prior to the
payment thereof of the aggregate amount of such payment that will consist all or
in part of shares of Buyer Common Stock, (ii) the value of the Buyer Common
Stock as determined pursuant to this Section 1.4(c) shall not be less than $5.00
per share, as equitably adjusted for stock splits, combinations, dividends and
the like and (iii) Buyer shall have complied with the provisions set forth in
Section 5.17(b) regarding registration of Buyer Common Stock, to the extent
applicable. Any such distribution of Buyer Common Stock to the Selling
Stockholders or the Surrendering Optionees pursuant to this Section 1.4(c) shall
be proportional among all Selling Stockholders and Surrendering Optionees that
are either Accredited Investors or that will be receiving such shares of Buyer
Common Stock pursuant to Regulation S promulgated under the Securities Act.
Buyer shall pay cash to those Selling Stockholders and Surrendering Optionees
who are both (i) not Accredited Investors and (ii) "U.S. Persons" as that term
is defined in Regulation S promulgated under the Securities Act.
(d) EARN-OUT DISTRIBUTION. Based on the Total Transaction Value to
be paid by Buyer pursuant to the terms of this Agreement, the Earn-Out
Percentages used for distribution pursuant to this Section 1.4(d) refer to those
Earn-Out Percentages included on the applicable Consideration Schedule
referenced beside the Total Transaction Value ranges set forth below. The "TOTAL
TRANSACTION VALUE" shall be equal to the sum of (A) the Closing Consideration,
(B) the First Anniversary Consideration, and (C) the Earn-Out Amount. For
purposes of illustration only, if the Total Transaction Value equals
$65,000,000, then the Earn-Out Percentages on Consideration Schedule G would be
used to calculate the distribution of the Earn-Out Payment.
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Total Transaction Value Range Consideration Schedule
----------------------------- ----------------------
< or = $29,999,999 C
$30,000,000 - $39,999,999 D
$40,000,000 - $49,999,999 E
$50,000,000 - $59,999,999 F
$60,000,000 - $69,999,999 G
$70,000,000 - $74,999,999 H
> or = $75,000,000 I
The Buyer will distribute the Earn-Out Payment, if any, in the following
preferential order:
(i) Prior to any other distribution of the Earn-Out Amount,
each Surrendering Series A-1 Optionee shall be entitled to receive, in addition
to the amounts provided for in Sections 1.4(d)(ii) and 1.4(d)(iv) below, if any,
an amount equal to the difference between (A) the product of (x) the number of
Additional Surrendered A-1 Options for such Surrendering Series A-1 Optionee
referenced on the applicable Consideration Schedule, multiplied by (y) a
fraction, the numerator of which is the sum of (1) the Closing Consideration
plus (2) the First Anniversary Consideration, and the denominator of which is
the Aggregate Series A-1/A-2 Liquidation Amount, minus (B) the amount of
Additional Series A-1 Exercise Price for such Surrendering Series A-1 Optionee
referenced in the applicable Consideration Schedule (the aggregate amount
payable to all Surrendering Series A-1 Optionees under this clause (i) shall be
referred to herein as the "PREFERENTIAL OPTION CONSIDERATION"); provided that if
the resultant amount of the Preferential Option Consideration exceeds the
difference between the Earn-Out Amount minus the Investment Banking Fee, the
Preferential Option Consideration shall be reduced to the amount equal to the
Earn-Out Amount minus the Investment Banking Fee.
(ii) After distribution of the Preferential Option
Consideration, each Selling Stockholder and Surrendering Series A-1 Optionee
shall be entitled to receive, in addition to the amount provided for in Section
1.4(d)(iv) below, if any, an amount equal to the product of (A) such Selling
Stockholder's and Surrendering Series A-1 Optionee's applicable Series A-1/A-2
Earn-Out Percentage, multiplied by (B) the Earn-Out Amount, less the Investment
Banking Fee, less the Preferential Option Consideration, provided that if the
resultant amount of this clause (B) would otherwise be less than zero, then such
amount shall be zero (the aggregate amount payable to all Selling Stockholders
and Surrendering Series A-1 Optionees under this clause (ii) shall be referred
to herein as the "SERIES A-1/A-2 EARN-OUT PREFERENCE"); provided, however, in
the event that the Series A-1/A-2 Earn-Out Preference exceeds the Series A-1/A-2
Remaining Preference Amount (defined below), the Series
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X-0/X-0 Xxxx-Xxx Preference shall be equal to the Series A-1/A-2 Remaining
Preference Amount. The "SERIES A-1/A-2 REMAINING PREFERENCE AMOUNT" shall be
equal to (A) the product of (x) the sum of the Aggregate Series A-1/A-2 Shares
plus the total number of Additional Surrendered A-1 Options as referenced on the
applicable Consideration Schedule, multiplied by (y) $1.00, less (B) the sum of
the Closing Consideration plus the First Anniversary Consideration.
(iii) After the distribution provided for in
Section 1.4(d)(ii), each Selling Stockholder and Surrendering Series A-3
Optionee shall be entitled to receive, in addition to the amount provided for in
Section 1.4(d)(iv) below, if any, an amount equal to (I) with respect to each
Selling Stockholder, the product of (A) such Selling Stockholder's applicable
Series A-3 Earn-Out Percentage, multiplied by (B) (x) the Earn-Out Amount less
the sum of (1) the Investment Banking Fee, (2) the Preferential Option
Consideration and (3) the Series A-1/A-2 Earn-Out Preference, provided that if
the resultant amount of this clause (B)(x) would otherwise be less than zero,
then such amount shall be zero (the resultant amount of this clause (B)(x) shall
be referred to herein as the "INTERIM EARN-OUT AMOUNT"), plus (y) the aggregate
Additional Series A-3 Exercise Prices for all Surrendering Series A-3 Optionees
referenced on the applicable Consideration Schedule, and (II) with respect to
each Surrendering Series A-3 Optionee, the difference between (A) the product of
(x) such Surrendering Series A-3 Optionee's applicable Series A-3 Earn-Out
Percentage, multiplied by (y) the Interim Earn-Out Amount plus the aggregate
Additional Series A-3 Exercise Prices for all Surrendering Series A-3 Optionees
referenced on the applicable Consideration Schedule, minus (B) the amount of
Additional Series A-3 Exercise Price for such Surrendering Series A-3 Optionee
referenced on the applicable Consideration Schedule; provided, however, in the
event that the Interim Earn-Out Amount exceeds the Series A-3 Preference Amount
(defined below), the Interim Earn-Out Amount shall be equal to the Series A-3
Preference Amount. The "SERIES A-3 PREFERENCE AMOUNT" shall be equal to the
product of (A) the sum of the Aggregate Series A-3 Shares plus the total number
of Surrendered A-3 Options as referenced on the applicable Consideration
Schedule, multiplied by (B) $1.00.
(iv) After the distribution provided for in
Section 1.4(d)(iii), each Selling Stockholder and Surrendering Optionee shall be
entitled to receive an amount equal to the product of (A) such Selling
Stockholder's and Surrendering Optionee's applicable Final Earn-Out Percentage,
multiplied by (B) the Earn-Out Amount less the sum of (w) the Investment Banking
Fee, (x) the Preferential Option Consideration, (y) the Series A-1/A-2 Earn-Out
Preference, and (z) the Interim Earn-Out Amount, provided that if the resultant
amount of this clause (B) would otherwise be less than zero, then such amount
shall be zero (the aggregate amount payable to all Selling Stockholders and
Surrendering Optionees under this clause (iv) shall be referred to herein as the
"FINAL EARN-OUT AMOUNT").
(v) Notwithstanding anything in this Section 1.4 to the
contrary, in no event shall Buyer be obligated to distribute in the aggregate
any amount in excess of the Earn-Out Amount less the Investment Banking Fee
pursuant to this Section 1.4.
(e) EARN-OUT NOTICE. On the later to occur of (i) the One Year
Anniversary Date or (ii) twenty (20) Business Days after the date on which the
consolidated financial statements of the Company prepared in accordance with
GAAP have been prepared as of and for the fiscal quarter ended
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March 31, 2005, but in any event with respect to this clause (ii) on or before
July 31, 2005, Buyer shall deliver to the Onex Stockholder Representative a
memorandum (the "EARN-OUT NOTICE") specifying in reasonable detail the
calculation of the Earn-Out Amount, if any, and the calculation of the
distribution of the Earn-Out Amount to each of the Selling Stockholders and
Surrendering Optionees pursuant to Sections 1.4(d)(i), 1.4(d)(ii), 1.4(d)(iii)
and 1.4(d)(iv), with the basis for such calculation and any supporting
documentation, as applicable.
(f) ONEX STOCKHOLDER REPRESENTATIVE OBJECTION. The Onex Stockholder
Representative shall have forty-five (45) days to make an objection (in writing)
to any item in the Earn-Out Notice, and such statement must be delivered to
Buyer prior to 11:59 p.m. Eastern time on the last day of such forty-five (45)
day period. The Onex Stockholder Representative may notify Buyer in writing at
any time prior to the expiration of such forty-five (45) day period that it does
not object to any item in the Earn-Out Notice, which notice shall trigger
payment by Buyer in accordance with Section 1.4(d). During such forty-five (45)
day period, Buyer shall provide the Onex Stockholder Representative and an
accounting firm of national standing and reputation selected by the Onex
Stockholder Representative (which firm shall be reasonably acceptable to the
Buyer), upon reasonable advance notice and during regular working hours, full
access to the books and records and the management of the Company to the extent
relevant for the purpose of review of the Earn-Out Notice and verification of
the calculations set forth therein. The cost of such review, including the
expenses of any accounting firm, shall be borne by the Indemnifying
Stockholders, who shall bear such costs based on their Indemnity Pro Rata
Portion, unless the results of such review, which shall have either been agreed
to by the Buyer or shall have been determined to be correct after application of
the arbitration provisions of Section 8.3(f)(iii) hereof, reveal that the
Buyer's calculation of the Earn Out Amount was inaccurate in the favor of Buyer
by more than 2.5% of the actual amount, in which case Buyer shall pay such costs
and expenses to the extent they are reasonable and documented in reasonable
detail. Any such costs of review borne by the Indemnifying Stockholders shall be
deducted from the Earn-Out Payment (to the extent thereof) prior to distribution
and paid by Buyer to the Onex Stockholder Representative, and, to the extent the
Onex Stockholder Representative has not previously advanced such amount to the
accounting firm providing such review (and/or other appropriate recipients
thereof), Onex shall remit such amount to such accounting firm (and/or other
appropriate recipients thereof); provided that the Onex Stockholder
Representative shall have first provided to Buyer an executed certificate
providing a detailed listing of such costs and attesting as to its accuracy. The
Onex Stockholder Representative and any accounting firm performing such review
shall be subject to non-disclosure obligations reasonably satisfactory to the
Buyer.
(g) RESOLUTION OF CONFLICTS.
(i) In case the Onex Stockholder Representative shall have
objected in writing to the Earn-Out Notice in a timely manner or in case of any
other dispute relating to the Earn-Out Amount, the Onex Stockholder
Representative and Buyer will attempt in good faith to resolve such objection or
dispute. Buyer shall promptly make payment of that portion (if any) of the
Earn-Out Amount not subject to such dispute and retain only the disputed portion
of the Earn-Out Amount until such dispute is resolved in accordance with this
Section 1.4(g). If the Onex Stockholder Representative and Buyer should so
agree, a memorandum setting forth such agreement will be prepared and signed by
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both parties, and any payments to be made as set forth therein shall be made on
the terms provided therein.
(ii) In the event the parties cannot come to an agreement as
set forth in Section 1.4(g)(i) within thirty (30) days after the date on which
the Onex Stockholder Representative objected in writing to the Earn-Out Notice
or, in the event the dispute does not relate to an Earn-Out Notice, the date on
which the parties determine that they are unable to reach agreement pursuant to
Section 1.4(g)(i), such dispute shall be resolved in the manner set forth in
Section 8.3(f).
(h) EARN-OUT OPERATIONS. Buyer agrees that the operation of the
Company during the period beginning on the Closing Date and ending on March 31,
2005 (the "EARN-OUT PERIOD") shall be governed by the provisions set forth at
EXHIBIT D (the "EARN-OUT OPERATIONS PARAMETERS"). Without limiting the
foregoing, Buyer agrees not to take any other action that would frustrate the
spirit of the transaction and the Earn-Out contemplated hereunder. Buyer
acknowledges that compliance with this Section 1.4(h) is intended to protect the
interests of the Selling Stockholders in maximizing the Earn-Out Amount. If
Buyer fails to comply with any of the provisions or the intent of the Earn-Out
Operations Parameters, or takes other actions to frustrate the spirit of the
transaction and the Earn-Out contemplated hereunder, the Selling Stockholders
shall have the right to pursue a claim in accordance with the terms of this
Agreement for Losses (which shall include, without limitation, any reduction in
the Earn-Out Amount which results, directly or indirectly, from such failure to
comply). Any disputes regarding this Section 1.4(h) (including any dispute
regarding whether Buyer has complied with the Earn-Out Operations Parameters)
shall be resolved in the manner set forth in Section 8.3(f).
(i) TRANSFER LIMITATIONS. No Selling Stockholder may sell, exchange,
transfer or otherwise dispose of his, her or its right to receive any portion of
the Earn-Out Amount, other than (i) by the laws of descent and distribution or
succession or by operation of law or (ii) if such Selling Stockholder or
Surrendering Optionee shall have furnished Buyer with an opinion of counsel
reasonably satisfactory to the Buyer that such disposition will not require
registration of such portion of the Earn-Out Amount under the Securities Act,
and the attempted transfer in violation of this Section 1.4(i) shall be null and
void and shall not be recognized by Buyer. No Surrendering Optionee may sell,
exchange, transfer or otherwise dispose of his, her or its right to receive any
portion of the Earn-Out Amount other than by the laws of descent and
distribution or succession or by operation of law, and the attempted transfer in
violation of this Section 1.4(i) shall be null and void and shall not be
recognized by Buyer. Each permitted transferee of the Earn-Out Amount and First
Anniversary Consideration shall be subject to the restrictions set forth in this
Section 1.4(i).
(j) RIGHT TO SET OFF. Buyer shall have rights to set off amounts of
the Earn-Out Amount pursuant to the provisions of Section 8.5(e) hereof.
(k) CONSIDERATION SCHEDULE. The Company shall provide to the Buyer
prior to the Closing a true, complete and accurate list of each Selling
Stockholder and Surrendering Optionee and the amount of Closing Consideration,
First Anniversary Consideration and Earn-Out Amount each such individual or
entity is entitled to pursuant to Section 1.3 and 1.4 (the "CONSIDERATION
SCHEDULE"). The Consideration Schedule shall be deemed a part of this Agreement
for all purposes hereunder.
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1.5 CALCULATION OF DISTRIBUTION AMOUNTS.. Any amount of Closing
Consideration calculated for distribution pursuant to the terms of this
Agreement shall be rounded down to the nearest cent, with all amounts payable to
any Selling Stockholder or Surrendering Optionee in any one distribution
aggregated for such rounding purposes.
1.6 WITHHOLDING TAXES. Any amounts payable to any Selling Stockholder and
Surrendering Optionees pursuant to this ARTICLE I will be subject to, and
reduced by, all amounts required to be withheld under any applicable Canadian or
U.S. federal, state, provincial, and foreign taxation laws as determined by
Buyer in its reasonable discretion. To the extent such amounts are so deducted
or withheld, the amount of such consideration shall be treated for all purposes
under this Agreement as having been paid to the person to whom such
consideration would otherwise have been paid.
1.7 COMPANY OPTIONS. Each of the Surrendering Optionees shall execute an
Option Termination Agreement in the form set forth at EXHIBIT E (the "OPTION
TERMINATION AGREEMENT") whereby such optionee shall surrender the options set
forth at EXHIBIT E in exchange for a right to receive its respective payments,
if any, pursuant to Sections 1.3 and 1.4. Except as set forth on Schedule 1.7,
each outstanding Company Option not surrendered in accordance with the
foregoing, whether vested or unvested, shall be cancelled by the Company
immediately prior to the Effective Time and not assumed by Buyer. Prior to the
Effective Time, the Company shall take all actions necessary, subject to
advanced approval of Buyer, to effect the cancellation of all such outstanding
Company Options, including, but not limited to, the giving of a notice (the
"CANCELLATION NOTICE") to all holders of Company Options, informing such holders
of the cancellation, the form and substance of which shall be subject to the
reasonable advance review of Buyer. The Cancellation Notice shall be provided no
later than the time specified in the applicable Company Plan or agreement and
shall be in accordance with all applicable laws. The Company also shall take
such other actions in furtherance of the foregoing as Buyer may reasonably
require.
1.8 FRACTIONAL SHARES. No fraction of a share of Buyer Common Stock will
be issued, but in lieu thereof, any fractional share (after aggregating all
shares of Buyer Common Stock to be received by each Selling Stockholder) will be
rounded to the nearest whole share of Buyer Common Stock (with one half being
rounded up).
1.9 RELEASES. Each Selling Stockholder and Surrendering Optionee, for
itself and its Affiliates, heirs, personal representatives, successors and
assigns (collectively, the "RELEASORS"), hereby forever fully and irrevocably
releases and discharges the Buyer and the Company and their respective
predecessors, successors, subsidiaries, affiliated entities and past and present
stockholders (direct and indirect), directors, officers, employees, agents, and
representatives (collectively, the "RELEASED PARTIES") from any and all actions,
suits, claims, demands, debts, sums of money, accounts, reckonings, bonds,
bills, covenants, contracts, agreements, controversies, promises, damages,
judgments, liabilities or obligations of any kind whatsoever in law or equity
and causes of action of every kind and nature, or otherwise (including, without
limitation, claims for damages, costs, expenses, and attorneys', brokers' and
accountants' fees and expenses) that the Releasors can, will or may have against
the Released Parties in each case related to or arising from such Selling
Stockholder's relationship to the Company as security holder (but not in any
other capacity, including as a holder of a promissory note), whether
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known or not known, suspected or unsuspected, unanticipated as well as
anticipated and that now exist or may hereafter accrue based on matters now
known or not known (collectively, the "RELEASED CLAIMS"); provided, however,
that Released Claims shall not include claims arising out of this Agreement. The
Selling Stockholders and Surrendering Optionees hereby irrevocably agree to
refrain from directly or indirectly asserting any claim or demand or commencing
(or causing to be commenced) any suit, action, or proceeding of any kind, in any
court or before any tribunal, against any Released Party based upon any Released
Claim. This release will be effective at, and not prior to, the Closing.
1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any certificates
evidencing any of the Company Capital Stock shall have been lost, stolen or
destroyed, Buyer will pay and/or issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof in form and substance satisfactory to Buyer, such consideration
as may be required pursuant to this ARTICLE I hereof; provided, however, that
Buyer may, in its discretion and as a condition precedent to the payment and/or
issuance of said consideration, require the owner of such lost, stolen or
destroyed certificates to agree to indemnify Buyer to the reasonable
satisfaction of Buyer against any claim that may be made against Buyer with
respect to the certificates alleged to have been lost, stolen or destroyed.
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement, the Buyer is fully authorized to take, and will
take, all such lawful and necessary action.
1.12 ACKNOWLEDGMENT. The parties acknowledge that Buyer may make a Section
338 election under the Code following the Closing Date.
1.13 DEFINITIONS. For all purposes of this Agreement, the following terms
shall have the following respective meanings:
(a) "338 ELECTION TAX LIABILITIES" shall have the meaning set forth
in Section 2.10(b).
(b) "ACCREDITED INVESTOR" shall mean each holder of Company Capital
Stock and Options to purchase shares of Company Capital Stock who is an
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act or is otherwise excluded from the calculation of the number of
purchasers under Rule 501(e)(1) promulgated under the Securities Act.
(c) "ACQUISITION" shall have the meaning set forth in the Recitals
hereto.
(d) "ADDITIONAL INDEMNIFYING STOCKHOLDERS" shall mean those
Indemnifying Stockholders other than the Onex Stockholders, the MCNC
Stockholders and the TAT Stockholders.
(e) "ADDITIONAL INDEMNIFYING STOCKHOLDER REPRESENTATIVE" shall have
the meaning set forth in the Introductory Paragraph hereto.
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(f) "ADDITIONAL SERIES A-1 EXERCISE PRICE" shall mean, for each
Surrendering Series A-1 Optionee, the amount for the exercise of such
Surrendering Series A-1 Optionee's Additional Surrendered Series A-1 Options
reflected on the applicable Consideration Schedule.
(g) "ADDITIONAL SERIES A-3 EXERCISE PRICE" shall mean, for each
Surrendering Series A-3 Optionee, the amount for the exercise of such
Surrendering Series A-3 Optionee's Additional Surrendered Series A-3 Options
reflected on the applicable Consideration Schedule.
(h) "ADDITIONAL SHARES" shall have the meaning set forth in Section
8.2(a).
(i) "AFFILIATE" shall mean, with respect to a Person, any other
Person that directly or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such first Person.
(j) "AGGREGATE PAID-IN EXERCISE PRICE" shall mean the dollar amounts
received by the Company after the date of this Agreement and on or prior to the
Closing Date in connection with the exercise of any Series A-2 Options, and
Series A-3 Warrants.
(k) "AGGREGATE SERIES A-1/A-2 LIQUIDATION AMOUNT" shall mean
$48,410,993, the aggregate liquidation preference amount for shares of Series
A-1 Preferred Stock and Series A-2 Preferred Stock and Surrendered Series A-1
Options assumed outstanding on the Closing Date.
(l) "AGGREGATE SERIES A-1/A-2 SHARES" shall mean 48,410,993, the
aggregate number of shares of Series A-1 Preferred Stock and Series A-2
Preferred Stock and Surrendered Series A-1 Options assumed outstanding on the
Closing Date.
(m) "AGGREGATE SERIES A-3 SHARES" shall mean 22,601,163, the
aggregate number of shares of Series A-3 Preferred Stock assumed outstanding on
the Closing Date.
(n) "APPLICABLE AMOUNT" shall have the meaning set forth in Section
8.2(a). (o) "BALANCE SHEET DATE" shall have the meaning set forth in Section
2.7.
(p) "BUSINESS DAY[S]" shall mean each day that is not a Saturday,
Sunday or holiday on which banking institutions located in New York, New York
are authorized or obligated by law or executive order to close.
(q) "BUYER" shall have the meaning set forth in the Introductory
Paragraph.
(r) "BUYER COMMON STOCK" shall have the meaning set forth in Section
1.3(b).
(s) "BUYER INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 8.2(a).
(t) "BUYER REPORTS" shall mean, collectively, (i) the Buyer's Annual
Reports on Form 10-K for each fiscal year of the Buyer beginning since December
31, 2001; (ii) its Quarterly Reports on Form 10-Q for each of the first three
fiscal quarters in each of the fiscal years of the Buyer
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referred to in clause (i) above; (iii) all proxy statements relating to the
Buyer's meetings of stockholders (whether annual or special) held, and all
information statements relating to stockholder consents since the beginning of
the first fiscal year referred to in clause (i) above; (iv) all other forms,
reports, registration statements and other documents filed by the Buyer with the
SEC since the beginning of the first fiscal year referred to in clause (i)
above; in each case, as amended to date.
(u) "CANCELLATION NOTICE " shall have the meaning set forth in
Section 1.7.
(v) "CLOSING" shall have the meaning set forth in Section 1.2.
(w) "CLOSING CONSIDERATION PERCENTAGE" shall mean that Closing
Consideration Percentage referenced beside a Selling Stockholder's name or
Surrendering Optionee's name, as the case may be, on Consideration Schedule A.
(x) "CLOSING CONSIDERATION" shall have the meaning set forth in
Section 1.3(a).
(y) "CLOSING DATE" shall have the meaning set forth in Section 1.2.
(z) "CLOSING EXCESS EXPENSES" shall have the meaning set forth in
Section 5.7.
(aa) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(bb) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(cc) "COMPANY" shall have the meaning set forth in the Introductory
Paragraph.
(dd) "COMPANY AUTHORIZATIONS" shall have the meaning set forth in
Section 2.16.
(ee) "COMPANY BUSINESS PLAN" shall mean the most recent Business
Plan delivered by the Company to Buyer prior to the date of this Agreement.
(ff) "COMPANY CAPITAL STOCK" shall mean shares of Company Common
Stock and Company Preferred Stock.
(gg) "COMPANY COMMON STOCK" shall mean shares of Common Stock of the
Company, par value of $0.01 per share.
(hh) "COMPANY DEFERRAL PLANS" shall have the meaning set forth in
Section 5.8.
(ii) "COMPANY DISCLOSURE SCHEDULE" shall have the meaning set forth
in ARTICLE II.
(jj) "COMPANY EMPLOYEE PLAN" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, deferred compensation, retirement benefits,
performance awards, stock or stock-related awards, fringe benefits or other
employee benefits or remuneration of any kind, whether written, unwritten or
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otherwise, funded or unfunded, including without limitation, each "employee
benefit plan," within the meaning of Section 3(3) of ERISA which is or has been,
in the past six (6) years, maintained, contributed to, or required to be
contributed to, by the Company or any ERISA Affiliate for the benefit of any
Employee, or with respect to which the Company or any ERISA Affiliate has or may
have any liability or obligation.
(kk) "COMPANY INTELLECTUAL PROPERTY" or "COMPANY IP" shall have the
meaning set forth in Section 2.13(a).
(ll) "COMPANY MATERIAL ADVERSE EFFECT" shall mean any change, event
or effect that is materially adverse to the business, assets (whether tangible
or intangible), condition (financial or otherwise), or operations of the Company
and its Subsidiaries, taken as a whole; provided, however, that in no event
shall any of the following constitute a material adverse change in the business,
assets, condition or operation of the Company and its Subsidiaries: (i) any
change resulting primarily and substantially from conditions affecting the
Company's industry generally which does not have a substantially
disproportionate impact on the Company, or (ii) any change resulting primarily
and substantially from general business or economic conditions generally which
does not have a substantially disproportionate impact on the Company.
(mm) "COMPANY OFFICER GROUP" shall mean the following officers of
the Company: Xxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxx Mis, Xxxx Xxxxx, Xxx Xxxxxx and
Xxxxx Xxxx.
(nn) "COMPANY OPTIONS" shall mean all issued and outstanding options
(including commitments to grant options), warrants, calls, rights, convertible
securities, commitments or agreements of any character to purchase or otherwise
acquire Company Capital Stock (whether or not vested) held by any person or
entity.
(oo) "COMPANY PLANS" shall mean the Unitive Electronics, Inc. 1998
Stock Plan and the Unitive International, N.V. 1999 Stock Plan, and the
Company's 2001 Stock Plan, 2002 Series B Preferred Stock Purchase Plan and 2004
Equity Incentive Plan.
(pp) "COMPANY PREFERRED STOCK" shall mean shares of Series A-1
Preferred Stock, Series A-2 Preferred Stock and Series A-3 Preferred Stock, each
with a par value of $0.01 per share.
(qq) "COMPANY RESTRICTED STOCK" shall mean shares of Company Capital
Stock outstanding immediately prior to the Effective Time which are unvested or
are subject to a right of repurchase by the Company, risk of forfeiture or other
condition under any applicable restricted stock purchase agreement or other
agreement with the Company, but excluding any shares of Company Capital Stock
subject to a right of repurchase as set forth in any Company Plan.
(rr) "COMPANY SERVICES" shall have the meaning set forth in Section
2.13(b).
(ss) "CONSIDERATION" shall mean the Closing Consideration, First
Anniversary Consideration and the Earn-Out Amount (if any), as such terms are
defined in Sections 1.3(a), 1.3(b) and 1.4, respectively.
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(tt) "CONSIDERATION PERCENTAGE" shall mean the applicable Closing
Consideration Percentage, First Anniversary Consideration Percentage or Earn-Out
Percentage for a Selling Stockholder or Surrendering Optionee referenced on any
Consideration Schedule.
(uu) "CONSIDERATION SCHEDULE" shall have the meaning set forth in
Section 1.4(k).
(vv) "CONTEMPLATED TRANSACTIONS" shall mean all of the transactions
contemplated by this Agreement and the Related Agreements.
(ww) "COPYRIGHTS" shall have the meaning set forth in Section
2.13(a).
(xx) "CURRENT BALANCE SHEET" shall have the meaning set forth in
Section 2.7.
(yy) "DISPUTED AMOUNTS" shall have the meaning set forth in Section
8.3(e).
(zz) "DOL" shall mean the United States Department of Labor.
(aaa) "EARN-OUT AMOUNT" shall have the meaning set forth in Section
1.4.
(bbb) "EARN-OUT NOTICE" shall have the meaning set forth in Section
1.4(e).
(ccc) "EARN-OUT OPERATIONS PARAMETERS" shall have the meaning set
forth in Section 1.4(h).
(ddd) "EARN-OUT PAYMENT" shall have the meaning set forth in Section
1.4.
(eee) "EARN-OUT PERCENTAGE" shall mean the applicable Earn-Out
Percentage for a Selling Stockholder or Surrendering Optionee referenced on any
Consideration Schedule.
(fff) "EARN-OUT PERIOD" shall have the meaning set forth in Section
1.4(h).
(ggg) "EFFECTIVE TIME" shall have the meaning set forth in Section
1.2.
(hhh) "EMPLOYEE" shall mean any current or former employee, officer,
consultant or director of the Company or its Subsidiaries or an ERISA Affiliate.
(iii) "EMPLOYEE AGREEMENT" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visa, work permit
or other agreement, or contract (including, without limitation, any offer letter
or any agreement providing for acceleration of Company Options, or any other
agreement providing for compensation or benefits) between the Company or any
ERISA Affiliate and any current employee or consultant, whether written or oral
or with respect to which the Company may have any liability or obligation.
(jjj) "ENVIRONMENTAL LAW" shall have the meaning set forth in
Section 2.19.
(kkk) "ENVIRONMENTAL PERMIT" shall have the meaning set forth in
Section 2.19.
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(lll) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, or any successor law.
(mmm) "ERISA AFFILIATE" shall mean each Subsidiary of the Company
and any other person or entity under common control with the Company or any of
its Subsidiaries within the meaning of Section 414(b), (c), (m), or (o) of the
Code and the regulations issued thereunder.
(nnn) "ESCROW AGENT" shall have the meaning set forth in the
Introductory Paragraph.
(ooo) "EXCESS AMOUNTS" shall have the meaning set forth in Section
8.2(a).
(ppp) "EXCESS CAPITAL EXPENDITURES" shall have the meaning set forth
in Section 1.4(b).
(qqq) "EXCESS THIRD PARTY EXPENSES" shall have the meaning set forth
in Section 5.7.
(rrr) "EXCHANGE ACT" shall mean the U.S. Securities Exchange Act of
1934, as amended, or any successor law, and the rules and regulations issued
pursuant thereto.
(sss) "FICA" shall have the meaning set forth in Section 2.10(c).
(ttt) "FINAL EARN-OUT AMOUNT" shall have the meaning set forth in
Section 1.4(d)(iv).
(uuu) "FINANCIALS" shall have the meaning set forth in Section 2.7.
(vvv) "FIRST ANNIVERSARY CONSIDERATION" shall have the meaning set
forth in Section 1.3(b).
(www) "FIRST ANNIVERSARY CONSIDERATION PERCENTAGE" shall mean that
First Anniversary Consideration Percentage referenced beside a Selling
Stockholder's name on Consideration Schedule B.
(xxx) "FIRST ANNIVERSARY SHARES" shall have the meaning set forth in
Section 5.17(a)(i).
(yyy) "FINAL EARN-OUT PERCENTAGE" shall mean that Earn-Out
Percentage referenced beside a Selling Stockholder's or Surrendering Optionee's
name on Consideration Schedules C through I.
(zzz) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended.
(aaaa) "FUTA" shall have the meaning set forth in Section 2.10(c).
(bbbb) "GAAP" shall mean United States generally accepted accounting
principles consistently applied.
(cccc) "GENERAL CAP AMOUNT" shall have the meaning set forth in
Section 8.5(b).
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(dddd) "GOVERNMENTAL ENTITY" shall have the meaning set forth in
Section 2.6.
(eeee) "HAZARDOUS MATERIAL" shall have the meaning set forth
in Section 2.19.
(ffff) "HIPAA" shall mean the Health Insurance Portability and
Accountability Act of 1996, as amended.
(gggg) "HOLDERS" shall have the meaning set forth in Section
5.17(b)(i).
(hhhh) "INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 8.2(b).
(iiii) "INDEMNIFYING STOCKHOLDERS" shall mean the Selling
Stockholders who currently own or at the Closing will own shares of Series A-1
Preferred Stock and/or Series A-2 Preferred Stock.
(jjjj) "INDEMNITY ESCROW FUND" shall have the meaning set forth in
Section 8.3(a).
(kkkk) "INDEMNITY PRO RATA PORTION" shall mean, with respect to each
Indemnifying Stockholder, an amount equal to the quotient obtained by dividing
(x) that amount of the Closing Consideration received by such Indemnifying
Stockholder by (y) the total amount of Closing Consideration received by all
Indemnifying Stockholders under this Agreement.
(llll) "INITIAL SERIES A-1 EXERCISE PRICE" shall mean, for
each Surrendering Series A-1 Optionee, the cash amount for the exercise of such
Surrendering Series A-1 Optionee's Surrendered Series A-1 Options reflected on
Consideration Schedule A.
(mmmm) "INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 2.13(a).
(nnnn) "INTELLECTUAL PROPERTY RIGHTS" shall have the meaning set
forth in Section 2.13(a).
(oooo) "INTERIM EARN-OUT AMOUNT" shall have the meaning set forth in
Section 1.4(d)(iii).
(pppp) "INTERIM FINANCIALS" shall have the meaning set forth in
Section 2.7.
(qqqq) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Company
Employee Plan that has been adopted or maintained by the Company or any ERISA
Affiliate, whether formally or informally or with respect to which the Company
or any ERISA Affiliate will or may have any liability with respect to Employees
who perform services outside the United States.
(rrrr) "INTERNET PROPERTIES" shall have the meaning set forth in
Section 2.13(a).
(ssss) "INVESTMENT BANKING FEE" shall mean an amount, which shall be
no less than zero, equal to the product of (i) the Earn-Out Amount minus
$22,468,000 multiplied by (ii) 2.75%.
(tttt) "IP" shall have the meaning set forth in Section 2.13(a).
-17-
(uuuu) "IP AGREEMENTS" shall have the meaning set forth in Section
2.13(a).
(vvvv) "IRS" shall mean the United States Internal Revenue Service.
(wwww) "KNOWLEDGE" shall mean (i) with respect to the Company, the
actual knowledge of the Company Officer Group, after reasonable inquiry, (ii)
with respect to Buyer, the actual knowledge of Xxxxx Xxxxxxx, Xxxx Xxxxxxx,
Xxxxxxx Xxxxx and Xxxxx Xxxxxxxx, after reasonable inquiry, and (iii) with
respect to any person that is an individual, the actual knowledge of such person
after reasonable inquiry, or with respect to any other person that is an entity,
the actual knowledge of the officers, directors, managers, trustees or other
managing personnel after reasonable inquiry.
(xxxx) "LEASE AGREEMENTS" shall have the meaning set forth in
Section 2.12(b).
(yyyy) "LEASED REAL PROPERTY" shall have the meaning set forth in
Section 2.12(a).
(zzzz) "LEGAL REQUIREMENT" shall mean any U.S., federal, state,
local, municipal, foreign, international, multinational, or other administrative
order, constitution, law, ordinance, principle of common law, regulation,
statute, or treaty.
(aaaaa) "LIEN" shall mean any lien, pledge, charge, claim, mortgage,
security interest, hypothec, prior claim, legal hypothec or other encumbrance of
any sort.
(bbbbb) "LOSS" or "LOSSES" shall have the meaning set forth in
Section 8.2(a).
(ccccc) "MASK WORKS" shall have the meaning set forth in Section
2.13(a).
(ddddd) "MATERIAL CONTRACT" shall have the meaning set forth in
Section 2.14.
(eeeee) "MCNC STOCKHOLDER REPRESENTATIVE" shall have the meaning set
forth in the Introductory Paragraph.
(fffff) "MCNC STOCKHOLDERS" shall mean those Selling Stockholders
set forth in Schedule 1.13(fffff).
(ggggg) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan" which is
a "multiemployer plan," as defined in Section 3(37) of ERISA.
(hhhhh) "NON-ONEX STOCKHOLDER REPRESENTATIVE COMMITTEE" shall have
the meaning set forth in the Introductory Paragraph.
(iiiii) "OFFICER'S CERTIFICATE" shall have the meaning set forth in
Section 8.3(d).
(jjjjj) "OFF-THE-SHELF LICENSES" shall have the meaning set forth in
Section 2.13(a).
(kkkkk) "ONEX STOCKHOLDERS" shall mean those Selling Stockholders
set forth in Schedule 1.13(kkkkk).
-18-
(lllll) "ONEX STOCKHOLDER REPRESENTATIVE" shall have the meaning set
forth in the Introductory Paragraph.
(mmmmm) "ONE YEAR ANNIVERSARY DATE" shall have the meaning set forth
in Section 1.3(b).
(nnnnn) "OPTION CONSIDERATION" shall have the meaning set forth in
Section 1.4(d)(i).
(ooooo) "OPTION TERMINATION AGREEMENT" shall have the meaning set
forth in Section 1.7.
(ppppp) "ORDER" shall mean any award, decision, injunction,
judgment, order, ruling, subpoena, or verdict against the Company or Buyer or
any Subsidiary of either entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Entity or by any arbitrator.
(qqqqq) "ORGANIZATIONAL DOCUMENTS" shall mean (a) the articles or
certificate of incorporation and the bylaws of a corporation; (b) any charter or
similar document adopted or filed in connection with the creation, formation, or
organization of a Person; and (c) any amendment to any of the foregoing.
(rrrrr) "PATENTS" shall have the meaning set forth in Section
2.13(a).
(sssss) "PBGC" shall mean the United States Pension Benefit Guaranty
Corporation.
(ttttt) "PENSION PLAN" shall mean each Company Employee Plan that is
an "employee pension benefit plan," within the meaning of Section 3(2) of ERISA.
(uuuuu) "PERSON" shall mean shall mean an individual, a corporation,
a partnership, an association, a trust or other entity or organization or a
government or any agency or political subdivision thereof, and any Subsidiary of
any Person.
(vvvvv) "PROCEEDING" shall mean any action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental Entity or
arbitrator.
(wwwww) "PTO" shall have the meaning set forth in Section 2.13(a).
(xxxxx) "R&D EXPENSES" shall have the meaning set forth in Section
1.4(a).
(yyyyy) "REGISTER," "REGISTERED" and "REGISTRATION" shall mean a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(zzzzz) "REGISTERED INTELLECTUAL PROPERTY RIGHTS" shall have the
meaning set forth in Section 2.13(a).
-19-
(aaaaaa) "REGISTRABLE SECURITIES" shall have the meaning set forth
in Section 5.17(b).
(bbbbbb) "REGISTRATION EXPENSES" means all expenses, except Selling
Expenses, incurred by Buyer in complying with Section 5.17 hereof, including
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for Buyer, the expense
of any special audits incident to or required by any such registration, and the
reasonable fees and disbursements (not to exceed $35,000) of one counsel for the
selling Holder or Holders selected by them by majority vote with the reasonable
approval of the Buyer.
(cccccc) "REGISTRATION STATEMENT" shall have the meaning set forth
in Section 5.17(b)(i)
(dddddd) "RELATED AGREEMENTS" shall mean the Employment Agreements,
the Regulation S Agreements, the Option Termination Agreements, the Investor
Questionnaires and the Offer Letter Agreements.
(eeeeee) "RELEASED CLAIMS" shall have the meaning set forth in
Section 1.9.
(ffffff) "RELEASED PARTIES" shall have the meaning set forth in
Section 1.9.
(gggggg) "RELEASORS" shall have the meaning set forth in Section
1.9.
(hhhhhh) "SEC" shall mean the United States Securities and Exchange
Commission.
(iiiiii) "SG&A EXPENSES" shall have the meaning set forth in Section
1.4(a).
(jjjjjj) "SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the
securities registered by the Holders.
(kkkkkk) "SELLING STOCKHOLDER" shall mean those holders of Company
Capital Stock listed on EXHIBIT A hereto along with the number
and class of shares held by each such holder.
(llllll) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(mmmmmm) "SERIES X-0/X-0 XXXX-XXX XXXXXX" shall have the meaning set
forth in Section 1.4(d)(iii).
(nnnnnn) "SERIES A-1/A-2 EARN-OUT PERCENTAGE" shall mean that Series
A-1/A-2 Earn-Out Percentage referenced beside a Selling Stockholder's or
Surrendering Series A-1 Optionee's name on Consideration Schedules C through I,
as applicable.
(oooooo) "SERIES A-1/A-2 EARN-OUT PREFERENCE" shall have the meaning
set forth in Section 1.4(d)(ii).
(pppppp) "SERIES A-1/A-2 REMAINING PREFERENCE AMOUNT" shall have the
meaning set forth in Section 1.4(d)(ii).
-20-
(qqqqqq) "SERIES A-1 OPTIONS" shall mean the Company Options
referenced in Section 2.2(b) of the Company Disclosure Schedule that are
exercisable for Series A-1 Preferred Stock of the Company.
(rrrrrr) "SERIES A-1 PREFERRED STOCK" shall mean the Series A-1
Preferred Stock of the Company, par value $0.01 per share.
(ssssss) "SERIES A-2 OPTIONS" shall mean the Company Options
referenced in Section 2.2(b) of the Company Disclosure Schedule that are
exercisable for Series A-2 Preferred Stock of the Company.
(tttttt) "SERIES A-2 PREFERRED STOCK" shall mean the Series A-2
Preferred Stock of the Company, par value $0.01 per share.
(uuuuuu) "SERIES A-3 EARN-OUT PERCENTAGE" shall mean that Series A-3
Earn-Out Percentage referenced beside a Selling Stockholder's or Surrendering
Series A-3 Optionee's name on Consideration Schedules C through I, as
applicable.
(vvvvvv) "SERIES A-3 PREFERENCE AMOUNT" shall have the meaning set
forth in Section 1.4(d)(iii).
(wwwwww) "SERIES A-3 PREFERRED STOCK" shall mean the Series A-3
Preferred Stock of the Company, par value $0.01 per share.
(xxxxxx) "SERIES A-3 WARRANTS" shall mean the Company Options
referenced in Section 2.2(b) of the Company Disclosure Schedule that are
exercisable for Series A-3 Preferred Stock of the Company.
(yyyyyy) "SOFTWARE" shall have the meaning set forth in Section
2.13(a).
(zzzzzz) "SOX" shall mean the Xxxxxxxx-Xxxxx Act of 2002, as
amended.
(aaaaaaa) "STOCKHOLDER INDEMNIFIED PARTIES" shall have the meaning
set forth in Section 8.2(b).
(bbbbbbb) "STOCKHOLDER REPRESENTATIVE" shall mean, individually, the
Onex Stockholder Representative or the Non-Onex Stockholder Representative
Committee, and collectively, both the Onex Stockholder Representative and the
Non-Onex Stockholder Representative Committee.
(ccccccc) "STOCKHOLDER REPRESENTATIVE ACTIONS" shall have the
meaning set forth in Section 8.4(c).
(ddddddd) "STOCKHOLDER REPRESENTATIVE EXPENSES" shall have the
meaning set forth in Section 8.4(d).
(eeeeeee) "SUBSIDIARY" shall have the meaning set forth in Section
2.3.
-21-
(fffffff) "SURRENDERING OPTIONEES" shall have the meaning set forth
in the Introductory Paragraph.
(ggggggg) "SURRENDERING SERIES A-1 OPTIONEE" shall mean a
Surrendering Optionee holding Surrendered Series A-1 Options.
(hhhhhhh) "SURRENDERED SERIES A-1 OPTIONS" shall mean those Series
A-1 Options referenced as surrendered on any applicable Consideration Schedule.
(iiiiiii) "SURRENDERING SERIES A-3 OPTIONEE" shall mean a
Surrendering Optionee holding Surrendered Series A-3 Options.
(jjjjjjj) "SURRENDERED SERIES A-3 OPTIONS" shall mean those Series
A-3 Options referenced as surrendered on any applicable Consideration Schedule.
(kkkkkkk) "SURVIVAL DATE" has the meaning set forth in Section 8.1.
(lllllll) "SUSPENSION" shall have the meaning set forth in Section
5.17(b)(i).
(mmmmmmm) "SUSPENSION NOTICE" shall have the meaning set forth in
Section 5.17(d).
(nnnnnnn) "TAT STOCKHOLDER REPRESENTATIVE" shall have the meaning
set forth in the Introductory Paragraph.
(ooooooo) "TAT STOCKHOLDERS" shall mean those Selling Stockholders
set forth in Schedule 1.13(ooooooo).
(ppppppp) "TAXES" shall have the meaning set forth in Section
2.10(a).
(qqqqqqq) "TAX RETURNS" shall have the meaning set forth in Section
2.10(b).
(rrrrrrr) "THIRD PARTY EXPENSES" shall have the meaning set forth in
Section 5.7.
(sssssss) "THRESHOLD AMOUNT" shall have the meaning set forth in
Section 8.5(a).
(ttttttt) "TOTAL TRANSACTION VALUE" shall have the meaning set forth
in Section 1.4(d).
(uuuuuuu) "TRADEMARKS" shall have the meaning set forth in Section
2.13(a).
(vvvvvvv) "TRAILING EBITDA" shall have the meaning set forth in
Section 1.4(a).
(wwwwwww) "U.S." shall mean the United States of America.
(xxxxxxx) "VIOLATION" shall have the meaning set forth in Section
5.17(i)(i).
(yyyyyyy) "YEAR END FINANCIALS" shall have the meaning set forth in
Section 2.7.
-22-
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Buyer, subject to such
exceptions as are specifically disclosed in the Company Disclosure Schedule (the
"COMPANY DISCLOSURE SCHEDULE") concurrently herewith and dated as of the date
hereof, as follows (references to "Company" in this ARTICLE II shall refer,
wherever not inappropriate by reference to the context, to the Company and its
Subsidiaries). The Company Disclosure Schedule shall be arranged in separate
parts corresponding to the numbered and lettered sections contained in this
Article II. Any matter or item disclosed pursuant to any Section of the Company
Disclosure Schedule shall be deemed to be disclosed only for purposes of
disclosure under that Section; provided, that any matter or item disclosed in
one Section of the Company Disclosure Schedule will be deemed disclosed with
respect to another Section of the Company Disclosure Schedule if such disclosure
is made in such a way as to make its relevance with respect to such other
Section readily apparent:
2.1 ORGANIZATION OF THE COMPANY. The Company and each of its Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The Company and each of its
Subsidiaries has the corporate power to own its properties and to carry on its
business as currently conducted.
The Company and each of its Subsidiaries has the corporate or other
statutory power to own its properties and to carry on its business as now being
conducted and is duly qualified or licensed to do business and in good standing
as a foreign corporation in each jurisdiction in which such qualifications are
necessary or where the failure to be so qualified would have a Company Material
Adverse Effect.
The Company has delivered a true and correct copy of its Organizational
Documents, each as amended to date and in full force and effect on the date
hereof, to Buyer. Each of the Company's Subsidiaries has delivered a true and
correct copy of its Organizational Documents, each as amended to date and in
full force and effect on the date hereof, to Buyer. Section 2.1 of the Company
Disclosure Schedule lists the current directors and officers of the Company and
each of its Subsidiaries. Section 2.1 of the Company Disclosure Schedule also
lists every state or foreign jurisdiction in which the Company has employees or
facilities. The operations now being conducted by the Company and each of its
Subsidiaries are not now and have never been conducted by the Company or any of
its Subsidiaries under any name other than the names set forth on Section 2.1 of
the Company Disclosure Schedule.
2.2 COMPANY CAPITAL STRUCTURE.
(a) The authorized capital stock of the Company consists of
333,610,201 shares, consisting of 250,000,000 shares of Common Stock, 60,755,161
shares of which are issued and outstanding, and 83,610,201 shares of Preferred
Stock, (i) 37,408,837 shares of which are designated Series A-1 Preferred Stock,
24,874,830 shares of which are issued and outstanding, (ii) 20,601,163 shares of
which are designated Series A-2 Preferred Stock, 8,101,163 shares of which are
issued and
-23-
outstanding and (iii) 25,600,201 shares of which are designated Series A-3
Preferred Stock, none of which are issued and outstanding. As of the date
hereof, each share of Series A-1 Preferred Stock is convertible into one share
of Company Common Stock; each share of Series A-2 Preferred Stock is convertible
into one share of Company Common Stock; and each share of Series A-3 Preferred
Stock is convertible into one share of Company Common Stock. All outstanding
shares of Company Capital Stock are held as of the date of this Agreement by the
persons with the domicile addresses and in the classes and amounts set forth in
Section 2.2(a) of the Company Disclosure Schedule. The Company has no other
capital stock authorized, issued or outstanding. The Company shall notify Buyer
in writing promptly upon becoming aware of any changes arising after the date
hereof in the identity of the holders of Company Capital Stock, the number and
class or series of shares of Company Capital Stock held by any such holder, and
the number of shares of Company Common Stock into which the Preferred Stock is
convertible. All outstanding shares of Company Capital Stock are duly
authorized, validly issued, fully paid and non-assessable and, except as set
forth in Section 2.2(a) of the Company Disclosure Schedule, are not subject to
preemptive rights created by statute, the Company Organizational Documents, or
any agreement to which the Company is a party or by which it is bound, and have
been issued in compliance with applicable federal, state and foreign securities
laws. The Company has not repurchased any shares of Company Capital Stock except
in compliance with all applicable federal, state, foreign, or local statues,
laws, rules, or regulations, including federal, state and foreign securities
laws. The Company is not subject to any obligation and will not suffer or incur
any liability (contingent or otherwise) or Loss relating to or arising out of
the issuance or repurchase of any shares of Company Capital Stock or Company
Options, or out of any agreements or arrangements relating thereto. Except as
set forth in Section 2.2(a) of the Company Disclosure Schedule, there are no
declared or accrued but unpaid dividends with respect to any shares of Company
Capital Stock. Except as set forth in Section 2.2(a) of the Company Disclosure
Schedule or as contemplated by the terms of this Agreement, no vesting
provisions applicable to any Company Options, or to any other rights to purchase
Company Capital Stock will accelerate as a result of the transactions
contemplated by this Agreement. The Consideration Schedule to be delivered by
the Company to Buyer shall be true, complete and accurate in all respects.
(b) Except for the Company Plans, neither the Company nor any of its
Subsidiaries has ever adopted, sponsored or maintained any stock option plan or
any other plan or agreement providing for equity compensation to any person.
(i) No Shares remain reserved for issuance under the Unitive
Electronics, Inc. 1998 Stock Plan, and 159,192 shares are issuable, as of the
date hereof, upon the exercise of outstanding, unexercised options granted under
such plan. No Shares remain reserved for issuance under the Unitive
International, N.V. 1999 Stock Plan, and 53,911 shares are issuable, as of the
date hereof, upon the exercise of outstanding, unexercised options granted under
such plan. The Company has reserved 4,028,839 shares of Company Common Stock for
issuance to employees and directors of, and consultants to, the Company upon the
exercise of options granted under the Company's 2001 Stock Plan, 1,194,527
shares of which are issuable, as of the date hereof, upon the exercise of
outstanding, unexercised options granted under such plan. The Company has
terminated the 2002 Series B Preferred Stock Purchase Plan, no options remain
outstanding thereunder and the Company has no further liabilities with respect
to such terminated options. The Company has reserved 8,000,000 shares of Company
Preferred Stock for issuance to employees and directors of, and consultants to,
the Company
-24-
on exercise of options granted under the Company's 2004 Equity Incentive Plan,
all of which are issuable, as of the date hereof, upon the exercise of
outstanding, unexercised options granted under such plan. The Company has
reserved 4,500,000 shares of Company Common Stock for issuance to employees and
directors of, and consultants to, the Company upon the exercise of options
granted under the Company's 2004 Equity Incentive Plan, all of which are
issuable, as of the date hereof, upon the exercise of outstanding, unexercised
options granted under such plan.
(ii) With respect to each Company Option and each arrangement
or understanding to which the Company is a party to issue any Company Option,
Section 2.2(b) of the Company Disclosure Schedule sets forth the holder thereof,
the domicile address of such holder, the number and type of securities issuable
thereunder, and, if applicable, the exercise price therefor, the exercise
period, the vesting schedule thereof (including the extent vested as of the date
hereof and a description of the circumstances under which such vesting schedule
can or will be accelerated), and whether such option is a nonstatutory option or
intended to qualify as an incentive stock option as defined in Section 422 of
the Code. With respect to Company Restricted Stock, Section 2.2(b) of the
Company Disclosure Schedule sets forth the holder thereof, the domicile address
of such holder, the original purchase price thereof (if applicable), the vesting
schedule thereof (including the extent vested as of the date hereof and a
description of the circumstances under which such vesting schedule can or will
be accelerated), and, to the Knowledge of the Company, whether an election under
Section 83(b) of the Code has been timely and properly filed with the IRS. As of
the date hereof, an aggregate of 6,592,680 shares of Company Common Stock are
issuable upon the exercise of outstanding Company Options. The form(s) of
agreement pursuant to which such Company Options have been issued have been
provided to Buyer. Except for the Company Options and as set forth in Section
2.2(b) of the Company Disclosure Schedule, there are no options, warrants,
calls, rights, convertible securities, commitments or agreements of any
character to which the Company is a party or by which the Company is bound
obligating the Company to issue, deliver, sell, repurchase or redeem, or cause
to be issued, delivered, sold, repurchased or redeemed, any shares of the
capital stock of the Company or obligating the Company to grant, extend,
accelerate the vesting of, change the price of, otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. Except as
disclosed in Section 2.2(b) of the Company Disclosure Schedule, there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or other similar rights with respect to the Company or any of its
Subsidiaries. Except as contemplated pursuant to this Agreement and as set forth
in Section 2.2(b) of the Company Disclosure Schedule, there are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting stock of the Company or any of its Subsidiaries to which the Company is a
party or by which the Company is bound or of which the Company has Knowledge.
Except as set forth on Section 2.2(b) of the Company Disclosure Schedule, there
are no agreements to which the Company or any of its Subsidiaries is a party
relating to the registration, sale or transfer (including agreements relating to
rights of first refusal, co-sale rights or "drag-along" rights) of any Company
Capital Stock. All Company Options have been issued in compliance with all
applicable federal, state and foreign securities laws. The Company has not
issued shares of Company Capital Stock directly from any Company Plan (except
for shares of Company Capital Stock issued upon exercise of Company Options);
only Company Options have been issued directly from Company Plans. Each Company
Option listed on Schedule 1.7 hereto will, according to its terms, terminate or
expire upon the
-25-
merger, after the Closing, of the Company with and into another corporation (or
the merger of another corporation with and into the Company), even if such other
corporation is an Affiliate of Buyer.
2.3 SUBSIDIARIES. Section 2.3 of the Company Disclosure Schedule lists
any other corporation, limited liability company, partnership, association,
joint venture or other business entity in which the Company owns any shares of
capital stock or any equity interest in, or control, directly or indirectly (any
of such entities for any Person, excluding Unitive Semiconductor Taiwan
Corporation, a "SUBSIDIARY"), including the Company's percentage interest
therein. All of the shares of capital stock or other equity interests of each
Subsidiary of the Company are owned of record and beneficially by the Company or
its Subsidiaries. All outstanding shares of stock of each Subsidiary of the
Company are duly authorized, validly issued, fully paid and non-assessable and,
except as set forth in Section 2.3 of the Company Disclosure Schedule, not
subject to preemptive rights created by statute, the Organizational Documents or
bylaws of such Subsidiary, or any agreement to which the Subsidiary is a party
or by which it is bound, and have been issued in compliance with federal and
state securities laws.
2.4 AUTHORITY. The Company has all requisite power and authority to enter
into this Agreement and any Related Agreements to which it is a party and to
consummate the Contemplated Transactions. The execution and delivery of this
Agreement and any Related Agreements to which the Company is a party and the
consummation of the Contemplated Transactions have been duly authorized by all
necessary corporate action on the part of the Company and no further action is
required on the part of the Company to authorize this Agreement and any Related
Agreements to which it is a party and the Contemplated Transactions. This
Agreement and the Contemplated Transactions have been approved by the Board of
Directors of the Company. This Agreement and each of the Related Agreements to
which the Company is a party have been duly executed and delivered by the
Company and assuming the due authorization, execution and delivery by the other
parties hereto and thereto, constitute the valid and binding obligations of the
Company enforceable against it in accordance with their respective terms, except
as may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, (ii) laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent any indemnification provisions may be limited by applicable U.S. federal
or state securities laws.
2.5 NO CONFLICT. Except as set forth on Section 2.5 of the Company
Disclosure Schedule, the execution and delivery by the Company of this Agreement
and any Related Agreement to which the Company is a party, and the consummation
of the Contemplated Transactions, will not conflict with or result in any
violation of or default under (with or without notice or lapse of time, or both)
or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or loss of any benefit under (any such event, a
"CONFLICT") (i) any provision of the Company's or any Subsidiary's
Organizational Documents, (ii) any Material Contract, or (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any of its Subsidiaries or any of their respective properties
(whether tangible or intangible) or assets. The Company and each of its
Subsidiaries are in compliance in all material respects with and have not
materially breached, violated or defaulted under, or received notice that they
have materially breached, violated or defaulted under, any of the terms or
conditions of any Material Contract (with materiality being measured
individually and on an aggregate basis taking into account all breaches,
violations and defaults under all Material Contracts)
-26-
nor does the Company have Knowledge of any event that would constitute such a
breach, violation or default with the lapse of time, giving of notice or both.
Each Material Contract is in full force and effect, and neither the Company nor
any of its Subsidiaries is subject to any default thereunder, nor to the
Knowledge of the Company, except as set forth in Section 2.5 of the Company
Disclosure Schedule, is any party obligated to the Company or any of its
Subsidiaries pursuant to any such Material Contract subject to any default
thereunder. Section 2.5 of the Company Disclosure Schedule sets forth all
necessary consents, waivers and approvals of parties to any Material Contracts
as are required thereunder in connection with the Acquisition, or for any such
Material Contract to remain in full force and effect without limitation,
modification or alteration after the Effective Time. Except as set forth in
Section 2.5 of the Company Disclosure Schedule, the Acquisition will not trigger
the payment of any additional amounts or consideration by the Company or any of
its Subsidiaries under any Material Contract other than ongoing fees, royalties
or payments which the Company or any of its Subsidiaries, as the case may be,
would otherwise be required to pay pursuant to the terms of such Material
Contracts had the Acquisition not occurred, and will not cause the Company or
any Subsidiary to be prohibited from exercising any of their rights under any
Material Contract as of the Closing Date.
2.6 GOVERNMENTAL CONSENTS. Except as set forth in Section 2.6 of the
Company Disclosure Schedule, no consent, notice, waiver, approval, order or
authorization of, or registration, declaration or filing with any court,
administrative agency or commission or other federal, state, county, local or
other foreign governmental authority, instrumentality, agency or commission
(each, a "GOVERNMENTAL ENTITY"), is required by, or with respect to, the Company
in connection with the execution and delivery of this Agreement and any Related
Agreement to which the Company is a party or the consummation of the
Contemplated Transactions, except for such consents, notices, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable securities laws.
2.7 COMPANY FINANCIAL STATEMENTS. Section 2.7 of the Company Disclosure
Schedule sets forth the Company's (i) audited consolidated balance sheet as of
December 31, 2003 and the related consolidated statements of income, cash flow
and stockholders' equity for the twelve (12) month period then ended (the
"YEAR-END FINANCIALS"), and (ii) unaudited consolidated balance sheet as of May
31, 2004 (the "BALANCE SHEET DATE"), and the related unaudited consolidated
statement of income, cash flow and stockholders' equity for the five (5) months
then ended (the "INTERIM FINANCIALS"). The Year-End Financials and the Interim
Financials (collectively referred as the "FINANCIALS") are true and correct in
all material respects and have been prepared in accordance with GAAP throughout
the periods indicated and consistent with each other (except that the Interim
Financials do not contain notes and other presentation items that may be
required by GAAP). The Financials present fairly the Company's consolidated
financial condition, operating results and cash flows as of the dates and during
the periods indicated therein. The Company's unaudited consolidated balance
sheet as of the Balance Sheet Date is referred to hereinafter as the "CURRENT
BALANCE SHEET."
2.8 NO UNDISCLOSED LIABILITIES.
(a) Except as set forth in Section 2.8(a) of the Company
Disclosure Schedule, the Company has no liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement
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of any type, whether accrued, absolute, contingent, matured, unmatured, known,
unknown or other (whether or not required to be reflected in financial
statements in accordance with GAAP), except for liabilities, indebtedness,
obligations, expenses, claims, deficiencies, guaranties or endorsements (i) that
are reflected in the Current Balance Sheet, and (ii) that have arisen in the
ordinary course of business consistent with past practices since the Balance
Sheet Date.
(b) Except as set forth on Section 2.8(b) of the Company
Disclosure Schedule, the Company has no liability, indebtedness, or obligation
to any employee, director or consultant, other than expenses or reimbursements
that arise in the ordinary course of business, and severance payments expressly
set forth in, and provided for by, employment agreements disclosed in Section
2.14 of the Company Disclosure Schedule, which individually or in the aggregate
(i) has not been reflected or reserved against in the Current Balance Sheet, or
(ii) has not arisen in the ordinary course of business consistent with past
practices since the Balance Sheet Date.
2.9 NO CHANGES. Except as contemplated by this Agreement or as set forth
in Section 2.9 of the Company Disclosure Schedule, since the Balance Sheet Date,
there has not been, occurred or arisen any:
(a) transaction by the Company with payments to be made by or to
the Company in excess of $25,000 individually or $50,000 in the aggregate except
in the ordinary course of business as conducted on that date and consistent with
past practices;
(b) amendments or changes to the certificate of incorporation or
bylaws of the Company or the Organizational Documents of any of its
Subsidiaries;
(c) capital expenditure or commitment by the Company exceeding
$25,000 individually or $100,000 in the aggregate;
(d) destruction of, material damage to, or material loss of any
material assets (whether tangible or intangible), or material business of the
Company (whether or not covered by insurance), and the Company has not received
written notice (and the Company Officer Group has not received oral notice) from
any material customer that it will stop or materially decrease its business with
the Company;
(e) employment dispute, including but not limited to, claims or
matters raised by any individuals or any workers' representative organization,
bargaining unit or union regarding labor trouble or claim of wrongful discharge
or other unlawful employment or labor practice or action with respect to the
Company;
(f) change in accounting methods or practices by the Company other
than as required by GAAP;
(g) change in any material election in respect of Taxes (as
defined below), adoption or change in any accounting method in respect of Taxes,
agreement or settlement of any claim or assessment in respect of Taxes, or
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;
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(h) revaluation by the Company of any of its assets (whether
tangible or intangible), including without limitation, writing down the value of
inventory or writing off notes receivable;
(i) increase in the salary or other compensation payable or to
become payable by the Company to any of its officers, directors, employees,
consultants or advisors, or the declaration, payment or commitment or obligation
of any kind for the payment (whether in cash or equity) by the Company of a
severance payment, termination payment, bonus or other additional salary or
compensation to any such person, other than in the ordinary course of business;
(j) adoption or amendment to any Company Employee Plan, except as
required by applicable law;
(k) loan by the Company to any person or entity, or purchase by
the Company of any debt securities of any person or entity;
(l) payment, discharge, waiver or satisfaction by the Company, in
an amount in excess of $25,000 in any one case, or $50,000 in the aggregate, of
any claim, liability, right or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business;
(m) declaration, setting aside or payment of a dividend or other
distribution (whether in cash, stock or property) in respect of any Company
Capital Stock, or any split, combination or reclassification in respect of any
shares of Company Capital Stock, or any issuance or authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Company Capital Stock, or any direct or indirect repurchase,
redemption, or other acquisition by the Company of any shares of Company Capital
Stock (or options, warrants or other rights convertible into, exercisable or
exchangeable therefor), except in accordance with the agreements evidencing
Company Options;
(n) waiver or release by the Company of any right or claim of the
Company or Subsidiary, including any write-off or other compromise of any
account receivable of the Company or Subsidiary in excess of any established
reserves for accounts receivable in the Current Balance Sheet;
(o) expenditure of cash other than in the ordinary course of
business;
(p) incurrence by the Company of any indebtedness, amendment of
the terms of any outstanding loan agreement, guaranteeing by the Company of any
indebtedness, issuance or sale of any debt securities of the Company or
guaranteeing of any debt securities of others, except for advances to employees
for travel and business expenses in the ordinary course of business consistent
with past practices;
(q) (i) sale or license of any Company Intellectual Property or
execution, modification or amendment of any agreement with respect to the
Company Intellectual Property with any person or entity or with respect to the
Intellectual Property of any person or entity other than the granting of object
code licenses in conjunction with the sale of the Company's products in the
ordinary course of the Company's business and consistent with past practice, or
(ii) purchase or license of any
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Intellectual Property or execution, modification or amendment of any agreement
with respect to the Intellectual Property of any person or entity, except in the
ordinary course of business, (iii) agreement or modification or amendment of an
existing agreement with respect to the development of any Intellectual Property
with a third party, or (iv) material change in royalties set or charged by the
Company to its customers or licensees or in royalties set or charged by persons
who have licensed Intellectual Property to the Company;
(r) receipt by the Company of written notice (or receipt of oral
notice by the Company Officer Group) of any claim or potential claim of
ownership, interest or right by any person other than the Company or any of its
Subsidiaries of the Company Intellectual Property owned by or developed or
created by the Company or any of its Subsidiaries or of infringement by the
Company or any of its Subsidiaries of any other person's Intellectual Property;
(s) agreement or modification to any agreement pursuant to which
any other party was granted marketing, distribution, development, manufacturing
or similar rights of any type or scope with respect to any products or
technology of the Company;
(t) event or condition of any character that has had or is
reasonably likely to have a Company Material Adverse Effect;
(u) lease, license, sublease or other occupancy of any Leased Real
Property by the Company; or
(v) agreement by the Company, or any officer or employees on
behalf of the Company , to do any of the things described in the preceding
clauses (a) through (u) of this Section 2.9 (other than negotiations with the
Buyer and its representatives regarding the Contemplated Transactions).
2.10 TAX MATTERS.
(a) DEFINITION OF TAXES. For the purposes of this Agreement, the
term "TAX" or, collectively, "TAXES" shall mean (i) any and all federal, state,
local and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes as well as public imposts, fees and social security
charges (including but not limited to health, unemployment and pension
insurance), together with all interest, penalties and additions imposed with
respect to such amounts, (ii) any liability for the payment of any amounts of
the type described in clause (i) of this Section 2.10(a) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any period,
and (iii) any liability for the payment of any amounts of the type described in
clauses (i) or (ii) of this Section 2.10(a) as a result of any express or
implied obligation to indemnify any other person or as a result of any
obligation under any agreement or arrangement with any other person with respect
to such amounts and including any liability for taxes of a predecessor entity.
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(b) TAX RETURNS AND AUDITS.
(i) The Company and each of its Subsidiaries have timely filed
or will timely file with the appropriate taxing authorities all income and other
tax returns, statements, forms and reports (including elections, declarations,
disclosures, schedules, estimates and information tax returns) relating to Taxes
(collectively, "TAX RETURNS") that are required to be filed by, or with respect
to, the Company and its Subsidiaries on or prior to the Closing Date. The Tax
Returns have accurately reflected and will accurately reflect all liability for
Taxes of Company and its Subsidiaries for the periods covered thereby.
(ii) All Taxes and tax liabilities, whether or not shown on
such Tax Returns as due and payable, by or with respect to the income, assets or
operations of Company and its Subsidiaries for all taxable years or other
taxable periods that end on or before the Closing Date, and, with respect to any
taxable year or other taxable period beginning on or before and ending after the
Closing Date, the portion of such taxable year or period ending on and including
the Closing Date, excluding, for purposes of this paragraph, however, any taxes
and tax liabilities arising from the Buyer's election under Section 338(g) of
the Code pursuant to Section 5.13 hereof (collectively, "338 ELECTION TAX
LIABILITIES")(provided that such exclusion shall not limit the indemnification
rights of the Buyer Indemnified Parties hereunder for any breach of any other
representation or warranty of the Company contained herein), have been timely
paid or will be timely paid in full on or prior to the Closing Date, or, with
respect to taxable periods (or portions thereof) beginning after December 31,
2003, (A) to the extent due and payable on or prior to the Closing Date, have
been timely paid in full, and (B) to the extent not due and payable prior to the
Closing Date, have been accrued and fully provided for on the books and records
of Company and its Subsidiaries as of the Closing Date in accordance with GAAP.
(c) OTHER TAX MATTERS.
(i) As of the Closing Date, the Company and each of its
Subsidiaries will have withheld with respect to its Employees and other third
parties, all federal, state and foreign income taxes and social security charges
and similar fees, Federal Insurance Contribution Act ("FICA"), Federal
Unemployment Tax Act ("FUTA") and other Taxes required to be withheld, and will
have timely paid all such Taxes over to the appropriate authorities.
(ii) There is no Tax deficiency outstanding, assessed or
proposed against the Company or any of its Subsidiaries, nor has the Company or
any of its Subsidiaries executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
(iii)No audit or other examination of any Tax Return of the
Company or any of its Subsidiaries is presently in progress, nor has the Company
or any of its Subsidiaries been notified in writing (nor has any member of the
Company Officer Group been notified orally) of any request for such an audit or
other examination.
(iv) Other than the 338 Election Tax Liabilities, neither the
Company nor any of its Subsidiaries has any liabilities for unpaid Taxes which
have not been accrued or reserved on the Current Balance Sheet, whether asserted
or unasserted, contingent or otherwise, and, other than the 338
-31-
Election Tax Liabilities, neither the Company nor any of its Subsidiaries has
incurred any liability for Taxes since the date of the Current Balance Sheet
other than in the ordinary course of business.
(v) The Company has provided to Buyer or its legal counsel,
copies of federal and state income Tax Returns for the year 2002 and 2001 and
its payroll and local property Tax Returns for the years 2002, 2003 and 2004.
(vi) There are (and immediately following the Effective Time
there will be) no Liens on the assets of the Company or any of its Subsidiaries
relating to or attributable to Taxes other than Liens for Taxes not yet due and
payable.
(vii) The Company has no Knowledge of any basis for the
assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of the Company or any of its
Subsidiaries, other than any Liens for Taxes not yet due and payable and other
than the 338 Election Tax Liabilities.
(viii) None of the Company's or any of its Subsidiaries'
assets is treated as "tax-exempt use property," within the meaning of Section
168(h) of the Code.
(ix) Neither the Company nor any of its Subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to
have Section 341(f)(4) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by the Company or any
of its Subsidiaries.
(x) Except as set forth in Section 2.10(c) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has (a)
ever been a member of an affiliated group (within the meaning of Code
Section 1504(a)) filing a consolidated federal income Tax Return (other than a
group the common buyer of which was Company), (b) ever been a party to any Tax
sharing, indemnification or allocation agreement, (c) any liability for the
Taxes of any person (other than Company or any of its subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract or agreement, or
otherwise and (d) ever been a party to any joint venture, partnership or other
arrangement that could be treated as a partnership for Tax purposes.
(xi) The Company's and each of its Subsidiaries' tax basis in
their respective assets for purposes of determining its future amortization,
depreciation and other income Tax deductions is accurately reflected on the
Company's and its Subsidiaries' tax books and records.
(xii) The information and data the Company has provided to
Ernst & Young, LLP ("E&Y") and Buyer used by E&Y in connection with its
preparation of the "Ownership Change Analysis" provided to Buyer and its
advisors for the purpose of determining the extent to which use of any net
operating losses, net operating loss carryovers, tax credits or credit
carryovers, for federal and each applicable state income tax purposes, may be
subject to limitation under Sections 382, 383 or 384 of the Code, is true and
accurate; provided, that, the Company makes no representations regarding the
stock valuation information provided to E&Y for use in the "Ownership Change
Analysis."
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(xiii) Neither the Company nor any of its Subsidiaries has
been, at any time, a "United States Real Property Holding Corporation" within
the meaning of Section 897(c)(2) of the Code.
(xiv) Except as set forth on Section 2.10(c) of the Company
Disclosure Schedule, no adjustment relating to any Tax Return filed by the
Company or any of its Subsidiaries has been proposed formally or, to the
Knowledge of the Company, informally by any tax authority to the Company or any
of its Subsidiaries or any representative thereof.
(xv) Neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock intended to qualify for tax-free treatment under Section
355 of the Code (x) in the two (2) years prior to the date of this Agreement or
(y) in a distribution that could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with the Acquisition.
(xvi) No written claim has ever been made by any taxing
authority to the Company or its Subsidiaries in a jurisdiction where Company or
any of its Subsidiaries does not file Tax Returns that Company or any of its
Subsidiaries is or may be subject to taxation by that jurisdiction, other than
any such claim that has been resolved without the imposition of a material
liability on Company or any of its Subsidiaries.
(xvii) The Company and each of its Subsidiaries have complied
in all respects with the requirements of and conditions stipulated by any taxing
authority with respect to any tax holiday or other tax relief granted to the
Company or any of its Subsidiaries, and no taxing authority has threatened in
writing or proposed in writing (or has threatened orally or proposed orally to
the Company Officer Group) to revoke, eliminate, reduce or fail to renew such
tax holiday or other tax relief.
(xviii) None of Company or any of its Subsidiaries has applied
for, been granted, or agreed to any accounting method change for which it will
be required to take into account any adjustment under Section 481 of the Code or
any similar provision of the Code or the corresponding tax laws of any nation,
state or locality.
(d) EXECUTIVE COMPENSATION TAX. Except as set forth in Section
2.21(j) of the Company Disclosure Schedule, there is no contract, agreement,
plan or arrangement to which the Company or any of its Subsidiaries is a party,
including, without limitation, the provisions of this Agreement, covering any
Employee of the Company or any of its Subsidiaries, which, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
2.11 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in Section
2.11 of the Company Disclosure Schedule, there is no agreement (non-competition
or otherwise), commitment, judgment, injunction, order or decree to which the
Company is a party or, to the Knowledge of the Company, otherwise binding upon
the Company which has or would reasonably be expected to have the effect of
prohibiting or impairing any business practice of the Company, any acquisition
of property (tangible or intangible) by the Company, the conduct of business by
the Company, or otherwise limiting the freedom
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of the Company to engage in any line of business or to compete with any Person.
Without limiting the generality of the foregoing, except as set forth on Section
2.11 of the Company Disclosure Schedule, the Company has not entered into any
agreement under which the Company is restricted from selling, licensing,
manufacturing or otherwise distributing any of its technology or products or
from providing services to customers or potential customers or any class of
customers, in any geographic area, during any period of time, or in any segment
of the market.
2.12 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES; CONDITION OF
EQUIPMENT; CUSTOMER INFORMATION.
(a) The Company owns no real property, nor has the Company ever
owned any real property. Section 2.12(a) of the Company Disclosure Schedule sets
forth a list of all real property currently leased, subleased or licensed by or
from the Company or otherwise used or occupied by the Company for the operation
of its business (the "LEASED REAL PROPERTY"), the name of the lessor, licensor,
sublessor, master lessor and/or lessee, the date and term of the lease, license,
sublease or other occupancy right and each amendment thereto and the aggregate
annual rental payable thereunder.
(b) Section 2.12(b) of the Company Disclosure Schedule sets forth
a true, correct and complete list of all leases, lease guaranties, subleases,
agreements for the leasing, use or occupancy of, or otherwise granting a right
in or relating to the Leased Real Property, including all amendments,
terminations and modifications thereof ("LEASE AGREEMENTS"). All such Lease
Agreements are valid and effective with respect to the Company in accordance
with their respective terms, and there is not, under any of such leases, any
existing default (or event which with notice or lapse of time, or both, would
constitute a default) by the Company, or to the Knowledge of the Company, by the
other contracting party, and no rentals are past due.
(c) Except as set forth on Section 2.12(c) of the Company
Disclosure Schedule, the Leased Real Property is in good operating condition and
repair, free from material structural, physical and mechanical defects and is
structurally sufficient and otherwise suitable for the conduct of the business
as presently conducted. Neither the operation of the Company on the Leased Real
Property nor such Leased Real Property, including the improvements thereon,
violate in any material respect any applicable building code, zoning requirement
or statute relating to such property or operations thereon, and any such
non-violation is not dependent on so-called non-conforming use exceptions.
(d) Except as set forth in Section 2.12(d) of the Company
Disclosure Schedule, the Company has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal, immovable, movable and mixed, used or
held for use in its business, free and clear of any Liens, except (i) as
reflected in the Current Balance Sheet, (ii) Liens for Taxes not yet due and
payable, and (iii) such imperfections of title and encumbrances, if any, which
do not materially detract from the value or interfere with the present use of
the property subject thereto or affected thereby.
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2.13 INTELLECTUAL PROPERTY.
(a) DEFINITIONS. For all purposes of this Agreement, the following
terms shall have the following respective meanings:
"INTELLECTUAL PROPERTY" shall mean any or all of the
following: (i) works of authorship, including without limitation, computer
programs, algorithms, routines, source code and executable code, whether
embodied in firmware, software or otherwise, documentation, designs, files,
records and data ("SOFTWARE"); (ii) inventions (whether or not patentable),
improvements, and technology; (iii) proprietary and confidential information,
including technical data, customer and supplier lists and data, trade secrets,
show-how, know-how and techniques; (iv) databases, data compilations and
collections and technical data; (v) tools, methods, processes, devices,
prototypes, schematics, bread boards, net lists, mask works, test methodologies
and hardware and Software development tools; (vi) World Wide Web addresses
("WWW"), uniform resource locators and domain names; (vii) Company Services; and
(viii) all instantiations of the foregoing in any form and embodied in any
media.
"INTELLECTUAL PROPERTY RIGHTS" shall mean any or all of the
following and all rights in, arising out of, or associated therewith: (i) all
United States and foreign patents and utility models and applications therefor,
and all reissues, divisions, re-examinations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries, including
without limitation, invention disclosures ("PATENTS"); (ii) all trade secrets
and other rights in privacy, data, know-how and confidential or proprietary
information; (iii) all copyrights, copyrights registrations and applications
therefor and all other rights corresponding thereto throughout the world
("COPYRIGHTS"); (iv) all industrial designs and any registrations and
applications therefor throughout the world; (v) all rights in WWW addresses,
uniform resource locators and domain names and applications and registrations
therefor ("INTERNET PROPERTIES"); (vi) all rights in all trade names, logos,
common law trademarks and service marks, trademark and service xxxx
registrations and applications therefor ("TRADEMARKS"); all mask works, mask
work registrations and applications therefor, and any equivalent or similar
rights in semiconductor masks, layouts, architectures or topology ("MASK
WORKS"); and (viii) any similar, corresponding or equivalent rights to any of
the foregoing anywhere in the world.
"IP" means Intellectual Property and Intellectual Property
Rights.
"IP AGREEMENTS" means all the contracts, licenses, purchase
orders, and agreements to which the Company is a party that relate to any
Intellectual Property or Intellectual Property Rights licensed, transferred,
developed, or provided by, for, or to the Company.
"COMPANY IP" or "COMPANY INTELLECTUAL PROPERTY" shall mean any
IP, including the Company Registered Intellectual Property Rights (as defined
below), that are owned by, or exclusively licensed to, the Company.
"REGISTERED INTELLECTUAL PROPERTY RIGHTS" shall mean all
United States, international and foreign: (i) Patents, including applications
therefor; (ii) registered Trademarks,
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applications to register Trademarks, including intent-to-use applications, other
registrations or applications related to Trademarks; (iii) registrations of, and
applications for the use of, Internet Properties; (iv) Copyrights registrations
and applications to register Copyrights; (v) Mask Work registrations and
applications to register Mask Works; and (vi) any other Intellectual Property
that is the subject of an application, certificate, filing, registration or
other document issued by, filed with, or recorded by, any private, state,
government or other public legal authority or Governmental Entity at any time.
(b) Section 2.13(b) of the Company Disclosure Schedule contains a
complete and accurate list (by name and any identification number) of all
service offerings (including electroplating, bumping, repassivation, copper
redistribution, and aluminum redistribution as such terms are understood in the
semiconductor industry), processes, products, Internet Properties, or software
of the Company (collectively, "COMPANY SERVICES") (i) that have been operated,
sold, licensed, distributed or otherwise provided in the five (5)-year period
preceding the date hereof, (ii) for which the Company has any obligation or
liability related thereto, or (iii) which the Company currently intends to sell,
distribute, operate, license or otherwise provide in the future, including any
Company Services under development.
(c) Section 2.13(c) of the Company Disclosure Schedule lists all
Registered Intellectual Property Rights owned by, filed in the name of, or
applied for, by the Company (the "COMPANY REGISTERED INTELLECTUAL PROPERTY
RIGHTS") and lists any proceedings or actions before any court, tribunal
(including the United States Patent and Trademark Office (the "PTO") or
equivalent authority anywhere in the world) related to any of the Company
Registered Intellectual Property Rights or other Company Intellectual Property.
Except as set forth in Section 2.13(c) of the Company Disclosure Schedule, to
the Knowledge of the Company (including reasonable inquiry of the Company's
patent counsel), there are no actions that must be taken by the Company before
November 30, 2004, including the payment of any registration, maintenance or
renewal fees, or the filing of any responses to PTO office actions, documents,
applications or certificates for the purposes of obtaining, maintaining,
perfecting, or preserving or renewing any Company Registered Intellectual
Property Rights.
(d) Each Company Registered Intellectual Property Right is currently
in compliance in all material respects with all formal Legal Requirements
(including payment of filing, examination and maintenance fees and proofs of
use) and is valid and subsisting. All necessary documents and certificates in
connection with such Company Registered Intellectual Property Rights have been
filed with the relevant patent, copyright, trademark, Internet, or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of applying for, perfecting, prosecuting and maintaining such
Company Registered Intellectual Property Right. The Company has not claimed any
status in the application for or registration of any Company Registered
Intellectual Property Rights, including "small business status," that would not
be applicable to Buyer.
(e) All WWW sites of the Company and each of its Subsidiaries are in
compliance in all material respects with all applicable industry-standard
privacy or data rights policies and all applicable privacy or data rights
policies of the United States. The Company has not received any written notice
(and the Company Officer Group has not received any oral notice) claiming or
alleging
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that it has not complied with its privacy policy or any other policies, laws or
regulations governing the operation of the Company's WWW sites, nor does the
Company have Knowledge of any facts or circumstances that would give rise to
such claim or allegations.
(f) The Company's collection and distribution of any data,
information, content or other works (including data, information content or
works belonging to third parties) does not (i) infringe or violate and has not
infringed or violated the rights (including Intellectual Property Rights or
rights under contract or policy) of any Person or (ii) violate any law or
regulation of the United States, and, to the Knowledge of the Company, any other
country or jurisdiction.
(g) The Company has no Knowledge of any facts or circumstances that
would render any Company IP invalid or unenforceable, nor has the Company taken,
or failed to take, any action in the application for or prosecution of any
Company Registered Intellectual Property Rights that would render such Company
Registered Intellectual Property Rights invalid or unenforceable. Without
limiting the foregoing, the Company has no Knowledge of any information,
materials, facts, or circumstances, including any information or fact that would
constitute prior art, that would render any of the Company Registered
Intellectual Property Rights invalid or unenforceable, or would adversely affect
any pending application for any Company Registered Intellectual Property Right,
and the Company has not misrepresented, or failed to disclose, and has no
Knowledge of any misrepresentation or failure to disclose, any fact or
circumstances in any application for any Company Registered Intellectual
Property Right that would constitute fraud or a misrepresentation with respect
to such application or that would otherwise affect the validity or
enforceability of any Company Registered Intellectual Property Right.
(h) Except as set forth on Section 2.13(h) of the Company Disclosure
Schedule, all Company IP is and as of the Closing Date will be fully
transferable, alienable and licensable by the Company without restriction and
without payment of any kind to any third party.
(i) Except as set forth in Section 2.13(i) of the Company Disclosure
Schedule, each item of Company IP is free and clear of any liens or
encumbrances.
(j) Section 2.13(j) of the Company Disclosure Schedule lists (i) the
standard warranties, if any, that the Company provides its customers with
respect to the Company Services; (ii) customers that have received warranties
from the Company materially deviating from such standard warranties that the
Company has granted any of its customers; and (iii) any warranty claims that the
Company's customers have made with respect to the Company Services since
December 31, 2001.
(k) Except as set forth in Section 2.13(k) of the Company Disclosure
Schedule, the Company has not (i) transferred ownership of, or granted any
exclusive license of or right to use, or authorized the retention of any
exclusive rights to use or joint ownership of, any IP that is or was Company IP,
to any other Person, or (ii) permitted Company's rights in such Company IP to
lapse or enter the public domain.
(l) Except as set forth on Section 2.13(l) of the Company Disclosure
Schedule, and except for IP licensed by the Company under inbound "shrinkwrap"
and similar publicly available commercial object code end-user licenses
("OFF-THE-SHELF LICENSES"), and client third party
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non-exclusive licenses granted to the Company solely for the purpose of allowing
the Company to provide Company Services to such third parties, the Company IP
constitutes all the IP used in and/or necessary to the conduct of the business
of the Company as it currently is conducted, and as it is currently planned or
contemplated to be conducted by the Company, including, without limitation, the
operation, design, development, manufacture, use, import, distribution and sale
of Company Services.
(m) In each case in which the Company has acquired any IP from any
Person with the intention by the Company to acquire ownership thereof, either
(i) such IP was developed or created by employees of the Company acting within
the scope of their employment or (ii) the Company has obtained a valid and
enforceable assignment sufficient to irrevocably transfer all rights in and to
all such IP to the Company. To the maximum extent provided for by, and in
accordance with, applicable laws and regulations, the Company has recorded each
such assignment of a Registered Intellectual Property Right assigned to the
Company with the relevant Governmental Entity, and no third party owns or has
any rights to any such IP.
(n) To the extent that any IP has been developed or created by a
third party for the Company or is incorporated into, or used to provide, any of
the Company Services and such IP was not developed or created with the intention
by the Company to acquire ownership thereof, the Company has a written agreement
with such third party with respect thereto and the Company thereby has obtained
a perpetual, non-terminable license (sufficient for the conduct of its business
as currently conducted and as currently proposed to be conducted) to all such
third party's IP, and in each case such rights and licenses shall survive the
Acquisition and be fully exercisable by the Company following the Acquisition.
(o) Except as set forth in Section 2.13(o) of the Company Disclosure
Schedule, no Person who has licensed any IP to the Company has ownership rights
or license rights to improvements, modifications or derivative works made by or
for the Company in such IP. Except as set forth in Section 2.13(o) of the
Company Disclosure Schedule, no customer of the Company has ownership rights or
license rights to any IP that the Company develops in the course of providing
Company Services to such customer.
(p) The Company has the right to use, pursuant to valid licenses,
all data (including personal data of third parties), all software development
tools, library functions, operating systems, data bases, compilers and all other
third-party software that are used in the operation of the Company or that are
required to create, modify, compile, operate or support any software that is
Company Intellectual Property or is incorporated into or used to provide any
Company Service.
(q) Except as set forth in Section 2.13(q) of the Company Disclosure
Schedule, no government funding, facilities of a university, college, other
educational institution or research center or funding from third parties was
used in the development of any Company IP. To the Knowledge of the Company, no
current or former employee, consultant or independent contractor of Company, who
was involved in, or who contributed to, the creation or development of any
Company IP, has performed services for the government, university, college, or
other educational institution or research center during a period of time during
which such employee, consultant or independent contractor was also performing
services for Company.
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(r) The operation of the business of the Company as it is currently
conducted, or is currently contemplated to be conducted, by the Company,
including but not limited to the design, development, use, import, branding,
advertising, promotion, marketing, operation, manufacture and sale of Company
Services, does not infringe or misappropriate any Intellectual Property Right of
any Person, violate any right of any Person (including any right to privacy or
publicity), or constitute unfair competition or unfair trade practices under the
laws of any jurisdiction, and the Company has not received written notice (and
the Company Officer Group has not received oral notice) from any Person claiming
that such operation or any act, product, technology or service (including
Company Services and products, technology or services currently under
development) of the Company infringes or misappropriates any Intellectual
Property Right of any Person or constitutes unfair competition or trade
practices under the laws of any jurisdiction (nor does the Company have
Knowledge of any basis therefor).
(s) No Company IP or Company Service is subject to any proceeding or
outstanding decree, order, judgment or settlement agreement or stipulation that
restricts in any manner the use, transfer or licensing thereof by the Company or
which would affect the validity, use or enforceability of such Company IP or
Company Service.
(t) Section 2.13(t) of the Company Disclosure Schedule lists all IP
Agreements other than (i) Off-the-Shelf Licenses and (ii) the Company's standard
terms and conditions of sale, a form of which has been provided to Buyer. All IP
Agreements are in full force and effect. The Company is not in material breach
of nor has the Company failed to perform in any material respects under, any of
the IP Agreements and, to the Knowledge of the Company, no other party to any
such IP Agreement is in breach thereof or has failed to perform thereunder.
Except as set forth in Section 2.13(t) of the Company Disclosure Schedule, the
consummation of the Contemplated Transactions will neither violate nor result in
the breach, modification, cancellation, termination or suspension of any IP
Agreements or entitle the other party or parties to such IP Agreements to
terminate such IP Agreements. Except as set forth in Section 2.13(t) of the
Company Disclosure Schedule, following the Closing Date, the Company will be
permitted to exercise all of Company's rights under the IP Agreements to the
same extent Company would have been able to had the Acquisition not occurred and
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which Company would otherwise be required to
pay. The Acquisition will not result in any third party being granted any rights
to any Company IP that are in addition to, or greater than, such third party
currently has under such IP Agreements.
(u) Section 2.13(u) of the Company Disclosure Schedule lists all
material IP Agreements between the Company and any other Person wherein or
whereby the Company has agreed to, or assumed, any obligation or duty to
warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or
incur any obligation or liability or provide a right of rescission with respect
to the infringement or misappropriation by the Company or such other Person of
the Intellectual Property Rights of any Person other than the Company.
(v) To the Knowledge of the Company, there are no IP Agreements
between the Company and any other Person under which there is any dispute
regarding the scope of such agreement,
-39-
or performance under such agreement, including with respect to any payments to
be made or received by the Company thereunder and with respect to deficiencies,
nonconformities, or other problems in the Company Services. To the Knowledge of
the Company, as of the Closing Date, all Company Services conform and have
conformed in all material respects to their respective specifications and
warranties as set forth in the applicable IP Agreements.
(w) To the Knowledge of the Company, no Person is infringing or
misappropriating any Company Intellectual Property Right.
(x) The Company has taken all steps that are reasonably required to
protect the Company's rights in confidential information and trade secrets of
the Company and the confidential information and trade secrets of any other
Person which were provided to the Company pursuant to an appropriate
nondisclosure agreement or with respect to which the Company had a duty to
protect the confidentiality under applicable law. Without limiting the
foregoing, the Company has and enforces a policy requiring each technical
employee of the Company to execute a proprietary rights and confidentiality
agreement substantially in the form set forth in Section 2.13(x) of the Company
Disclosure Schedule, all current employees who have created or modified any of
the Company Intellectual Property have executed such an agreement, and all
former employees and consultants of the Company who have created or modified any
of the Company Intellectual Property have executed a similar agreement, in each
case assigning all of such employees' and consultants' rights in and to the
Company Intellectual Property to the Company.
(y) Neither this Agreement nor the Contemplated Transactions,
including the assignment, by operation of law or otherwise (by virtue of the
Contemplated Transactions), of any contracts or agreements to which the Company
is a party, will result in (i) the Company's granting to any third party any
right to or with respect to any IP owned by, or licensed to, it, (ii) the
Company's being bound by, or subject to, any non-compete or other restriction on
the operation or scope of its business, or (iii) the Company's being obligated
to pay any royalties or other amounts to any third party in excess of those
payable by the Company prior to the Closing.
(z) To the extent that the Company has granted any Person any option
to acquire a license or ownership of any Company IP, such Person has not
exercised such option.
(aa) Section 2.13(aa) of the Company Disclosure Schedule lists all
IP Agreements pursuant to which the Company has granted any Person any
Intellectual Property Rights with respect to Intellectual Property developed
under such agreements and identifies such Intellectual Property.
2.14 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth in Section
2.14 of the Company Disclosure Schedule, the Company is not a party to, nor is
it bound by any of the following (each, a "MATERIAL CONTRACT"):
(a) any agreement, contract or commitment with an employee or
individual consultant or salesperson, or consulting or sales agreement,
contract, or commitment with a firm or other organization;
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(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation rights plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the Contemplated Transactions or the
value of any of the benefits of which will be calculated on the basis of any of
the Contemplated Transactions;
(c) any fidelity or surety bond or completion bond;
(d) any lease of personal or movable property having a value in
excess of $50,000 individually or $100,000 in the aggregate;
(e) any agreement of indemnification or guaranty;
(f) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $50,000 individually or
$100,000 in the aggregate;
(g) any agreement, contract or commitment outside the ordinary
course of the Company's business;
(h) any mortgages, hypothecations, indentures, guarantees, loans or
credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit;
(i) any purchase order or contract for the purchase of materials
involving in excess of $50,000 individually or $100,000 in the aggregate;
(j) any agreement containing covenants or other obligations granting
any person exclusive rights, "most favored nations" or similar terms or binding
the Company to a covenant not to compete or restricting any operation of its
business or containing any similar terms;
(k) any dealer, distribution, joint marketing or development
agreement;
(l) any sales representative, original equipment manufacturer,
manufacturing, value added, remarketer, reseller, or independent software
vendor, or other agreement for use or distribution of the products, technology
or services of the Company;
(m) any IP Agreements; or
(n) any other agreement, contract or commitment that (i) involves
the 5 largest customers of the Company during the current fiscal year to date,
or (ii) involves $50,000 individually or $100,000 in the aggregate and is not
cancelable without penalty within thirty (30) days.
Except as set forth in Section 2.14 of the Company Disclosure Schedule,
the consummation of the Contemplated Transactions will not violate nor result in
the breach, modification, cancellation, termination or suspension of any of the
agreements referenced in this Section 2.14, entitle the other party
-41-
or parties to such agreements to terminate such agreements or require the
payment of any additional amounts or consideration other than amounts which
Company would otherwise be required to pay.
2.15 INTERESTED PARTY TRANSACTIONS. Except as set forth in Section 2.15 of
the Company Disclosure Schedule, to the Knowledge of the Company, no officer,
director or stockholder of the Company (nor any ancestor, sibling, descendant or
spouse of any of such persons, or any trust, partnership or corporation in which
any of such persons has an interest), has, directly or indirectly, (i) an
interest in any entity which furnished or sold, or furnishes or sells, services,
products, technology or Intellectual Property that the Company furnishes or
sells, or currently proposes to furnish or sell, (ii) any interest in any entity
that purchases from or sells or furnishes to the Company, any goods or services,
or (iii) a beneficial interest in any Material Contract; provided, however, that
ownership of no more than one percent (1%) of the outstanding voting stock of a
publicly traded corporation shall not be deemed to be an "interest in any
entity" for purposes of this Section 2.15. Except as set forth on Section 2.15
of the Company Disclosure Schedule, to the Knowledge of the Company, there are
no agreements, contracts, or commitments with regard to contribution or
indemnification between or among any holder of Company Capital Stock.
2.16 GOVERNMENTAL AUTHORIZATION. Each consent, license, permit, grant or
other authorization (i) pursuant to which the Company or any of its Subsidiaries
currently operates or holds any interest in any of their respective properties,
or (ii) which is required for the operation of the Company's or any of its
Subsidiaries' business as currently conducted or currently contemplated to be
conducted or the holding of any such interest (collectively, "COMPANY
AUTHORIZATIONS") has been issued or granted to the Company or any of its
Subsidiaries, as the case may be. The Company Authorizations are in full force
and effect and constitute all Company Authorizations required to permit the
Company and its Subsidiaries to operate or conduct their respective businesses
or hold any interest in their respective properties or assets.
2.17 LITIGATION. Except as set forth in Section 2.17 of the Company
Disclosure Schedule, there is no Proceeding pending, or to the Knowledge of the
Company, threatened, against the Company or any Subsidiary, their properties
(tangible or intangible) or, to the Company's Knowledge, any of their officers
or directors in their respective capacities as such. There is no Proceeding
pending or, to the Knowledge of the Company, threatened, against the Company or
any Subsidiary, any of their respective properties (tangible or intangible), to
the Company's Knowledge, any of their officers or directors in their respective
capacities as such by or before any Governmental Entity. No Governmental Entity
has at any time challenged or questioned the legal right of the Company to
conduct its operations as presently or previously conducted since January 1,
2000 or as presently contemplated to be conducted.
2.18 MINUTE BOOKS. The minutes of the Company and its Subsidiaries made
available to counsel for Buyer contain complete and accurate records of all
actions taken, and summaries of all meetings held, by the stockholders, the
Board of Directors of the Company and its Subsidiaries (and any committees
thereof) since the time of incorporation of the Company and each Subsidiary, as
the case may be.
2.19 ENVIRONMENTAL MATTERS. Except as set forth in Section 2.19 of the
Company Disclosure Schedule, (i) the Company is in compliance in all material
respects with all applicable Environmental
-42-
Laws and holds and is in compliance in all material respects with all permits
required by Environmental Laws; (ii) the Company has not been in noncompliance
with Environmental Laws or Environmental Permits; (iii) the Company has not
released a Hazardous Material at, or transported a Hazardous Material to or
from, any real property currently or formerly owned, leased or occupied by the
Company, in material violation of any Environmental Law; (iv) the Company has
not received any written notice or other communication (and the Company Officer
Group has not received oral notice), from a Governmental Entity or other Person,
that alleges that the Company is not in compliance with any Environmental Law,
and, to the Company's Knowledge, there are no circumstances that may prevent the
Company's current compliance with any Environmental Law; and (v) to the
Company's Knowledge without inquiry, no current owner of any property leased by
the Company or any Subsidiary has received any notice or other communication (in
writing or otherwise), from a Governmental Entity or other Person, that alleges
that such current owner or the Company is not in compliance with any
Environmental Law with respect to such property. For purposes of this Agreement,
"Environmental Law" shall mean any statute, law, ordinance, rule or regulation
and any enforceable judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
pollution or protection of the environment or natural resources, including,
without limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Material, as in
effect as of the date hereof. "Environmental Permit" shall mean any permit,
approval, identification number, license or other authorization required under
or issued pursuant to any applicable Environmental Law. "Hazardous Material"
shall mean (i) any petroleum, petroleum products, byproducts or breakdown
products, radioactive materials, asbestos-containing materials or
polychlorinated biphenyls or (ii) any chemical, material or substance defined or
regulated as toxic or hazardous or as a pollutant or contaminant or waste under
any applicable Environmental Law.
2.20 BROKERS' AND FINDERS' FEES; THIRD PARTY EXPENSES. Except as set forth
in Section 2.20 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries has incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions, fees related to
investment banking or similar advisory services or any similar charges in
connection with this Agreement or any transaction contemplated hereby. Section
2.20 of the Company Disclosure Schedule sets forth the principal terms and
conditions of any agreement, written or oral, with respect to such fees. Section
2.20 of the Company Disclosure Schedule sets forth the Company's current
reasonable estimate of all Third Party Expenses (as defined in Section 5.7
hereof) expected to be incurred by the Company or any of its Subsidiaries in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby.
2.21 EMPLOYEE BENEFIT PLANS AND COMPENSATION.
(a) SCHEDULE. Section 2.21(b) of the Company Disclosure Schedule
contains an accurate and complete list of each Company Employee Plan and each
Employee Agreement. Neither the Company nor any ERISA Affiliate has made any
plan or commitment to establish any new Company Employee Plan or Employee
Agreement, to modify any Company Employee Plan or Employee Agreement (except to
the extent required by law or to conform any such Company Employee Plan or
Employee Agreement to the requirements of any applicable law, in each case as
previously disclosed to Buyer in writing, or as required by this Agreement), or
to enter into any Company Employee Plan or
-43-
Employee Agreement. The Company has separately provided Buyer with a table
setting forth the name and salary of each current employee of the Company and
each of its Subsidiaries.
(b) DOCUMENTS. The Company has provided to Buyer (i) correct and
complete copies of all documents embodying each Company Employee Plan and each
Employee Agreement including, without limitation, all amendments thereto and all
related trust documents, (ii) the most recent annual report (Form Series 5500
and all schedules and financial statements attached thereto), if any, required
under ERISA or the Code in connection with each Company Employee Plan, (iii) if
the Company Employee Plan is funded, the most recent annual and periodic
accounting of Company Employee Plan assets, (iv) the most recent summary plan
description together with the summary(ies) of material modifications thereto, if
any, required under ERISA with respect to each Company Employee Plan, (v) all
material written agreements and contracts relating to each Company Employee
Plan, including, without limitation, administrative service agreements and group
insurance contracts, (vi) all communications material to any Employee or
Employees relating to any Company Employee Plan and any proposed Company
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any liability to the
Company or any ERISA Affiliate, (vii) all correspondence to or from any
governmental agency relating to any Company Employee Plan, (viii) all standard
COBRA forms and related notices (or such forms and notices as required under
comparable law), (ix) all policies of the Company pertaining to fiduciary
liability insurance covering the fiduciaries for each Company Employee Plan, (x)
all discrimination tests for each Company Employee Plan for the most recent plan
year, and (xi) the most recent IRS determination or opinion letter issued with
respect to each Company Employee Plan.
(c) EMPLOYEE PLAN COMPLIANCE. The Company and each of its
Subsidiaries have performed in all material respects all obligations required to
be performed by them under each Company Employee Plan, and each Company Employee
Plan has been established and maintained in accordance with its terms and in
material compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the Code. Any Company
Employee Plan intended to be qualified under Section 401(a) of the Code has
obtained a favorable determination letter as to its qualified status under the
Code or is in a prototype or volume submitter plan document that has been
pre-approved by the IRS as is evidenced by a letter from the IRS. For each
Company Employee Plan that is intended to be qualified under Section 401(a) of
the Code there has been no event, condition or circumstance that has adversely
affected or is likely to adversely affect such qualified status. No "prohibited
transaction," within the meaning of Section 4975 of the Code or Sections 406 and
407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred
with respect to any Company Employee Plan. There are no actions, suits or claims
pending or, to the Knowledge of the Company, threatened (other than routine
claims for benefits) against any Company Employee Plan or against the assets of
any Company Employee Plan. Each Company Employee Plan can be amended, terminated
or otherwise discontinued after the Effective Time in accordance with its terms,
without liability to Buyer, the Company or any ERISA Affiliate (other than
ordinary administration expenses). There are no audits, inquiries or proceedings
pending or to the Knowledge of the Company, threatened by the IRS, DOL, or any
other Governmental Entity with respect to any Company Employee Plan. Neither the
Company nor any ERISA Affiliate is subject to any penalty or Tax with respect to
any Company Employee Plan under
-44-
Section 502(i) of ERISA or Sections 4975 through 4980 of the Code. The Company
and each ERISA Affiliate have timely made all contributions and other payments
required by and due under the terms of each Company Employee Plan.
(d) NO PENSION PLANS. Neither the Company nor any ERISA Affiliate
has ever maintained, established, sponsored, participated in, or contributed to,
any Pension Plans subject to Title IV of ERISA or Section 412 of the Code.
(e) NO SELF-INSURED PLANS. Neither the Company nor any ERISA
Affiliate has ever maintained, established sponsored, participated in or
contributed to any self-insured plan that provides benefits to employees
(including, without limitation, any such plan pursuant to which a stop-loss
policy or contract applies).
(`f) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE-EMPLOYER
PLANS. At no time has the Company or any ERISA Affiliate contributed to or been
obligated to contribute to any Multiemployer Plan. Neither the Company nor any
ERISA Affiliate has at any time ever maintained, established, sponsored,
participated in or contributed to any multiple employer plan or to any plan
described in Section 413 of the Code.
(g) NO POST-EMPLOYMENT OBLIGATIONS. Except as set forth in Section
2.21(g) of the Company Disclosure Schedule, no Employee Agreement provides, or
reflects or represents any liability to provide, post-termination retiree life
insurance, health or other employee welfare benefits to any person for any
reason, except as may be required by COBRA or other applicable statute, and
neither the Company nor any ERISA Affiliate has ever represented, promised or
contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with post-termination retiree life
insurance, health or other employee welfare benefits, except to the extent
required by statute.
(h) COBRA; FMLA; HIPAA. The Company and each ERISA Affiliate has,
prior to the Effective Time, complied with COBRA, FMLA, HIPAA, and any similar
provisions of state law applicable to their Employees. To the Knowledge of the
Company, neither the Company nor any ERISA Affiliate has unsatisfied obligations
to any Employees or qualified beneficiaries pursuant to COBRA, HIPAA or any
state law governing health care coverage or extension.
(i) EFFECT OF TRANSACTION. Except as set forth in Section 2.21(i) of
the Company Disclosure Schedule, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that will or
is reasonably likely to result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits.
(j) PARACHUTE PAYMENTS. Except as set forth in Section 2.21(j) of
the Company Disclosure Schedule, no payment or benefit which has been, will be
or may be made by the Company or its ERISA Affiliates with respect to any
Employee may be characterized as a "parachute payment,"
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within the meaning of Section 280G(b)(2) of the Code. There is no contract,
agreement, plan or arrangement to which the Company or any ERISA Affiliate is a
party by which it is bound to compensate any Employee for excise taxes paid
pursuant to Section 4999 of the Code.
(k) EMPLOYMENT MATTERS. The Company and each ERISA Affiliate are in
compliance in all material respects with all applicable foreign, federal, state
and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment, employee safety and wages and
hours, and in each case, with respect to Employees: (i) have withheld and
reported all amounts required by law or by agreement to be withheld and reported
with respect to wages, salaries and other payments to Employees, (ii) are not
liable in any material respect for any arrears of wages, severance pay or any
taxes or any penalty for failure to comply with any of the foregoing, and (iii)
are not liable for any payment to any trust or other fund governed by or
maintained by or on behalf of any governmental authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the normal
course of business and consistent with past practice). There are no actions,
suits, claims or administrative matters pending, or to the Knowledge of the
Company, threatened or reasonably anticipated against the Company, any ERISA
Affiliate, or any of their Employees relating to any Employee or Employee
Agreement. There are no pending or, to the Knowledge of the Company, threatened
or reasonably anticipated claims or actions against Company, any ERISA
Affiliate, any Company trustee or any trustee of any ERISA Affiliate under any
worker's compensation policy or long-term disability policy. Except as set forth
in Section 2.21(k) of the Company Disclosure Schedule, employment of each of the
Company's and each ERISA Affiliates' current employees is terminable at the will
of the Company and its ERISA Affiliates. Neither the Company nor any ERISA
Affiliate has direct or indirect liability with respect to any misclassification
of any person as an independent contractor rather than as an employee, or with
respect to any employee leased from another employer.
(l) LABOR. No work stoppage or labor strike against the Company or
any ERISA Affiliate is pending, or to the Knowledge of the Company, threatened.
Neither the Company nor any ERISA Affiliate has Knowledge of any activities or
proceedings of any labor union to organize any Employees. There are no actions,
suits, claims, labor disputes or grievances pending or, to the Knowledge of the
Company, threatened or anticipated relating to any labor, safety, or
discrimination matters involving any Employee, including, without limitation,
charges of unfair labor practices or discrimination complaints. Neither the
Company nor any ERISA Affiliate has engaged in any unfair labor practices within
the meaning of the National Labor Relations Act. Neither the Company nor any
ERISA Affiliate does presently, nor has it been since January 1, 2000, a party
to, or bound by, any collective bargaining agreement or union contract with
respect to Employees and no collective bargaining agreement is being negotiated
by the Company or any ERISA Affiliate. Neither the Company nor any ERISA
Affiliate has incurred any material liability or material obligation under the
Worker Adjustment and Retraining Notification Act or any similar state or local
law which remains unsatisfied.
(m) NO INTERFERENCE OR CONFLICT. To the Knowledge of the Company, no
stockholder, director, officer, current employee or consultant of the Company or
any ERISA Affiliate is obligated under any contract or agreement, subject to any
judgment, decree, or order of any court or administrative
-46-
agency that would interfere with such person's efforts to promote the interests
of the Company or any ERISA Affiliate or that would interfere with the Company's
business. Neither the execution nor delivery of this Agreement, nor the carrying
on of the Company's business as presently conducted or currently proposed to be
conducted nor any activity of such officers, directors, current employees or
consultants in connection with the carrying on of the Company's business or any
ERISA Affiliate's businesses as presently conducted or currently proposed to be
conducted will, to the Knowledge of the Company, conflict with or result in a
material breach of the terms, conditions, or provisions of, or constitute a
default under, any contract or agreement under which any of such officers,
directors, current employees, or consultants is now bound.
(n) INTERNATIONAL EMPLOYEE PLAN. Neither the Company nor any ERISA
Affiliate currently, nor has it ever had the obligation to, maintain, establish,
sponsor, participate in, or contribute to any International Employee Plan.
2.22 INSURANCE. Section 2.22 of the Company Disclosure Schedule lists all
insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company, and
any of its Subsidiaries, including the type of coverage, the carrier, the amount
of coverage, the term and the annual premiums of such policies. There is no
claim by the Company or any Subsidiary pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed or that the
Company or any of its Subsidiaries has a reason to believe will be denied or
disputed by the underwriters of such policies or bonds. In addition, there is no
pending claim of which its total value (inclusive of defense expenses) will
exceed the policy limits. The coverage provided by such policies and bonds is
reasonably adequate to fully insure (excluding any deductibles) the Company and
any Subsidiary against risks to the business, assets (whether tangible or
intangible), or operations of the Company or such Subsidiary. All premiums due
and payable under all such policies and bonds have been paid, (or if installment
payments are due, will be paid if incurred prior to the Closing Date), and the
Company, and its Subsidiaries are otherwise in material compliance with the
terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). Such policies and bonds (or other
policies and bonds providing substantially similar coverage) have been in effect
since April 28, 1998 and remain in full force and effect. The Company has no
Knowledge of threatened termination of, or premium increase with respect to, any
of such policies. Neither the Company nor any of its Subsidiaries has ever
maintained, established, sponsored, participated in or contributed to any
self-insurance plan.
2.23 COMPLIANCE WITH LAWS. The Company has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
Legal Requirement, except where the failures to so comply is not reasonably
likely to result in a Company Material Adverse Effect.
2.24 COMPLETE COPIES OF MATERIALS. The Company has delivered or made
available true and complete copies of each document (or summaries of same) that
have been referenced in this Article VIII or the Company Disclosure Schedule.
2.25 INFORMATION STATEMENT. Any and all information furnished on or in any
document mailed, delivered or otherwise furnished by the Company to the holders
of Company Capital Stock in connection with the solicitation of their consent to
this Agreement and the Acquisition, does not and will
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not contain, as of its date, any untrue statement of a material fact and does
not and will not, as of its date, omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which made not misleading.
2.26 BANK ACCOUNTS, LETTERS OF CREDIT AND POWERS OF ATTORNEY. Section 2.26
of the Company Disclosure Schedule lists (a) all bank accounts, lock boxes and
safe deposit boxes relating to the business and operations of the Company
(including the name of the bank or other institution where such account or box
is located and the name of each authorized signatory thereto), (b) all
outstanding letters of credit issued by financial institutions for the account
of the Company (setting forth, in each case, the financial institution issuing
such letter of credit, the maximum amount available under such letter of credit,
the terms (including the expiration date) of such letter of credit and the party
or parties in whose favor such letter of credit was issued), and (c) the name
and address of each Person who has a power of attorney to act on behalf of the
Company. The Company has heretofore delivered to Buyer true, correct and
complete copies of each letter of credit and each power of attorney described in
Section 2.26 of the Company Disclosure Schedule.
2.27 FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any of its
Subsidiaries (including any of their officers or directors) has taken any action
which would cause it to be in violation of the Foreign Corrupt Practices Act of
1977, as amended, or any rules or regulations thereunder.
2.28 INVENTORY. The inventories shown on the Year-End Financials or
thereafter acquired by the Company consisted of items of a quantity and quality
usable or salable in the ordinary course of business. Since December 31, 2003,
the Company has continued to replenish inventories in a normal and customary
manner consistent with past practices. The Company has not received written
notice (and the Company Officer Group has not received oral notice) that it will
experience in the foreseeable future any difficulty in obtaining, in the desired
quantity and quality and at a reasonable price and upon reasonable terms and
conditions, the raw materials, supplies or component products required for the
manufacture, assembly or production of its products. The values at which
inventories are carried reflect the inventory valuation policy of the Company,
which is in accordance with GAAP. As of the date hereof, the Company does not
have any commitments to purchase inventory, other than in the ordinary course of
business in accordance with past practices.
2.29 REPRESENTATIONS COMPLETE. To the Knowledge of the Company, none of
the representations or warranties made by the Company in this Agreement (as
modified by the Company Disclosure Schedule), and none of the statements made in
any exhibit, schedule or certificate furnished by the Company pursuant to this
Agreement contains, or will contain at the Effective Time, any untrue statement
of a material fact, or omits or will omit at the Effective Time to state any
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLING STOCKHOLDERS
Each Selling Stockholder, severally but not jointly, solely with respect
to himself, herself or itself and not with respect to the other Selling
Stockholders, represents and warrants to the Buyer as follows.
3.1 ORGANIZATION AND SHARE HOLDINGS.
(a) The Selling Stockholder is the sole record and beneficial owner
of the number and class of shares of Company Capital Stock set forth next to
his, her or its name on Section 2.2(a) of the Company Disclosure Schedule, and
such shares of Company Capital Stock will not at the Closing be subject to any
Lien or to any rights of first refusal of any kind (other than Liens arising by
reason of restrictions on transfer under federal or state securities laws). The
Selling Stockholder has good and valid title to, and has the sole right to
transfer such shares of Company Capital Stock. The shares of Company Capital
Stock listed on Section 2.2(a) of the Company Disclosure Schedule beside the
name of such Selling Stockholder constitute all of the shares of Company Capital
Stock owned, beneficially or of record, by the Selling Stockholder. Except as
set forth in Section 2.2(b) of the Company Disclosure Schedule and as set forth
on Schedule 3.1, there are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which such Selling Stockholder
is a party or by which he, she or it is bound obligating such Selling
Stockholder to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold repurchased or redeemed, any shares of Company Capital
Stock or obligating such Selling Stockholder to grant or enter into any such
option, warrant, call, right, commitment or agreement and there will be no such
agreements at any time prior to or at the Closing.
(b) If an entity, such Selling Stockholder is duly incorporated or
formed and validly existing under the laws of its jurisdiction of incorporation
or formation.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement and any Related Agreements to which the Selling
Stockholder is a party have been duly authorized and validly executed and
delivered by the Selling Stockholder, and constitute the legal, valid, and
binding obligation of the Selling Stockholder, enforceable against the Selling
Stockholder in accordance with their terms (in each case, solely to the extent
that the Selling Stockholder is a party to this Agreement and the Related
Agreements), except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent any indemnification provisions may be limited
by applicable U.S. federal or state securities laws. The Selling Stockholder has
all necessary power, authority, and capacity to execute and deliver this
Agreement and any Related Agreements to which such Selling Stockholder is a
party and to perform its obligations hereunder and thereunder.
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(b) Neither the execution and delivery of this Agreement or any
Related Agreements to which the Selling Stockholder is a party nor the
consummation or performance of the obligations of the Selling Stockholder in
connection with the Contemplated Transactions or thereby will, directly or
indirectly (with or without notice or lapse of time):
(i) if such Selling Stockholder is an entity, contravene,
conflict with, or result in a violation of, if applicable, (A) any provision of
the Organizational Documents of the Selling Stockholder, or (B) any resolution
adopted by the board of directors, stockholders, partners, limited partners, or
members of the Selling Stockholder; or
(ii) contravene, conflict with, or result in a violation of
any Legal Requirement or any Order applicable to such Selling Stockholder.
Except as set forth in Schedule 3.2, the Selling Stockholder is not
required to give any notice to or obtain any consent from any Person in
connection with the execution and delivery of this Agreement or any Related
Agreements to which such Selling Stockholder is a party or the consummation or
performance of any of its obligations in connection with the Contemplated
Transactions.
3.3 LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending Proceeding that has been commenced by or
against the Selling Stockholder that (i) relates to the business of, or any of
the assets owned or used by, the Company, or (ii) challenges, or that would
reasonably be expected to have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions;
(b) To the Knowledge of the Selling Stockholder, no such Proceeding
has been threatened by or against the Company or the Selling Stockholder; and
(c) Except as set forth on Schedule 3.3, the Selling Stockholder
does not have any claim against the Company whether contingent or unconditional,
fixed or variable under any contract or on any other legal basis whatsoever
except for unpaid salaries, fees, bonuses and expenses incurred in the normal
course of business.
3.4 TAX AND LEGAL MATTERS. The Selling Stockholder has had an opportunity
to review with its own Tax and legal advisors the Tax and legal consequences to
such Selling Stockholder of the Acquisition and the Contemplated Transactions.
The Selling Stockholder understands that he, she or it must rely solely on his,
her or its advisors and not on any statements or representations (other than the
Buyer's representations and warranties in this Agreement) by the Buyer or any of
its agents. The Selling Stockholder further understands that he, she or it (and
not the Buyer or any representative of the Buyer) shall be responsible for his,
her or its own Tax liability that may arise as a result of the Acquisition or
the Contemplated Transactions.
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3.5 INVESTMENT INTENT.
(a) The Selling Stockholder understands that if any Registrable
Securities are to be issued as Consideration pursuant to this Agreement, (i)
such shares have not been registered under the Securities Act, nor qualified
under the securities laws of any other jurisdiction, (ii) such shares cannot be
resold unless they subsequently are registered under the Securities Act and
qualified under applicable state securities laws or foreign securities laws,
unless exemptions from such registration and qualification requirements are
available, (iii) such Selling Stockholder has no right to require such
registration or qualification except in accordance with the provisions of
Section 5.17 hereof and (iv) the certificates representing such unregistered
shares of Buyer Common Stock shall bear the legends as set forth in Section
5.17(k) hereof.
(b) The Selling Stockholder understands that Buyer's reliance on an
exemption from the registration requirements under the Securities Act is based
in part on the Selling Stockholder's representations set forth in this
Agreement.
(c) Any Registrable Securities received by the Selling Stockholder,
if any, will be acquired for such Selling Stockholder's own account and not with
a view to, or intention of, distribution thereof in violation of the Securities
Act, any applicable state securities laws or foreign securities laws, and the
Selling Stockholder will not dispose of the shares of such Registrable
Securities in contravention of the Securities Act or any applicable state
securities laws or foreign securities laws.
(d) In the event such Selling Stockholder is eligible to receive
Registrable Securities hereunder, such Selling Stockholder is either:
(i) an "accredited investor" as such term is defined in Rule
501 of Regulation D of the Securities Act; or
(ii) not a "U.S. Person" as that term is defined in Regulation
S promulgated under the Securities Act ("REGULATION S") and has a legal
residence outside the United States.
(e) Prior to the Closing, the Selling Stockholder will provide Buyer
with such information concerning any prior investment experience, business or
professional experience and other information as Buyer may reasonably deem
necessary to further evaluate the foregoing representations, including a
customary investor questionnaire with reasonably acceptable answers thereon, as
to such Selling Stockholder's investor status.
(f) The Selling Stockholder has carefully reviewed and understands
the risks of, and other considerations relating to, an investment in Buyer
Common Stock.
(g) The Selling Stockholder is able to bear the economic risk of its
investment in Buyer Common Stock for an indefinite period of time. The Selling
Stockholder understands that the Registrable Securities to be issued pursuant to
this Agreement, if at all, have not been registered under the Securities Act
and, therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
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(h) The Selling Stockholder has had an opportunity to ask questions
and receive answers concerning the terms and conditions of the potential
offering of the Buyer Common Stock, has had full access to such other
information concerning Buyer as such Selling Stockholder has requested.
(i) The name, address and shareholdings in the Company of the
Selling Stockholder as listed on Section 2.2(a) and Section 2.2(b) of the
Company Disclosure Schedule are true and correct in all material respects, and
such address constitutes such Selling Stockholder's principal address for the
purpose of determining the applicability of any state, local or foreign
securities laws.
3.6 NON-U.S. PERSON. If the Selling Stockholder has a legal residence
outside the United States and is not a "U.S. Person" as that term is defined in
Regulation S or an "accredited investor" as such term is defined in Rule 501 of
Regulation D of the Securities Act, such Selling Stockholder represents and
warrants that he or it is not acquiring the Buyer Common Stock issued pursuant
to the Acquisition for the account or benefit of a U.S. Person. ARTICLE IV
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company and the Selling
Stockholders, subject to such exceptions as are specifically disclosed in the
disclosure schedule (referencing the appropriate section and paragraph numbers)
delivered by Buyer to the Company (the "BUYER DISCLOSURE SCHEDULE") concurrently
herewith and dated as of the date hereof, as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Buyer has the corporate power to own its properties and to carry on its
business as currently conducted and as currently contemplated to be conducted.
The Buyer is duly qualified or licensed to do business and in good standing as a
foreign corporation in each jurisdiction in which it conducts business, except
where the failure to be so qualified has not or is not reasonably likely to
result in a material adverse effect on the business, assets (whether tangible or
intangible), condition (financial or otherwise), or operations of Buyer (a
"BUYER MATERIAL ADVERSE EFFECT").
4.2 AUTHORITY. The Buyer has all requisite power and authority to enter
into this Agreement and any Related Agreements to which it is a party and to
consummate the Contemplated Transactions. The execution and delivery of this
Agreement and any Related Agreements to which the Buyer is a party and the
consummation of the Contemplated Transactions have been duly authorized by all
necessary corporate action on the part of the Buyer, and no further action is
required on the part of the Buyer to authorize this Agreement and any Related
Agreements to which it is a party and the Contemplated Transactions. This
Agreement and each of the Related Agreements to which the Buyer is a party has
been duly executed and delivered by the Buyer, and assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
constitute the valid and binding obligations of the Buyer enforceable against it
in accordance with their respective terms, except as may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application
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affecting enforcement of creditors' rights generally, (ii) laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent any indemnification provisions may be limited
by applicable U.S. federal or state securities laws.
4.3 CAPITALIZATION.
(a) The authorized capital stock of Buyer consists of 500,000,000
shares of Buyer Common Stock, of which 175,711,209 shares were outstanding as of
the close of business on July 12, 2004, and 10,000,000 shares of Preferred
Stock, none of which were outstanding as of the close of business on July 12,
2004. All of the outstanding shares of Buyer Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable.
(b) Except as set forth above or in the Quarterly Report on From
10-Q for the quarter ended March 31, 2004 filed by Buyer with the SEC and other
than options granted to employees, officers and directors of Buyer in the
ordinary course of business, there are no preemptive or other outstanding
rights, options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, arrangements or commitments of
any kind under which Buyer is or may become obligated to issue or sell to any
Person a right to subscribe for or acquire or in any way dispose of any shares
of Buyer's capital stock, or any securities or obligations exercisable or
exchangeable for or convertible into any shares of Buyer's capital stock, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding.
4.4 CONSENTS. No consent, notice, waiver, approval, order or authorization
of, or registration, declaration or filing with any Governmental Entity or any
third party, including a party to any agreement with Buyer (so as not to trigger
any Conflict), is required by, or with respect to, the Buyer in connection with
the execution and delivery of this Agreement and any Related Agreement to which
it is a party or the consummation of the Contemplated Transactions, except for
such consents, notices, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
securities laws.
4.5 BUYER COMMON STOCK. The shares of Buyer Common Stock (if any) issuable
in connection with the Acquisition have been duly authorized, and upon issuance,
will be validly issued, fully paid and nonassessable and, based in part on the
Investor Questionnaires and the representations and warranties of the Selling
Stockholders set forth in Article III, will be issued in compliance in all
material respects with all applicable federal and state securities laws.
4.6 NONCONTRAVENTION. The execution, delivery and performance by the Buyer
of this Agreement and the Related Agreements (to the extent the Buyer is a party
thereto), and the consummation of the Contemplated Transactions, does not and
will not (i) violate any provision of the Organizational Documents of the Buyer,
or (ii) result in a Conflict of or under any material contract to which the
Buyer is a party or any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Buyer or any of its subsidiaries or any of their
respective properties or assets, except for such Conflicts as to which requisite
waivers or consents have been obtained.
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4.7 BUYER REPORTS. The Buyer has made available to the Company all forms,
reports and documents required to be filed by it with the SEC since December 31,
2001, and has on a timely basis filed all such forms, reports and documents
since July 1, 2003. Except to the extent available in full without redaction
(other than items for which confidential treatment has been granted) on the
SEC's web site through the Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX") two (2) days prior to the date of this Agreement, the Buyer has
made available to the Company in the form filed with the SEC (a) the Buyer
Reports and (b) all comment letters with respect to which the SEC has not
ultimately acknowledged an adequate response. The Buyer Reports (i) were or will
be prepared in accordance with the requirements of the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder and (ii) when read together, do 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 made therein, in light of the
circumstances under which they were made, not misleading.
4.8 BUYER REPORTS; FINANCIAL STATEMENTS. Each of the consolidated balance
sheets, statements of income, cash flow and stockholders' equity included in or
incorporated by reference into the Buyer Reports (including any related notes
and schedules) is true and correct in all material respects, has been prepared
in accordance with GAAP throughout the periods indicated and consistent with
each other, except, in the case of unaudited statements, to the extent permitted
by Regulation S-X for Quarterly Reports on Form 10-Q, and fairly presents the
consolidated financial condition, operating results and cash flows of Buyer and
its subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect). There are no material amendments or
modifications to agreements, documents, financial statements or other documents
which previously have been filed with the SEC by Buyer pursuant to the
Securities Act, the Exchange Act or the rules and regulations promulgated
thereunder, that have not yet been filed with the SEC but are or will be
required to be filed by Buyer.
4.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in any Buyer
Report and except with respect to the Contemplated Transactions, from December
31, 2003 through the date of this Agreement, there has not been any Buyer
Material Adverse Effect or any event or condition that could reasonably be
expected to have a Buyer Material Adverse Effect.
4.10 LITIGATION. Except as set forth in any Buyer Report, there is no
Proceeding pending, or to the Knowledge of the Buyer, threatened, against the
Buyer or any of its subsidiaries, their properties (tangible or intangible) or,
to the Buyer's Knowledge, any of their officers or directors in their respective
capacities as such that challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement. The
Buyer Reports, at the time they were filed with the SEC, included the disclosure
required by applicable law with respect to Proceedings against the Buyer and its
subsidiaries, their properties (tangible or intangible) and Proceedings against
any of their officers or directors in their respective capacities. Since June
30, 2004, (i) no known Proceeding has been commenced or, to Buyer's knowledge,
threatened, against the Buyer or any of its subsidiaries, their properties
(tangible or intangible), or, to the Buyer's Knowledge, any of their officers or
directors in their respective capacity as such that would be required to be
disclosed in a Form 10-K, 10-Q or 8-K that would reasonably be expected to have
a Buyer Material Adverse Effect, and (i) there has been no
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adverse development in any Proceeding disclosed in any Buyer Reports that would
reasonably be expected to have a Buyer Material Adverse Effect.
4.11 COMPLIANCE WITH LAWS. Buyer has complied with, is not in violation
of, and has not received any notices of violation with respect to, any Legal
Requirements, except where the failure to so comply is not reasonably likely to
result in a Buyer Material Adverse Effect.
4.12 COMMISSIONS AND FEES. Neither the Buyer nor any of its subsidiaries
has incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions, fees related to investment
banking or similar advisory services or any similar charges in connection with
the Agreement or any transaction contemplated hereby.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 INFORMATION STATEMENT.
(a) The Company shall prepare, with the review and approval of
Buyer, an information statement (the "INFORMATION STATEMENT") which shall
constitute a disclosure document to be sent to the holders of Company Capital
Stock and Company Options in connection with the transactions contemplated by
this Agreement. The Company shall use its reasonable best efforts to prepare and
mail the Information Statement in accordance with the terms hereof on or before
July 21, 2004 and Buyer shall use its reasonable best efforts to cooperate with
the Company in its efforts to prepare and mail the Information Statement by July
21, 2004.
(b) Each of Buyer and the Company agrees to provide promptly to the
other such information concerning its business and financial statements and
affairs as, in the reasonable judgment of Buyer or its counsel, may be required
or appropriate under applicable law for inclusion in the Information Statement,
or in any amendments or supplements thereto, and to cause its counsel and
auditors to cooperate with the other's counsel and auditors in preparation of
the Information Statement. Anything to the contrary contained herein
notwithstanding, the Company shall not include in Information Statement any
information with respect to Buyer or its affiliates or associates, the form and
content of which shall not have been approved by Buyer prior to such inclusion;
provided, however, that Buyer covenants to provide information with respect to
Buyer and its affiliates and associates to the extent necessary to ensure the
Company's compliance with Regulation 14E under the Exchange Act. The Company
shall cause the Information Statement to comply with Regulation 14E under the
Exchange Act, and the process by which Company shall solicit the holders of
Company Capital Stock and Company Options in connection with this Agreement and
the transactions contemplated hereby shall comply with Regulation 14E under the
Exchange Act; provided, however, that the foregoing shall not affect or limit
the binding nature of this Agreement by and among the parties who have executed
and delivered it as of the date hereof.
(c) As promptly as practical after the date any Buyer Common Stock
is issued pursuant to this Agreement, Buyer shall prepare and make such filings
as are required under applicable blue sky
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laws relating to the transactions contemplated by this Agreement. After the
Closing, the Company shall use reasonable and good faith efforts to assist Buyer
as may be necessary to comply with the securities and blue sky laws relating to
the transactions contemplated by this Agreement.
5.2 RESERVED.
5.3 ACCESS TO INFORMATION. Upon reasonable advance notice, and during
regular working hours, the Company shall afford Buyer and its accountants,
counsel and other representatives, reasonable access during the period from the
date hereof and prior to the Effective Time to (i) all of the properties, books,
contracts, written commitments and records of the Company, (ii) all other
information concerning the business, properties and personnel (subject to
restrictions imposed by applicable law) of the Company as Buyer may reasonably
request, and (iii) all employees of the Company as identified by Buyer; provided
that such access shall not create an unreasonable disruption to the conduct of
the Company's business. The Company agrees to provide to Buyer and its
accountants, counsel and other representatives copies of internal financial
statements (including Tax Returns and supporting documentation) promptly upon
request. No information or knowledge obtained in any investigation pursuant to
this Section 5.3 or otherwise shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Acquisition in accordance with the terms and
provisions hereof.
5.4 REQUIRED APPROVALS AND EXEMPTIONS; REASONABLE EFFORTS. As promptly as
practicable after the date of this Agreement, the Parties will make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions. Subject to the terms and conditions provided in this
Agreement, each of the parties hereto shall use commercially reasonable efforts
to take promptly, or cause to be taken (including actions after the Closing) all
actions, and to do promptly, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the Contemplated Transactions, to obtain all necessary waivers,
consents and approvals and to effect all necessary registrations and filings and
to remove any injunctions or other impediments or delays, legal or otherwise, in
order to consummate and make effective the Contemplated Transactions for the
purpose of securing to the parties hereto the benefits contemplated by this
Agreement; provided, however, that Buyer shall not be required to agree to any
divestiture by the Buyer or the Company or any of Buyer's other Subsidiaries or
affiliates, of shares of capital stock or of any business, assets or property of
Buyer or its Subsidiaries or affiliates, or of the Company, its affiliates, or
the imposition of any limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
Each party hereto, at the request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or desirable for effecting completely the consummation of the
Acquisition and the Contemplated Transactions.
5.5 CONFIDENTIALITY. Each of the parties hereto hereby agrees that the
information obtained in any investigation pursuant to the negotiation and
execution of this Agreement or the effectuation of the Contemplated Transactions
shall be governed by the terms of the Confidential Information Agreement dated
as of May 13, 2004 (the "CONFIDENTIALITY AGREEMENT") between the Company and
Buyer. Without limiting the foregoing, the Company and Selling Stockholders
agree that, except with the prior
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written permission of the Buyer, they shall at all times hold in confidence and
trust and not use or disclose any confidential information of (x) the Company
provided to or learned by them prior to the Closing or provided to them by Buyer
or the Company after the Closing or (y) Buyer provided to or learned by it in
connection with the due diligence process in connection with Contemplated
Transactions and the drafting and negotiation of this Agreement and the Related
Agreements. Notwithstanding the foregoing, the confidentiality restrictions of
this Section 5.5 shall not apply to information that (i) was in the public
domain at the time it was disclosed or has entered the public domain through no
fault of the receiving party, (ii) is disclosed pursuant to the order or
requirement of a court, administrative agency, or other Governmental Entity;
provided, however, that the receiving party shall provide prompt notice of such
court order or requirement to the disclosing party to enable the disclosing
party to seek a protective order or otherwise prevent or restrict such
disclosure, (iii) with respect to information described in clause (y) above, was
known by the receiving party at the time it is disclosed, (iv) is subsequently
lawfully disclosed to the receiving party by a third party not bound by
obligations of confidentiality or (v) is used by a Selling Stockholder who is an
employee of the Company or Buyer in the performance of services for the Company
after the Closing.
5.6 PUBLIC DISCLOSURE. Except to the extent required by Applicable Legal
Requirements, no party shall issue any statement or communication to any third
party (other than their respective agents) regarding the subject matter of this
Agreement or the transactions contemplated hereby, including, if applicable, the
termination of this Agreement and the reasons therefor, without the consent of
the other parties, which consent shall not be unreasonably withheld, provided,
however, that this restriction shall not prevent any party from making any
disclosure that is necessary or appropriate to comply with applicable laws or
regulations; and provided, further, that this restriction shall not prevent
Buyer, the Company or Onex American Holdings II LLC (or Onex Corporation) from
issuing a press release after the execution of this Agreement with respect to
this Agreement or the transactions contemplated hereby provided such press
release has been approved by the other parties referenced in this proviso
(excluding Onex Corporation), which approval shall not be unreasonably withheld.
5.7 EXPENSES. Whether or not the Acquisition is consummated, all fees and
expenses incurred in connection with the Acquisition including, without
limitation, all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties incurred by a party in connection with the
negotiation and effectuation of the terms and conditions of this Agreement and
the Contemplated Transactions ("THIRD PARTY EXPENSES"), shall be the obligation
of the respective party incurring such fees and expenses. The Company shall pay
its Third Party Expenses prior to Closing to the extent possible, and to the
extent not possible, shall properly accrue any such Third Party Expenses on its
books and records. If the amount of actual and anticipated Third Party Expenses
listed on Section 2.20 of the Company Disclosure Schedule updated as of the
Closing with the Company's then current reasonable estimate of all Third Party
Expenses actually incurred and expected to be incurred by the Company or any of
its Subsidiaries in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the transactions contemplated hereby
(which updated amount the Company shall provide in writing to Buyer prior as of
Closing) exceeds $1,250,000 (the "EXPENSE CAP"), the amount of such excess (such
amount, the "CLOSING EXCESS EXPENSES") shall reduce the Closing Consideration.
If it is determined after the Closing, in accordance with the provisions of
Article VIII, that the Third Party Expenses of the Company exceed the Expense
Cap or exceed the
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Expense Cap in an amount greater than as determined at Closing, the amount of
such excess not already reduced from the Consideration shall, notwithstanding
any provision of this Agreement to the contrary, be withheld by Buyer from and
shall reduce the amount of First Anniversary Consideration. Such amount,
exclusive of the Closing Excess Expenses, is referred to as the "EXCESS THIRD
PARTY EXPENSES".
5.8 TERMINATION OF BENEFIT PLANS. Effective prior to the Closing (such
date, the "TERMINATION DATE"), the Company and ERISA Affiliates, as applicable,
shall each terminate any and all group severance, separation or salary
continuation, programs or arrangements (unless Buyer provides written notice to
the Company at least five days prior to the Closing that such plans shall not be
terminated) (collectively, "COMPANY DEFERRAL PLANS"). Unless Buyer provides such
written notice to the Company, the Company shall provide Buyer at the Closing
with evidence that such Company Deferral Plan(s) have been terminated (effective
as of the Termination Date) pursuant to resolutions of the Company's or its
ERISA Affiliates (as may be applicable) Board of Directors. The form and
substance of such resolutions shall be subject to prior review and approval of
Buyer, which approval shall not be unreasonably withheld. The Company and its
Subsidiaries also shall take such other actions in furtherance of terminating
such Company Employee Plan(s) as Buyer may reasonably require.
5.9 RELEASE OF LIENS. The Company shall file, or shall have filed, all
agreements, instruments, certificates and other documents, in form and substance
reasonably satisfactory to Buyer, that are necessary or appropriate to effect
the release of all Liens set forth in Schedule 5.9 to this Agreement.
5.10 DELIVERY OF ADDITIONAL INFORMATION. Each party hereto shall deliver
or make available to the other parties any information that such party may
reasonably request, including but not limited to, in the case of the Company and
Buyer, audited financial statements on a consolidated basis, in order to
effectuate filings, notices, petitions or statements required by any
Governmental Body in connection with the Acquisition and the transactions
contemplated hereby, including, without limitation, any filings required under
the Securities Act, the Exchange Act, or any rules and regulations of the SEC.
5.11 NOTIFICATION OF CERTAIN MATTERS. Each of the Company and the Buyer
shall give prompt notice to the other of: (i) the occurrence or non-occurrence
of any event, the occurrence or non-occurrence of which would reasonably be
expected to cause any representation or warranty of the Company or Buyer, as the
case may be, contained in this Agreement to be untrue or inaccurate at or prior
to the Closing, and (ii) any failure of the Company or Buyer, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.11 shall not (a) limit or otherwise
affect any remedies available to the party receiving such notice or (b)
constitute an acknowledgment or admission of a breach of this Agreement. Without
limiting the provisions of Section 8.5(h), no disclosure by the Company or Buyer
as the case may be pursuant to this Section 5.11, however, shall be deemed to
amend or supplement the Company Disclosure Schedule or prevent or cure any
misrepresentations, breach of warranty or breach of covenant.
5.12 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. If, at any time after
the Closing Date, Buyer shall reasonably determine that any deeds, bills of
sale, assignments or assurances or other documents or instruments or any other
acts or things are reasonably necessary or proper (a) to vest,
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perfect or confirm, of record or otherwise, in Buyer, its right to, and title or
interest in, the Company Capital Stock transferred by the Selling Stockholders
or (b) otherwise to carry out the purposes of this Agreement, Buyer shall so
advise the Onex Stockholder Representative and the Non-Onex Stockholder
Representative in writing, and the Selling Stockholders thereupon shall execute
and deliver all such deeds, bills of sale, assignments and assurances and other
documents and instruments and do all such other acts and things reasonably
necessary, desirable or proper to vest, perfect or confirm Buyer's right, title
or interest in, to or under the Company Capital Stock transferred by the Selling
Stockholders, and otherwise to carry out the purposes of this Agreement. Buyer
shall, at the request of any of the other parties hereto, execute and deliver
such other instruments and do and perform such other acts and things as may be
necessary or proper for effecting completely the consummation of the Acquisition
and the transactions contemplated hereby.
5.13 SECTION 338 ELECTION.
(a) The Company and the Selling Stockholders are hereby notified
that Buyer reserves the right to make an election under Section 338(g) of the
Code with respect to the purchase of the Company Capital Stock provided that the
requirements under Section 338(g) of the Code and the regulations promulgated
thereunder are otherwise satisfied.
(b) Buyer and the Company agree that the Consideration paid by Buyer
and the liabilities of the Company, along with any other relevant items, will be
allocated to the assets of Company for all purposes (including U.S. income tax
and U.S. GAAP purposes) in a manner consistent with the provisions under
Sections 338 and 1060 of the Code and the regulations promulgated thereunder.
(c) Buyer and the Company shall file all required U.S. and non-U.S.
Tax Returns (including amended returns and claims for refund) and information
reports in a manner consistent with the allocations established in Section
5.13(b) of this Agreement.
5.14 DIRECTORS AND OFFICERS' INDEMNIFICATION.
(a) Except to the extent required by applicable Legal Requirement,
Buyer agrees that for a period of six (6) years after the Closing, it shall not,
and shall not permit the Company to, amend, repeal or modify any provision in
the Company's Organizational Documents relating to exculpation or
indemnification of present or former officers and directors of the Company (or
any indemnification or similar agreement in effect between the Company and any
such officer or director without the written consent of such officer or
director), it being the intent of the parties that the officers and directors of
the Company prior to the Closing shall continue to be entitled to such
exculpation and indemnification and to the benefit of any such agreement to the
fullest extent permitted under the law of the Company's jurisdiction of
incorporation and other applicable Legal Requirements; provided, however, that
nothing in this Section 5.14 shall be construed to limit the ability of the
Company to merge or consolidate with or sell all or substantially all of its
assets to another entity; provided, that in the event of a merger or
consolidation, the surviving entity shall honor the indemnity obligations of the
Company.
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(b) The Company shall maintain, and Buyer shall cause the Company to
maintain, at no additional expense to Buyer or the Company, the officers' and
directors' liability insurance policies in effect as of the date of this
Agreement for a period of six (6) years after the Closing, with respect to
actions and omissions occurring prior to the Closing Date, on terms which are at
least as favorable, including at least the same coverage, as the terms of such
insurance policies in effect on the date hereof. The expense of such policies
shall be borne by the Company and shall be deemed a Third Party Expense
hereunder.
5.15 CERTAIN ACTIONS BY BUYER. Buyer shall not cause the Company to merge
with another entity, regardless of whether the Company or such other entity
survives such merger, until the first business day following the Closing Date.
5.16 280G APPROVAL(a) . As soon as reasonably practicable after the
execution of this Agreement, the Company shall submit to the Stockholders for
approval (in a manner reasonably satisfactory to Buyer), by such number of
Stockholders as is required by the terms of Section 280G(b)(5)(B) of the Code,
any payments and/or benefits that may separately or in the aggregate, constitute
"parachute payments," within the meaning of Section 280G(b)(2) of the Code
("SECTION 280G PAYMENTS") (which initial determination shall be made by the
Company and shall be subject to review and approval by Buyer, which shall not be
unreasonably withheld), such that such Section 280G Payments shall not be deemed
to be Section 280G Payments, and prior to the Effective Time the Company shall
deliver to Buyer certification that (A) a Stockholder vote was solicited in
conformance with Section 280G of the Code and the regulations promulgated
thereunder and the requisite Stockholder approval was obtained with respect to
any Section 280G Payments that were subject to the Stockholder vote, or (B) that
the Stockholder approval of Section 280G Payments was not obtained and as a
consequence, that such payments and/or benefits shall not be made or provided to
the extent they would cause any amounts to constitute Section 280G Payments,
pursuant to the waivers of those payments and/or benefits duly executed by the
affected individuals prior to the Stockholder vote.
5.17 REGISTRATION OBLIGATIONS; RESTRICTIONS ON TRANSFER.
(a) FIRST ANNIVERSARY SHARES.
(i) If Buyer elects pursuant to Section 1.3(b) hereof to issue
Buyer Common Stock as part of the First Anniversary Consideration (the "FIRST
ANNIVERSARY SHARES"), then, as soon as practicable after the date the First
Anniversary Shares become issuable pursuant to Section 1.3(b) (and in no event
more than five (5) Business Days thereafter), Buyer shall have registered all of
such shares with the SEC on Form S-1 or S-3 so as to permit the resale of the
First Anniversary Shares.
(ii) If Buyer so elects to issue First Anniversary Shares,
Buyer shall prepare (with the assistance of the Company) the requisite
registration statement and file it with the SEC.
(b) EARN-OUT PAYMENT.
(i) If (x) after the Closing Date and before the date on which
the Earn-Out Payment is due pursuant to Section 1.4 hereof, Buyer files a
registration statement (collectively with any
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registration statement referred to in Section 5.17(a), a "REGISTRATION
STATEMENT") with the SEC (excluding any registration statement currently on file
with the SEC and any amendment thereto, other than an amendment to such
registration statement causing such registration statement to cover the resale
of Buyer Common Stock held by a Person other than Buyer) covering the issuance
or resale of Buyer Common Stock issued by Buyer or amends any registration
statement causing such registration statement to cover the resale of Buyer
Common Stock held by a Person other than Buyer, other than (A) a registration
relating solely to employee benefit plans, and (B) a registration in which the
only equity security being registered is Buyer Common Stock issuable upon
conversion of convertible debt securities which are also being registered and
(y) Buyer elects pursuant to Section 1.4(c) hereof to issue Buyer Common Stock
as part of the Earn-Out Payment (collectively with the First Anniversary Shares,
the "REGISTRABLE SECURITIES"), then as soon as practicable after the date such
shares become issuable (and in no event more than five (5) Business Days
thereafter), Buyer shall have registered all of the shares of Buyer Common Stock
with the SEC on the Registration Statement as to permit each holder of
Registrable Securities (the "HOLDERS") to resell such shares of Buyer Common
Stock.
(ii) If the registration of which Buyer under this clause (b)
gives notice is for a registered public offering involving an underwriting,
Buyer shall so advise the Holders. In such event, the right of any Holder to
registration pursuant to clause (b) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting shall be limited to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with Buyer and the other holders distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting by Buyer. If any Holder
disapproves of the terms of any such underwriting, such person may elect to
withdraw therefrom by written notice to Buyer.
(c) In the case of each registration effected by Buyer pursuant to
this Section 5.17(a) or (b), Buyer will keep each Holder advised in writing as
to the initiation of such registration and as to the completion thereof. Buyer
will:
(i) Prepare and file with the SEC a Registration Statement (or
amendment thereto) with respect to such securities and use its reasonable
efforts to cause such Registration Statement to become and remain effective from
the later of (i) the date on which Registrable Securities are first included
therein and (ii) the date the Registrable Securities are issued for at least 180
days or, if earlier, until the distribution described in the Registration
Statement has been completed;
(ii) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the Registration Statement, preliminary prospectus, final
prospectus and such other documents as such persons may reasonably request in
order to facilitate the public offering of such securities;
(iii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement;
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(iv) Use its commercially reasonable efforts to register and
qualify the securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that Buyer shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;
(v) Promptly notify each Holder of Registrable Securities
covered by such Registration Statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
made;
(vi) Cause all Registrable Securities registered pursuant to
this Agreement to be listed on each securities exchange or market on which
similar securities issued by Buyer are then listed;
(vii) On or before the effective date of the Registration
Statement, furnish to Buyer's transfer agent unlegended certificates
representing ownership of the Registrable Securities being sold; and
(viii) Make available, at the cost of the Holders (except for
attorneys' fees and disbursements which are Registration Expenses) and during
normal business hours upon reasonable advance notice, for inspection by the
Holders and their attorneys and accountants, all financial and other records and
other information, pertinent corporate documents and properties of Buyer and its
subsidiaries, as shall be reasonably necessary to enable the Holders to exercise
their due diligence responsibilities; provided however, that any such records
and other information disclosed by Buyer pursuant to this clause (viii) shall be
subject to the confidentiality provisions of Section 5.5.
(d) Subject to paragraph (e) below, in the event (i) of any request
by the SEC or any other federal or state governmental authority during the
period of effectiveness of the Registration Statement for amendments or
supplements to such Registration Statement or related prospectus or for
additional information; (ii) of the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by Buyer of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) of any event or circumstance not otherwise
covered by clause (v) below which, upon the advice of its counsel, necessitates
the making of any changes in a Registration Statement or prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so that
they will not contain any untrue statement of a material fact or any omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (v) Buyer determines in good faith that
offers and sales pursuant to a Registration Statement should not be made by
reason of the presence of material undisclosed circumstances or developments
with respect to which the disclosure would be required in such a Registration
Statement or related prospectus, is reasonably likely to have a seriously
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detrimental effect on Buyer, then Buyer shall deliver a certificate in writing
to the Holders (the "SUSPENSION NOTICE") to the effect of the foregoing and,
upon receipt of such Suspension Notice, the Holders shall refrain from selling
any Registrable Securities pursuant to the Registration Statement (a
"SUSPENSION") until the Holders have received copies of a supplemented or
amended prospectus prepared and filed by Buyer, or until they are advised in
writing by Buyer that the current prospectus may be used, and have received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in any such prospectus. In the event of any
Suspension, Buyer shall use commercially reasonable efforts to cause the use of
the prospectus so suspended to be resumed as soon as reasonably practicable
after the delivery of a Suspension Notice to the Holders.
(e) Notwithstanding the foregoing, (i) no Suspension shall continue
for more than 90 days, and (ii) Buyer shall not deliver more than two Suspension
Notices under clause (v) of Section 5.17(d) in any twelve-month period.
(f) Provided that a Suspension is not then in effect, each
Stockholder may sell Registrable Securities under a Registration Statement,
provided, to the extent required by applicable law, that it arranges for
delivery of a current prospectus to the transferee of such securities. Upon
receipt of a reasonable request therefor, Buyer shall provide an adequate number
of current prospectuses to the Stockholder Representatives.
(g) EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with all registrations pursuant to Section 5.17 shall be borne by
Buyer. All Selling Expenses relating to securities registered on behalf of the
Holders and all other registration expenses shall be borne by the Holders on a
pro rata basis based on the number of Registrable Securities included in the
registration. Any fees and disbursements of one counsel for the selling
Holder(s) selected by them by majority vote, in excess of $35,000, shall be
borne by the Holders on a pro rata basis, based on the number of Registrable
Securities included in the registration.
(h) INFORMATION. Each Holder shall furnish to Buyer such information
regarding such Holder, the shares of Buyer Common Stock held by them and the
distribution proposed by such Holder as Buyer may reasonably request in writing
and as shall be required in connection with any registration referred to in this
Agreement.
(i) INDEMNIFICATION. In the event any shares of Buyer Common Stock
are included in a Registration Statement under this Section 5.17:
(i) To the extent permitted by law, Buyer will indemnify and
hold harmless each Holder, its officers and directors, any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act or
the Exchange Act, against any losses, claims, damages, liabilities (joint or
several), costs (including, without limitation, costs of investigation,
preparation and reasonable attorneys' fees) and expenses (collectively,
"REGISTRATION LOSSES") to which they may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such
Registration Losses arise out of or are based upon any of the following
statements, omissions or violations (collectively a "VIOLATION"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
Registration
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Statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by Buyer of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; provided, however, that the
indemnity agreement contained in this subsection (i) (i) shall not apply to
amounts paid in settlement of any such Registration Loss if such settlement is
effected without the consent of Buyer (which consent shall not be unreasonably
withheld), nor shall Buyer be liable in any such case for any such Registration
Loss to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by or on behalf of any
such Holder.
(ii) To the extent permitted by law, each selling Holder
(severally and not jointly) will indemnify and hold harmless Buyer, each of its
directors, each of its officers who has signed the Registration Statement, each
person, if any, who controls Buyer within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such Registration Statement
and any controlling person of any such underwriter or other Holder, against any
Registration Losses to which any of the foregoing persons may become subject,
under the Securities Act, the Exchange Securities Act or other federal or state
law, insofar as such Registration Losses arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
provided, however, that the indemnity agreement contained in this subsection (i)
(ii) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall the aggregate liability of any Holder pursuant to this
subsection (i) (ii) and Section 5.17(i)(iv) exceed the net proceeds from the
offering received by such Holder, except in the case of willful fraud by such
Holder.
(iii) Promptly after receipt by an indemnified party under
this subsection (e) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this subsection (e) deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this subsection (i) except to the extent such failure is
prejudicial to the indemnifying party's ability to defend such action and the
omission so to deliver written notice to the indemnifying party will not relieve
it of any liability that it
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may have to any indemnified party otherwise than under this subsection (i). The
indemnifying party shall not consent to entry of any judgment or enter into any
settlement unless (i) there is no finding or admission of any violation of any
rights of any person and no effect on any other claims that may be made against
the indemnified party, and (ii) the sole relief provided is monetary damages
that are paid in full by the indemnifying party.
(iv) If the indemnification provided for in this subsection
(i) is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Registration Loss referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such Registration Loss in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the statements or
omissions that resulted in such Registration Loss as well as any other relevant
equitable considerations; provided, that, in no event shall the aggregate
liability of any Holder under this subsection (i)(iv), and Section 5.17(i)(ii)
exceed the net proceeds from the offering received by such Holder, except in the
case of willful fraud by such Holder. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control. The obligations of Buyer and Holders under this
subsection (i) shall survive the completion of any offering of Registrable
Securities in a Registration Statement under this Section 5.17, and otherwise.
(j) RESTRICTIONS ON TRANSFERABILITY. Unless covered by an effective
Registration Statement, the Buyer Common Stock and any other securities issued
in respect of such stock upon any stock split, stock dividend, recapitalization,
merger, or similar event, shall not be sold, assigned, transferred or pledged
except upon the conditions specified in this Agreement, which conditions are
intended to ensure compliance with the provisions of the Securities Act. Each
Holder will cause any proposed purchaser, assignee, transferee, or pledgee of
any such shares held by the Holder or transferor to agree to take and hold such
securities subject to the restrictions and upon the conditions specified in this
Agreement.
(k) RESTRICTIVE LEGEND. Each certificate representing the
Registrable Securities, or any other securities issued in respect of such stock
upon any stock split, stock dividend, recapitalization, merger, or similar
event, shall (unless otherwise permitted by the provisions of subsection (l)
below) be stamped or otherwise imprinted with legends in substantially the
following form (in addition to any legends required by agreement or by
applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES MAY NOT BE
TRANSFERRED UNLESS A REGISTRATION
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STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION
OF COUNSEL FOR THE COMPANY, SUCH TRANSFER MAY BE MADE PURSUANT TO RULE
144, AND, IF APPLICABLE, RULE 145 OR REGISTRATION UNDER THE ACT IS
OTHERWISE UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT.
Each Holder consents to Buyer making a notation on its records and giving
stop transfer instructions to any transfer agent of its capital stock in order
to implement the restrictions on transfer established in this Agreement.
(l) NOTICE OF PROPOSED TRANSFERS. No sale, assignment, transfer or
pledge of Registrable Securities shall be made by any holder thereof to any
person unless such person shall first agree in writing to be bound by the
restrictions of this Agreement. Prior to any proposed sale, assignment, transfer
or pledge of any Registrable Securities, unless there is in effect a
Registration Statement under the Securities Act covering the proposed transfer,
the holder thereof shall give written notice to Buyer of such holder's intention
to effect such transfer, sale, assignment or pledge. Each such notice shall
describe the manner and circumstances of the proposed transfer, sale, assignment
or pledge in sufficient detail, and, if requested by Buyer, the holder shall
also provide, at such holder's expense, either (i) a written opinion of legal
counsel who shall be, and whose legal opinion shall be, reasonably satisfactory
to Buyer addressed to Buyer, to the effect that the proposed transfer of the
Registrable Securities may be effected without registration under the Securities
Act, or (ii) a "no action" letter from the SEC to the effect that the transfer
of such securities without registration will not result in a recommendation by
the staff of the SEC that action be taken with respect thereto, whereupon the
holder of such Registrable Securities shall be entitled to transfer such
Registrable Securities in accordance with the terms of the notice delivered by
the holder to Buyer. Each certificate evidencing the Registrable Securities
transferred as above provided shall bear the appropriate restrictive legend set
forth in subsection (k) above, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for such holder reasonably
acceptable to Buyer such legend is not required in order to establish compliance
with any provision of the Securities Act.
(m) CURRENT PUBLIC INFORMATION. Buyer covenants that it will file
any reports required to be filed by it under the Securities Act and Exchange Act
so as to enable Holders holding Buyer Common Stock issued to them hereunder to
sell such Buyer Common Stock without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rules 144, 144A and 145
under the Securities Act, as each may be amended from time to time, or (b) any
similar rule or rules hereafter adopted by the SEC, so long as the exemptions
provided for in such Rules would otherwise be available to such Holders at such
time. Upon the request of any such Holder, Buyer shall promptly deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding anything in this Agreement to the contrary, (i) the remedy of a
Holder for any breach of this paragraph (m) shall be limited to the dollar
amount of the Buyer Common Stock that could not be sold or which a Holder was
delayed in selling as a result of such breach valued as of the dates and
according to the procedures set forth in Article 1 with respect to such shares
of Buyer Common Stock, and (ii) no Holder may issue an Officer's Certificate or
otherwise assert a breach or make a claim with respect to this paragraph (m)
unless such Holder delivers written notice of such breach or claim to Buyer
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within thirty (30) days after the date such Holder was first unable to sell its
shares of Buyer Common Stock pursuant the exemptions provided by Rules 144, 144A
and 145 under the Securities Act, as each may be amended from time to time, as a
result of a breach of this paragraph (m).
5.18 DELIVERY OF FINANCIAL STATEMENTS. Commencing with the first fiscal
month (or portion thereof) of the Company after the Closing and terminating with
the last completed month of the Company occurring prior to the date the Earn-Out
Notice is delivered, Buyer shall deliver to each Stockholder Representative as
soon as practicable, but in any event within 20 days after the end of each such
month, the following financial statements of the Company and its Subsidiaries
(which shall be consolidated for the Company and its Subsidiaries only and shall
not include the consolidated results of Buyer): an unaudited statement of
operations for such month and an unaudited balance sheet as of the end of such
month. Each Stockholder Representative shall hold in confidence and trust such
financial statements and the information contained therein according to the
confidentiality provisions of Section 5.5 hereof.
5.19 PAYMENT OF INVESTMENT BANKING FEE. Concurrent with the payment of the
Earn-Out Amount pursuant to the provisions of Section 1.4 hereof, Buyer agrees
to pay a cash amount equal to the Investment Banking Fee directly to Bear,
Xxxxxxx & Co. Inc. in accordance with instructions provided to Buyer by Bear,
Xxxxxxx & Co., Inc. Such Investment Banking Fee shall reduce the amount of the
Earn-Out Amount Buyer is obligated to pay hereunder on a dollar for dollar
basis.
ARTICLE VI
CONDUCT PRIOR TO THE EFFECTIVE TIME
6.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, the Company agrees to conduct its business,
except to the extent that Buyer shall otherwise consent in writing, in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay the debts and Taxes of the Company when due
(subject to Buyer's right pursuant to Section 6.1(e) to review and approve the
filing of any Tax Returns), to pay or perform other obligations when due, and,
to the extent consistent with such ordinary course conduct of its business, to
preserve intact the present business organizations of the Company, to use
reasonable efforts to keep available the services of the present officers and
key employees of the Company and to use reasonable efforts to preserve the
relationships of the Company with customers, suppliers, distributors, licensors,
licensees, and others having business dealings with them. The Company shall
promptly notify Buyer of any event or occurrence or emergency not in the
ordinary course of business of the Company and any material event involving the
Company that arises during the period from the date of this Agreement and
continuing until the earlier of the termination date of this Agreement or the
Effective Time. In addition to the foregoing, except as expressly contemplated
by this Agreement and except as expressly set forth in Section 6.1 of the
Company Disclosure Schedule, the Company shall not, without the prior written
consent of Buyer, from and after the date of this Agreement:
(a) cause or permit any amendments to the certificate of
incorporation, bylaws or other organizational documents of the Company or the
Organizational Documents of any Subsidiary;
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(b) make any capital expenditures or enter into any commitment or
transaction exceeding $50,000 individually or $100,000 in the aggregate;
(c) pay, discharge, waive or satisfy, in an amount in excess of
$25,000 in any one case, or $100,000 in the aggregate, any claim, liability,
right or obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in the Current
Balance Sheet;
(d) adopt or change accounting methods or practices (including any
change in depreciation or amortization policies) other than as required by GAAP;
(e) make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes or file any Tax return unless a copy of such Tax
return has been delivered to Buyer for review a reasonable time prior to filing
and Buyer has approved such Tax return;
(f) revalue any of its assets (whether tangible or intangible),
including without limitation writing down the value of inventory or writing off
notes receivable other than in the ordinary course of business consistent with
past practice;
(g) except to the extent contemplated by this Agreement, declare,
set aside, or pay any dividends on or make any other distributions (whether in
cash, stock or property) in respect of any Company Capital Stock, or split,
combine or reclassify any Company Capital Stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Company Capital Stock, or repurchase, redeem or otherwise acquire,
directly or indirectly, any shares of Company Capital Stock (or options,
warrants or other rights exercisable therefor);
(h) increase the salary or other compensation payable or to become
payable to any officer, director, employee or advisor, or make any declaration,
payment or commitment or obligation of any kind for the payment (whether in cash
or equity) of a severance payment, termination payment, bonus or other
additional salary or compensation to any such person, except payments made
pursuant to written agreements outstanding on the date hereof and disclosed in
the Company Disclosure Schedule;
(i) sell, lease, license or otherwise dispose of or grant any
security interest in any of its properties or assets with a value exceeding
$25,000 individually or $100,000 in the aggregate, including without limitation
the sale of any accounts receivable of the Company, except properties or assets
(whether tangible or intangible) which are not Company Intellectual Property and
only in the ordinary course of business and consistent with past practices;
(j) make any loan to any person or entity or purchase debt
securities of any person or entity or amend the terms of any outstanding loan
agreement;
(k) incur any indebtedness, guarantee any indebtedness of any person
or entity, issue or sell any debt securities, or guarantee any debt securities
of any person or entity, except for advances
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to employees for travel and business expenses in the ordinary course of business
consistent with past practices and except as disclosed in the Company Disclosure
Schedule;
(l) waive or release any right or claim of the Company with a value
exceeding $25,000 individually or $50,000 in the aggregate, including any
write-off or other compromise of any account receivable of the Company;
(m) commence or settle any lawsuit, threat of any lawsuit or
proceeding or other investigation against the Company;
(n) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any Company Capital Stock or any securities convertible into, exercisable or
exchangeable for, or subscriptions, rights, warrants or options to acquire, or
other agreements or commitments of any character obligating it to issue or
purchase any such shares or other convertible securities, except for the
issuance of Company Capital Stock pursuant to the exercise of outstanding
Company Options;
(o) sell or license to any person or entity any rights to any
Company Intellectual Property or enter into any agreement or modify any existing
agreement with respect to any Company Intellectual Property with any person or
entity or with respect to any Intellectual Property of any person or entity
other than the granting of object code licenses in conjunction with the sale of
the Company's products in the ordinary course of the Company's business and
consistent with past practices, (ii) purchase or license any Intellectual
Property or enter into any agreement or modify any existing agreement with
respect to the Intellectual Property of any person or entity, except in the
ordinary course of business, (iii) enter into any agreement or modify any
existing agreement with respect to the development of any Intellectual Property
with a third party, or (iv) materially change pricing or royalties set or
charged by the Company to its customers or licensees;
(p) enter into or amend any agreement pursuant to which any other
party is granted marketing, distribution, development, manufacturing or similar
rights of any type or scope with respect to any products or technology of the
Company;
(q) enter into any agreement to purchase or sell any interest in
real property, grant any security interest in any real property, enter into any
lease, sublease, license or other occupancy agreement with respect to any real
property or alter, amend, modify or terminate any of the terms of any Lease
Agreements; or
(r) amend or otherwise modify (or agree to do so), or violate the
terms of, any of the Material Contracts;
(s) acquire or agree to acquire by merging or consolidating with, or
by purchasing any assets or equity securities of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the business of
the Company;
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(t) adopt or amend any Company Employee Plan or enter into any
employment contract;
(u) enter into any strategic alliance, affiliate agreement or joint
marketing arrangement or agreement;
(v) except as contemplated by this Agreement or pursuant to the
terms of any Company Plan, take any action to accelerate the vesting schedule of
any of the outstanding Company Options;
(w) promote, demote or terminate any current employee or consultant,
or encourage any current employee or consultant, to resign from the Company
without prior consultation with (which shall not require the consent of) Buyer;
(x) hire or offer to hire any employee or consultant except in
accordance with the Company's Business Plan in the form provided to Buyer;
(y) alter, or enter into any commitment to alter, its interest in
any corporation, association, joint venture, partnership or business entity in
which the Company directly or indirectly holds any interest;
(z) cancel or amend any insurance policy; or
(aa) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.1(a) through 6.1(z) hereof.
6.2 NO SOLICITATION. Until the Effective Time, neither the Company nor the
Selling Stockholders shall (nor shall the Company or the Selling Stockholders
permit, as applicable, any of their respective officers, directors, employees,
stockholders, agents, representatives or affiliates to), directly or indirectly,
take any of the following actions with any party other than Buyer and its
designees: (a) solicit, encourage, seek, entertain, support, assist, initiate or
participate in any inquiry, negotiations or discussions, or enter into any
agreement, with respect to any offer or proposal to acquire all or any material
part of the business, properties or technologies of the Company, or any amount
of the Company Capital Stock (whether or not outstanding), whether by merger,
purchase of assets, tender offer, license or otherwise, or effect any such
transaction, (b) disclose any information not customarily disclosed to any
person concerning the business, technologies or properties of the Company, or
afford to any person or entity access to its properties, technologies, books or
records, not customarily afforded such access, in each case, except in the
ordinary course of the operations of the business of the Company in accordance
with past practices, (c) assist or cooperate with any person to make any
proposal to purchase all or any part of the Company Capital Stock or assets
(which shall include assets with a value greater than $50,000) of the Company
(other than inventory in the ordinary course of business), or (d) enter into any
agreement with any person providing for the acquisition of the Company (other
than inventory in the ordinary course of business), whether by merger, purchase
of assets (which shall include assets with a value greater than $50,000),
license, tender offer or otherwise (other than inventory in the ordinary course
of business and as set forth in Section 6.1 of the Company Disclosure Schedule).
The Company
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shall immediately cease and cause to be terminated any such negotiations,
discussion or agreements (other than with Buyer) that are the subject matter of
clause (a), (b), (c) or (d) above. In the event that the Company, any Selling
Stockholder, or any of the Company's affiliates shall receive, prior to the
Effective Time, any offer, proposal, or request, directly or indirectly, of the
type referenced in clause (a), (c), or (d) above, or any request for disclosure
or access as referenced in clause (b) above, the Company or such Selling
Stockholder, as applicable, shall immediately (x) suspend any discussions with
such offeror or party with regard to such offers, proposals, or requests and (y)
notify Buyer thereof, including, subject to nondisclosure obligations of the
Company, information as to the identity of the offeror or the party making any
such offer or proposal and the specific terms of such offer or proposal, as the
case may be, and such other information related thereto as Buyer may reasonably
request. The parties hereto agree that irreparable damage would occur in the
event that the provisions of this Section 6.2 were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
by the parties hereto that Buyer shall be entitled to an immediate injunction or
injunctions, without the necessity of proving the inadequacy of money damages as
a remedy and without the necessity of posting any bond or other security, to
prevent breaches of the provisions of this Section 6.2 and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which Buyer may be entitled at law or in equity. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth above by any
officer, director, agent, representative or affiliate of the Company shall be
deemed to be a breach of this Agreement by the Company.
6.3 PROCEDURES FOR REQUESTING BUYER CONSENT. If the Company desires to
take an action which would be prohibited pursuant to Section 6.1 of this
Agreement without the written consent of Buyer, prior to taking such action the
Company may request such written consent by sending a letter or facsimile in
accordance with the notice provisions of Section 10.1.
ARTICLE VII
CONDITIONS TO THE ACQUISITION
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE ACQUISITION. The
respective obligations of the Company, Buyer and the Selling Stockholders to
effect the Acquisition shall be subject to the satisfaction, at or prior to the
Effective Time, of the following conditions:
(a) NO ORDER. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Acquisition illegal or
otherwise prohibiting consummation of the Acquisition.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Acquisition shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be threatened or pending.
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(c) GOVERNMENT APPROVALS. All approvals of governments and
government agencies necessary to consummate the Acquisition hereunder shall have
been received, and all filings required by Legal Requirements by the Company to
be made by it in order to consummate the Contemplated Transactions shall have
been made.
7.2 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate and effect this Agreement and the Contemplated Transactions shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, exclusively by
Buyer:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of the Company and the Selling Stockholders in
this Agreement (other than the representations and warranties of the Company and
the Selling Stockholders as of a specified date, which shall be true and correct
as of such date) (A) that are not qualified by materiality shall have been true
and correct in all material respects on the date they were made and shall be
true and correct in all material respects on and as of the Closing Date as
though such representations and warranties were made on and as of such time
(with materiality being measured individually and on an aggregate basis with
respect to all breaches of representations and warranties) and (B) that are
qualified by "materiality" or "Company Material Adverse Effect" shall have been
true and correct on the date they were made and shall be true and correct on and
as of the Closing Date as though such representations and warranties were made
on and as of such time, and (ii) the Company and the Selling Stockholders shall
have performed and complied in all material respects with all covenants and
obligations under this Agreement required to be performed and complied with by
such parties as of the Closing.
(b) CANCELLATION OF COMPANY OPTIONS. Except as set forth on Schedule
1.7, all Company Options that have not been exercised prior to the Closing shall
be cancelled and/or terminated on or before the Closing and shall be of no
further force or effect.
(c) REQUISITE STOCKHOLDER PARTICIPATION. The percentage resulting
from the following fraction shall not be less than ninety-one percent (91%): the
numerator of such fraction shall be the number of shares of outstanding Company
Capital Stock as of the Closing held by Selling Stockholders, and the
denominator of such fraction shall be the sum of (i) the total number of shares
of Company Capital Stock outstanding as of the Closing plus (ii) the total
number of Company Options outstanding as of Closing.
(d) NO MATERIAL ADVERSE EFFECT. There shall not have occurred any
event or condition of any character that has had or is reasonably likely to have
a Company Material Adverse Effect since the date of this Agreement.
(e) CERTIFICATE OF THE COMPANY. Buyer shall have received a
certificate, validly executed by the Chief Executive Officer of the Company for
and on the Company's behalf certifying the amount of the Aggregate Exercise
Price and stating that, as of the Closing:
(i) all representations and warranties made by the Company in
this Agreement (other than the representations and warranties of the Company as
of a specified date, which
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were true and correct as of such date) (A) that are not qualified by materiality
were true and correct in all material respects on the date they were made and
are true and correct in all material respects on and as of the Closing Date as
though such representations and warranties were made on and as of such time
(with materiality being measured individually and on an aggregate basis with
respect to all breaches of representations and warranties) and (B) that are
qualified by "materiality" or "Company Material Adverse Effect" were true and
correct on the date they were made and are true and correct on and as of the
Closing Date as though such representations and warranties were made on and as
of such time;
(ii) all covenants and obligations under this Agreement to be
performed or complied with by the Company on or before the Closing have been so
performed or complied with in all material respects; and
(iii) the conditions to the obligations of Buyer set forth in
this Section 7.2 have been satisfied in full (unless otherwise waived in
accordance with the terms hereof).
(f) LITIGATION. There shall be no action, suit, claim, order,
injunction or proceeding of any nature pending, or threatened in writing or
orally communicated to any member of the Company Officer Group (with any such
written or oral threat having a reasonable basis for such claim and having a
reasonable likelihood of resulting in substantial damages to the Company),
against Buyer or the Company, their respective properties or any of their
respective officers or directors arising out of, or in any way connected with,
the Acquisition or the Contemplated Transactions.
(g) THIRD PARTY CONSENTS. The Company shall have delivered to Buyer
all necessary consents, waivers and approvals of parties to any Material
Contract set forth in Section 2.5 of the Company Disclosure Schedule hereto as
are required thereunder in connection with the Acquisition, or for any such
Contract to remain in full force and effect without limitation, modification or
alteration after the Effective Time.
(h) LEGAL OPINION. Buyer shall have received a legal opinion from
legal counsel to the Company, substantially in the form attached hereto as
EXHIBIT G.
(i) CERTIFICATE OF SECRETARY OF COMPANY. Buyer shall have received a
certificate, validly executed by the Secretary of the Company, certifying as to
(i) the terms and effectiveness of the Organizational Documents and the good
standing of the Company, and (ii) the valid adoption of resolutions of the Board
of Directors of the Company (whereby the Acquisition and the Contemplated
Transactions were unanimously approved by the Board of Directors) and (iii)
execution of this Agreement by all Selling Stockholders.
(j) CERTIFICATES OF GOOD STANDING. Buyer shall have received a
long-form certificate of good standing from the Secretary of State of the State
of Delaware, and a good standing certificate from each jurisdiction in which the
Company is qualified to do business, each of which to be dated within a
reasonable period prior to Closing with respect to the Company.
(k) TERMINATION OF COMPANY DEFERRAL PLANS. The Company Deferral
Plans shall have been terminated effective as of the day immediately preceding
the Closing Date.
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(l) EMPLOYEES; EMPLOYMENT AND NONCOMPETITION AGREEMENTS.
(i) The employees listed on Schedule 7.2(l)(i) (the "LISTED
EMPLOYEES") shall have accepted offers of employment with Buyer in the form
provided to such Listed Employees by Buyer prior to Closing (the "OFFER LETTER
AGREEMENTS").
(ii) The Employment Agreements shall become effective at the
Closing Date and all of the individuals who have entered into such agreements
shall continue to be employed by Company as of the Closing Date and shall not
have notified (whether formally or informally) Buyer or Company of such
individual's intention of leaving the employ of Buyer or Company following the
Closing Date.
(iii) Each Listed Employee and each contractor of the Company
providing Intellectual Property development services to the Company after the
Closing Date shall have entered into and executed the Buyer's standard form of
proprietary information and inventions assignment agreement.
(m) RELEASE OF LIENS. Buyer shall have received from the Company a
duly and validly executed copy of all agreements, instruments, certificates and
other documents, in form and substance reasonably satisfactory to Buyer, that
are necessary or appropriate to evidence the release of all Liens set forth in
Schedule 5.9 to this Agreement effective as of the Closing.
(n) REGULATION S AGREEMENT. Each Selling Stockholder who is not a
"U.S. Person" as that term is defined in Regulation S shall have executed and
delivered to Buyer an agreement in the form attached hereto as EXHIBIT H (each,
a "REGULATION S AGREEMENT").
(o) RESIGNATION OF OFFICERS AND DIRECTORS. Buyer shall have received
a written resignation from each of the officers and directors of the Company
effective as of the Closing and no such letter shall have been withdrawn.
(p) COMPLIANCE WITH FIRPTA. Buyer shall have received from Company a
certificate, in form and substance reasonably satisfactory to Buyer, signed by a
duly authorized officer of Company and certifying pursuant to Section 1.897-2(h)
of the Treasury Regulations that the capital stock of Company is not a United
States real property interest within the meaning of Section 897(c)(1) of the
Code.
(q) INVESTOR QUESTIONNAIRE. Each Selling Stockholder that has not
executed and delivered a Regulation S Agreement shall have completed, executed
and returned to Buyer an Investor Questionnaire in the form attached hereto as
EXHIBIT I.
(r) ENVIRONMENTAL MATTERS. MCNC Research & Development Institute,
the landlord of Unitive Electronics, Inc., a Subsidiary of the Company ("UEI"),
with respect to 0000 Xxxxxxxxxx Xxxx, Research Triangle Park, North Carolina
(the "PROPERTY") shall have agreed in writing to indemnify UEI with respect to
environmental matters in connection with the Property, as set forth in EXHIBIT J
hereto. A Phase II environmental study shall have been completed with respect to
the
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Property which shall not have recommended remediation measures with respect to
the Property, the implementation cost of which exceeds an aggregate of $200,000.
(s) TERMINATION OF AGREEMENTS. The following agreements shall have
been terminated: (i) the Series A Preferred Stock Purchase Agreement, dated
November 13, 2003, by and among the Company and the investors listed on Schedule
1 thereto, (ii) the First Amended and Restated Shareholders Agreement dated as
of November 13, 2003 among the Company and the holders of Company Capital Stock
and Company Options listed therein and (iii) the First Amended and Restated
Registration Rights Agreement dated as of November 13, 2003 among the Company
and the holders of Company Capital Stock and Company Options listed therein.
(t) SECTION 280G PAYMENTS. With respect to any payments or benefits
that may constitute a Section 280G Payment, the Stockholders shall have
approved, pursuant to the method provided for in the regulations promulgated
under Section 280G of the Code, any such Section 280G Payments or shall have
disapproved such payments, and, as a consequence, no Section 280G Payments shall
be paid or provided for in any manner and Buyer and its subsidiaries shall not
have any liabilities with respect to any Section 280G Payments. (
(u) NO ACCELERATION OF DEBT. Without limiting Section 7.2(g), all
debt obligations of the Company listed on Schedule 2.5 of the Company Disclosure
Schedule, the payment schedules or maturity dates of which would otherwise be
accelerated or altered as a result of the Contemplated Transactions or with
respect to which the Contemplated Transactions would create the right for the
respective creditor(s) to take possession of the underlying collateral, shall
have been amended in writing or written waivers thereto shall have been obtained
such that the payment schedules and maturity dates shall not be accelerated or
altered as a result of the Contemplated Transactions and such that the
respective creditor(s) may not take possession of the underlying collateral as a
result of the Contemplated Transactions, and such amendments or waivers shall
have been delivered by the Company to Buyer.
(v) TERMINATION OF PENTECH PURCHASE RIGHT. Without limiting Section
7.2(g), the right of Pentech Financial Services, Inc. to purchase up to an
aggregate of $1,500,000 of securities issued in the Company's future private
equity financings set forth in that certain Master Equipment Lease dated January
2002 between Pentech Financial Services, Inc. and the Company shall have been
terminated, and evidence of such termination shall have been delivered by the
Company to Buyer.
7.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
The obligations of the Company and the Selling Stockholders to consummate and
effect this Agreement and the Contemplated Transactions shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, together by the Company and
the Onex Stockholder Representative.
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of Buyer in this Agreement shall have been true
and correct on the date they were made and shall be true and correct in all
material respects (without giving effect to any limitation as to "materiality"
set forth therein) on and as of the Closing Date as though such representations
and
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warranties were made on and as of such time, and (ii) Buyer shall have performed
and complied in all material respects with all covenants and obligations under
this Agreement required to be performed and complied with by it as of the
Closing Date.
(b) LEGAL OPINION. Buyer shall have delivered to the Company and the
Selling Stockholders a legal opinion from legal counsel to Buyer, substantially
in the form attached hereto as EXHIBIT K.
(c) CERTIFICATE OF THE BUYER. The Company and the Selling
Stockholders shall have received a certificate, validly executed by the Chief
Financial Officer of the Buyer for and on the Buyer's behalf, to the effect
that, as of the Closing:
(i) all representations and warranties made by the Buyer in
this Agreement (other than the representations and warranties of the Buyer as of
a specified date, which were true and correct as of such date) were true and
correct in all material respects on the date they were made and on and as of the
Closing Date as though such representations and warranties were made on and as
of such time;
(ii) all covenants and obligations under this Agreement to be
performed or complied with by the Buyer on or before the Closing have been so
performed or complied with in all material respects; and
(iii) the conditions to the obligations of the Company set
forth in this Section 7.3 have been satisfied in full (unless otherwise waived
in accordance with the terms hereof).
(d) LITIGATION. There shall be no action, suit, claim, order,
injunction or proceeding of any nature pending or threatened in writing or
verbally communicated to the Company Officer Group against Buyer or the Company,
their respective properties or any of their respective officers or directors
arising out of, or in any way connected with, the Acquisition or the
Contemplated Transactions.
(e) CERTIFICATE OF SECRETARY OF THE BUYER. The Company and the
Selling Stockholders shall have received a certificate, validly executed by the
Secretary of the Buyer, certifying as to (i) the terms and effectiveness of the
Organizational Documents and the good standing of the Buyer, and (ii) the valid
adoption of resolutions of the Board of Directors of the Buyer (whereby the
Acquisition and the Contemplated Transactions were approved by the Board of
Directors).
(f) NO MATERIAL ADVERSE EFFECT. There shall not have occurred any
event or condition of any character that has had or is reasonably likely to have
a Buyer Material Adverse Effect since the date of this Agreement in a manner
that would be reasonably likely to adversely impact Buyer's ability to perform
its obligations under this Agreement or any Related Agreements to which it is a
party.
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ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW
8.1 SURVIVAL. All representations, warranties, covenants and agreements of
the Company and the Selling Stockholders contained in this Agreement shall
survive the Closing and any investigation at any time made by or on behalf of
Buyer until, and the right to make claims thereunder shall terminate upon, (a)
the thirtieth (30th) day following the expiration of the statute of limitations
(including any extensions thereof) applicable to any Tax liability for any
misrepresentation or breach of warranty made in Section 2.10 (Tax Matters), and
(b) the date which is twenty-four (24) months following the Closing Date (the
expiration of such period referred to in this clause (b) shall be referred to
herein as the "SURVIVAL DATE") for all other representations, warranties,
covenants and agreements of the Company and Selling Stockholders (including the
Pre-Closing Operation Indemnity described in Section 8.2(a)); provided, however,
that the representations and warranties in Section 2.2 (Company Capital
Structure) and Section 3.1 (Organization and Share Holdings) shall not
terminate. All representations, warranties, covenants and agreements of Buyer
contained in this Agreement shall terminate as of the Survival Date.
8.2 INDEMNIFICATION.
(a) Subject to Section 8.5, each Selling Stockholder agrees to
indemnify and hold Buyer and its officers, directors, employees, agents,
advisors, representatives and affiliates (the "BUYER INDEMNIFIED PARTIES"),
harmless against all claims, losses, liabilities, damages, deficiencies, costs
and expenses, including reasonable attorneys' fees and expenses of investigation
and defense, but specifically excluding special consequential and punitive
damages (hereinafter individually a "LOSS" and collectively "LOSSES") incurred
or sustained by the Buyer Indemnified Parties, or any of them, directly or
indirectly, as a result of (i) any breach or inaccuracy of a representation or
warranty of such Selling Stockholder contained in this Agreement or in any
certificate or other instruments delivered by such Selling Stockholder pursuant
to this Agreement, or (ii) any failure by such Selling Stockholder to perform or
comply with any covenant applicable to such Selling Stockholder contained in
this Agreement. In addition, subject to Section 8.5, each Indemnifying
Stockholder agrees, severally and not jointly, to indemnify and hold the Buyer
Indemnified Parties harmless against Losses incurred or sustained by the Buyer
Indemnified Parties, or any of them, directly or indirectly, as a result of: (i)
any breach or inaccuracy of a representation or warranty of the Company
contained in this Agreement or in any certificate or other instruments delivered
by it pursuant to this Agreement; (ii) any failure by the Company to perform or
comply with any covenant applicable to it contained in this Agreement to be
performed prior to the Closing Date; (iii) the operation of the Company or any
of its Subsidiaries relating only to the period prior to the Closing; provided,
however, that the indemnity under this clause (iii) shall cover Losses only
related to claims by employees and consultants against the Company and its
Subsidiaries, product, service, warranty or intellectual property claims against
the Company or any of its Subsidiaries, and noncompliance with Legal
Requirements relating to environmental matters; and provided further that this
clause (iii) shall not apply to any Loss to the extent such Loss would also
arise as the result of a breach or inaccuracy of a representation or warranty of
the Company contained in this Agreement or in any certificates or other
instruments delivered by it pursuant to this Agreement (the "PRE-CLOSING
OPERATION INDEMNITY"); or (iv) any amount in excess of the Applicable Amount
(defined
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below) actually paid by Buyer in conjunction with the acquisition of Additional
Shares, if any ("EXCESS AMOUNTS"). "ADDITIONAL SHARES" shall mean any
outstanding shares of Company Capital Stock or securities convertible into or
exercisable for Company Capital Stock not otherwise acquired by Buyer pursuant
to the transactions contemplated by this Agreement. "APPLICABLE AMOUNT" shall
mean the respective amounts due for shares of Company Capital Stock or
securities convertible into or exercisable for Company Capital Stock pursuant to
the terms of this Agreement. The indemnification obligation of the Selling
Stockholders and Indemnifying Stockholders in this Article VIII shall be several
and not joint; provided, however, that the indemnification obligations of (i)
the Onex Stockholders are assumed by Onex American Holdings II LLC, and both
Onex American Holdings II LLC and Buyer acknowledge that Onex American Holdings
II LLC is the sole Selling Stockholder responsible for any and all
indemnification obligations of the Onex Stockholders pursuant to this Article
VIII (provided that the indemnification obligations of Onex American Holdings II
LLC shall be binding upon any successor in interest of Onex American Holdings II
LLC by way of (x) sale or assignment of all or substantially all of its assets
to an Affiliate of Onex American Holdings II LLC, or (y) by way of merger,
equity sale or transfer, consolidation, or similar transaction with any Person;
(ii) the TAT Stockholders shall be joint and several among the TAT Stockholders.
(b) Buyer agrees to indemnify and hold the Selling Stockholders and
their respective Affiliates, partners, officers, directors, employees, agents,
advisors and representatives (the "STOCKHOLDER INDEMNIFIED PARTIES") harmless
against all Losses incurred or sustained by the Stockholder Indemnified Parties,
or any of them, directly or indirectly, as a result of (i) any breach or
inaccuracy of a representation or warranty of Buyer contained in this Agreement
or in any certificate or other instruments delivered by Buyer pursuant to this
Agreement, (ii) any failure by Buyer to perform or comply with any covenant
applicable to it contained in this Agreement, including, without limitation,
compliance with the provisions of Section 1.4(h), or (iii) the operation of the
Company or its Subsidiaries after the Closing Date; provided, however, that this
clause (iii) shall not be interpreted to apply to any Loss incurred or deemed to
have been incurred in connection with all or a portion of the Earn-Out Amount
not being earned (except to the extent Buyer has failed to comply with the
provisions of Section 1.4(h) as set forth in such section). The Stockholder
Indemnified Parties and the Buyer Indemnified Parties shall be referred to
herein collectively as the "INDEMNIFIED PARTIES".
8.3 ESCROW ARRANGEMENTS; CLAIMS FOR INDEMNIFICATION.
(a) INDEMNITY ESCROW FUND. As security for the indemnity obligations
provided for in Section 8.2(a) hereof, on the date of the payment of the First
Anniversary Consideration, Buyer will deposit with the Escrow Agent such portion
of the First Anniversary Consideration as set forth in Section 1.3(c), such
amount to be held and distributed by the Escrow Agent in accordance with the
terms and conditions set forth in this Article VIII. Any funds deposited by the
Buyer with the Escrow Agent pursuant to this Section 8.3, together with any
interest earned thereon from investments under Section 8.3(b)(iv) hereof, shall
be referred to herein as the "INDEMNITY ESCROW FUND." Except as expressly
provided in this Article VIII, the Indemnity Escrow Fund shall be the sole and
exclusive source to compensate the Buyer Indemnified Parties for any claims by
such parties for any Losses suffered or incurred by them and for which they are
entitled to recovery under this ARTICLE VIII. The Escrow Agent may execute this
Agreement following the date hereof but prior to the Closing, and such
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subsequent execution, if so executed after the date hereof, shall not affect the
binding nature of this Agreement as of the date hereof between the other
signatories hereto.
(b) INDEMNITY ESCROW PERIOD; DISTRIBUTION UPON TERMINATION OF
INDEMNITY ESCROW PERIODS.
(i) INDEMNITY ESCROW. Subject to the following requirements,
the Indemnity Escrow Fund shall be in existence during the period (the
"INDEMNITY ESCROW PERIOD") commencing upon receipt by the Escrow Agent of the
Indemnity Escrow Fund and shall terminate upon the earlier to occur of (A) 5:00
p.m., local time at Buyer's headquarters, on the date thirty (30) days after the
Survival Date (as such date is certified in writing by the Buyer to the Escrow
Agent), and (B) the date when the last portion of the Indemnity Escrow Fund then
held by the Escrow Agent is distributed in accordance with this Section 8.3
(such date, the "INDEMNITY ESCROW TERMINATION DATE"). Upon the Indemnity Escrow
Termination Date the Escrow Agent shall immediately distribute to the
Indemnifying Stockholders the full remaining amount of the Indemnity Escrow
Fund, less (i) any Disputed Amounts, (ii) any amounts necessary to satisfy
claims for Losses that have been previously resolved pursuant to Section 8.3(f),
and (iii) the amount of all other Losses for which Buyer has delivered an
Officer's Certificate prior to the Indemnity Escrow Termination Date with
respect to facts and circumstances existing prior to the Indemnity Escrow
Termination Date but which are not yet resolved pursuant to Section 8.3. As soon
as all such pending claims have been resolved in accordance with this Section
8.3, the Escrow Agent shall promptly deliver the remaining portion of the
Indemnity Escrow Fund, if any, to the Indemnifying Stockholders. Deliveries of
amounts out of the Indemnity Escrow Fund to the Indemnifying Stockholders
pursuant to this Section 8.3(b)(i) shall be made in proportion to their
respective Indemnity Pro Rata Portion of the remaining Indemnity Escrow Fund.
(ii) WITHHOLDING. The Indemnifying Stockholders and the Buyer
agree to provide the Escrow Agent with properly executed Forms W-9 (or Forms
W-8, in the case of non-U.S. persons) prior to the date on which the first
distribution out of the Indemnity Escrow Fund is made hereunder. The parties
hereto understand that, in the event properly executed Forms W-9 (Forms W-8 in
the case of non-U.S. persons) are not provided to the Escrow Agent, the Internal
Revenue Code, as amended from time to time, may require withholding of a portion
of any distributions from the Indemnity Escrow Fund.
(iii) TAX OWNERSHIP. For any and all income Tax purposes the
Indemnity Escrow Fund and any and all investment income or earnings (including
realized capital gains) with respect to the Indemnity Escrow Fund, until
distributed pursuant to the terms hereof, shall be the property of Buyer and
shall be reported as such for all Tax purposes (and, therefore, Buyer shall be
liable for and shall pay all income taxes imposed on such investment income).
Notwithstanding any other provision of this Agreement, within 30 calendar days
of the end of each calendar quarter (or as soon as reasonably practical
thereafter after taking into account the maturity dates of any applicable
investments) and upon the Indemnity Escrow Termination Date, the Escrow Agent
shall make a cash distribution to Buyer of 40% of the investment income
attributable to the preceding calendar quarter (or portion thereof). All
remaining investment income shall become part of the Indemnity Escrow Fund.
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(iv) INVESTMENT. The Escrow Agent shall invest and reinvest
any or all of the Indemnity Escrow Fund as directed in writing by the Buyer, the
Onex Stockholder Representative and the Non-Onex Stockholder Representative
Committee, in any of the following:
(i) obligations issued or guaranteed by the United
States of America or any agency or instrumentality thereof;
(ii) certificates of deposit or interest-bearing
accounts of national banks or corporations endowed with trust powers
having capital and surplus in excess of One Hundred Million Dollars
($100,000,000) (including Escrow Agent);
(iii) commercial paper at the time of investment rated
A-1+ or better by Standard & Poor's Corporation or P-1 or better by
Xxxxx'x Investor's Service, Inc.;
(iv) repurchase agreements with any bank or corporation
described in clause (ii) fully secured by obligations described in clause
(i); and
(v) shares of a money market fund investing only in
short-term U.S. Treasury obligations or obligations backed by short-term
U.S. Treasury obligations.
If the Escrow Agent does not receive investment direction from the Buyer,
the Onex Stockholder Representative and the Non-Onex Stockholder Representative
Committee with respect to any portion of the Indemnity Escrow Fund, the Escrow
Agent shall invest and reinvest the Indemnity Escrow Fund in the Escrow Agent's
Money Market Insured Savings Account.
(c) PROTECTION OF INDEMNITY ESCROW FUND. The Escrow Agent shall hold
and safeguard the Indemnity Escrow Fund during the Indemnity Escrow Period, and
shall hold and dispose of the Indemnity Escrow Fund only in accordance with the
terms of this ARTICLE VIII.
(d) CLAIMS FOR INDEMNIFICATION.
(i) Upon receipt by the Escrow Agent at any time on or before
the Indemnity Escrow Termination Date of an Officer's Certificate (as defined
below) from Buyer, the Escrow Agent shall, subject to the provisions of this
Section 8.3, deliver to Buyer, as promptly as practicable, funds held in the
Indemnity Escrow Fund equal to the Losses specified in such Officer's
Certificate (to the extent available). Upon receipt by Buyer at any time on or
before the Survival Date of an Officer's Certificate from the Onex Stockholder
Representative or the Non-Onex Stockholder Representative Committee, Buyer
shall, subject to the provisions of this Section 8.3, deliver to the notifying
Stockholder Representative, as promptly as practicable, cash equal to the Losses
specified in such Officer's Certificate. At the time of delivery of any
Officer's Certificate by Buyer to the Escrow Agent, Buyer shall deliver a
duplicate copy of such Officer's Certificate to each of the Onex Stockholder
Representative and the members of the Non-Onex Stockholder Representative
Committee. At the time of delivery of any Officer's Certificate by a Stockholder
Representative to Buyer, such Stockholder Representative shall deliver a
duplicate copy of such Officer's Certificate to such other Stockholder
Representative (or Stockholder Representative Committee, as appropriate). For
the purposes hereof,
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"OFFICER'S CERTIFICATE" shall mean a certificate signed by a duly authorized
officer(s) of the applicable Indemnified Party (1) stating that an Indemnified
Party has paid, sustained, incurred, or properly accrued, or reasonably
anticipates in good faith that it will have to pay, sustain, incur, or accrue
Losses, and (2) specifying in reasonable detail the individual items of Losses
included in the amount so stated, the date each such item was paid, sustained,
incurred, or properly accrued, or the basis for such anticipated liability, and
the nature of the misrepresentation, breach of warranty or covenant, as
applicable, to which such Loss is related.
(ii) If either the Onex Stockholder Representative or the
Non-Onex Stockholder Representative Committee, as applicable, fails to object in
writing within the 30-day period after delivery by Buyer of an Officer's
Certificate to such Stockholder Representative, such failure to so object shall
be an irrevocable acknowledgment by the non-objecting Stockholder Representative
and the Indemnifying Stockholders represented by such Stockholder Representative
that the Buyer Indemnified Parties are entitled to the full amount of the claim
for Losses set forth in such Officer's Certificate allocable to such
Indemnifying Stockholders. If Buyer does not object in writing within the 30-day
period after delivery by the Onex Stockholder Representative or the Non-Onex
Stockholder Representative Committee, as applicable, of an Officer's Certificate
to Buyer, such failure to so object shall be an irrevocable acknowledgement by
Buyer that the applicable Stockholder Indemnified Parties are entitled to the
full amount of the claim for Losses set forth in such Officer's Certificate.
(iii) In the event that a distribution from the Indemnity
Escrow Fund is made to Buyer on account of any such misrepresentation or breach
by a Selling Stockholder for which it is severally liable as provided above, the
applicable Selling Stockholder shall at the time of such distribution repay to
the Indemnifying Stockholders (other than itself if it is an Indemnifying
Stockholder) the amount of such distribution, with such payment to be
distributed among the other Indemnifying Stockholders on a pro rata basis based
on their respective Indemnity Pro Rata Portions (without taking into account the
Indemnity Pro Rata Portion of the paying Selling Stockholder).
(IV) TAX INDEMNIFICATION. The parties hereto agree, jointly
and severally, to indemnify and hold the Escrow Agent harmless from any
liability or obligations on account of taxes, assessments, additions for late
payment, interest, penalties, expenses and other governmental charges that may
be assessed or asserted against the Escrow Agent in connection with or relating
to any payment made or other activities performed under the terms of this
Agreement (other than taxes assessed against the income of the Escrow Agent
derived from its fees), including without limitation any liability for the
withholding or deduction of (or failure to withhold or deduct) the same, and any
liability for failure to obtain proper certifications or to report properly to
governmental authorities in connection with this Agreement, including costs and
expenses (including reasonable legal fees and expenses), interest and penalties.
The foregoing indemnification and agreement to hold harmless shall survive the
termination of this Agreement.
(e) OBJECTIONS TO CLAIMS.
(i) For a period of thirty (30) days after delivery of an
Officer's Certificate to the Onex Stockholder Representative, the members of the
Non-Onex Stockholder Representative Committee and Escrow Agent, the Escrow Agent
shall not distribute any portion of the Indemnity
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Escrow Fund unless the Escrow Agent shall have received written authorization
from the Onex Stockholder Representative and the Non-Onex Stockholder
Representative Committee to make such distribution. After the expiration of such
thirty (30) day period, the Escrow Agent shall deliver cash from the Indemnity
Escrow Fund equal to the amount of Losses claimed in such Officer's Certificate,
provided that no such payment or delivery may be made if either Stockholder
Representative shall object in a written statement to the claim made in such
Officer's Certificate (an "OBJECTION NOTICE"), and such Objection Notice shall
have been delivered to the Escrow Agent prior to the expiration of such thirty
(30) day period. The amount objected to by a Stockholder Representative in an
Objection Notice is referred to as a "DISPUTED AMOUNT."
(ii) If Buyer objects to the claim made in any Officer's
Certificate delivered by either the Onex Stockholder Representative or the
Non-Onex Stockholder Representative Committee (as the case may be), it shall
deliver a written statement of such objection (a "BUYER OBJECTION NOTICE") to
the applicable Stockholder Representative within thirty (30) days after receipt
of such Officer's Certificate by Buyer. Buyer shall not be obligated to deliver
payment in respect of such Losses allocable to the Indemnifying Stockholders
represented by such notifying Stockholder Representative until resolution of
such disputed claim in accordance with Section 8.3(f) below.
(f) RESOLUTION OF CONFLICTS; ARBITRATION.
(i) In case either the Onex Stockholder Representative or the
Non-Onex Stockholder Representative Committee delivers an Objection Notice or
Buyer delivers a Buyer Objection Notice, the objecting Stockholder
Representative(s) and Buyer shall attempt in good faith, for a period of at
least thirty (30) days, to agree upon the rights of the respective parties with
respect to each of such claims and the amount of Losses. If the Stockholder
Representative(s) and Buyer should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and, in the case of a
claim against the Indemnity Escrow Fund, shall be furnished to the Escrow Agent.
The Escrow Agent shall be entitled to rely on any such memorandum and shall make
distributions from the Indemnity Escrow Fund in accordance with the terms
thereof.
(ii) If no such agreement can be reached after good faith
negotiation and after thirty (30) days from the date of the delivery of an
Objection Notice or a Buyer Objection Notice, either Buyer or the applicable
Stockholder Representative may demand arbitration of the matter unless the
amount of the Loss is at issue in a pending Third Party Claim, in which event
arbitration shall not be commenced until either such amount is finally
determined pursuant to a final, non-appealable order, judgment or decree (as
certified in writing to the Escrow Agent by the applicable party), or both
parties agree to arbitration, and in either such event the matter shall be
settled by binding arbitration conducted by one arbitrator mutually selected by
Buyer and such Stockholder Representative. In the event that, within thirty (30)
days after submission of any dispute to arbitration, Buyer and such Stockholder
Representative cannot mutually agree on one arbitrator, then, within fifteen
(15) days after the end of such thirty (30) day period, Buyer and the
Stockholder Representative shall each select one neutral arbitrator. The two
arbitrators so selected shall select a third neutral arbitrator. If either such
Stockholder Representative or the Buyer fails to select an arbitrator during
this fifteen (15) day period,
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then the parties agree that the arbitration will be conducted by the one neutral
arbitrator selected by the other party.
(iii) Any such arbitration shall be held in New York City, New
York, under the Commercial Arbitration Rules then in effect of the American
Arbitration Association. All reasonable fees and expenses relating to the
arbitration, including, without limitation, the respective expenses of each
party (including, without limitation, reasonable attorneys' fees and costs of
investigation), the fees of each arbitrator and the administrative fee of the
American Arbitration Association shall be borne by the non-prevailing party, as
determined by the arbitrator(s). The arbitrator or arbitrators, as the case may
be, shall set a limited time period and establish procedures designed to reduce
the cost and time for discovery while allowing the parties an opportunity,
adequate in the sole judgment of the arbitrator or majority of the three
arbitrators, as the case may be, to discover relevant information from the
opposing parties solely to the extent related to the subject matter of the
dispute. The arbitrator, or a majority of the three arbitrators, as the case may
be, shall rule upon motions to compel or limit discovery and shall have the
authority to impose sanctions to the same extent as a competent court of law or
equity, should the arbitrators or a majority of the three arbitrators, as the
case may be, determine that discovery was sought without reasonable
justification or that discovery was refused or objected to without reasonable
justification. The decision of the arbitrator or a majority of the three
arbitrators, as the case may be, as to the validity and amount of any claim in
such Officer's Certificate shall be final, binding, and conclusive upon the
parties to this Agreement and shall not be appealable. Such decision shall be
written and shall be supported by written findings of fact and conclusions which
shall set forth the award, judgment, decree or order awarded by the
arbitrator(s). In case of a claim by Buyer against the Indemnity Escrow Fund,
the Escrow Agent shall be entitled to rely on, and make distributions from the
Indemnity Escrow Fund in accordance with, the terms of such award, judgment,
decree or order, as applicable. Within thirty (30) days of a decision of the
arbitrator(s) requiring payment by one party to another, such party (or, in case
of a claim by Buyer against the Indemnity Escrow Fund, the Escrow Agent) shall
make the payment to such other party in accordance with the terms of this
ARTICLE VIII.
(iv) Judgment upon any award rendered by the arbitrator(s) may
be entered in any court having jurisdiction. The foregoing arbitration provision
shall apply to any dispute among the parties under this ARTICLE VIII or Section
1.4, whether relating to claims upon the Indemnity Escrow Fund or to the other
indemnification obligations set forth in this ARTICLE VIII or disputes relating
to the Earn-Out Payment.
(g) THIRD-PARTY CLAIMS.
(i) Promptly after receipt by an Indemnified Party of notice
of the commencement of a third party claim (a "THIRD PARTY CLAIM") against it,
such Indemnified Party shall, if a claim in respect thereof is to be made
against an indemnifying party under this ARTICLE VIII, give written notice to
the indemnifying party and, in case of a claim against the Indemnity Escrow
Fund, the Escrow Agent, of the commencement thereof, but the failure to so
notify the indemnifying party shall not relieve it of any liability that it may
have to any Indemnified Party except to the extent the indemnifying party
demonstrates that the defense of such action is prejudiced thereby. In case any
such Third Party Claim shall be brought against an Indemnified Party and it
shall give notice to the
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indemnifying party (and the Escrow Agent, if applicable) of the commencement
thereof, then the indemnifying party shall be entitled to participate therein
and, to the extent that it shall wish (unless (i) an indemnifying party is also
a party to such Third Party Claim and the Indemnified Party reasonably
concludes, based on the advice of counsel, that joint representation would
create a conflict of interest, (ii) the Third Party Claim asserts infringement
of intellectual property rights) to assume the defense thereof with counsel
reasonably satisfactory to such Indemnified Party and, after notice from such
indemnifying party to such Indemnified Party of its election so to assume the
defense thereof, such indemnifying party shall not be liable to such Indemnified
Party under this ARTICLE VIII for any fees of other counsel or any other
expenses with respect to the defense of such Third Party Claim, in each case,
subsequently incurred by such Indemnified Party in connection with the defense
thereof unless the indemnifying party shall have failed, after notice by the
Indemnified Party to the indemnifying party, to defend such claim. An
Indemnified Party shall, at its own expense (except as provided for in the
preceding sentence), have the right to employ separate counsel in any such
action or claim and to participate in, but not control, the defense thereof. If
an indemnifying party assumes the defense of such Third Party Claim, (A) no
compromise or settlement thereof may be effected by the indemnifying party
without the Indemnified Party's consent (not to be unreasonably withheld),
unless (1) there is no finding or admission of any violation of law or any
violation of the rights of any Person and no effect on any other claims that may
be made against the Indemnified Party and (2) the sole relief provided is
monetary damages that are paid in full by the indemnifying party and (B) the
indemnifying party shall have no liability with respect to any compromise or
settlement thereof effected without its consent. If notice is given to an
indemnifying party of the commencement of any Third Party Claim and it does not,
within thirty (30) Business Days after the Indemnified Party's notice is
provided, give notice to the Indemnified Party of its election to assume the
defense thereof, the indemnifying party shall only be bound by any determination
made in such Third Party Claim or any compromise or settlement thereof effected
by the Indemnified Party if consented to by the indemnifying party (which
consent shall not be unreasonably withheld), subject in any such case to the
limitations set forth in Section 8.5. Notwithstanding anything in this Section
8.3(g) to the contrary, in no event may any Selling Stockholder (other than a
Stockholder Representative) participate in or assume the defense of any Third
Party Claim as an indemnifying party pursuant to this Section 8.3(g); instead,
the right to so participate in or assume the defense of any Third Party Claim
pursuant to this Section 8.3(g) shall belong to the Stockholder
Representative(s) representing such Selling Stockholder(s).
(h) ESCROW AGENT'S DUTIES.
(i) The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth in this ARTICLE VIII,
and as set forth in any additional written escrow instructions which the Escrow
Agent may receive after the date of this Agreement which are signed by a duly
authorized officer of Buyer and the Onex Stockholder Representative and the
Non-Onex Stockholder Representative Committee which are not inconsistent with
the terms of this ARTICLE VIII, and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed to be genuine
and to have been signed or presented by the proper party or parties. The Escrow
Agent shall not be liable for any act done or omitted hereunder as Escrow Agent
while acting in good faith, and any act done or omitted pursuant to the advice
of legal counsel shall be conclusive evidence of such good faith.
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(ii) The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree of any court, the Escrow Agent shall not be liable to any of the
parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(iii) The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the expiration
of any rights under any statute of limitations with respect to this Agreement or
any documents deposited with the Escrow Agent.
(v) The Escrow Agent's duties hereunder are ministerial, and
shall not be construed as fiduciary, and in no event shall the Escrow Agent be
liable for indirect, punitive, or consequential damages, including damages
arising from a loss arising from the liquidation of investments to pay a claim
hereunder. In performing any duties under this Agreement, the Escrow Agent shall
not be liable to any party for damages, losses, or expenses, except as a result
of gross negligence or willful misconduct on the part of the Escrow Agent. The
Escrow Agent shall not incur any such liability for (A) any act or failure to
act made or omitted in good faith, or (B) any action taken or omitted in
reliance upon any instrument, including any written statement or affidavit
provided for in this Agreement that the Escrow Agent shall in good faith believe
to be genuine, nor will the Escrow Agent be liable or responsible for forgeries,
fraud, impersonations, or determining the scope of any representative authority.
In addition, the Escrow Agent may consult with legal counsel in connection with
performing the Escrow Agent's duties under this Agreement and shall be fully
protected in any act taken, suffered, or permitted by him/her in good faith in
accordance with the advice of counsel. The Escrow Agent is not responsible for
determining and verifying the authority of any person acting or purporting to
act on behalf of any party to this Agreement.
(vi) If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and the Indemnity Escrow Fund and may wait for settlement
of any such controversy by final appropriate legal proceedings or other means
as, in the Escrow Agent's discretion, may be required, subject to the terms of
this Agreement. In such event, the Escrow Agent will not be liable for damages.
Furthermore, the Escrow Agent may at its option, file an action of interpleader
requiring the parties to answer and litigate any claims and rights among
themselves. The Escrow Agent is authorized to deposit with the clerk of the
court all documents and the Indemnity Escrow Fund held in escrow. All costs,
expenses, charges and reasonable attorney fees incurred by the Escrow Agent due
to the interpleader action (the "AGENT INTERPLEADER EXPENSES") shall be paid by
the parties as follows: fifty percent (50%) to be paid by Buyer and fifty
percent (50%) to be paid out of (and only to the extent
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of) the Indemnity Escrow Fund, with any shortfall due to the Indemnity Escrow
Fund being exhausted paid for by Buyer. Upon initiating such action, the Escrow
Agent shall be fully released and discharged of and from all obligations and
liability imposed by the terms of this Agreement.
(vii) The parties and their respective successors and assigns
agree to indemnify (as provided herein) and hold the Escrow Agent harmless
against any and all losses, claims, damages, liabilities, and expenses,
including reasonable costs of investigation, counsel fees, including allocated
costs of in-house counsel and disbursements that may be imposed on the Escrow
Agent or incurred by the Escrow Agent in connection with the performance of
his/her duties under this Agreement, including but not limited to any litigation
arising from this Agreement or involving its subject matter, other than those
arising out of the gross negligence or willful misconduct of the Escrow Agent
(the "AGENT INDEMNIFICATION EXPENSES") as follows: fifty percent (50%) to be
paid by Buyer and fifty percent (50%) to be paid out of (and only to the extent
of) the Indemnity Escrow Fund, with any shortfall due to the Indemnity Escrow
Fund being exhausted paid for by Buyer. This section shall survive the
termination of this Agreement.
(viii) The Escrow Agent may resign at any time upon giving at
least thirty (30) days written notice to the Buyer, the Onex Stockholder
Representative and the members of the Non-Onex Stockholder Representative
Committee; provided, however, that no such resignation shall become effective
until the appointment of a successor escrow agent which shall be accomplished as
follows: Buyer, the Onex Stockholder Representative and the Non-Onex Stockholder
Representative Committee shall use their best efforts to mutually agree on a
successor escrow agent within thirty (30) days after receiving such notice. If
the parties fail to agree upon a successor escrow agent within such time, the
Escrow Agent shall have the right to appoint a successor escrow agent authorized
to do business in the State of New York or, failing that, to apply to a court of
competent jurisdiction to appoint a successor escrow agent. The successor escrow
agent shall execute and deliver an instrument accepting such appointment and it
shall, without further acts, be vested with all the estates, properties, rights,
powers, and duties of the predecessor escrow agent as if originally named as
escrow agent. Upon appointment of a successor escrow agent, the Escrow Agent
shall be discharged from any further duties and liability under this Agreement.
(i) FEES. All fees of the Escrow Agent for performance of its duties
hereunder shall be paid by Buyer in accordance with the standard fee schedule of
the Escrow Agent. It is understood that the fees and usual charges agreed upon
for services of the Escrow Agent shall be considered compensation for ordinary
services as contemplated by this Agreement. In the event that the conditions of
this Agreement are not promptly fulfilled, or if the Escrow Agent renders any
service not provided for in this Agreement but that has been requested by an
officer of Buyer, or if the parties request a substantial modification of the
terms of the Agreement, or if any controversy arises, or if the Escrow Agent is
made a party to, or intervenes in, any litigation pertaining to the Indemnity
Escrow Fund or its subject matter, the Escrow Agent shall be reasonably
compensated for such extraordinary services and reimbursed for all costs,
attorney's fees, including allocated costs of in-house counsel, and expenses
occasioned by such default, delay, controversy or litigation.
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(j) SUCCESSOR ESCROW AGENTS. Any corporation into which the Escrow
Agent in its individual capacity may be merged or converted or with which it may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent in its individual capacity shall be a
party, or any corporation to which substantially all the corporate trust
business of the Escrow Agent in its individual capacity may be transferred,
shall be the Escrow Agent under this Escrow Agreement without further act. In no
event shall the Escrow Agent by required to make distributions from the
Indemnity Escrow Fund or take any other action hereunder sooner that two (2)
Business Days following the Escrow Agent's receipt of written instructions or
the applicable paperwork.
8.4 STOCKHOLDER REPRESENTATIVES.
(a) APPOINTMENT OF REPRESENTATIVES. By virtue of the approval of the
Acquisition and this Agreement by the requisite vote of the Onex Stockholders,
each of the Onex Stockholders hereby appoints Onex American Holdings II LLC as
its agent and attorney-in-fact, as the "Onex Stockholder Representative" for and
on behalf of the Onex Stockholders to take all Stockholder Representative
Actions on behalf of such Onex Stockholders. By virtue of the approval of the
Acquisition and this Agreement by the requisite vote of the MCNC Stockholders,
each of the MCNC Stockholders hereby appoints Xxxxx Xxxxx as its agent and
attorney-in-fact, as the "MCNC Stockholder Representative" for and on behalf of
the MCNC Stockholders to take all Stockholder Representative Actions on behalf
of such MCNC Stockholders. By virtue of the approval of the Acquisition and this
Agreement by the requisite vote of the TAT Stockholders, each of the TAT
Stockholders hereby appoints Xxxxxx Xxxxx as its agent and attorney-in-fact, as
the "TAT Stockholder Representative" for and on behalf of the TAT Stockholders
to take all Stockholder Representative Actions on behalf of such TAT
Stockholders. By virtue of the approval of the Acquisition and this Agreement by
the requisite vote of the Additional Indemnifying Stockholders, each of the
Additional Indemnifying Stockholders hereby appoints Xxxxxxx Xxxxxxx as its
agent and attorney-in-fact, as the "Additional Indemnifying Stockholder
Representative" for and on behalf of the Additional Indemnifying Stockholders to
take all Stockholder Representative Actions on behalf of such Additional
Indemnifying Stockholders. Notwithstanding the foregoing, each of the Selling
Stockholders hereby appoints, solely for purposes of Sections 1.4(f) and (g)
hereof, the Onex Stockholder Representative as its agent and attorney-in-fact to
take all Stockholder Representative Actions with respect to matters covered by
Sections 1.4(f) and (g) hereof.
(b) FORMATION AND ACTIONS OF THE NON-ONEX STOCKHOLDER REPRESENTATIVE
COMMITTEE. Each of the MCNC Stockholders, the TAT Stockholders and the
Additional Indemnifying Stockholders hereby acknowledges and confirms that the
MCNC Stockholder Representative, the TAT Representative and the Additional
Indemnifying Stockholder Representative shall constitute all the members of the
Non-Onex Stockholder Representative Committee, and that all Stockholder
Representative Actions taken by each of the MCNC Stockholder Representative, TAT
Stockholder Representative and Additional Indemnifying Stockholder
Representative shall be taken as a member of the Non-Onex Stockholder
Representative Committee. A decision, act, consent or instruction of any two (2)
of the members of the Non-Onex Stockholder Representative Committee shall,
pursuant to this Article VIII, constitute a decision of the Non-Onex Stockholder
Representative Committee and shall be
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final, binding and conclusive upon each MCNC Stockholder, TAT Stockholder and
Additional Indemnifying Stockholder, and Buyer, the Onex Stockholder
Representative and the Escrow Agent may rely upon any decision, act, consent or
instruction of any two (2) of the members of the Non-Onex Stockholder
Representative Committee as being the decision, act, consent or instruction of
the Non-Onex Stockholder Representative Committee as a whole and each and every
MCNC Stockholder, TAT Stockholder and Additional Indemnifying Stockholder.
(c) STOCKHOLDER REPRESENTATIVE ACTIONS; REMOVAL. For purposes of
this Agreement, "Stockholder Representative Actions" shall mean the ability and
right to give and receive notices and communications, to authorize payment to
any Buyer Indemnified Party from the Indemnity Escrow Fund in satisfaction of
claims by any Buyer Indemnified Party, to object to such payments, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claims, to assert, negotiate, enter into settlements and compromises of, and
demand arbitration and comply with orders of courts and awards of arbitrators
with respect to, any other claim by any Buyer Indemnified Party against any
Indemnifying Stockholder represented by such Stockholder Representative or by
any Indemnifying Stockholder represented by such Stockholder Representative
against any Buyer Indemnified Party or any dispute between any Indemnified Party
and any such Indemnifying Stockholder represented by such Stockholder
Representative, in each case relating to this Agreement or the Contemplated
Transactions, and to take all other actions that are either (i) necessary or
appropriate in the judgment of such Stockholder Representative for the
accomplishment of the foregoing or (ii) specifically mandated by the terms of
this Agreement. Such agency may be changed by the applicable Selling
Stockholders from time to time upon not less than thirty (30) days prior written
notice to Buyer and, if applicable, the Escrow Agent; provided, however, that
(A) the Onex Stockholder Representative may not be removed unless holders of
two-thirds of the Onex Stockholders' aggregate interest in the Indemnity Escrow
Fund agree to such removal and to the identity of the substituted agent, (B) the
MCNC Stockholder Representative may not be removed unless holders of a majority
of the MCNC Stockholders' aggregate interest in the Indemnity Escrow Fund agree
to such removal and to the identity of the substituted agent, (C) the TAT
Stockholder Representative may not be removed unless holders of a majority of
the TAT Stockholders' aggregate interest in the Indemnity Escrow Fund agree to
such removal and to the identity of the substituted agent, and (D) the
Additional Indemnifying Stockholder Representative may not be removed unless
holders of a majority of the Additional Indemnifying Stockholders' aggregate
interest in the Indemnity Escrow Fund agree to such removal and to the identity
of the substituted agent. A vacancy in the position of any Stockholder
Representative may be filled by the holders of a majority of the applicable
Selling Stockholders' aggregate interest in the Indemnity Escrow Fund. No bond
shall be required of any Stockholder Representative.
(d) RECOVERY OF EXPENSES. The Onex Stockholder Representative shall
be entitled to recover from the applicable Indemnifying Stockholders (which,
with respect to the Earn-Out Amount and objections thereto, and all matters
arising in connection therewith, shall include all Indemnifying Stockholders) on
a pro rata basis all fees and expenses (including, without limitation,
attorneys' fees) (the "STOCKHOLDER REPRESENTATIVE EXPENSES") incurred in
connection with the acceptance, performance or administration of its duties as
the Onex Stockholder Representative hereunder and shall be entitled, in its
reasonable discretion, to offset any amounts payable by the Onex Stockholder
Representative to such
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Indemnifying Stockholders on account of such Stockholder Representative
Expenses. The MCNC Stockholder Representative shall be entitled to recover from
the MCNC Stockholders on a pro rata basis all Stockholder Representative
Expenses incurred in connection with the acceptance, performance or
administration of its duties as the MCNC Stockholder Representative hereunder
and shall be entitled, in its reasonable discretion, to offset any amounts
payable by the MCNC Stockholder Representative to such MCNC Stockholders on
account of such Stockholder Representative Expenses. The TAT Stockholder
Representative shall be entitled to recover from the TAT Stockholders on a pro
rata basis all Stockholder Representative Expenses incurred in connection with
the acceptance, performance or administration of its duties as the TAT
Stockholder Representative hereunder and shall be entitled, in its reasonable
discretion, to offset any amounts payable by the TAT Stockholder Representative
to such TAT Stockholders on account of such Stockholder Representative Expenses.
The Additional Indemnifying Stockholder Representative shall be entitled to
recover from the Additional Indemnifying Stockholders on a pro rata basis all
Stockholder Representative Expenses incurred in connection with the acceptance,
performance or administration of its duties as the Additional Indemnifying
Stockholder Representative hereunder and shall be entitled, in its reasonable
discretion, to offset any amounts payable by the Additional Indemnifying
Stockholder Representative to such Additional Indemnifying Stockholders on
account of such Stockholder Representative Expenses. Neither the Onex
Stockholder Representative, the MCNC Stockholder Representative, the TAT
Stockholder Representative nor the Additional Indemnifying Stockholder
Representative shall receive any compensation for its services from the Company.
Notices or communications to or from any Stockholder Representative shall
constitute notice to or from the applicable group of Indemnifying Stockholders.
(e) LIABILITY; INDEMNIFICATION. No Stockholder Representative shall
be liable for any act done or omitted hereunder in its capacity as a Stockholder
Representative while acting in good faith and in the exercise of reasonable
judgment. The Indemnifying Stockholders shall indemnify the applicable
Stockholder Representative (which, with respect to the Earn-Out Amount and
objections thereto, and all matters arising in connection therewith, shall be
the Onex Stockholder Representative for all Indemnifying Stockholders) and hold
such applicable Stockholder Representative harmless against any loss, liability
or expense incurred without gross negligence or bad faith on the part of such
Stockholder Representative and arising out of or in connection with the
acceptance, performance or administration of such Stockholder Representative's
duties hereunder, including the reasonable fees and expenses of any legal
counsel retained by such Stockholder Representative. A decision, act, consent or
instruction of any Stockholder Representative, including but not limited to an
amendment, extension or waiver of this Agreement pursuant to Section 9.1 and
Section 9.2 hereof, shall constitute a decision of the applicable Selling
Stockholders and shall be final, binding and conclusive upon such applicable
Selling Stockholders; and the Escrow Agent and Buyer may rely upon any such
decision, act, consent or instruction of any Stockholder Representative as being
the decision, act, consent or instruction of the Selling Stockholders
represented by such Stockholder Representative. The Escrow Agent and Buyer are
hereby relieved from any liability to any Indemnifying Stockholder for any acts
done by them in accordance with such decision, act, consent or instruction of
the applicable Stockholder Representative.
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8.5 DEDUCTIBLE; MAXIMUM PAYMENTS; REMEDY.
(a) Notwithstanding any provision of this Agreement to the contrary,
except as set forth in the last sentence of this Section 8.5(a), an Indemnified
Party may not recover any Losses under Sections 8.2(a) or 8.2(b) unless and
until the aggregate amount of Losses specified in one or more Officer's
Certificates exceeds $400,000 (the "Threshold Amount"), in which case the
Indemnified Party shall be indemnified only to the extent that the aggregate
amount of such Losses exceed the Threshold Amount. Notwithstanding the
foregoing, an Indemnified Party shall be entitled to recover for, and the
Threshold Amount shall not apply as a threshold to, any and all claims or
payments made with respect to (i) Losses involving any intentional
misrepresentations or fraud or (ii) Excess Amounts. The treatment of Excess
Third Party expenses shall be as set forth in Section 5.7 hereof, and shall not
be subject to any of the limitations set forth in this Section 8.5.
(b) Except as set forth in Sections 8.5(d) and 8.5(e) hereof, the
maximum amount of Losses that the Buyer Indemnified Parties may recover from any
Indemnifying Stockholder pursuant to this Article VIII shall be limited to the
lesser of (i) such Indemnifying Stockholder's Indemnity Pro Rata Portion of such
Losses and (ii) such Indemnifying Stockholder's Indemnity Pro Rata Portion of
the sum of (A) the Indemnity Escrow Fund plus (B) an additional $1,250,000 (the
"GENERAL CAP AMOUNT"); provided, however, that (x) if the Earn-Out Payment is
made, with respect to claims related to the Pre-Closing Operation Indemnity, the
Buyer Indemnified Parties may seek to recover from each Indemnifying Stockholder
up to an additional amount (above the General Cap Amount) up to the lesser of
(i) such Indemnifying Stockholder's Indemnity Pro Rata Portion of such Losses
and (ii) such Indemnifying Stockholder's Indemnity Pro Rata Portion of the
product of (xx) $5,000,000 multiplied by (yy) the quotient of (AA) the Earn-Out
Amount divided by (BB) $55,000,000 and (y) with respect to claims (1) resulting
from the breach or inaccuracy of a representation or warranty contained in
Section 2.2 (Company Capital Structure), Section 2.10 (Tax Matters), or Article
III hereof, and (2) for Excess Amounts, the Buyer Indemnified Parties may seek
to recover from such Indemnifying Stockholder an additional amount in excess of
the General Cap Amount up to the lesser of (i) such Indemnifying Stockholder's
Indemnity Pro Rata Portion of such Losses and (ii) the aggregate amount of
Consideration actually received by such Indemnifying Stockholder (the "MAXIMUM
CAP AMOUNT"). Except as set forth in this Section 8.5(b), Section 8.5(d) and
8.5(f) hereof, upon distribution by the Escrow Agent of all of the
then-remaining Indemnity Escrow Fund in accordance with Section 8.3 hereof, the
Buyer Indemnified Parties shall not have any further right to recover from any
Indemnifying Stockholder.
(c) Except as set forth in Section 8.5(f) hereof, the maximum amount
of Losses a Stockholder Indemnified Party may recover from Buyer pursuant to
this ARTICLE VIII shall be limited to the aggregate value of the Consideration
paid by Buyer to the related Selling Stockholder hereunder (and the maximum
aggregate amount all Stockholder Indemnified Parties may recover from Buyer
pursuant to this ARTICLE VIII shall be limited to the aggregate value of the
Consideration paid by Buyer to all Selling Stockholders) with the value of any
shares of Buyer Common Stock to be determined as of the dates and according to
the procedures set forth in Article 1 with respect to such shares of Buyer
Common Stock. Notwithstanding the foregoing, the Stockholder Indemnified Parties
may recover Losses arising, directly or indirectly, as a result of a breach or
violation by Buyer of the covenants
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contained in Section 1.4(h) above, up to an aggregate amount equal to
$55,000,000 multiplied by the aggregate Earn-Out Percentage reflected on the
applicable Consideration Schedule applicable to all Selling Stockholders and
Surrendering Optionees.
(d) Notwithstanding anything to the contrary contained herein,
except as set forth in Section 8.5(f) hereof, the maximum amount of Losses that
the Buyer Indemnified Parties may recover from any Selling Stockholder pursuant
to this ARTICLE VIII for breach by such Selling Stockholder of any of its
representations and warranties set forth in ARTICLE III hereof shall be limited
to the total amount of Consideration paid to such Selling Stockholder hereunder
(and the Indemnity Escrow Fund shall not be the exclusive remedy). The value of
shares of Buyer Common Stock received by any such Selling Stockholder, if any,
shall be valued as of the dates and according to the procedures set forth in
Article 1 with respect to such shares of Buyer Common Stock. With respect to
Losses arising out of the breach of representations and warranties made by a
Selling Stockholder or in any covenant or other agreement made by such Selling
Stockholder, the liability to the Buyer Indemnified Parties under this ARTICLE
VIII shall be the several liability of the applicable Selling Stockholder who
made such misrepresentation or breached such warranty, representation, covenant
or other agreement, and the other Selling Stockholders shall have no liability
in respect thereof.
(e) Subject to the limitations provided in this Section 8.5, Buyer
may, at its election, set off any amounts of the Earn-Out Payment for any
amounts finally determined in accordance with the provisions of this Article
VIII to the extent not otherwise paid to Buyer from the Indemnity Escrow Fund or
from any Selling Stockholder. In no event shall this provision modify the timing
of payment obligations of Buyer pursuant to Section 1.4.
(f) Any Losses a Buyer Indemnified Party may recover from any
Indemnifying Stockholder or any Selling Stockholder shall first be paid out of
the Indemnity Escrow Fund. Notwithstanding anything to the contrary set forth in
this Agreement, nothing in this Agreement shall limit the liability of any party
(and the Indemnity Escrow Fund shall not be the exclusive remedy) in respect of
Losses arising out of any fraud or any willful breaches of representations and
warranties or covenants on the part of such party.
(g) The amount of any Losses for which indemnification is provided
under this ARTICLE VIII shall be reduced by any insurance proceeds related
thereto actually received by the Indemnified Party or any of its Affiliates.
(h) Notwithstanding the foregoing provision of this Article VIII,
Buyer will not be able to recover Losses for breaches disclosed in the officer's
certificate delivered by the Company at Closing pursuant to Section 7.2(e) if,
notwithstanding such breaches, Buyer agrees to perform the Closing.
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ARTICLE IX
AMENDMENT AND WAIVER
9.1 AMENDMENT. This Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of the party
against whom enforcement is sought. For purposes of this Section 9.1, the Onex
Stockholders agree that any amendment of this Agreement signed by the Onex
Stockholder Representative shall be binding upon and effective against the Onex
Stockholders whether or not they have signed such amendment, the MCNC
Stockholders agree that any amendment of this Agreement signed by the MCNC
Stockholder Representative shall be binding upon and effective against the MCNC
Stockholders whether or not they have signed such amendment, the TAT
Stockholders agree that any amendment of this Agreement signed by the TAT
Stockholder Representative shall be binding upon and effective against the TAT
Stockholders whether or not they have signed such amendment, the Additional
Indemnifying Stockholders agree that any amendment of this Agreement signed by
the Additional Indemnifying Stockholder Representative shall be binding upon and
effective against the Additional Indemnifying Stockholders whether or not they
have signed such amendment, and the Selling Stockholders that do not constitute
an Indemnifying Stockholder agree that any amendment of this Agreement signed by
the Company shall be binding upon and effective against such Selling
Stockholders whether or not they have signed such amendment; provided, however,
that any amendment that adversely affects any Selling Stockholder in a manner
differently than other Selling Stockholders shall require the consent of such
affected Selling Stockholder. Notwithstanding the foregoing, this Agreement may
be amended prior to the Closing solely for the purpose of adding additional
Selling Stockholders and/or Surrendering Optionees as signatories and parties
hereto without the consent of any of the other parties hereto, and EXHIBIT A and
EXHIBIT B shall be appropriately updated for such additional Selling
Stockholders and/or Surrendering Optionees.
9.2 EXTENSION; WAIVER. At any time prior to the Closing, Buyer, on the one
hand, and the Company, the Onex Stockholder Representative and the Non-Onex
Stockholder Representative Committee, on the other hand, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
covenants, agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. For purposes of this Section 9.2, the Selling Stockholders
agree that any extension or waiver signed by both the Onex Stockholder
Representative and the Non-Onex Stockholder Representative Committee shall be
binding upon and effective against all Selling Stockholders whether or not they
have signed such extension or waiver.
9.3 TERMINATION.
(a) TERMINATION EVENTS. This Agreement may be terminated prior to
the Closing:
(i) by Buyer if any of the Company's representations and
warranties contained in this Agreement shall have been materially inaccurate as
of the date of this Agreement, or if
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any of the Company's representations and warranties contained in this Agreement
shall have been materially inaccurate as of the date of this Agreement, or if
any of the Company's covenants contained in this Agreement shall have been
breached in any material respect (with materiality being measured individually
and on an aggregate basis taking into account all breaches of all covenants,
representations and warranties); provided, however, that Buyer may not terminate
this Agreement under this Section 9.3(a)(i) on account of an inaccuracy in the
Company's representations and warranties that is waived by Buyer or that is
curable by the Company or on account of a breach of a covenant by the Company
that is waived by Buyer or that is curable by the Company unless the Company
fails to cure such inaccuracy or breach within fifteen (15) days after receiving
written notice from Buyer of such inaccuracy or breach (provided that Buyer is
not then in material breach of the terms of this Agreement);
(ii) by the Company or the Onex Stockholder Representative if
any of Buyer's representations and warranties contained in this Agreement shall
have been materially inaccurate as of the date of this Agreement, or if any of
Buyer's covenants contained in this Agreement shall have been breached in any
material respect (with materiality being measured individually and on an
aggregate basis taking into account all breaches of all covenants,
representations and warranties); provided, however, that neither the Company nor
the Onex Stockholder Representative may terminate this Agreement under this
Section 9.3(a)(ii) on account of an inaccuracy in Buyer's representations and
warranties that is waived by the Company and the Onex Stockholder Representative
or that is curable by Buyer, or on account of a breach of a covenant by Buyer
that is waived by the Company and the Onex Stockholder Representative or that is
curable by Buyer unless Buyer fails to cure such inaccuracy or breach within
fifteen (15) days after receiving written notice from the Company of such
inaccuracy or breach (provided that the Company is not then in material breach
of the terms of this Agreement);
(iii) by Buyer if the Closing has not taken place on or before
5:00 P.M. Eastern Time on the date that is ninety (90) days from the date of
this Agreement (other than as a result of any failure on the part of Buyer to
comply with or perform any covenant or obligation of Buyer set forth in this
Agreement);
(iv) by the Company or the Onex Stockholder Representative if
the Closing has not taken place on or before 5:00 P.M. Eastern Time on the date
that is ninety (90) days from the date of this Agreement (other than as a result
of the failure on the part of the Company to comply with or perform any covenant
or obligation of the Company set forth in this Agreement or in any other
agreement or instrument delivered to Buyer);
(v) By the Company or the Onex Stockholder Representative or
Buyer if (a) there shall be a final, non-appealable order of a federal or state
court in effect preventing consummation of the transactions contemplated hereby,
or (b) there shall be any final action taken, or any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the transactions
contemplated hereby, by any Governmental Entity which would make consummation of
the transactions contemplated hereby illegal; or
(vi) by the mutual consent of Buyer, the Onex Stockholder
Representative, the Non-Onex Stockholder Representative Committee and the
Company.
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(b) TERMINATION PROCEDURES. If Buyer wishes to terminate this
Agreement pursuant to Section 9.3(a)(i), 9.3(a)(iii) or 9.3(a)(v), Buyer shall
deliver to the Company a written notice stating that Buyer is terminating this
Agreement and setting forth a brief description of the basis on which Buyer is
terminating this Agreement. If the Company or the Onex Stockholder
Representative wishes to terminate this Agreement pursuant to Section
9.3(a)(ii), 9.3(a)(iv) or 9.3(a)(v), the Company or the Onex Stockholder
Representative shall deliver to Buyer a written notice stating that the Company
or the Onex Stockholder Representative, as applicable, is terminating this
Agreement and setting forth a brief description of the basis on which the
Company or the Onex Stockholder Representative is terminating this Agreement.
(c) EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 9.3, all further obligations of the parties under this Agreement
shall terminate; provided, however, that: (i) neither the Company, the Selling
Stockholders nor Buyer shall be relieved of any obligation or liability arising
from any inaccuracy or prior breach by such party of any obligation set forth in
this Agreement (but shall not be liable for any breach of representation or
warranty that is not willful or fraudulent); (ii) the parties shall, in all
events, remain bound by and continue to be subject to the provisions set forth
in ARTICLE X; and (iii) the parties shall, in all events, remain bound by and
continue to be subject to Section 5.5, Section 5.6 and Section 5.7.
ARTICLE X
GENERAL PROVISIONS
10.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Buyer, to:
Amkor Technology, Inc.
Goshen Corporate Park
0000 Xxxxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to:
Amkor Technology, Inc.
0000 Xxxxx Xxxxx Xxxx
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Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
and to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to the Company, to:
Unitive Inc.
000 Xxxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
(c) if to the Onex Stockholder Representative, to:
ONEX American Holdings II LLC
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
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if to the MCNC Stockholder Representative, to:
Xxxxx Xxxxx
c/o MCNC Research & Development Institute
P.O. Box 13910
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxxx Xxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P.
000 Xxxxxxxxxxxx Xxxxxx Xxxx
00xx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, XX, Esq.
Facsimile No.: (000) 000-0000
(d) if to the TAT Stockholder Representative, to:
Xxxxxx Xxxxx
c/o TAT Capital Partners Ltd.
Xxxxxxx Xxxxx 0
XX-0000 Xxxxxxxxxxxx
Facsimile No.: 00-00-000-0000
With a copy to:
TAT Investment Management Ltd.
Xxxxxxxxx 00
Xxxxxxx, Xxxxxxxxxxx Antilles
Attn: Maarten Xxxxxxxx
Facsimile No: 599-9-4343-567
(e) if to the Additional Indemnifying Stockholder
Representative, to:
Xxxxxxx Xxxxxxx
c/o Unitive, Inc.
000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
-96-
with a copy to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
(f) If to the Escrow Agent, to:
U.S. Bank National Association
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
All such notices and other communications will be deemed to have been received
(i) in the case of personal delivery, on the date of such delivery, (ii) in the
case of delivery by nationally recognized overnight courier, on the Business Day
following dispatch, (iii) in the case of a facsimile or electronic communication
when the party receiving such facsimile or electronic communication has
confirmed receipt, and (iv) in the case of mailing by registered or certified
mail, on the date of receipt.
10.2 INTERPRETATION. The words "include," "includes" and "including" when
used herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
10.4 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the Exhibits hereto,
the Disclosure Schedules the Confidentiality Agreement, and the documents and
instruments and other agreements among the parties hereto referenced herein: (i)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings both written
and oral, among the parties with respect to the subject matter hereof,
including, without limitation, that certain Memorandum of Understanding by and
between Buyer and the Company dated as of May 13, 2004, (ii) except to the
extent expressly provided herein, are not intended to confer upon any other
person any rights or remedies hereunder, and (iii) shall not be assigned by
operation of law or otherwise without the other parties' prior written consent,
except that any party may assign its rights and delegate its obligations
hereunder to any of its Affiliates as long as such party remains ultimately
liable for all of its obligations hereunder.
-97-
10.5 SEVERABILITY. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
10.6 OTHER REMEDIES. The remedies herein expressly conferred upon a party
will be exclusive of any other remedies available to the parties at law, equity
or otherwise.
10.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of any court within the State of New York, County of New York, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein (other than disputes subject to resolution pursuant
to Section 8.3(f) hereof, agrees that process may be served upon them in any
manner authorized by the laws of the State of New York for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process.
10.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefor, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
10.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
-98-
IN WITNESS WHEREOF, Buyer, the Company, the Escrow Agent, the Stockholder
Representatives and the Selling Stockholders have caused this Agreement to be
signed, all as of the date first written above.
AMKOR TECHNOLOGY, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Attorney-in-fact
UNITIVE INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
ONEX STOCKHOLDER REPRESENTATIVE
By: Onex American Holdings II LLC
Name: /s/ Xxxxxx X. Xxxx
Title: Xxxxxx X. Xxxx
Director
MCNC STOCKHOLDER REPRESENTATIVE
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: President and CEO
TAT STOCKHOLDER REPRESENTATIVE
By: /s/ Andy Senior
Name: Andy Senior
Title: Director
ADDITIONAL INDEMNIFYING
STOCKHOLDER REPRESENTATIVE
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: CEO, Unitive, Inc.
SELLING STOCKHOLDER SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
MCNC ENTERPRISE FUND, L.P. MCNC UNITIVE EQUITY
ASSOCIATES, LLC
By: /s/ Xxxxx X. Xxxxx
-----------------------------
By: MCNC Ventures, LLC, General Partner Name: MCNC
Name: MCNC Research & Development Title: Managing Partner
Title: Institute Manager
/s/ Xxxxx X. Xxxxx, President
------------------------------
MCNC UNIVITE INTERNATIONAL EQUITY MCNC UNITIVE SERIES C
ASSOCIATES, LLC EQUITY ASSOCIATES, LLC
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------------- -----------------------------
Name: MCNC Name: MCNC
Title: Managing Partner Title: Managing Partner
SELLING STOCKHOLDER SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
PRIVATE EQUITY CO-FINANCE
By: /s/ Xxxx Xxxxxx /s/ Xxxx XxXxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxx / Xxxx XxXxxxxxxx
Title: Directors
SELLING STOCKHOLDER SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
PICTET & CIE. AIG PRIVATE BANK LTD.
By: /s/ Andy Senior By: /s/ Andy Senior
------------------------------------ -------------------------------
Name: TAT Investment Management N.V. Name: TAT Investment Management
N.V.
Title: Proxy holder Title: Proxy holder
PRIVATE VENTURES LTD. XXXXXXX CAPITAL AS
By: /s/ Andy Senior By: /s/ Andy Senior
------------------------------------ ------------------------------
Name: TAT Investment Management N.V. Name: TAT Investment Management
N.V.
Title: Proxy holder Title: Proxy holder
CAP G. DA
By: /s/ Andy Senior
------------------------------------
Name: TAT Investment Management N.V.
Title: Proxy holder
SELLING STOCKHOLDER SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
TAT INVESTMENTS I L.P.
By: /s/ Andy Senior
------------------------------------
Name: TAT Investment Management N.V.
Title: General Partner
/s/ Xxxxxx Xxxxx
---------------------------------------
By: Xxxxxx Xxxxx
SELLING STOCKHOLDER SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
ONEX AMERICAN HOLDINGS II LLC
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Director
EXHIBIT A
List of Selling Stockholders
MCNC Enterprise Fund, L.P.
X.X. Xxx 00000
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxxx Xxxx, XX 00000-0000
MCNC Unitive Equity Associates, LLC
X.X. Xxx 00000
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxxx Xxxx, XX 00000-0000
Unitive International Equity Associates, LLC
X.X. Xxx 00000
3021 Cornwallis Road
Research Triangle Park, NC 27709-2889
MCNC Unitive Series C Equity Associates, LLC
X.X. Xxx 00000
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxxx Xxxx, XX 00000-0000
Onex American Holdings II LLC
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
AIG Private Bank Ltd.
Xxxxxxxxxx. 00
XX-0000 Xxxxxx, Xxxxxxxxxxx
Cap G. DA
(Mega Pacific)
c/o Mosvold (UK) Ltd.
00 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxx X0X 0XX
Great Britain
Xxxxxx Xxxxx
c/o Amicorp Fund Services NV
TAT Investment Management Ltd.
Xxxxxxxxxxxxxx 000, X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxx Antilles
Xxxxxxx Capital AS
c/x Xxxxxxx Capital (UK) Ltd.
00 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XXX 0XX
Pictet & Cie.
00 Xxxxxxxxx Xxxxxxx Xxxxx
XX-0000 Xxxxxx, Xxxxxxxxxxx
Private Equity Co-Finance
Attn: Xxxx Xxxxxx
One Capital Place
P.O. Box 847GT
Grand Cayman
Cayman Islands BWI
Private Ventures Ltd.
c/o Amicorp Fund Services NV
TAT Investment Management Ltd.
Xxxxxxxxxxxxxx 000, X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxx Antilles
TAT Investments I L.P.
c/o Amicorp Fund Services NV
TAT Investment Management Ltd.
Xxxxxxxxxxxxxx 000, X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxx Antilles
