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EXHIBIT 2
STOCK PURCHASE AGREEMENT
by and among
FORSTMANN LITTLE & CO.
SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP-V, L.P.,
MTF PARTNERS, L.P.,
THE SHAREHOLDER INDIVIDUALS,
THE XXXXXXX-XXXXXXXX COMPANY
and
SILVER ACQUISITION CORP.
Dated as of November 22, 1996
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TABLE OF CONTENTS
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ARTICLE I
TERMS OF PURCHASE AND SALE...........................................................................2
1.01. Purchase and Sale of Shares of the Company..............................................2
1.02. The Closing.............................................................................2
1.03. Purchase Price..........................................................................2
1.04. Cancellation of Options.................................................................4
1.05. Indebtedness Payment and Certain Closing Deliveries.....................................4
1.06. Partial Closing.........................................................................5
1.07. Closing Balance Sheet; Purchase Price Adjustment........................................5
1.08. Trust Agreement.........................................................................10
1.09. Manner of Payment to Sellers............................................................15
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS............................................................15
2.01. Title to Shares.........................................................................15
2.02. Capitalization..........................................................................16
2.03. Subsidiaries............................................................................16
2.04. Organization............................................................................17
2.05. Financial Statements....................................................................17
2.06. Absence of Certain Changes or Events....................................................18
2.07. Title to Assets.........................................................................18
2.08. Patents, Trademarks, Etc................................................................19
2.09. Power and Authority; Effect of Agreement................................................19
2.10. Commitments.............................................................................21
2.11. Litigation..............................................................................22
2.12. Compliance with Laws....................................................................22
2.13. Environmental Matters...................................................................23
2.14. Taxes...................................................................................25
2.15. Employee Benefit Plans..................................................................26
2.16. Consents................................................................................27
2.17. Insurance...............................................................................27
2.18. Labor Matters...........................................................................28
2.19. Undisclosed Liabilities.................................................................28
2.20. Fees....................................................................................29
2.21. Representations and Warranties of Sellers as of the Closing Date........................29
2.22. Disclaimer..............................................................................29
(i)
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER...................................................30
3.01. Organization............................................................................30
3.02. Power and Authority; Effect of Agreement................................................30
3.03. Litigation..............................................................................31
3.04. Availability of Funds...................................................................32
3.05. Consents................................................................................32
3.06. Fees....................................................................................32
ARTICLE IV
COVENANTS OF SELLERS.................................................................................32
4.01. Cooperation by Sellers..................................................................32
4.02. Conduct of Business.....................................................................33
4.03. Access..................................................................................34
4.04. No Solicitation.........................................................................35
4.05. Disclosure Schedules....................................................................36
4.06. Resale Exemption Certificates...........................................................36
ARTICLE V
COVENANTS OF PARENT AND BUYER........................................................................37
5.01. Cooperation by Parent and Buyer.........................................................37
5.02. Disclosure Schedules....................................................................38
5.03. Indemnification; Insurance..............................................................38
5.04. Employee Benefits.......................................................................41
5.05. Parent Obligations......................................................................42
5.06. Resale Exemption Certificates...........................................................43
ARTICLE VI
CONDITIONS TO PARENT'S AND BUYER'S OBLIGATIONS.......................................................43
6.01. Material Adverse Effect.................................................................43
6.02. Covenants of Sellers....................................................................43
6.03. No Prohibition..........................................................................43
6.04. Consents................................................................................44
6.05. Delivery of Shares......................................................................44
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS...................................................................44
7.01. Representations, Warranties and Covenants of Parent and Buyer...........................44
(ii)
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7.02. No Prohibition..........................................................................45
7.03. Consents................................................................................45
ARTICLE VIII
TERMINATION..........................................................................................45
8.01. Termination.............................................................................45
8.02. Effect on Obligations...................................................................46
ARTICLE IX
INDEMNIFICATION......................................................................................46
9.01. Survival................................................................................46
9.02. Indemnification.........................................................................48
9.03. Procedures for Claims...................................................................49
9.04. Other Provisions........................................................................52
ARTICLE X
MISCELLANEOUS........................................................................................56
10.01. Interpretive Provisions................................................................56
10.02. Seller's Knowledge.....................................................................56
10.03. Entire Agreement.......................................................................56
10.04. Successors and Assigns.................................................................56
10.05. Parties in Interest....................................................................57
10.06. Headings...............................................................................57
10.07. Amendment..............................................................................57
10.08. Waivers................................................................................57
10.09. Expenses...............................................................................58
10.10. Notices................................................................................58
10.11. Governing Law, Etc.....................................................................59
10.12. Public Announcements...................................................................60
10.13. Sellers' Representatives...............................................................60
10.14. Counterparts...........................................................................60
(iii)
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STOCK PURCHASE AGREEMENT
------------------------
This STOCK PURCHASE AGREEMENT, dated as of the 22nd day of
November, 1996, by and among Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-V, L.P., a Delaware limited partnership ("MBO-V"),
MTF Partners, L.P., a New York limited partnership ("MTF Partners"), the persons
listed on Exhibit A hereto (the "Shareholder Individuals") (MBO-V, MTF Partners
and the Shareholder Individuals are hereinafter collectively referred to as
"Sellers"), The Xxxxxxx-Xxxxxxxx Company, an Ohio corporation ("Parent"), and
Silver Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of Parent ("Buyer");
W I T N E S S E T H :
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WHEREAS, Sellers own of record and beneficially all of the
outstanding shares of capital stock of Xxxxxxxx Minwax Holding Corp., a Delaware
corporation (the "Company"); and
WHEREAS, Sellers desire to sell to Buyer, and Parent and Buyer
desire that Buyer buy from Sellers, all of the issued and outstanding shares of
capital stock of the Company (the "Shares");
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements, and upon the terms and
subject to the conditions, hereinafter set forth, the parties do hereby agree as
follows:
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ARTICLE I
TERMS OF PURCHASE AND SALE
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1.01. PURCHASE AND SALE OF SHARES OF THE COMPANY. On the
Closing Date (as defined in Section 1.02), Sellers shall sell to Buyer, and
Buyer shall purchase from Sellers, the Shares for the purchase price specified
herein. At the Closing (as defined in Section 1.02), Sellers shall deliver to
Buyer certificates representing the Shares being sold hereunder duly endorsed in
blank for transfer or accompanied by duly executed stock powers assigning such
Shares in blank, and Buyer shall deliver to Sellers the Purchase Price (as
defined in Section 1.03(a)) in accordance with Section 1.03. Buyer shall bear
the cost of any documentary, stamp, sales and excise or other taxes (other than
federal, state, local and foreign income taxes payable by Sellers) in respect of
the transfer of the Shares.
1.02. THE CLOSING. Upon the terms and subject to the
conditions of this Agreement, the closing of the purchase and sale of the Shares
(the "Closing") shall take place at the offices of Fried, Frank, Harris, Xxxxxxx
& Xxxxxxxx, One New York Plaza, New York, New York, at 9:00 a.m., local time, on
the fifth business day following the day on which any applicable waiting period
under the HSR Act (as defined in Section 2.16) shall have expired or been
terminated, or at such other time, date or place as Buyer and the
Representatives (as defined in Section 10.13) may agree. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
1.03. PURCHASE PRICE. (a) The purchase price to be paid by
Buyer to Sellers for the Shares (the "Purchase Price") shall be an amount in
cash equal to $830,000,000 less the sum of (i) the Indebtedness Payment plus
(ii) the Option Payments (each of the foregoing terms as defined in Section
1.03(b)). The Purchase Price shall be subject to adjustment as provided in
Section 1.07.
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(b) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Indebtedness Payment" shall mean an amount equal
to, as of the Closing Date, the then outstanding principal of, accrued
and unpaid interest on, any prepayment penalties or premiums on, and
any other amounts payable with respect to, (A) all indebtedness of the
Company and the Subsidiaries under the Credit Agreement, dated as of
November 30, 1994, among the Company, The Xxxxxxxx Minwax Company,
Chase Manhattan Bank ("Chase"), as agent, and the financial
institutions party thereto, as amended (the "Credit Agreement"), but
not including any undrawn amounts under outstanding letters of credit
(the "Bank Indebtedness Payment"), and (B) all indebtedness of the
Company and the Subsidiaries under the Subordinated Debentures (the
"Subordinated Debentures") issued by the Company and held by the
limited partners of MBO-V (the "Debenture Indebtedness Payment").
(ii) "Option Payments" shall mean the aggregate
amount payable as a result of the transactions contemplated hereby in
cancellation or termination of outstanding options to purchase shares
of capital stock of the Company (collectively, "Options") (including
the portion thereof which the Company is required to withhold under
applicable tax laws).
(c) At the Closing, Buyer shall (i) pay the amount of the
Purchase Price less $20,000,000 to an account or accounts designated by the
Representatives and (ii) deposit the sum of $20,000,000 in trust in accordance
with the terms set forth in Section 1.08. All payments pursuant to clauses (i)
and (ii) of this paragraph (c) shall be made by wire transfer of U.S. dollars in
immediately available funds.
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(d) As soon as practicable but in any event no later than
seven days prior to the Closing Date, the Representatives shall deliver to Buyer
a good faith estimate of (i) the Purchase Price, (ii) the Indebtedness Payment
and (iii) the Option Payments. The Representatives shall deliver to Buyer no
later than the opening of business on the Closing Date a certificate setting
forth (i) the Purchase Price, (ii) the Indebtedness Payment and (iii) the Option
Payments.
1.04. CANCELLATION OF OPTIONS. At the Closing, Buyer shall
contribute to the Company, by wire transfer of immediately available funds, cash
in an amount equal to the Option Payments, and the Representatives shall cause
the Company to deliver such amount less the withholding tax payable in respect
thereof to the Representatives on behalf of the holders of Options entitled to
Option Payments as a result of the transactions contemplated hereby in
cancellation of such holders' Options. The Company shall be responsible for and
shall pay when due any withholding taxes payable in respect of the Option
Payments.
1.05. INDEBTEDNESS PAYMENT AND CERTAIN CLOSING DELIVERIES. (a)
At the Closing, Buyer shall contribute to the Company, by wire transfer of
immediately available funds, cash in an amount equal to the Indebtedness
Payment, and the Representatives shall cause the Company (or a Subsidiary) to
(i) pay to Chase (for the benefit of the financial institutions party to the
Credit Agreement), by wire transfer of immediately available funds, an amount in
cash equal to the Bank Indebtedness Payment, and (ii) pay to the Representatives
(for the benefit of the holders of the Subordinated Debentures), by wire
transfer of immediately available funds, an amount in cash equal to the
Debenture Indebtedness Payment. At the Closing, Sellers shall deliver to Buyer
written statements from Chase and the holders of the Subordinated Debentures (or
their representatives) stating the amount due, as of the Closing Date, for the
Bank Indebtedness Payment and the Debenture Indebtedness Payment, respectively.
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(b) At the Closing, Buyer shall either (i) furnish to the
Company letters of credit in an aggregate principal amount and with terms
satisfactory to the Company to replace all then outstanding letters of credit
under the Credit Agreement (the "Letters of Credit") or (ii) provide the Company
such other forms of security as may be necessary to replace the Letters of
Credit.
1.06. PARTIAL CLOSING. If all of the terms and conditions to
the parties' respective obligations to consummate the transaction (including
that set forth in Section 6.05) are satisfied (or waived by the appropriate
party) but one or more of Sellers shall have failed to deliver an executed
counterpart of this Agreement as provided in Section 9.14 or to deliver the
certificates representing their Shares, then Buyer shall be entitled to hold
back from the Purchase Price an amount equal to the amount which otherwise would
have been payable in respect of such Shares. Buyer shall purchase and pay for
any Shares the certificates for which are delivered after the Closing within
three days of notice by the Representatives that they have the certificates
available, against delivery of such certificates duly endorsed or accompanied by
duly executed stock powers and a counterpart of this Agreement executed by the
holder of such Shares, if not previously delivered. Notwithstanding the
foregoing provisions of this Section 1.06 or the provisions of Section 6.05,
Sellers shall use their best efforts (which shall in no event require the
payment of any monies by Sellers) to deliver 100% of the total number of Shares.
1.07. CLOSING BALANCE SHEET; PURCHASE PRICE ADJUSTMENT. (a)
Within 45 days following the Closing Date, Sellers shall prepare, issue and
deliver to Buyer an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the close of business on the day immediately preceding the
Closing Date (the "Closing Balance Sheet"). There shall be attached to the
Closing Balance Sheet an annex setting forth in
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reasonable detail the computation of the Purchase Price Adjustment (as defined
in Section 1.07(d)).
(b) The Closing Balance Sheet shall be prepared using the same
accounting methods, policies, practices, principles and procedures
(collectively, "Methods"), with consistent classification, judgments and
estimation methodology (collectively, "Methodology"), that were used, and making
the same pro forma adjustments that were made, in the preparation of the
September 30 Balance Sheet (as defined in Section 2.05), except as set forth
below, shall be prepared on an interim basis (except as set forth in clause
(iii) below), even if the Closing Date is January 1, 1997, and shall not take
into account any information not known by the Company or any of the Subsidiaries
prior to the close of business on the day immediately preceding the Closing Date
or any changes in circumstances or events occurring after the close of business
on the day immediately preceding the Closing Date. In preparing the Closing
Balance Sheet, (i) there shall be included therein Cash on Hand (as defined in
Section 1.07(d)), notwithstanding that Cash on Hand was not included in the
September 30 Balance Sheet (provided that the Closing Balance Sheet shall not
include both the uncashed check representing payment of an account receivable
and the account receivable itself), (ii) the respective amounts included therein
for those reserves which are listed on Exhibit 1.07 shall be equal to the
respective amounts (including the absence of a reserve or zero) of such reserves
shown on Exhibit 1.07, and (iii) the amount included therein for inventories
shall be based upon a physical inventory of the Company and the Subsidiaries, to
be conducted jointly by the Company and Buyer as of a mutually agreed upon date
and completed prior to the Closing Date, and shall be adjusted to reflect
activity from such mutually agreed upon date to and including the day
immediately preceding the Closing Date and otherwise shall be determined in
accordance with the Methods and
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Methodology used in the preparation of the December 31 Balance Sheet (as defined
in Section 2.05).
(c) The Closing Balance Sheet delivered by Sellers to Buyer
and the computation of the Purchase Price Adjustment annexed thereto shall be
conclusive and binding upon the parties unless Buyer, within 30 days after the
delivery to Buyer of the Closing Balance Sheet, notifies the Representatives in
writing that Buyer disputes any of the amounts set forth therein, specifying the
nature of the dispute and the basis therefor. The parties shall in good faith
attempt to resolve any dispute, in which event the Closing Balance Sheet and the
computation of the Purchase Price Adjustment, as amended to the extent necessary
to reflect the resolution of the dispute, shall be conclusive and binding upon
the parties. If the parties do not reach agreement resolving the dispute within
10 days after notice is given by Buyer to the Representatives pursuant to the
second preceding sentence, the parties shall submit the dispute to a partner at
the accounting firm of Xxxxxx Xxxxxxxx LLP or if no partner of such firm will
act, to a partner at such other nationally recognized independent accounting
firm mutually agreeable to the parties, which firm shall not have had a material
relationship with either Buyer or the Representatives or their respective
affiliates within the two years preceding the appointment (the "Arbiter"), for
resolution. If the parties cannot agree on the selection of a partner at an
independent accounting firm to act as Arbiter, the parties shall request the
American Arbitration Association to appoint such a partner, and such appointment
shall be conclusive and binding upon the parties. Promptly, but no later than 20
days after its acceptance of his or her appointment as Arbiter, the Arbiter
shall determine, based solely on presentations by Buyer and the Representatives,
and not by independent review, only those issues in dispute and shall render a
report as to the dispute and the resulting computation of the Closing Balance
Sheet and the Purchase Price Adjustment, if any, which shall be conclusive and
binding upon the parties. All proceedings conducted by
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the Arbiter shall take place in the City of New York. In resolving any disputed
item, the Arbiter (x) shall be bound by the provisions of Section 1.07(b) and
(y) may not assign a value to any item greater than the greatest value for such
item claimed by either party or less than the smallest value for such item
claimed by either party. The fees, costs and expenses of the Arbiter (i) shall
be borne by Buyer in the proportion that the aggregate dollar amount of such
disputed items so submitted that are unsuccessfully disputed by Buyer (as
finally determined by the Arbiter) bears to the aggregate dollar amount of such
items so submitted and (ii) shall be borne by Sellers in the proportion that the
aggregate dollar amount of such disputed items so submitted that are
successfully disputed by Buyer (as finally determined by the Arbiter) bears to
the aggregate dollar amount of such items so submitted. Whether any dispute is
resolved by agreement among the parties or by the Arbiter, changes to the
Closing Balance Sheet shall be made hereunder only for items as to which Buyer
has taken exception as provided herein. Buyer and the Representatives each shall
make available to the other (upon the request of the other) their respective
work papers generated in connection with the preparation or review of the
Closing Balance Sheet. Such work papers of the Representatives shall be
destroyed by the Representatives within 90 days following the determination of
the Final Closing Balance Sheet, provided that the Representatives may deliver
one copy of such work papers to their outside counsel, Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx, and the Representatives shall cause such outside counsel to
keep such copy confidential.
(d) As used herein,
(i) the term "Final Closing Balance Sheet" shall mean
the Closing Balance Sheet which has become conclusive and binding upon
the parties pursuant to Section 1.07(c);
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(ii) the term "Closing Book Value" shall mean the
amount obtained by subtracting the total liabilities of the Company and
its Subsidiaries, as set forth in the Final Closing Balance Sheet, from
the total assets of the Company and its Subsidiaries, as set forth in
the Final Closing Balance Sheet; and
(iii) the term "Cash on Hand" shall mean the
aggregate amount of any cash and cash equivalents (including the amount
of any uncashed checks payable to the Company or any of the
Subsidiaries) on hand at or in bank accounts or lockboxes of the
Company or any of the Subsidiaries as of 11:59 p.m. New York City Time
on the day immediately preceding the Closing Date.
The difference, if any, between the Closing Book Value and
$685,916,000, whether a positive or negative number, is herein referred to as
the "Purchase Price Adjustment." If the Closing Book Value exceeds $685,916,000,
the dollar amount of the Purchase Price Adjustment shall be paid by Buyer to
Sellers in accordance with the provisions of Section 1.07(e). If the Closing
Book Value is less than $685,916,000, the dollar amount of the Purchase Price
Adjustment shall be paid by Sellers (who shall be jointly and severally liable
therefor) to Buyer in accordance with the provisions of Section 1.07(e).
(e) The amount of any Purchase Price Adjustment shall bear
interest at an annual rate equal to 5.5% from and including the Closing Date to,
but not including, the date of payment. Any amount payable as Purchase Price
Adjustment (plus interest determined pursuant to the immediately preceding
sentence) shall be paid by wire transfer of immediately available funds to an
account designated in writing by Buyer or Sellers, as the case may be. Such
payment shall be made on the third business day following (i) the last day on
which Buyer may, pursuant to the first sentence of Section 1.07(c), notify the
Representatives that it disputes any of the amounts set forth in the Closing
Balance Sheet,
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if Buyer shall not notify the Representatives of any dispute, or such earlier
date as Buyer shall advise the Representatives of the absence of any dispute, or
(ii) the date mutual agreement is reached as to the amount of the Purchase Price
Adjustment, if any, in the event of a dispute that is settled by the parties
without resort to the Arbiter, or (iii) the date of receipt of the report of the
Arbiter in the event of a dispute which is settled by the Arbiter, as applicable
(the third business day following the applicable date being referred to herein
as the "Payment Date"). Any amounts payable by Sellers to Buyer in respect of
this paragraph (e) shall first be payable out of the PPA Trust Funds (as defined
in Section 1.08(a)) in accordance with the Trust Agreement and the balance shall
be payable by Sellers (who shall be jointly and severally liable therefor).
(f) Buyer shall provide Sellers and their accountants full
access to all relevant books and records and to employees of the Company and its
Subsidiaries to the extent necessary for Sellers to prepare the Closing Balance
Sheet and in connection with any items in dispute with respect to the Closing
Balance Sheet. Such access shall be provided during regular business hours and
upon reasonable notice. Sellers shall endeavor to cause minimal disruption to
the business of the Company and its Subsidiaries. A reasonable number of
representatives of Sellers (including Sellers' accountants) shall participate in
the preparation of the Closing Balance Sheet at sites of the Company and its
Subsidiaries. All such access of Sellers shall be coordinated through designated
representatives of Buyer.
1.08. TRUST AGREEMENT. (a) Sellers and Buyer shall enter into
a trust agreement at the Closing in substantially the form attached as Exhibit
1.08 (the "Trust Agreement"). At the Closing, Buyer shall deposit $20,000,000 in
trust in accordance with the Trust Agreement, of which $5,000,000 shall be
designated for purposes of the Purchase Price Adjustment (the "PPA Trust Funds")
and $15,000,000 shall be designated for purposes of Sellers' indemnification
obligations set forth in Section 9.02(a)(i) (the
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"Indemnity Trust Funds"). The PPA Trust Funds and the Indemnity Trust Funds
shall earn interest in accordance with the Trust Agreement; all interest earned
on the PPA Trust Funds and the Indemnity Trust Funds shall belong to Sellers and
the Representatives shall have the sole right to direct the release of any such
interest.
(b) With respect to the PPA Trust Funds, the following
principles shall apply:
(i) If Buyer notifies the Representatives that it
disputes any of the amounts set forth in the Closing Balance Sheet
delivered by Sellers, but the amount of the Purchase Price Adjustment
payable by Sellers would be less than $5,000,000 or there would be no
Purchase Price Adjustment at all payable by Sellers, assuming for these
purposes that Buyer would prevail on every disputed item, then, within
one business day following such notice by Buyer, the Representatives
and Buyer shall instruct the Trustee to pay the PPA Trust Funds, less
the amount, if any, that would be owing to Buyer were Buyer to prevail
on every item disputed by it, to the Representatives. If on any
subsequent dates, either because of resolution of any disputed items by
mutual agreement of the parties, or because Buyer withdraws any of its
disputes, or otherwise, none, or not all, of the PPA Trust Funds would
be payable to Buyer, even were Buyer to prevail on every disputed item,
then Buyer and the Representatives shall instruct the Trustee in
writing to disburse all or the appropriate portion of the PPA Trust
Funds to the Representatives.
(ii) On the Payment Date, one of the following shall
occur:
(1) If the Purchase Price Adjustment is zero
or is payable to Sellers, the Representatives and Buyer shall
instruct the Trustee in writing to disburse the PPA Trust
Funds (or any remaining portions thereof,
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if disbursement of any portion thereof had previously been
made in accordance with Section 1.08(b)(i)) to the
Representatives.
(2) If the Purchase Price Adjustment is
payable to Buyer, the Representatives and Buyer shall instruct
the Trustee to disburse to Buyer an amount of the PPA Trust
Funds equal to the amount of the Purchase Price Adjustment
plus interest on such amount at the interest rate set forth in
Section 1.07(e) and, if the amount of the Purchase Price
Adjustment plus such interest is less than $5,000,000, to
disburse the remaining portion of the PPA Trust Funds, if any,
to the Representatives. If the amount of the Purchase Price
Adjustment plus such interest payable to Buyer exceeds the
amount of the PPA Trust Funds, Sellers shall jointly and
severally pay the amount of such excess to Buyer in accordance
with Section 1.07(e).
(c) With respect to the Indemnity Trust Funds, the
following principles shall apply:
(i) If Buyer and the Representatives shall agree (or,
failing such agreement, if a court of competent jurisdiction by final
non-appealable order shall determine) that Buyer has suffered any
Losses (as defined in Section 5.03) with respect to which Buyer is
entitled to indemnification pursuant to Section 9.02(a)(i), the
Representatives and Buyer shall instruct the Trustee in writing to
disburse to Buyer from the Indemnity Trust Funds an amount equal to the
amount of such Losses.
(ii) On the twelve month anniversary of the Closing
Date, Buyer and the Representatives shall instruct the Trustee in
writing to disburse the amount of the Indemnity Trust Funds then
remaining on deposit with the Trustee under the
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Trust Agreement less the Sales and Use Tax Amount (as defined below) to
the Representatives; provided, however, that if, on or prior to that
date, Buyer has in good faith given Valid Claim Notices (as defined in
Section 9.01) with respect to any claims for indemnification pursuant
to Section 9.02(a)(i), which claims remain unresolved (collectively,
"Unresolved Claims") (other than claims for breaches of the Sales Tax
Representations (as defined in Section 9.04(h)) or the Use Tax
Representations (as defined in Section 9.04(h))), there shall remain on
deposit with the Trustee, and not disbursed to the Representatives, the
aggregate amount that would be payable to Buyer pursuant to Article IX
were Buyer to prevail in respect of all such claims until Buyer and the
Representatives shall instruct the Trustee to disburse such funds by
mutual agreement or pursuant to and in accordance with a final
non-appealable order of a court of competent jurisdiction. The term
"Sales and Use Tax Amount" at any time shall mean the sum of (i)
$1,000,000 less the aggregate amount disbursed prior to such time
pursuant to Section 1.08(c)(i) for indemnification for any breaches of
the Sales Tax Representations, plus (ii) $300,000 less the aggregate
amount disbursed prior thereto pursuant to Section 1.08(c)(i) for
indemnification for any breaches of the Use Tax Representations.
(iii) If at any time an Unresolved Claim in respect
of which funds are being held under the Trust Agreement shall be
resolved, either by mutual agreement of the parties or pursuant to a
final non-appealable order of a court of competent jurisdiction, Buyer
and the Representatives shall instruct the Trustee in writing to
disburse such funds in accordance with such agreement or court order,
provided that no funds shall be disbursed to Sellers unless there shall
remain on deposit until the twenty-four month anniversary of the
Closing Date the sum of (1) $1,000,000 less any amounts disbursed
pursuant to Section 1.08(c)(i) in respect
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of claims for indemnification for any breaches of the Sales Tax
Representations plus (2) $300,000 less any amounts disbursed pursuant
to Section 1.08(c)(i) in respect of claims for indemnification for any
breaches of the Use Tax Representations.
(iv) On the 24-month anniversary of the Closing Date,
Buyer and the Representatives shall instruct the Trustee in writing to
disburse the Sales and Use Tax Amount then remaining on deposit with
the Trustee under the Trust Agreement to the Representatives; provided,
however, that if, on or prior to that date, Buyer has in good faith
given Valid Claim Notices with respect to any claims for
indemnification pursuant to Section 9.02(a)(i) for breaches of the
Sales Tax Representations and/or the Use Tax Representations, which
claims remain unresolved, there shall remain on deposit with the
Trustee, and not disbursed to the Representatives, the aggregate amount
that would be payable to Buyer pursuant to Article IX were Buyer to
prevail in respect of all such claims until Buyer and the
Representatives shall instruct the Trustee to disburse such funds by
mutual agreement or pursuant to and in accordance with a final
non-appealable order of a court of competent jurisdiction.
(v) On the 36-month anniversary of the Closing Date,
Buyer and the Representatives shall instruct the Trustee in writing to
disburse any Indemnity Trust Funds being held in respect of any
Unresolved Claim if the claimant of such Unresolved Claim shall not
have communicated (including by commencing a Litigation (as defined in
Section 2.11)) with the Company with regard to such Unresolved Claim
during the prior 24-month period. If there has been such communication
during the prior 24-month period with respect to any Unresolved Claim,
then the Indemnity Trust Funds being held in respect thereof shall be
released to the Representatives upon receipt of written instructions
from Buyer and
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the Representatives (and Buyer agrees to join in written instructions
to the Trustee no later than the expiration of the statute of
limitations applicable to the Unresolved Claim so long as the claimant
has not commenced any legal proceeding prior to the expiration of the
statute of limitations) or pursuant to and in accordance with a final
nonappealable order of a court of competent jurisdiction.
(d) In the event that a party shall at any time have failed to
timely join in written instructions to the Trustee as required by this Section
1.08, the other party shall receive from such party its out-of-pocket costs and
expenses incurred in connection with any actions taken by the other party in
connection with such failure, including reasonable attorney's fees and expenses.
1.09. MANNER OF PAYMENT TO SELLERS. Any sums owed by Buyer to
Sellers pursuant to this Article I shall be paid by Buyer to the Representatives
and the Representatives shall allocate such sums among Sellers in proportion to
the percentage of the Shares owned by each Seller on the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers hereby severally represent and warrant to Parent and
Buyer as follows:
2.01. TITLE TO SHARES. The sale and delivery of the Shares to
Buyer pursuant to Article I hereof will vest in Buyer legal and valid title to
the Shares, free and clear of all liens, security interests or other
encumbrances ("Encumbrances") (other than Encumbrances created or suffered by
Buyer).
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2.02. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of 10,000 shares of preferred stock, par
value $.01 per share, none of which are issued and outstanding, and 195,000
shares of common stock, divided into two classes consisting of (i) 180,000
shares of Class A Common Stock, par value $.01 per share (the "Class A Common
Stock"), of which 165,050 shares are issued and outstanding, and (ii) 15,000
shares of Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"), of which 14,926 shares are issued and outstanding. All of the issued
and outstanding Shares are validly issued, fully paid and non-assessable. As of
the date hereof, there are outstanding Options to acquire 2,740 shares of Class
A Common Stock. Except as set forth in Disclosure Schedule 2.02, there are
outstanding no securities convertible into, exchangeable for, or carrying the
right to acquire, or any voting agreements with respect to, any equity
securities of the Company, or subscriptions, warrants, options, rights or other
arrangements or commitments obligating the Company to issue or acquire any of
its equity securities or any ownership interest therein. Upon payment of the
Option Payments as provided in Section 1.04, all of the outstanding Options will
be terminated and the Company will have no further obligations to the holders
thereof with respect thereto except to remit the applicable withholding taxes
when due.
2.03. SUBSIDIARIES. Disclosure Schedule 2.03 sets forth a
list, as of the date hereof, of all direct or indirect subsidiaries of the
Company (the "Subsidiaries") together with its jurisdiction of organization and
its authorized and outstanding capital stock or other equity interests as of the
date hereof. Except as set forth in Disclosure Schedule 2.03, the Company owns,
either directly or indirectly through one or more Subsidiaries, all of the
capital stock of the Subsidiaries free and clear of any Encumbrance. All of the
issued and outstanding shares of capital stock of the Subsidiaries are validly
issued, fully paid and non-assessable. Except as set forth in
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Disclosure Schedule 2.03, there are outstanding no securities convertible into,
exchangeable for, or carrying the right to acquire, or any voting agreements
with respect to, any equity securities of any of the Subsidiaries, or
subscriptions, warrants, options, rights or other arrangements or commitments
obligating any Subsidiary to issue or acquire any of its equity securities or
any ownership interest therein.
2.04. ORGANIZATION. The Company and each of the Subsidiaries
are corporations duly organized and validly existing under the laws of their
respective jurisdictions of incorporation and have all requisite corporate power
and authority to carry on their businesses as they are now being conducted. The
Company and each of the Subsidiaries are duly qualified to do business and are
in good standing as foreign corporations in all jurisdictions where the nature
of the property owned or leased by them, or the nature of the business conducted
by them, makes such qualification necessary and the absence of such
qualification would, individually or in the aggregate, have a material adverse
effect on the business or financial condition of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect"). True and complete
copies of the Certificates of Incorporation and By-Laws of the Company and each
of the Subsidiaries have previously been made available to Buyer.
2.05. FINANCIAL STATEMENTS. The Company has delivered to Buyer
(a) the audited consolidated balance sheet of the Company and the Subsidiaries
as of December 31, 1995 (the "December 31 Balance Sheet"), (b) the unaudited
consolidated balance sheet of the Company and the Subsidiaries as of September
30, 1996 (the "September 30 Balance Sheet"), (c) the audited consolidated
statements of operations of the Company and the Subsidiaries for the year ended
December 31, 1995 and (d) the unaudited consolidated statements of operations of
the Company and the Subsidiaries for the nine months ended September 30, 1996
(collectively, the "Financial Statements"), a copy of each of which is included
in Disclosure Schedule 2.05. The Financial Statements
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present fairly, in all material respects, the consolidated financial position
and the results of operations of the Company and the Subsidiaries as of their
respective dates and for the respective periods then ended in conformity with
generally accepted accounting principles except as set forth in the footnotes
thereto or in Disclosure Schedule 2.05, and except that the unaudited financial
statements were prepared on an interim basis, are subject to normal year-end
adjustments and do not contain all of the footnote disclosures required by
generally accepted accounting principles.
2.06. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in Disclosure Schedule 2.06 or permitted or contemplated by this
Agreement, since September 30, 1996, neither the Company nor any of the
Subsidiaries has (a) suffered any damage, destruction or casualty loss to its
physical properties which individually exceeds $100,000 or which in the
aggregate exceed $500,000; (b) incurred or discharged any obligation or
liability or entered into any other transaction except in the ordinary course of
business; (c) suffered any changes which individually or in the aggregate have a
Material Adverse Effect; or (d) increased the rate or terms of compensation
payable or to become payable by the Company or any of its Subsidiaries to any of
their respective directors, officers or key employees, or increased the rate or
terms of any bonus, pension or other employee benefit plan covering any of their
respective directors, officers or key employees, except in each case increases
occurring in the ordinary course of business in accordance with their respective
customary practices (including normal periodic performance reviews and related
compensation and benefit increases) or as required by any pre-existing
Commitment (as defined in Section 2.10) which is listed on Disclosure Schedule
2.10 (or which is not required by the terms of Section 2.10 to be listed on such
Schedule).
2.07. TITLE TO ASSETS. The Company and the Subsidiaries have
good (and, in the case of real property, marketable) title to all of the assets
and properties which
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they purport to own, free and clear of Encumbrances, except (a) as set forth in
Disclosure Schedule 2.07, and (b) liens for taxes not yet due or being contested
in good faith by appropriate proceedings. Except as set forth in Disclosure
Schedule 2.07, no assets or properties of the Company or any Subsidiary other
than inventory in the ordinary course have been sold or otherwise transferred
since December 31, 1995. Except as set forth in Disclosure Schedule 2.07, to the
knowledge of Sellers, there are no existing structural defects in any of the
buildings or other structures located on the real property owned by the Company
or any of its Subsidiaries.
2.08. PATENTS, TRADEMARKS, ETC. Disclosure Schedule 2.08 sets
forth a list, as of the date hereof, of all registered United States and foreign
patents, trademarks, trade names, copyrights and applications therefor which are
used by the Company or any of the Subsidiaries in the conduct of the business of
the Company and the Subsidiaries (the "Patent and Trademark Rights"). Except as
set forth in Disclosure Schedule 2.08, (a) the Company and the Subsidiaries own
or possess adequate licenses or other valid rights to use all Patent and
Trademark Rights; (b) to Seller's knowledge, the conduct of the business of the
Company and the Subsidiaries as now being conducted does not conflict with any
valid patents, trademarks, trade names or copyrights of others; (c) to Seller's
knowledge, none of the Patent and Trademark Rights is being infringed upon by
others; (d) neither the Company nor any of the Subsidiaries has granted any
right to use the Patent and Trademark Rights to any third party; and (e) no
person or entity has alleged in writing the existence of any restrictions on use
of the Patent and Trademark Rights that would affect Buyer's right to use the
Patent and Trademark Rights in connection with the business of the Company and
the Subsidiaries following the Closing in the same manner as they are currently
being used.
2.09. POWER AND AUTHORITY; EFFECT OF AGREEMENT. (a) Each of
MTF Partners and MBO-V has all requisite power and authority to execute, deliver
and
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perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by MTF Partners and MBO-V of this
Agreement and the consummation by each of them of the transactions contemplated
hereby have been duly authorized by all necessary partnership action on each of
their part. This Agreement has been duly and validly executed and delivered by
MTF Partners and MBO-V and, assuming the due authorization, execution and
delivery thereof by Parent and Buyer, constitutes a valid and binding obligation
of each of MTF Partners and MBO-V, enforceable against each of them in
accordance with its terms, except to the extent that such enforceability (i) may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and (ii) is subject to
general principles of equity.
(b) Each Shareholder Individual has the right, power and
capacity to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each Shareholder Individual and constitutes his or her
valid and binding obligation, enforceable against him or her in accordance with
its terms, except to the extent that such enforceability (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally, and (ii) is subject to general
principles of equity.
(c) The execution, delivery and performance by MTF Partners
and MBO-V of this Agreement and the consummation by each of them of the
transactions contemplated hereby will not, with or without the giving of notice
or the lapse of time, or both, subject to obtaining any required consents,
approvals, authorizations, exemptions or waivers referred to in Section 2.16,
(i) violate any provision of law, rule or regulation to which MTF Partners or
MBO-V is subject, (ii) violate any order, judgment or decree applicable to MTF
Partners or MBO-V, or (iii) conflict with or result in a breach of the
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provisions of, or constitute a default under, the partnership agreements for
each of MTF Partners and MBO-V or any agreement reflecting obligations of MTF
Partners or MBO-V for borrowed money, except in the case of clause (i), (ii) or
(iii) of this Section 2.09(c), for violations, conflicts, breaches or defaults
which individually or in the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby.
2.10. COMMITMENTS. Disclosure Schedule 2.10 sets forth a list,
as of the date hereof, of each contract or agreement to which the Company or any
of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound (collectively, the "Commitments") (a) which provides for
future payments thereunder of more than $100,000 per year; (b) which are
Commitments for capital expenditures; (c) which are distribution, dealer or
sales agency Commitments; (d) which are guarantees of third party obligations;
(e) which are Commitments for the sale of any assets, but excluding purchase
orders or other Commitments for the purchase of raw materials, components or
supplies and sales orders or other Commitments for the sale of finished goods
entered into in the ordinary course of business; (f) which restricts the kinds
of businesses in which the Company or any of the Subsidiaries may engage or the
geographical area in which any of them may conduct their business; (g) which is
an indenture, mortgage, loan agreement or other Commitment for the borrowing of
money or a line of credit; (h) which is a collective bargaining agreement; (i)
which is a license (whether as licensor or licensee) or similar agreement
permitting the use of any Patent and Trademark Rights; (j) which is a brokerage
or finder's agreement; (k) which is a joint venture, partnership or similar
agreement; (l) which is a stock purchase agreement, asset purchase agreement or
other acquisition or divestiture agreement; or (m) which is not of the foregoing
type and is material to the business or financial condition of the Company and
the Subsidiaries taken as a whole ("Material"). Except as set forth in
Disclosure
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Schedule 2.10, each of such Commitments is a valid and binding obligation of the
Company or a Subsidiary and is enforceable against the Company or a Subsidiary
in accordance with its terms, except to the extent such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally and is subject to general
principles of equity, and neither the Company nor any Subsidiary nor, to the
knowledge of Sellers, any other party is in default under any Commitment.
2.11. LITIGATION. Except as set forth in Disclosure Schedule
2.11, there is no action, suit, claim or proceeding in any court or before any
governmental authority ("Litigation") pending or, to Sellers' knowledge,
threatened against Sellers relating to the business of the Company and the
Subsidiaries, or against the Company or any of the Subsidiaries. Except as set
forth in Disclosure Schedule 2.11, neither the Company nor any of the
Subsidiaries is subject to any outstanding orders, rulings, judgments or
decrees. No proceedings, whether voluntary or involuntary, are pending or, to
Sellers' knowledge, threatened, against the Company or any of the Subsidiaries
under the bankruptcy laws and/or receivership or similar laws of the United
States of America or of any state or foreign country, nor is the Company or any
of the Subsidiaries contemplating such proceedings.
2.12. COMPLIANCE WITH LAWS. Except as set forth in Disclosure
Schedule 2.12, to Sellers' knowledge, the Company and the Subsidiaries are in
compliance with all applicable federal, state, local and foreign laws, rules and
regulations currently in effect, including, without limitation, equal employment
opportunity practices. Except as set forth in Disclosure Schedule 2.12, the
Company and the Subsidiaries have all governmental permits, licenses and
authorizations necessary for the conduct of their businesses as presently
conducted. To Seller's knowledge, there are no pending or
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threatened investigations by any governmental body or agency with regard to the
operations of the Company or any of the Subsidiaries.
2.13. ENVIRONMENTAL MATTERS. Except as set forth in Disclosure
Schedule 2.13, to Sellers' knowledge, the Company and the Subsidiaries are in
compliance with all Environmental Laws (as defined below) currently in effect.
Except as set forth in Disclosure Schedule 2.13, the Company and the
Subsidiaries have all governmental permits, licenses, authorizations and
approvals required for the conduct of their businesses as presently conducted
and as the businesses have been conducted since December 31, 1995 pursuant to
any Environmental Law. All such permits, licenses, authorizations and approvals
are in good standing and the Company or the Subsidiaries, as the case may be,
have made timely application for renewal of such permits where necessary. To
Sellers' knowledge, except as set forth in Disclosure Schedule 2.13, no
hazardous substance (as defined under applicable federal, state or local law)
has been treated, stored, disposed of, or discharged into the environment on or
from the premises of the Company or any of the Subsidiaries, which is currently
required by applicable law, rule or regulation to be remediated by or at the
expense of the Company or any of the Subsidiaries. Except as set forth in
Disclosure Schedule 2.13, the Company and the Subsidiaries have not received any
written notice of any violation or alleged violation of, or any liability under,
any Environmental Law in connection with their respective businesses since
November 30, 1994, other than violations which would not materially or adversely
affect Buyer's ability to conduct the businesses of the Company and the
Subsidiaries as heretofore conducted. Except as set forth in Disclosure Schedule
2.13, there are no writs, injunctions, decrees, orders or judgments outstanding,
or any actions, suits or proceedings pending or, to the knowledge of Sellers,
threatened, nor, to the knowledge of Sellers, is any investigation pending or
threatened, relating to compliance with or liability under any Environmental Law
affecting the businesses of the Company
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and the Subsidiaries. Buyer and Sellers agree that the only representations and
warranties of Sellers made herein as to any Environmental Matters are those
contained in this Section 2.13. As used herein, the term "Environmental Matter"
means any matter arising out of or relating to the environment, safety or health
or the production, storage, handling, use, emission, release, discharge or
disposal of any substance, product or waste which is hazardous or toxic or which
is regulated by law. "Environmental Laws" means any law or order of any federal,
state, local or foreign governmental body relating to protection or regulation
of the environment, laws, rules, regulations or orders regulating or relating to
the emission, discharge, disposal, treatment, transportation, storage, release
or threatened release of hazardous, toxic or other pollutants, contaminants,
chemicals, materials, substances, wastes or Hazardous Materials (as defined
below) into the environment, including ambient air, surface water, ground water,
ground water, land surface or subsurface strata, or otherwise regulating or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of hazardous, toxic or other pollutants,
contaminants, chemicals, materials, substances, wastes or Hazardous Materials,
and all regulations, rules, codes, plans, decrees, judgments, injunctions,
orders, notices and demand letters issued, entered, promulgated or approved
hereunder. "Hazardous Materials" means any toxic substance, hazardous substance,
hazardous material, hazardous chemical, hazardous waste, mineral, metal,
material or chemical substance defined, regulated, or qualifying as such in any
Environmental Law, or any pollutant or contaminant, and shall include, but not
be limited to, petroleum, including crude oil or any fraction thereof which is
liquid at standard conditions of temperature or pressure (60 degrees fahrenheit
and 14.7 pounds per square inch absolute), any radioactive material, including
but not limited to any source, special nuclear or by-product material as
defined at 42 U.S.C. Section 2011 et seq., as amended, polychlorinated biphenyls
and asbestos that is friable or otherwise required to be remediated.
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2.14. TAXES. (a) Except as set forth on Disclosure Schedule
2.14, the Company and the Subsidiaries (i) will have timely filed, on or prior
to the Closing Date, all Tax returns, reports, schedules, documents and
declarations required to be filed by the Company or the Subsidiaries prior to
such date; (ii) have timely paid in full all Taxes due; and (iii) will have made
timely withholdings and payments of any Taxes required to be deducted and
withheld by the Company or the Subsidiaries from the wages or other remuneration
paid to employees of the Company or the Subsidiaries or others prior to the
Closing Date. All Tax returns, schedules and declarations filed by the Company
or the Subsidiaries reflect in all material respects the matters required to be
reported therein including, where appropriate, income, expenses, deductions,
credits, loss carryovers and Taxes due of the Company and the Subsidiaries, and
such returns, schedules and declarations have not been amended except as set
forth in Disclosure Schedule 2.14(a). Except as set forth in Disclosure Schedule
2.14(a), Sellers have no knowledge that an audit of any Tax returns of the
Company or any of the Subsidiaries is in progress and have not been notified in
writing that any such audit is contemplated. No claims have been asserted in
writing against the Company or any of the Subsidiaries with respect to Taxes
which claims are currently pending. Sellers have previously made available to
Buyer copies of all Tax returns of the Company and the Subsidiaries that have
been filed since their inception (for the last three years with respect to
Ronseal (Ireland) Limited), all amended Tax returns for those years, if any, all
written audit reports and proposed adjustments with respect to the Tax returns
of the Company and the Subsidiaries for those years including any assessments,
all refund claims with respect to the Company or any of the Subsidiaries for
those years, any and all property tax bills with respect to property owned by
the Company or any of the Subsidiaries during those years and any existing
tax-sharing or similar agreements to which the Company or any of the
Subsidiaries is a party.
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(b) "Tax" and "Taxes" shall include income taxes (whether
federal, state, local or foreign, or other taxes on or measured by income, gross
receipts, profits or occupations), franchise taxes, excise taxes, employment
taxes, unemployment taxes, payroll taxes, employee taxes, employer taxes, sales
and use taxes, real property taxes, personal property taxes, transfer taxes, ad
valorem taxes, per capita taxes, head taxes, and any other tax or taxes imposed,
whether or not assessed, by any federal, state, municipal, local or other
governmental agency, foreign or domestic, including assessments in the nature of
taxes, including interest and penalties on any of the foregoing.
2.15. EMPLOYEE BENEFIT PLANS. Disclosure Schedule 2.15 lists
all employee benefit plans (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) which are
maintained or contributed to by the Company or any of the Subsidiaries (the
"Company Benefit Plans"). Sellers have provided to Buyer (i) true and complete
copies of all Company Benefit Plans; (ii) the most recent annual actuarial
evaluation, if any, prepared for each Company Benefit Plan; (iii) the most
recent annual report (series 5500), if any, required under ERISA with respect to
each Company Benefit Plan; (iv) the most recent determination letter received
from the Internal Revenue Service (the "IRS"), if any, for each Company Benefit
Plan; and (v) the most recent Summary Plan Description, if any, required under
ERISA with respect to each Company Benefit Plan. Except as set forth in
Disclosure Schedule 2.15, (i) with respect to each Company Benefit Plan that is
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended and in effect during the relevant period (the "Code"), and is
maintained by the Company or any of the Subsidiaries for any of their employees,
(x) the Company or such Subsidiary has obtained a favorable determination letter
from the IRS, (y) such plan has been operated in compliance with the Code and
ERISA and in accordance with the provisions of, and the rules and regulations
covering, such plan, and (z) the Company and the Subsidiaries are
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not, and to Seller's knowledge no other person is, engaged in a transaction
prohibited by Section 4975 of the Code or Section 406 of ERISA which would
result in a liability to the Company and the Subsidiaries; (ii) each Company
Benefit Plan which is subject to Part III of Subtitle B of Title I or ERISA or
Section 412 of the Code has been maintained in compliance with the minimum
funding standards of ERISA and the Code; and (iii) no reportable event, within
the meaning of Section 4043 of ERISA, which is subject to Title IV of ERISA has
occurred with respect to any Company Benefit Plan, other than reportable events
with respect to which notice has been waived by the Pension Benefit Guaranty
Corporation. Disclosure Schedule 2.15 lists all multiemployer pension and/or
welfare benefit plans to which the Company and/or any of the Subsidiaries now
contribute, or since November 30, 1994 have contributed, and neither the Company
nor any of the Subsidiaries has received notice of an assessment of withdrawal
liability (whether full or partial) from any such multiemployer plan or has
knowledge of an event for which withdrawal liability may be incurred.
2.16. CONSENTS. Except as set forth in Disclosure Schedule
2.16, no consent, approval or authorization of, or exemption by, or filing with,
any governmental authority, other than pursuant to the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), is required in connection with the
execution, delivery and performance by Sellers of this Agreement or the taking
by it of any other action contemplated hereby, excluding, however, consents,
approvals, authorizations, exemptions and filings, if any, which Buyer is
required to obtain or make.
2.17. INSURANCE. Disclosure Schedule 2.17 sets forth a list,
as of the date hereof, of all casualty, general liability and other insurance
maintained by the Company or any of the Subsidiaries (the "Insurance Policies").
Each of the Insurance Policies is in full force and effect and no written notice
has been received by the Company or any of
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the Subsidiaries from any insurance carrier purporting to cancel coverage under
any of the Insurance Policies. Except as set forth in Disclosure Schedule 2.17,
to Seller's knowledge, there are no pending claims against the Insurance
Policies by the Company or any of the Subsidiaries as to which the insurers have
denied liability. The Company and its Subsidiaries have timely filed all claims
of which they have knowledge under such Insurance Policies. The Company and the
Subsidiaries have made timely premium payments with respect to all of the
Insurance Policies. Sellers make no representation or warranty that the
Company's insurance coverage under the Insurance Policies will be continued or
is continuable after the Closing.
2.18. LABOR MATTERS. Except as set forth in Disclosure
Schedule 2.18, neither the Company nor any of the Subsidiaries is a party to any
collective bargaining agreement nor does any labor union or collective
bargaining agent represent any of the employees of the Company or any of the
Subsidiaries. Except as set forth in Disclosure Schedule 2.18, there is no labor
strike, slow-down or stoppage pending or, to Sellers' knowledge, threatened by
the employees of the Company or any of the Subsidiaries.
2.19. UNDISCLOSED LIABILITIES. To Sellers' knowledge, the
Company and its Subsidiaries do not have any liabilities of any nature that
would be required by generally accepted accounting principles to be reflected on
a balance sheet or in the notes thereto of the Company and its Subsidiaries,
other than (i) liabilities disclosed or referred to in any of the Disclosure
Schedules (including liabilities for present or future performance under any of
the documents listed in any of the Disclosure Schedules); (ii) liabilities as to
which no disclosure is required pursuant to this Article II (for example,
because of the making of the representation and warranty is disclaimed or
because the liability involves an amount which is less than the threshold above
which disclosure is required); (iii) liabilities that are reflected in the
Financial Statements; or (iv) liabilities that will be reflected on the Final
Closing Balance Sheet.
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2.20. FEES. Except for the fees payable to Xxxxxxx Xxxxx & Co.
and Xxxxx Xxxxxx Inc., neither the Company nor any of the Subsidiaries has paid
or become obligated to pay any fee or commission to any broker, finder or
intermediary in connection with the transactions contemplated hereby.
2.21. REPRESENTATIONS AND WARRANTIES OF SELLERS AS OF THE
CLOSING DATE. All of the representations and warranties of Sellers contained in
this Article II are true on the date hereof and will be true on and as of the
Closing Date with the same effect as though made on and as of the Closing Date,
except (a) as otherwise contemplated hereby, and (b) to the extent that such
representations and warranties were made as of a specified date and as to such
representations and warranties the same will continue on the Closing Date to be
true as of the specified date.
2.22. DISCLAIMER. SELLERS HAVE NOT MADE AND SHALL NOT BE
DEEMED TO HAVE MADE TO PARENT OR BUYER ANY REPRESENTATION OR WARRANTY OTHER THAN
THOSE EXPRESSLY MADE BY SELLERS IN SECTIONS 2.01 THROUGH 2.21 HEREOF. IN ANY
EVENT, SELLERS MAKE NO REPRESENTATION OR WARRANTY TO PARENT OR BUYER (1) AS TO
MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY,
WITH RESPECT TO ANY OF THE TANGIBLE ASSETS BEING SO TRANSFERRED, OR AS TO THE
CONDITION OR WORKMANSHIP THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER
LATENT OR PATENT (OR ANY OTHER REPRESENTATION OR WARRANTY REFERRED TO IN SECTION
2-312 OF THE NEW YORK UNIFORM COMMERCIAL CODE OR THE UNIFORM COMMERCIAL CODE OF
ANY OTHER APPLICABLE JURISDICTION OR IN ANY STATUTE APPLICABLE TO REAL PROPERTY)
EXCEPT, IN THE CASE OF THIS CLAUSE (1) ONLY, AS EXPRESSLY COVERED BY THE
REPRESENTATION AND WARRANTY CONTAINED IN SECTION 2.07,
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(2) WITH RESPECT TO ANY PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED
TO OR MADE AVAILABLE TO PARENT OR BUYER, OR (3) WITH RESPECT TO ANY OTHER
INFORMATION OR DOCUMENTS MADE AVAILABLE TO PARENT OR BUYER EXCEPT, IN THE CASE
OF THIS CLAUSE (3) ONLY, AS EXPRESSLY COVERED BY A REPRESENTATION OR WARRANTY
CONTAINED IN SECTIONS 2.01 THROUGH 2.21 HEREOF.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
--------------------------------------------------
Parent and Buyer hereby represent and warrant to Sellers as
follows:
3.01. ORGANIZATION. Parent and Buyer are corporations duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, and each has all requisite corporate
power and authority to carry on its business as it is now being conducted. Buyer
is a wholly owned subsidiary of Parent.
3.02. POWER AND AUTHORITY; EFFECT OF AGREEMENT. (a) Each of
Parent and Buyer has all requisite power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Parent and Buyer of this Agreement
and the consummation by Parent and Buyer of the transactions contemplated hereby
have been duly authorized by the Board of Directors of each of Parent and Buyer,
and no other corporate action on the part of Parent or Buyer or their
stockholders or affiliates is necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by each of Parent and Buyer and,
assuming the due authorization, execution and delivery thereof by Sellers,
constitutes a valid and binding obligation of each of Parent and Buyer,
enforceable against each of
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them in accordance with its terms, except to the extent that such enforceability
(i) may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and (ii) is subject
to general principles of equity.
(b) The execution, delivery and performance by each of Parent
and Buyer of this Agreement and the consummation by each of Parent and Buyer of
the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, subject to obtaining any required
consents, approvals, authorizations, exemptions or waivers referred to in
Section 3.05, (i) violate any provision of law, rule or regulation to which
Parent or Buyer is subject, (ii) violate any order, judgment or decree
applicable to Parent or any of its subsidiaries, including Buyer, or (iii)
conflict with or result in a breach of the provisions of, or constitute a
default under, (A) the Amended Articles or Code of Regulations of Parent or the
Certificate of Incorporation or By-Laws of Buyer, or (B) any agreement
reflecting obligations of Parent or any of its subsidiaries, including Buyer,
for borrowed money, except in the case of clause (i), (ii) or (iii) of this
Section 3.02(b), for violations, conflicts, breaches or defaults which
individually or in the aggregate would not materially hinder or impair the
consummation of the transactions contemplated hereby.
3.03. LITIGATION. There is no Litigation pending or threatened
against Parent or any of its subsidiaries, including Buyer, (i) with respect to
which there is a reasonable likelihood of a determination which would,
individually or in the aggregate, have a material adverse effect on the ability
of Parent or Buyer to perform its obligations under this Agreement, or (ii)
which seeks to enjoin or obtain damages in respect of the consummation of the
transactions contemplated hereby. Neither Parent nor any of its subsidiaries,
including Buyer, is subject to any outstanding orders, rulings, judgments or
decrees which, individually or in the aggregate, would have a material adverse
effect on the ability of Parent or Buyer to perform its obligations under this
Agreement.
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3.04. AVAILABILITY OF FUNDS. On the Closing Date, Parent shall
cause Buyer to have available sufficient funds to enable it to consummate the
transactions contemplated by this Agreement.
3.05. CONSENTS. Except as set forth in Exhibit 3.05, no
consent, approval or authorization of, or exemption by, or filing with, any
governmental authority, other than pursuant to the HSR Act, is required in
connection with the execution, delivery and performance by Parent and Buyer of
this Agreement, or the taking by either of them of any other action contemplated
hereby, excluding, however, consents, approvals, authorizations, exemptions and
filings, if any, which Sellers are required to obtain or make.
3.06. FEES. Neither Parent nor Buyer nor any of their
affiliates has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary in connection with the transactions contemplated
hereby.
ARTICLE IV
COVENANTS OF SELLERS
--------------------
Sellers hereby covenant and agree with Parent and Buyer as
follows:
4.01. COOPERATION BY SELLERS. (a) From the date hereof and
prior to the Closing, Sellers shall use their best efforts, and will cooperate
with Parent and Buyer, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Sellers to effect the transactions contemplated hereby, and
shall otherwise use their best efforts to cause the consummation of such
transactions in accordance with the terms and conditions hereof.
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(b) Without limiting the provisions set forth in paragraph (a)
of this Section 4.01, Sellers shall file with the Department of Justice ("DOJ")
and the Federal Trade Commission ("FTC") a Pre-Merger Notification and Report
Form pursuant to the HSR Act in respect of the transactions contemplated hereby
within five business days after the date of this Agreement, and Sellers shall
use, and cause each of their affiliates to use, their best efforts to take or
cause to be taken all actions necessary to promptly and fully comply with any
requests for information from regulatory authorities to obtain any authorization
relating to the HSR Act that is necessary to enable the parties to consummate
the transactions contemplated by this Agreement.
4.02. CONDUCT OF BUSINESS. Except as may be otherwise
contemplated by this Agreement or required by any of the documents listed in the
Disclosure Schedule or except as Buyer may otherwise consent to in writing
(which consent shall not be unreasonably withheld or delayed), from the date
hereof and prior to the Closing, Sellers shall cause the Company and each of the
Subsidiaries to, (i) conduct its business only in the ordinary course; (ii) use
its reasonable efforts to preserve intact its business organization; (iii)
maintain its properties, machinery and equipment in sufficient operating
condition and repair to enable it to conduct its business in the manner in which
its business is currently conducted, except for maintenance required by reason
of fire, flood, earthquake or other acts of God; (iv) continue all existing
insurance policies (or comparable insurance) in full force and effect; (v) not
increase the rate or terms of compensation payable or to become payable by the
Company or any of its Subsidiaries to any of their respective directors,
officers, or key employees, and not increase the rate or terms of any bonus,
pension or other employee benefit plan covering any of their respective
directors, officers or key employees, except in each case increases occurring in
the ordinary course of business in accordance with their respective customary
practices (including normal periodic performance reviews and related
compensation and benefit
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increases) or as required by any pre-existing Commitment; (vi) use its
reasonable efforts to preserve its relationships with its lenders, suppliers,
customers, licensors and licensees and others having business dealings with the
Company and the Subsidiaries such that its business will not be impaired; (vii)
not borrow any money or otherwise incur any financial debt other than under the
Credit Agreement; (viii) not declare or pay any dividend or declare or make any
other distribution to shareholders other than cash dividends of earnings
generated from the operation of the Company and the Subsidiaries; (ix) not
purchase or redeem any shares, notes or other securities; (x) not reclassify,
split or combine the Shares, or issue, sell, distribute or dispose of any
Shares, notes or other securities, or issue any options, warrants or rights, or
make any changes to any Options, or commit to do so, provided that the exercise
of any Options granted prior to the date hereof and the issuance of Class B
Common Stock upon exercise of the Options, and the issuance of shares of Class A
Common Stock of the Company in exchange for shares of Class B Common Stock of
the Company pursuant to the Company's Certificate of Incorporation shall not be
deemed to violate the provisions of this Section 4.02; (xi) not make any
material change in accounting methods; (xii) not guarantee any obligation or
liability except for endorsements for collections in the ordinary course of
business; (xiii) not acquire an equity interest in, or all or substantially all
of the assets of, any entity, nor acquire substantially all of the assets of any
division, business unit or product line of any entity; and (xiv) not enter into,
or commit to enter into, any arrangements concerning the factoring of accounts
receivable or any similar arrangements involving accounts receivable.
4.03. ACCESS. From the date hereof and prior to the Closing,
Sellers shall provide Parent and Buyer with such information as they may from
time to time reasonably request with respect to the Company and the Subsidiaries
and the transactions contemplated by this Agreement and provide Parent and Buyer
and their representatives
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reasonable access during regular business hours and upon reasonable notice to
the properties, books and records of the Company and the Subsidiaries as they
may from time to time reasonably request; PROVIDED that Sellers shall not be
obligated to provide Parent or Buyer with any information relating to
proprietary formulas or processes of the Company or its Subsidiaries or which
would violate any law, rule or regulation or term of any Commitment, or if the
provision thereof would adversely affect the ability of Sellers or the Company
or any of the Subsidiaries or any of their respective affiliates to assert
attorney-client, attorney work product or other similar privilege. Sellers shall
promptly make available to Parent and Buyer copies of documents or other items
identified in any Disclosure Schedule which have not been delivered or otherwise
made available to Buyer prior to the date hereof. Any disclosure whatsoever
during such investigation by Parent or Buyer shall not constitute an enlargement
of or additional representations or warranties of Sellers beyond those
specifically set forth in this Agreement. All such information and access shall
be subject to the terms and conditions of the letter agreement dated September
11, 1996 between Parent and the Company (the "Confidentiality Agreement").
4.04. NO SOLICITATION. From and after the date hereof and
prior to the Closing, Sellers (or any of Sellers' financial advisors, investment
bankers, attorneys or other advisors and representatives) shall not, and Sellers
shall cause the Company and its directors, officers, employees, advisors and
representatives to not, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information) any Acquisition Proposal (as
defined below) from any person, or engage in or continue discussions or
negotiations relating to any Acquisition Proposal, and shall direct the
Company's directors, officers, financial advisors and other authorized
representatives to refrain from taking any such action. "Acquisition Proposal"
means, with respect to the Company, any proposal or offer for, or any written
statement of intention (by public announcement or otherwise) by any person or
group to effect, any merger or consolidation with, or
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acquisition of substantially all of the assets of, or other business combination
involving, the Company or any of the Subsidiaries. Sellers shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any persons conducted heretofore with respect to any of the
foregoing, and Sellers shall immediately demand that any such persons return to
Sellers any confidential information and/or materials such persons may have
received from Sellers or the Company during the course of such activities,
discussions or negotiations.
4.05. DISCLOSURE SCHEDULES. At any time and from time to time
prior to the Closing Date, Sellers may deliver to Parent and Buyer revised
Disclosure Schedules as may be necessary to make the representations and
warranties of Sellers contained herein or in any Ancillary Document true on the
date hereof and/or on and as of the Closing Date. Any delivery made by Sellers
pursuant to the preceding sentence shall not affect any right which Buyer may
have to elect not to close pursuant to Section 6.01 if any matter disclosed in
the revised Disclosure Schedules has a Material Adverse Effect, but if Buyer
consummates the Closing, then the accuracy of the representations and warranties
of Sellers, whether made on the date hereof or on and as of the Closing Date,
shall for all purposes of this Agreement be determined with reference to the
Disclosure Schedules as revised by Sellers pursuant to the first sentence of
this Section 4.05. Sellers shall provide Buyer with such additional information
in their possession as the Buyer may reasonably request relating to any
Disclosure Schedules revised pursuant to the provisions of this Section 4.05.
Sellers shall endeavor to provide any revised Disclosure Schedules to Buyer at
least seven days prior to the Closing Date but nothing herein shall preclude
Sellers from delivering revised Disclosure Schedules up to the Closing.
4.06. RESALE EXEMPTION CERTIFICATES. From the date hereof and
prior to the Closing, Sellers shall cause the Company and its Subsidiaries to
use their best efforts (which shall in no event require the payment of any
monies by Sellers) to obtain from
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their customers "Resale Exemption Certificates" in connection with the sale of
products of the Company and the Subsidiaries sold for purposes of resale in each
state where such products were sold.
ARTICLE V
COVENANTS OF PARENT AND BUYER
Parent and Buyer hereby covenant and agree with Sellers as
follows:
5.01. COOPERATION BY PARENT AND BUYER. (a) From the date
hereof and prior to the Closing, each of Parent and Buyer shall use its best
efforts, and shall cooperate with Sellers, to secure all necessary consents,
approvals, authorizations, exemptions and waivers from third parties as shall be
required in order to enable Parent and Buyer to effect the transactions
contemplated hereby, and will otherwise use its best efforts to cause the
consummation of such transactions in accordance with the terms and conditions
hereof.
(b) Without limiting the provisions set forth in paragraph (a)
of this Section 5.01, Parent and Buyer shall file with the DOJ and the FTC a
Pre-Merger Notification and Report Form pursuant to the HSR Act in respect of
the transactions contemplated hereby within five business days after the date of
this Agreement, and each of Parent and Buyer shall use, and shall cause each of
its affiliates to use, its best efforts to take or cause to be taken all actions
necessary to promptly and fully comply with any requests for information from
regulatory authorities to obtain any authorization relating to the HSR Act that
is necessary to enable the parties to consummate the transactions contemplated
by this Agreement; PROVIDED, HOWEVER, that such efforts shall not include any of
the following types of measures (or similar extraordinary measures): (i) the
proffer by Buyer of its willingness to accept an order providing for the
divestiture by Buyer of
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any of the assets or businesses of the Company, the Subsidiaries, Buyer or any
of its affiliates, or (ii) the divestiture or the holding separate by Buyer
following the Closing of any of the assets or businesses of the Company or any
of the Subsidiaries.
5.02. DISCLOSURE SCHEDULES. If at any time prior to the date
hereof or from the date hereof to the Closing Date, Parent or Buyer is or
becomes aware of any matter which should have been or should be disclosed by
Sellers in a Disclosure Schedule, Parent or Buyer, as applicable, shall promptly
provide notice to the Representatives of such matter.
5.03. INDEMNIFICATION; INSURANCE. (a) From and after the
Closing, Parent and Buyer shall jointly and severally indemnify and hold
harmless to the fullest extent permitted under Applicable Law (as defined below)
each person who is now, or has been at any time prior to the date hereof, an
officer, director or stockholder of the Company or any of its Subsidiaries or
any direct or indirect general partner of any stockholder that is a partnership
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties")(except that, with respect to Ronseal (Ireland) Limited, such
indemnification shall only apply to any person who has been any of the foregoing
from and after the effective time of the consummation of the transactions
pursuant to the Kodak Agreement (as defined in Section 9.04(g)) (a "New Ronseal
Party")), against all losses, claims, damages, liabilities, costs or expenses,
including attorneys' fees, judgments, fines, penalties and amounts paid in
settlement (collectively, "Losses") incurred by an Indemnified Party in
connection with any claim, action, suit, proceeding or investigation (an
"Action") in any way arising out of, pertaining to or incurred in connection
with acts or omissions, or alleged acts or omissions, by any of them in their
capacities as an officer, director or stockholder of the Company or any of its
Subsidiaries (or as a direct or indirect general partner of any stockholder that
is a partnership in respect of such partnership's capacity as a stockholder)
("Capacity"), whether commenced, asserted or claimed before
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or after the Closing and including, without limitation, any Losses incurred by
any Indemnified Party arising out of or relating in any way to (i) this
Agreement or any of the transactions contemplated hereby, or (ii) any liability
or obligation of or arising out of or relating to the Company or any of the
Subsidiaries (or any of their respective predecessors), including any attempt by
any third party (whether or not successful) to impose liability in respect
thereof on any of the Indemnified Parties, by reason of such Indemnified Party's
ownership of Shares or other Capacity. In the event of any such Action, (i)
Parent, Buyer or the Company shall pay on an as-incurred basis the reasonable
fees and expenses of counsel selected by the Indemnified Party in advance of the
final disposition of any such action to the full extent permitted by Applicable
Law, upon receipt of any undertaking contemplated by such Applicable Law, and
(ii) the Indemnified Party shall be entitled to control the defense of any such
Action with counsel of its own choosing, and Parent or Buyer shall, and shall
cause the Company to, cooperate with the Indemnified Party in the defense of any
such Action; PROVIDED, HOWEVER, that Buyer shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed); and PROVIDED, FURTHER, that the Indemnified
Parties as a group shall be permitted to retain only one law firm, to be
selected by the Representatives, at Parent and Buyer's expense (nothing herein,
however, shall preclude any Indemnified Party from retaining separate counsel at
such Indemnified Party's own expense), to represent them with respect to each
such Action unless there is, under applicable standards of professional conduct,
a conflict on any significant issue between the positions of any two or more
Indemnified Parties. For purposes of this Section 5.03, "Applicable Law" shall
mean, with respect to any stockholder of the Company or any direct or indirect
general partner of any such stockholder that is a partnership, any applicable
law, and, with respect to any other Indemnified Party, the General Corporation
Law of the State of Delaware (the "DGCL").
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(b) Parent and Buyer shall cause the Company to not amend the
provisions of the Certificate of Incorporation or the By-Laws of the Company or
any of its Subsidiaries in a way that would adversely affect the rights of the
Indemnified Parties under this Section 5.03.
(c) For a period of six years after the Closing Date, Parent
and Buyer shall cause to be maintained officers' and directors' liability
insurance covering the Indemnified Parties who are currently covered, in their
capacities as officers and directors, by the Company's or any Subsidiary's
existing officers' and directors' liability insurance policies on terms
substantially no less advantageous to the Indemnified Parties than such existing
insurance; PROVIDED, HOWEVER, that in order to maintain or procure such
coverage, Parent or Buyer shall not be required to pay an annual premium in
excess of 2.5 times the aggregate of the last annual premium paid by the Company
and the Subsidiaries prior to the date hereof for their existing coverage (the
"Cap"); and PROVIDED, FURTHER, that if equivalent coverage cannot be obtained,
or can be obtained only by paying an annual premium in excess of the Cap, Buyer
shall only be required to obtain as much coverage as can be obtained by paying
an annual premium equal to the Cap.
(d) Buyer shall pay all reasonable expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 5.03.
(e) The Company and each of its Subsidiaries hereby releases
and forever discharges each person who is now, or has been at any time prior to
the date hereof, an officer, director or stockholder of the Company or any of
its Subsidiaries and any direct or indirect general partner of any stockholder
that is a partnership (individually, a "Released Party" and collectively, the
"Released Parties") (except that, in the case of Ronseal (Ireland) Limited, such
release shall only apply to a New Ronseal Party) from
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any and all claims, rights, obligations, debts, liabilities, actions or causes
of action of every kind and nature, whether foreseen or unforeseen, contingent
or actual, and whether now known or hereafter discovered, which the Company or
any of its Subsidiaries had, now has or may have, in law or in equity, against
any Released Party in any way arising out of, pertaining to or incurred in
connection with acts or omissions or alleged acts or omissions by any of them
which acts or omissions existed or occurred at or prior to the Closing, other
than acts or omissions or alleged acts or omissions involving criminal activity
or willful misconduct by such Released Party. Each of Parent and Buyer hereby
acknowledges the release set forth in the preceding sentence and covenants and
agrees that it will not, and will cause the Company and its Subsidiaries not to,
take any action (including, without limitation, commencing an Action or
asserting a claim) inconsistent therewith.
(f) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the
Certificate of Incorporation or By-Laws of the Company or any Subsidiary or
under Applicable Law. Notwithstanding anything to the contrary contained in this
Agreement or otherwise, the provisions of this Section 5.03 shall survive the
Closing and each Indemnified Party and Released Party shall, for all purposes,
be a third-party beneficiary of the covenants and agreements of Parent and Buyer
under this Section 5.03 and, accordingly, shall be treated as a party to this
Agreement for purposes of the rights and remedies relating to enforcement of
such covenants and agreements and shall be entitled to enforce any such rights
and exercise any such remedies directly.
5.04. EMPLOYEE BENEFITS. After the Closing Date, Buyer shall
cause the Company to grant to all individuals who are, as of the Closing Date,
employees of the Company or any of its Subsidiaries credit for all service with
the Company, any of its present and former subsidiaries, any other affiliate of
the Company and their respective
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predecessors (collectively, the "TM Affiliated Group") prior to the Closing Date
for all purposes for which service is recognized under each Company Benefit
Plan, but only to the extent that the terms of such Company Benefit Plan require
the crediting of such service as of the Closing Date. Benefit plans which
provide medical, dental or life insurance benefits after the Closing Date to any
individual who is an active or former employee of the TM Affiliated Group as of
the Closing Date (an "Employee") or a dependent of an Employee (a "Dependent")
shall, with respect to such individuals, waive any waiting periods and any
pre-existing conditions and actively-at-work exclusions to the extent so waived
under present policy and shall provide that any expenses incurred on or before
the Closing Date by such individuals shall be taken into account under such
plans for purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions to the extent taken into account under present policy.
Without limiting the generality of any other provision of this Agreement, after
the Closing Date Buyer shall cause the Company and the Subsidiaries to honor and
fully perform all the obligations under (i) all written Commitments with any
Employee; and (ii) all Company Benefit Plans. After the Closing Date, the
Company Benefit Plans shall not be terminated or amended in any manner that
would adversely affect the rights, benefits or protections provided thereunder
to any Employee or Dependent which have accrued or have been earned prior to the
Closing Date, provided that nothing herein shall prevent or restrict the Company
from terminating any Company Benefit Plan at any time or from amending or
otherwise modifying the terms of such Company Benefit Plan with respect to
benefits accrued or amounts earned after the Closing Date.
5.05. PARENT OBLIGATIONS. Parent hereby covenants and agrees
to cause Buyer to comply with all of the Buyer's covenants and agreements
hereunder and in any Ancillary Document, and further covenants and agrees that
in the event of any breach of
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such covenants and agreements of Buyer, Sellers shall have recourse for such
breach directly to Parent.
5.06. RESALE EXEMPTION CERTIFICATES. After the Closing Date,
Parent and Buyer shall cause the Company and its Subsidiaries to use their best
efforts (which shall in no event require the payment of any monies by Parent or
Buyer) to obtain from their customers "Resale Exemption Certificates" in
connection with the sale of products of the Company and the Subsidiaries sold
for purposes of resale in each state where such products were sold.
ARTICLE VI
CONDITIONS TO PARENT'S AND BUYER'S OBLIGATIONS
----------------------------------------------
The obligations of Parent and Buyer to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
(or waiver, where permissible) at or prior to the Closing of all of the
following conditions:
6.01. MATERIAL ADVERSE EFFECT. There shall not exist any
matter on the Closing Date which has a Material Adverse Effect and which was not
disclosed to Buyer in a Disclosure Schedule on the date hereof.
6.02. COVENANTS OF SELLERS. Sellers shall have complied in all
material respects with all of their agreements and covenants contained herein to
be performed on or prior to the Closing Date. Buyer shall have received a
certificate executed by or on behalf of each of Sellers, dated as of the Closing
Date, certifying as to the fulfillment of the condition set forth in this
Section 6.02.
6.03. NO PROHIBITION. No statute, rule or regulation shall be
in effect which prohibits Buyer from consummating the transactions contemplated
hereby, and no
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order of any court or administrative agency shall be in effect or threatened
which prohibits Buyer from consummating the transactions contemplated hereby.
6.04. CONSENTS. The applicable waiting period under the HSR
Act shall have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from governmental agencies set forth in
Exhibit 6.04 hereof that shall be required in order to enable Buyer to
consummate the transactions contemplated hereby shall have been obtained.
6.05. DELIVERY OF SHARES. Buyer shall have received executed
Agreements from the holders of, and certificates for, Shares representing in the
aggregate at least 98% of the total number of Shares outstanding.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
----------------------------------
The obligation of Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver,
where permissible) at or prior to the Closing of all of the following
conditions:
7.01. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARENT AND
BUYER. Parent and Buyer each shall have complied in all material respects with
each of its agreements and covenants contained herein to be performed on or
prior to the Closing Date, and the representations and warranties of Parent and
Buyer contained herein shall be true in all material respects on and as of the
Closing Date with the same effect as though made on and as of the Closing Date,
except (a) as otherwise contemplated hereby, and (b) to the extent that such
representations and warranties were made as of a specified date and as to such
representations and warranties the same shall continue on the Closing Date to
have been true in all material respects as of the specified date. The
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Representatives shall have received a certificate executed by an executive
officer of Parent and Buyer, dated as of the Closing Date, certifying as to the
fulfillment of the conditions set forth in this Section 7.01.
7.02. NO PROHIBITION. No statute, rule or regulation shall be
in effect which prohibits Sellers from consummating the transactions
contemplated hereby, and no order of any court or administrative agency shall be
in effect or threatened which prohibits Sellers from consummating the
transactions contemplated hereby.
7.03. CONSENTS. The applicable waiting period under the HSR
Act shall have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from governmental agencies set forth in
Exhibit 7.03 that shall be required in order to enable Sellers to consummate the
transactions contemplated hereby shall have been obtained.
ARTICLE VIII
TERMINATION
-----------
8.01. TERMINATION. This Agreement may be terminated at any
time prior to the Closing,
(a) by the mutual written consent of Buyer and the
Representatives;
(b) by either Parent and Buyer, on the one hand, or
the Representatives, on the other hand, if the Closing shall not have
occurred on or before March 31, 1997; provided, that such date may be
extended for a limited period of time (not to exceed 60 days) by the
written agreement of Parent, Buyer and the Representatives if the
Closing has not been consummated because the
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applicable waiting period under the HSR Act has not expired or been
terminated and such parties determine in their reasonable judgment that
such extension will result in consummation of the transactions
contemplated hereby occurring prior to the final day of the extended
period; or
(c) by Parent and Buyer if any of the facilities
located at Flora, Illinois, Olive Branch, Mississippi or Chapeltown,
United Kingdom have been materially damaged or destroyed before the
Closing or if any of such real property has been taken, in whole or in
significant part, by eminent domain or by conveyance in lieu of eminent
domain.
8.02. EFFECT ON OBLIGATIONS. Termination of this Agreement
pursuant to this Article VIII shall terminate all rights and obligations of the
parties hereunder and none of the parties shall have any liability to the other
parties hereunder, except that Sections 10.09, 10.11, 10.12 and 10.13, the
Confidentiality Agreement, the last sentence of Section 4.03 and this Section
8.02 shall remain in effect, and provided that nothing herein shall relieve any
party from liability for any breach (in the case of Section 4.02, for any
material breach) of any covenant or agreement in this Agreement prior to such
termination.
ARTICLE IX
INDEMNIFICATION
---------------
9.01. SURVIVAL. The representations and warranties made in
this Agreement or in any agreement, certificate or other document executed at or
prior to the Closing in connection herewith (an "Ancillary Document") and the
covenants and agreements contained in Sections 4.02 and 5.02 ("Pre-Closing
Covenants") shall survive the Closing for twelve months from the Closing Date
(such twelve month period being
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the "Indemnification Period") and on the twelve month anniversary date of the
Closing shall expire, together with any right to indemnification for breach
thereof except to the extent a Valid Third Party Claim Notice (as defined in
Section 9.03(a)) or Valid Other Claim Notice (as defined in Section 9.03(b))
(each, a "Valid Claim Notice") shall have been given prior to such date in
accordance with Section 9.03 by the party seeking indemnification (the
"Indemnitee") to the party from which indemnification is being sought (the
"Indemnitor"), in which case the representation, warranty, covenant or agreement
alleged in the Valid Claim Notice to have been breached shall survive, to the
extent of the claim set forth in the Valid Claim Notice only, until such claim
is resolved, and except that if Buyer or any of its affiliates has given a Valid
Claim Notice prior to the end of the Indemnification Period, the covenants and
agreements contained in Section 5.02 shall not expire until the claim with
respect to which such Notice was given is resolved. The covenants and agreements
contained herein to be performed or complied with prior to the Closing other
than those contained in Sections 4.02 and 5.02 shall expire at the Closing along
with all rights and remedies with respect to the breach thereof. The covenants
and agreements contained herein to be performed or complied with at or after the
Closing (other than the covenant and agreement to indemnify against breaches of
representations and warranties and Pre-Closing Covenants, which shall expire as
set forth in the first sentence of this Section 9.01) ("Post-Closing Covenants")
shall survive the Closing until the expiration of the applicable statute of
limitations. Such Post-Closing Covenants shall include, without limitation, (i)
those relating to the payment to Sellers by the Representatives of their
allocable portion of the Purchase Price, (ii) those relating to the cancellation
of the Options (including, without limitation, payment of the Option Payments),
(iii) those relating to the payment in full of the Indebtedness Payment, and
(iv) those contained in Section 5.03.
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9.02. INDEMNIFICATION. (a) If the Closing shall occur, Sellers
shall jointly and severally indemnify Buyer and its affiliates and hold each of
them harmless from and against all Losses which are incurred or suffered by any
of them (i) by reason of the breach of any of the representations or warranties
made by Sellers herein or in any Ancillary Document or in any of their covenants
and agreements contained in Section 4.02, (ii) by reason of the failure by
Sellers to perform or comply with any of their Post-Closing Covenants, or (iii)
by reason of any dissenters' or appraisal rights, or any other rights, which a
Seller who does not deliver his Shares at the Closing may assert upon the
occurrence of any "second-step merger" with Buyer or a subsidiary thereof.
(b) Any recovery by Buyer and its affiliates for
indemnification shall be limited as follows: (1) Buyer and its affiliates shall
not be entitled to any recovery unless a claim for indemnification is made in
accordance with Section 9.03, so as to constitute a Valid Claim Notice, and
within the time period of survival set forth in Section 9.01; (2) Buyer and its
affiliates shall not be entitled to recover any amount for indemnification
claims under clause (i) of Section 9.02(a) unless and until the amount which
Buyer and its affiliates are entitled to recover in respect of such claims
exceeds, in the aggregate, $500,000 (the "Deductible"), in which event (subject
to clause (3) below) the entire amount which Buyer and its affiliates are
entitled to recover in respect of such claims less the Deductible shall be
payable; (3) the maximum amount recoverable by Buyer and its affiliates for
indemnification claims under clause (i) of Section 9.02(a) shall in the
aggregate be equal to $15,000,000 (e.g., if Buyer incurs an aggregate of
$15,500,000 of Losses in respect of such claims, it may recover an aggregate of
$15,000,000); and (4) any amounts recoverable by Buyer and its affiliates in
respect of indemnification claims under clause (i) of Section 9.02(a) shall be
payable solely from the Indemnity Trust Funds, in accordance with Section 1.08
and the Trust Agreement, and Buyer and its affiliates shall have no other
recourse to Sellers in respect of
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indemnification claims under clause (i) of Section 9.02(a). No Losses shall be
included in determining whether the Deductible has been reached unless a Valid
Claim Notice seeking indemnification for such Losses has been given by the
Indemnitee to the Indemnitor in accordance with Section 9.03.
(c) If the Closing shall occur, Parent and Buyer shall jointly
and severally indemnify Sellers and their affiliates and hold each of them
harmless from and against all Losses which are incurred or suffered by any of
them (i) by reason of the breach by Parent or Buyer of any of the
representations or warranties made by Parent or Buyer herein or in any Ancillary
Document or of any of their covenants and agreements contained in Section 5.02,
or (ii) by reason of the failure by Parent or Buyer to perform or comply with
any of their Post-Closing Covenants; PROVIDED, HOWEVER, that Sellers and their
affiliates shall not be entitled to any recovery unless a claim for
indemnification is made in accordance with Section 9.03, so as to constitute a
Valid Claim Notice, and within the time period of survival set forth in Section
9.01.
9.03. PROCEDURES FOR CLAIMS. (a)(i) In order for an Indemnitee
to be entitled to any indemnification provided for under this Article IX in
respect of, arising out of or involving a claim made by any third party against
the Indemnitee (a "Third Party Claim"), the Indemnitee must notify the
Indemnitor in writing of the Third Party Claim (a "Third Party Claim Notice")
promptly following receipt by such Indemnitee of written or oral notice of the
Third Party Claim, which notification, to be a valid Third Party Claim Notice,
with the effect set forth in Sections 9.01(a) and 9.02 (a "Valid Third Party
Claim Notice"), must be accompanied by a copy of the written notice, if any, of
the third party claimant to the Indemnitee asserting the Third Party Claim, or,
if such Third Party Claim shall not have been made in writing, the written
notice of Indemnitee certifying as to the receipt by Indemnitee of the oral
Third Party Claim, and, in each case, setting forth in reasonable detail, the
facts then known by Indemnitee with respect to such Third Party
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Claim; provided that the failure to provide such Notice promptly (so long as a
Valid Third Party Claim Notice is given before the expiration of the
Indemnification Period) shall not affect the obligations of the Indemnitor
hereunder except to the extent the Indemnitor is prejudiced thereby. The
Indemnitee shall deliver to the Indemnitor copies of all other notices and
documents (including court papers) received by the Indemnitee relating to the
Third Party Claim.
(ii) The Indemnitor shall have the right to defend
against any such Third Party Claim (including to conduct any proceedings or
settlement negotiations, provided that the Indemnitor shall not settle any Third
Party Claim without the Indemnitee's consent, which consent shall not be
unreasonably withheld) with counsel of its own choosing. The Indemnitee shall
have the right to participate in the defense of any Third Party Claim and to
employ its own counsel (it being understood that the Indemnitor shall control
such defense), at its own expense. Prior to the time the Indemnitee is notified
by the Indemnitor as to whether the Indemnitor will assume the defense of a
Third Party Claim, the Indemnitee shall take all actions reasonably necessary to
timely preserve the collective rights of the parties with respect to such Third
Party Claim, including responding timely to legal process. If the Indemnitor
shall decline to assume the defense of a Third Party Claim (or shall fail to
notify the Indemnitee of its election to defend such Third Party Claim) within
30 days after the giving by the Indemnitee to the Indemnitor of a Valid Third
Party Claim Notice with respect to the Third Party Claim, the Indemnitee shall
defend against the Third Party Claim and the Indemnitor shall be liable to the
Indemnitee for all reasonable fees and expenses incurred by the Indemnitee in
the defense of the Third Party Claim, including without limitation the
reasonable fees and expenses of counsel employed by the Indemnitee, if and to
the extent that the Indemnitor is responsible to indemnify for such Third Party
Claim. Regardless of which party assumes the defense of a Third Party Claim, the
parties agree to cooperate with one
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another in connection therewith. Such cooperation shall include providing of
records and information which are relevant to such Third Party Claim, and making
employees and officers available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder and to
act as a witness or respond to legal process. Whether or not the Indemnitor
assumes the defense of a Third Party Claim, the Indemnitee shall not admit any
liability with respect to, or settle, compromise or discharge, such Third Party
Claim without the Indemnitor's prior written consent (which consent shall not be
unreasonably withheld).
(b) In order for an Indemnitee to be entitled to any
indemnification provided for under this Article IX in respect of a claim that
does not involve a Third Party Claim being asserted against such Indemnitee (an
"Other Claim"), the Indemnitee must promptly notify the Indemnitor in writing of
such Other Claim (the "Other Claim Notice"), which notification, to be a valid
Other Claim Notice, with the effect set forth in Sections 9.01(a) and 9.02 (a
"Valid Other Claim Notice"), (i) must certify that the Indemnitee has in good
faith already sustained some (though not necessarily all) Losses with respect to
such claim and (ii) if the Other Claim Notice is asserting a claim for breach of
any of the representations and warranties contained in Section 2.13 (an
"Environmental Breach"), must be accompanied by a written report from a
reputable nationally or regionally recognized environmental consulting firm or
from employees of Parent with responsibility for Environmental Matters
confirming, in reasonable detail, the existence of the conditions as to which an
Environmental Breach is claimed. The failure by any Indemnitee to notify the
Indemnitor promptly (so long as a Valid Other Claim Notice is given before the
expiration of the Indemnification Period) shall not relieve the Indemnitor from
any liability that it may have to such Indemnitee under Section 9.02, except to
the extent that the Indemnitor has been prejudiced by such failure.
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9.04. OTHER PROVISIONS. (a) Notwithstanding anything herein to
the contrary, Buyer and its affiliates shall have no right to any
indemnification under clause (i) of Section 9.02(a) for any matter if (i) the
Closing Book Value was reduced for such matter and either Buyer did not dispute
the amount of such reduction in the Final Closing Balance Sheet or the dispute
as to the amount of such reduction was resolved pursuant to Section 1.07(c), or
(ii) the Closing Book Value was not reduced for such matter, Buyer disputed such
nonreduction, and the dispute was resolved in favor of Sellers pursuant to
Section 1.07(c).
(b) The indemnification provided in this Article IX shall be
the sole and exclusive remedy for any inaccuracy or breach of any representation
or warranty made by Sellers or Parent or Buyer and any breach of any Pre-Closing
Covenants in this Agreement or in any Ancillary Document. All amounts payable by
one party in indemnification of the other (whether paid from the Indemnification
Trust Funds or paid by Parent or Buyer) shall be considered an adjustment to the
Purchase Price.
(c) Upon making any payment to an Indemnitee for any
indemnification claim pursuant to this Article IX, the Indemnitor shall be
subrogated, to the extent of such payment, to any rights which the Indemnitee or
its affiliate may have against any other parties with respect to the subject
matter underlying such indemnification claim.
(d) The amount of any Losses shall be computed net of any
insurance proceeds recoverable by the Indemnitee in connection therewith.
(e) Notwithstanding anything in this Agreement to the
contrary, Sellers shall have no liability for any failure by Buyer or the
Company, or any of the Subsidiaries or any affiliates of the foregoing, to
comply with applicable law following the six month anniversary of the Closing
Date by reason of the business of the Company
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being operated following such six month anniversary of the Closing Date in the
manner operated prior to the Closing.
(f) Parent, Buyer, the Company and each of the Subsidiaries
each understands and agrees that the rights accorded it by Section 9.02(a) are
its sole and exclusive remedy against Sellers or any of their affiliates with
respect to any Environmental Matters whatsoever. Parent, Buyer, the Company and
each of the Subsidiaries (each on its own behalf and on behalf of its affiliates
and the successors and assigns of any of the foregoing) hereby waives any right
to seek contribution or other recovery from Sellers or any of their affiliates
that any of them may now or in the future ever have under any Environmental
Laws, including, without limitation, 42 U.S.C. xx.xx. 9607 and 9613(f) of the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
Section 9601 ET SEQ.), as amended ("CERCLA"), as such Laws were in the past or
are currently in effect, or may in the future be enacted or be in effect.
Parent, Buyer, the Company and each of the Subsidiaries (each on its own behalf
and on behalf of its affiliates and the successors and assigns of any of the
foregoing) hereby further unconditionally releases Sellers and their affiliates
from any and all claims, demands and causes of action that any of them may now
or in the future ever have against Sellers or any of their affiliates for
recovery under CERCLA or under any other Environmental Laws as such Laws were
in the past or are currently in effect, or may in the future be enacted or be
in effect. Nothing in this Section 9.04(f) shall affect any rights which Buyer
and its affiliates may have under Section 9.02 for indemnification for any
breach by Sellers of the representations and warranties contained in Section
2.13 subject to the limitations set forth in Sections 9.01 and 9.02.
(g) Notwithstanding anything herein to the contrary, if any
Losses incurred or suffered by Buyer or any of its affiliates are both Losses
for which indemnification may be sought under this Article IX and Losses for
which
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indemnification or any other remedy is available to the Company, any of the
Subsidiaries or Buyer under the Asset Purchase Agreement among Xxxxxxx Kodak
Company, L&F Products Inc., Sterling Winthrop Inc. and The Xxxxxxxx Minwax
Company (formerly MTF Acquisition Corp.), dated as of October 13, 1994 (the
"Kodak Agreement"), then Buyer and its affiliates first shall, or shall cause
the Company or the Subsidiary (as applicable) to, pursue their remedies under
the Kodak Agreement, and any Losses for which indemnification may be sought
under this Article IX shall be reduced by the amount, if any, recoverable under
the Kodak Agreement; PROVIDED, HOWEVER, that Buyer and its affiliates shall be
permitted to deliver to Sellers a Valid Claim Notice with respect to any Losses
incurred or suffered by Buyer or its affiliates for which indemnification or any
other remedy is available under both this Article IX and the Kodak Agreement,
and to pursue their remedies against Sellers under this Article IX to the extent
Buyer or its affiliates shall have been unsuccessful in their claims under the
Kodak Agreement and all of their remedies in respect thereof have been
exhausted.
(h) For purposes of the indemnification provisions set forth
in this Article IX only, the disclosure set forth in Section 3 of Disclosure
Schedule 2.14 shall be deemed not to have been made as of the date hereof nor
shall Sellers have the right to revise Section 3 of Disclosure Schedule 2.14
pursuant to Section 4.05. Notwithstanding anything in this Article IX to the
contrary, with respect to any representations and warranties of Sellers relating
to whether the Company or any of its Subsidiaries collected and timely paid in
full any state sales taxes which shall have become due and payable prior to the
Closing Date (the "Sales Tax Representations") or timely paid in full any state
use taxes which shall have become due and payable prior to the Closing Date (the
"Use Tax Representations") only, (i) such representations and warranties shall
survive the Closing for 24 months from the Closing Date, the Indemnification
Period for such representations and warranties shall be 24 months from the
Closing Date, the provisions
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of Section 9.01 shall otherwise apply to such representations and warranties
other than for corresponding changes in accordance with the foregoing provisions
of this clause (i), and any references in this Article IX to the time period of
survival set forth in Section 9.01 shall be deemed to include the time period of
survival for the Sales Tax Representations and the Use Tax Representations set
forth in this clause (i); (ii) Buyer and its affiliates shall only be entitled
to be indemnified, if at all, against liability imposed by a state or local
taxing authority by reason of the Company's or a Subsidiary's failure to timely
pay in full any state sales or use taxes in respect of periods ending prior to
the Closing Date and must timely deliver a Valid Third Party Claim Notice (and
not a Valid Other Claim Notice) in order to perfect a claim for indemnification;
(iii) such notice shall constitute a Valid Third Party Claim Notice only if
there is attached thereto a notice of deficiency or similar notice issued by a
state taxing authority asserting a deficiency for failure to collect and remit
sales taxes or pay use taxes which, if such assertion were upheld, would result
in a breach of the Sales Tax Representations or the Use Tax Representations, as
applicable; (iv) in addition to any other limitations on recovery for
indemnification set forth in this Article IX, (x) the maximum amount recoverable
by Buyer and its affiliates for indemnification claims for Losses incurred by
reason of the breach of the Sales Tax Representations shall in the aggregate be
equal to $1,000,000, and (y) the maximum amount recoverable by Buyer and its
affiliates for indemnification claims for Losses incurred by reason of the
breach of the Use Tax Representations shall in the aggregate be equal to
$300,000, in each case subject to the provisions of Section 9.02(b) relating to
the $15,000,000 maximum amount referred to therein, the Deductible and the
provision that indemnification claims under clause (i) of Section 9.02(a) shall
be payable solely from the Indemnity Trust Funds, except that with respect to
the Use Tax Representations the Deductible shall not apply. Except as otherwise
set forth in this Section 9.04(h), any breach of the Sales Tax Representations
or the Use Tax Representations shall be treated
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in this Article IX in the same manner as the breach of any other representation
or warranty of Seller.
ARTICLE X
MISCELLANEOUS
-------------
10.01. INTERPRETIVE PROVISIONS. The inclusion of any dollar
amount in any of the representations or warranties made herein shall not be
construed as evidence of materiality for purposes of that or any other
representation or warranty made herein.
10.02. SELLER'S KNOWLEDGE. Whenever used in this Agreement,
"to Seller's knowledge" or "to the knowledge of Sellers" shall mean the actual
knowledge of Sellers.
10.03. ENTIRE AGREEMENT. This Agreement (including the
Disclosure Schedules and all Exhibits hereto), the Ancillary Documents and the
Confidentiality Agreement constitute the sole understanding of the parties with
respect to the subject matter hereof. The disclosure of any matter in any
schedule to this Agreement shall only be deemed to be a disclosure for purposes
of the section of the Agreement to which such schedule relates. Any such
disclosure shall expressly not be deemed to constitute an admission by Sellers
or Parent or Buyer or to otherwise imply that any such matter is material for
the purposes of this Agreement.
10.04. SUCCESSORS AND ASSIGNS. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto; PROVIDED, HOWEVER, that this
Agreement may not be assigned by Parent or Buyer without the prior written
consent of the Representatives except that Buyer may, at its election, assign
this Agreement to a direct or indirect wholly-owned subsidiary so long as (a)
the representations and warranties of Buyer made herein are equally true of such
assignee and (b) such assignment does not have any adverse
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consequences to Sellers or any of their affiliates (including, without
limitation, any adverse tax consequences or any adverse effect on the ability of
Sellers to timely consummate the transactions contemplated hereby), but no such
assignment of this Agreement or any of the rights or obligations hereunder shall
relieve Buyer of any of its obligations under this Agreement. Such assignee
shall execute a counterpart of this Agreement agreeing to be bound by the
provisions hereof as "Buyer," and agreeing to be jointly and severally liable
with Buyer and any other assignee for all of the obligations of the assignor
hereunder.
10.05. PARTIES IN INTEREST. Notwithstanding anything contained
in this Agreement to the contrary, except for the provisions of Sections 5.03
and 9.02 (the "Third Party Provisions"), nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. The Third Party Provisions may be enforced directly by the
beneficiaries thereof.
10.06. HEADINGS. The headings of the articles, sections and
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
hereof.
10.07. AMENDMENT. This Agreement may not be amended except by
an instrument in writing signed by or on behalf of Buyer and the
Representatives.
10.08. WAIVERS. The waiver by any party hereto of a breach of
any provision hereunder shall not operate or be construed as a waiver of any
prior or subsequent breach of the same or any other provision hereunder. Any
waiver must be in writing and signed by Buyer and the Representatives.
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10.09. EXPENSES. Each of Sellers, on the one hand, and Parent
and Buyer, on the other hand, shall pay all costs and expenses incurred by such
party or on its behalf in connection with this Agreement and the transactions
contemplated hereby, including, without limiting the generality of the
foregoing, fees and expenses of its financial consultants, accountants and
counsel. At the Closing, Sellers shall pay all fees owing to Xxxxxxx Xxxxx & Co.
and Xxxxx Xxxxxx Inc. in connection with the transactions contemplated hereby.
10.10. NOTICES. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other party shall be
in writing and shall be given (and will be deemed to have been duly given upon
receipt) by delivery in person, by electronic facsimile transmission, cable,
telegram, telex or other standard forms of written telecommunications, by
overnight courier or by registered or certified mail, postage prepaid:
If to Sellers, to:
MTF Partners, X.X.
Xxxxxxxxx Little & Co.
Subordinated Debt and Equity
Management Buyout Partnership-V, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy: (000) 000-0000
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If to Parent or Buyer, to:
The Xxxxxxx-Xxxxxxxx Company
000 Xxxxxxxx Xxxxxx, X.X.
Xxxxxxxxx, Xxxx 00000
Attention: Vice President - Corporate Planning and
Development
Telecopy: (000) 000-0000
with a copy to:
The Xxxxxxx-Xxxxxxxx Company
000 Xxxxxxxx Xxxxxx, X.X.
Xxxxxxxxx, Xxxx 00000
Attention: Vice President, General Counsel and
Secretary
Telecopy: (000) 000-0000
or at such other address for a party as shall be specified by like notice.
10.11. GOVERNING LAW, ETC. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York applicable
to agreements made and to be performed wholly within such jurisdiction. Each of
the parties hereto hereby irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State of New York and of the
United States of America in each case located in the County of New York for any
Litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in Section 10.10 shall be effective service of process for any Litigation
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any Litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of New York or the United States of America in
each case located in the County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead
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or claim in any such court that any such Litigation brought in any such court
has been brought in an inconvenient forum.
10.12. PUBLIC ANNOUNCEMENTS. The Representatives and Buyer
shall consult with each other before issuing any press release or otherwise
making any public statement relating to the transactions contemplated hereby,
and shall not issue any such press release or make any such public statement
without the consent of the other party (which consent shall not be unreasonably
withheld or delayed) except as may be required by law.
10.13. SELLERS' REPRESENTATIVES. Each Seller hereby authorizes
MTF Partners and MBO-V to act as its representative (the "Representatives") on
such Seller's behalf in connection with this Agreement and the transactions
contemplated hereby, including giving and receiving notices and executing
documents and agreements. Buyer shall be entitled to rely on any document signed
by the Representatives as a document signed by and binding on all Sellers.
10.14. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
THE XXXXXXX-XXXXXXXX COMPANY
By: /s/ Xxxxxx X. Xxx
----------------------------------
Title: Vice President - Corporate Planning
and Development
SILVER ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxx
---------------------------------
Title: Vice President
MTF PARTNERS, L.P.
By: FLC XXVII Partnership, L.P.,
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED
DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP-V, L.P.
By: FLC Partnership, L.P.,
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
a general partner
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INDIVIDUAL SELLERS:
Xxx Xxxxxx
Xxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxx
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxxx III
Xxxxx Xxxxxxxx
Xxxxx X. Xxxxxxxxxx
Xxxx Xxxxxx
Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxx Xxxx
Ged Xxxxxxx
Xxxx Xxxxxxx
Xxxxxxxx X. Xxxxxxxxxx
Xxxxxxx Xxxxx
By: MTF PARTNERS, L.P., By: Forstmann Little & Co. Subordinated
as attorney-in-fact Debt and Equity Management
Buyout Partnership-V, L.P.,
By: FLC XXVII Partnership, L.P., as attorney-in-fact
its general partner
By: FLC Partnership, L.P.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------
a general partner
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
a general partner
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The undersigned hereby
agree to be bound by the
provisions of Sections 5.03
and 9.04(f) of the
foregoing Agreement:
XXXXXXXX MINWAX HOLDING CORP.
By: /s/ Xxxxx Xxxxx
---------------------------------------------------
Title: President and Chief Executive Officer
THE XXXXXXXX MINWAX COMPANY
By: /s/ Xxxxx Xxxxx
---------------------------------------------------
Title: President and Chief Executive Officer
XXXXXXXX MINWAX MANAGEMENT CORP.
By: /s/ Xxxxx Xxxxx
---------------------------------------------------
Title: President and Chief Executive Officer
XXXXXXXX MINWAX INTERNATIONAL CORP.
By: /s/ Xxxxx Xxxxx
---------------------------------------------------
Title: President and Chief Executive Officer
RONSEAL LIMITED
By: /s/ Xxxxx Xxxxx
---------------------------------------------------
Title: Director
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RONSEAL (IRELAND) LIMITED
By: /s/ Xxxxx Xxxxx
----------------------------------------------
Title: Director
WATCO HOLDING CORP.
By: /s/ Xxxxx Xxxxx
----------------------------------------------
Title: President and Chief Executive Officer
XXXXXXXX MINWAX (CANADA) LTD.
By: /s/ Xxxxx Xxxxx
----------------------------------------------
Title: Vice President
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