EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
NEPTUNE TECHNOLOGY GROUP HOLDINGS INC.,
THE SHAREHOLDERS OF
NEPTUNE TECHNOLOGY GROUP HOLDINGS INC.
LISTED ON THE SIGNATURE PAGES HERETO
AND
XXXXX INDUSTRIES, INC.
Dated as of October 21, 2003
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.............................................................................................2
SECTION 1.1. DEFINITIONS...............................................................................2
ARTICLE II PURCHASE AND REDEMPTION OF SHARES AND TREATMENT OF OPTIONS.............................................9
SECTION 2.1. AGREEMENT FOR THE PURCHASE AND SALE OF SHARES.............................................9
SECTION 2.2. AGGREGATE PURCHASE PRICE.................................................................10
SECTION 2.3. PAYMENT OF PURCHASE PRICE................................................................10
SECTION 2.4. FUNDS FLOW STATEMENT.....................................................................12
SECTION 2.5. PAYMENTS OF OTHER AMOUNTS PAYABLE AT CLOSING.............................................12
SECTION 2.6. CLOSING DATE.............................................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................13
SECTION 3.1. CORPORATE ORGANIZATION...................................................................13
SECTION 3.2. CORPORATE AUTHORITY......................................................................13
SECTION 3.3. CAPITAL STOCK............................................................................14
SECTION 3.4. SUBSIDIARIES.............................................................................16
SECTION 3.5. FINANCIAL STATEMENTS.....................................................................16
SECTION 3.6. ABSENCE OF CERTAIN CHANGES...............................................................17
SECTION 3.7. NO UNDISCLOSED LIABILITIES...............................................................18
SECTION 3.8. TAXES....................................................................................18
SECTION 3.9. GOVERNMENTAL PERMITS.....................................................................20
SECTION 3.10. OWNED REAL PROPERTY......................................................................20
SECTION 3.11. REAL PROPERTY LEASES.....................................................................20
SECTION 3.12. INTELLECTUAL PROPERTY....................................................................21
SECTION 3.13. LABOR RELATIONS..........................................................................21
SECTION 3.14. EMPLOYEE BENEFIT PLANS...................................................................22
SECTION 3.15. CERTAIN CONTRACTS........................................................................23
SECTION 3.16. GOVERNMENTAL CONSENTS AND APPROVALS......................................................24
SECTION 3.17. LITIGATION...............................................................................24
SECTION 3.18. ENVIRONMENTAL MATTERS....................................................................24
SECTION 3.19. INSURANCE................................................................................25
SECTION 3.20. FINDERS..................................................................................25
SECTION 3.21. TITLE TO ASSETS..........................................................................25
SECTION 3.22. TRANSACTIONS WITH AFFILIATES.............................................................25
SECTION 3.23. NOTES....................................................................................26
SECTION 3.24. PRODUCT AND SERVICE WARRANTIES...........................................................26
SECTION 3.25. CLOSING DATE TRANSACTION EXPENSE STATEMENT...............................................26
ARTICLE IV INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE CONVERTIBLE PREFERRED
STOCKHOLDERS.............................................................................26
SECTION 4.1. REPRESENTATIONS OF CONVERTIBLE PREFERRED STOCKHOLDERS....................................26
SECTION 4.2. REPRESENTATIONS OF SELLERS...............................................................27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................28
SECTION 5.1. ORGANIZATION.............................................................................28
SECTION 5.2. AUTHORITY RELATIVE TO THIS AGREEMENT.....................................................29
SECTION 5.3. NONCONTRAVENTION.........................................................................29
SECTION 5.4. GOVERNMENTAL CONSENTS....................................................................29
SECTION 5.5. INVESTMENT INTENT........................................................................29
SECTION 5.6. STATUS AS ACCREDITED INVESTOR............................................................29
SECTION 5.7. FINANCIAL CAPABILITY; SOLVENCY...........................................................30
SECTION 5.8. NO OUTSIDE RELIANCE......................................................................30
ARTICLE VI ADDITIONAL COVENANTS..................................................................................30
SECTION 6.1. CONDUCT OF BUSINESS OF THE NEPTUNE COMPANIES.............................................30
SECTION 6.2. CONFIDENTIALITY..........................................................................33
SECTION 6.3. CERTAIN EFFORTS..........................................................................33
SECTION 6.4. NO PUBLIC ANNOUNCEMENT...................................................................34
SECTION 6.5. DIRECTORS' AND OFFICERS' INDEMNIFICATION.................................................35
SECTION 6.6. INVESTIGATION OF THE COMPANY BY PURCHASER................................................36
SECTION 6.7. NO SOLICITATION; ACQUISITION PROPOSALS...................................................36
SECTION 6.8. REGISTRATION STATEMENT ON FORM S-3.......................................................36
SECTION 6.9. EMPLOYEE BENEFIT PLANS...................................................................36
SECTION 6.10. INTERIM FINANCIALS; COOPERATION WITH FINANCING...........................................37
SECTION 6.11. CHARTER AND STOCKHOLDER AGREEMENT........................................................38
SECTION 6.12. DAP......................................................................................38
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PURCHASER...............................................................38
SECTION 7.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES...............................38
SECTION 7.2. RESIGNATIONS OF DIRECTORS................................................................39
SECTION 7.3. LITIGATION...............................................................................39
SECTION 7.4. GOVERNMENTAL APPROVALS...................................................................39
SECTION 7.5. NO MATERIAL ADVERSE EFFECT...............................................................39
SECTION 7.6. CLOSING DATE PAYOFF LETTERS; RELEASE OF LIENS............................................40
SECTION 7.7. CLOSING DATE TRANSACTION EXPENSE STATEMENT...............................................40
SECTION 7.8. STOCKHOLDER AGREEMENT....................................................................40
SECTION 7.9. REDEMPTION...............................................................................40
SECTION 7.10. STOCK AND OPTION CERTIFICATES............................................................41
SECTION 7.11. GENERAL..................................................................................41
SECTION 7.12. FIRPTA AFFIDAVIT.........................................................................41
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SECTION 7.13. CLOSING DATE EXHIBIT A...................................................................41
SECTION 7.14. FUNDS FLOW STATEMENT.....................................................................41
SECTION 7.15. DAP......................................................................................41
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY, THE SELLERS AND THE CONVERTIBLE
PREFERRED STOCKHOLDERS...................................................................41
SECTION 8.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES...............................42
SECTION 8.2. LITIGATION...............................................................................42
SECTION 8.3. GOVERNMENTAL APPROVALS...................................................................42
ARTICLE IX TERMINATION...........................................................................................42
SECTION 9.1. TERMINATION..............................................................................42
ARTICLE X INDEMNIFICATION........................................................................................43
SECTION 10.1. ARTICLE III INDEMNIFICATION OBLIGATIONS..................................................43
SECTION 10.2. ARTICLE IV INDEMNIFICATION OBLIGATIONS...................................................43
SECTION 10.3. CLAIMS PERIOD............................................................................44
SECTION 10.4. LIMITATIONS..............................................................................44
ARTICLE XI MISCELLANEOUS.........................................................................................44
SECTION 11.1. AMENDMENT AND MODIFICATION...............................................................44
SECTION 11.2. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................................44
SECTION 11.3. PARTIAL INVALIDITY.......................................................................44
SECTION 11.4. EXECUTION IN COUNTERPARTS................................................................44
SECTION 11.5. ASSIGNMENT; SUCCESSORS AND ASSIGNS.......................................................45
SECTION 11.6. TITLES AND HEADINGS......................................................................45
SECTION 11.7. SCHEDULES AND EXHIBITS...................................................................45
SECTION 11.8. KNOWLEDGE................................................................................45
SECTION 11.9. WAIVERS..................................................................................45
SECTION 11.10. WAIVER OF JURY TRIAL.....................................................................46
SECTION 11.11. EXPENSES.................................................................................46
SECTION 11.12. NOTICES..................................................................................46
SECTION 11.13. ENTIRE AGREEMENT.........................................................................47
SECTION 11.14. NO THIRD PARTY BENEFICIARIES.............................................................47
SECTION 11.15. GOVERNING LAW; JURISDICTION; FORUM.......................................................47
SECTION 11.16. NO IMPLIED REPRESENTATIONS...............................................................48
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SCHEDULES
Schedule 1 Sellers and Convertible Preferred Stockholders
Schedule 1.1(a) Bonus Agreements
Schedule 1.1(b) Xxxxxx Xxxxxx Payment
Schedule 3.1 Foreign Qualifications
Schedule 3.2 Conflicts
Schedule 3.3(c) Agreements Regarding Capital Stock
Schedule 3.3(d) Authorization of Capital Stock
Schedule 3.4 Subsidiaries
Schedule 3.6 Absence of Certain Changes
Schedule 3.7 Debt
Schedule 3.8 Taxes
Schedule 3.9 Governmental Permits
Schedule 3.10 Owned Real Property
Schedule 3.11 Scheduled Leases
Schedule 3.12 Intellectual Property
Schedule 3.13 Labor Relations
Schedule 3.14 ERISA Matters
Schedule 3.15 Company Contracts
Schedule 3.16 Governmental Consents and Approvals
Schedule 3.17(a) Litigation
Schedule 3.17(b) Asbestos Litigation
Schedule 3.18 Environmental Matters
Schedule 3.19 Insurance
Schedule 3.20 Finders
Schedule 3.21 Title to Assets
Schedule 3.22 Transactions with Affiliates
Schedule 3.23 Notes
Schedule 3.24 Product and Service Warranties
Schedule 5.3 Purchaser Conflicts
Schedule 6.1 Conduct of Business
Schedule 11.8 Knowledge of Certain Persons
EXHIBITS
Exhibit A: Capital Stock
Exhibit 1.1: Adjustment Amount
Exhibit 6.11: Amended Certificate of Designation
Exhibit 7.14: Form of Funds Flow Statement Acknowledgement
Exhibit 10.1: Seller's Percentage
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of October
21, 2003, is entered into by and among NEPTUNE TECHNOLOGY GROUP HOLDINGS INC., a
Delaware corporation (the "Company"), those Persons listed on Schedule 1 hereto,
and XXXXX INDUSTRIES, INC., a Delaware corporation (the "Purchaser").
RECITALS
A. As of the date hereof, the outstanding equity securities of
the Company consist of shares of (i) Class A Common Stock, par value $0.01 per
share (the "Class A Common Stock"), held by the holders (the "Class A
Stockholders") listed on Exhibit A hereto, (ii) Class D Common Stock, par value
$0.01 per share (the "Class D Common Stock"), held by the holders (the "Class D
Stockholders" and together with the Class A Stockholders, the "Sellers") listed
on Exhibit A hereto and (iii) Series A Participating Convertible Preferred
Stock, par value $0.01 per share (the "Convertible Preferred Stock"), held by
the holders (the "Convertible Preferred Stockholders") listed on Exhibit A
hereto.
B. After giving effect to the amendment to the Company's charter
as contemplated by this Agreement and in accordance with the terms of such
amended charter, all of the outstanding shares of Convertible Preferred Stock
will, immediately prior to the closing contemplated by this Agreement, either be
converted into shares of Class B Common Stock, par value $0.01 per share (the
"Class B Common Stock") and sold pursuant to this Agreement or redeemed by the
Company.
C. The outstanding options to purchase equity securities of the
Company consist of options (the "Options") to purchase Class A Common Stock held
by the holders (the "Option Holders") listed on Exhibit A hereto.
D. The Sellers are, in the aggregate, the owners of 100% of the
outstanding shares of Class A Common Stock and Class D Common Stock and, to the
extent the Convertible Preferred Stock has been converted into Class B Common
Stock as of the closing contemplated by this Agreement, the Convertible
Preferred Stockholders will be, in the aggregate, the owners of 100% of the
outstanding shares of Class B Common Stock.
E. The Sellers and Convertible Preferred Stockholders desire to
sell to Purchaser and Purchaser desires to purchase from the Sellers and
Convertible Preferred Stockholders all of the outstanding shares of Class A
Common Stock, Class B Common Stock and Class D Common Stock.
F. Pursuant to the terms of the Option Agreements and this
Agreement, upon closing of the transactions contemplated by this Agreement, each
Option will be cancelled and the holder thereof will be entitled to receive, on
a per share basis, with respect to the entire exercisable but unexercised
portion of such Option, the same consideration that the Class A Stockholders
will receive per share less the applicable exercise price and applicable
withholding taxes.
G. As a result of the foregoing, upon consummation of the
transactions contemplated hereby Purchaser will acquire ownership of 100% of the
outstanding shares of capital stock of the Company and all Options will either
be fully exercised or otherwise cancelled.
H. In order to induce Purchaser to enter into this Agreement,
concurrently with the execution of this Agreement, each of Xxxxxxx X. XxXxxxx,
Xxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxx, Xxxxx
Xxxxxxxx, Xxx Xxxxxx Breeding, Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx (all of
whom are stockholders of the Company) has entered into (a) an employment
agreement with the Company and Purchaser and (b) a noncompete agreement with
Purchaser.
I. In order to induce Purchaser to enter into this Agreement,
concurrently with the execution of this Agreement, Investcorp International,
Inc., a Delaware corporation ("III") (which is an affiliate of certain
stockholders of the Company), has entered into a Nondisclosure and
Nonsolicitation Agreement with Purchaser.
AGREEMENT
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. In addition to the other words and terms that
may be defined elsewhere in this Agreement, as used in this Agreement, the
following words and terms shall have the meanings specified or referred to
below:
"Acquisition Proposal" shall have the meaning specified in Section 6.7
of this Agreement.
"Adjustment Amount" shall have the meaning specified in Exhibit 1.1 of
this Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such specified Person.
"Agreement" shall mean this Agreement.
"Assignee" shall have the meaning specified in this Agreement.
"Assignor" shall have the meaning specified in Section 3.12(e) of this
Agreement.
"Bonus Agreements" shall have the meaning specified in the Bonus
Expenses definition.
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"Bonus Expenses" shall mean the sum of (a) the aggregate amount payable
to or for the benefit of certain employees of the Neptune Companies as a result
of the transactions contemplated by this Agreement pursuant to the bonus
agreements (the "Bonus Agreements") by and between the Company and such
employees, dated April 1, 2003, and listed on Schedule 1.1(a) and (b) Two
Hundred Fifty-Nine Thousand Nine Hundred Dollars and Thirty-One Cents
($259,900.31) payable to Xxxxxx Xxxxxx pursuant to item (i) in Schedule 1.1(b).
"Business Day" means any day except Saturday, Sunday or any day on
which banks are generally not open for business in the city of New York, New
York.
"Certificate of Designation" shall have the meaning specified in
Section 3.3(d) of this Agreement.
"Charter" shall have the meaning specified in Section 3.3(d) of this
Agreement.
"Class A Common Stock" shall have the meaning specified in the recitals
of this Agreement.
"Class B Common Stock" shall have the meaning specified in the recitals
of this Agreement.
"Class D Common Stock" shall have the meaning specified in the recitals
of this Agreement.
"Class A Stockholders" shall have the meaning specified in the recitals
of this Agreement.
"Class D Stockholders" shall have the meaning specified in the recitals
of this Agreement.
"Closing" shall have the meaning specified in Section 2.6 of this
Agreement.
"Closing Date" shall have the meaning specified in Section 2.6 of this
Agreement.
"Closing Date Exhibit A" shall have the meaning specified in Section
7.13 of this Agreement.
"Closing Date Transaction Expense Statement" shall have the meaning
specified in Section 7.7 of this Agreement.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Commitment Letter" means that letter agreement, dated the date hereof,
between Purchaser and Xxxxxxx Xxxxx Capital Corporation relating to certain
financing commitments made by Xxxxxxx Xxxxx Capital Corporation in connection
with the transactions contemplated by this Agreement.
"Company" shall have the meaning specified in the preamble of this
Agreement.
"Company Contracts" shall have the meaning specified in Section 3.15 of
this Agreement.
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"Company Option Plan" shall have the meaning specified in Section
3.3(c) of this Agreement.
"Control," "Controlling" or "Controlled by" means, when used with
respect to any specified Person, the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
"Convertible Preferred Stock" shall have the meaning specified in the
recitals of this Agreement.
"Convertible Preferred Stockholders" shall have the meaning specified
in the recitals of this Agreement.
"DAP" means DAP Technologies Ltd., a corporation organized and existing
under the federal laws of Canada.
"DAP Option Purchase Expenses" means the aggregate amount (net of any
applicable exercise price) paid by the Neptune Companies to consummate the DAP
Option Purchase.
"DAP Options" shall have the meaning specified in Section 6.12 of this
Agreement.
"DAP Option Purchase" shall have the meaning specified in Section 6.12
of this Agreement.
"Debt" of any Person means all obligations of such Person, without
duplication, (a) for borrowed money, (b) evidenced by notes, bonds, debentures
or similar instruments, (c) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the Ordinary Course), (d)
under capital leases, (e) for bankers acceptances payable, (f) in the nature of
Guarantees of the obligations described in clauses (a) through (e) above of any
other Person; provided, however, that surety/performance bonds and undrawn
letters of credit in support of surety/performance bonds, workers' compensation
insurance obligations and other like obligations shall be excluded from the
definition of Debt for purposes of this Agreement.
"Effective Date" means the date that the Securities and Exchange
Commission declares the Registration Statement effective.
"Employee Pension Plan" shall have the meaning specified in section
6.9(b) of this Agreement.
"Employee Plan" shall have the meaning specified in Section 3.14 of
this Agreement.
"Encumbrances" shall mean all mortgages, liens, pledges, security
interests, charges, claims or other encumbrances.
4
"Environmental Laws" shall have the meaning specified in Section 3.18
of this Agreement.
"ERISA" shall have the meaning specified in Section 3.14 of this
Agreement.
"ERISA Affiliate" shall have the meaning specified in Section 3.14 of
this Agreement.
"Financial Statements" shall have the meaning specified in Section 3.5
of this Agreement.
"Fully Diluted Number" means the sum of (a) the aggregate number of
shares of Class A Common Stock, Class B Common Stock (if any) and Class D Common
Stock outstanding as of immediately prior to the Closing, (b) the aggregate
number of shares of Class A Common Stock issuable upon exercise of all
unexercised vested Options outstanding as of immediately prior to the Closing
and (c) provided that the Company notifies Purchaser in writing prior to the
Closing that the applicable shareholder approval meeting the requirements of
Section 280G(b)(5) of the Code has been obtained, 2,136.257, which represents
the number of notional shares set forth in Schedule 1.1(b).
"Funded Indebtedness" means the total required to prepay all of the
following as of the applicable date: (i) all amounts payable under the
$220,000,000 senior secured credit facility of the Company's wholly-owned
Subsidiary, Neptune Technology Group Inc., a Delaware corporation ("NTGI"),
pursuant to the Credit Agreement, dated as of April 1, 2003, with UBS AG,
Stamford Branch, as administrative agent for the Lenders party thereto (the
"Senior Credit Facility") (including any interest accrued thereon as of the
applicable date and all prepayment premiums and penalties and any other fees and
expenses payable pursuant to the Senior Credit Facility upon payment in full of
the Senior Credit Facility as of the applicable date), (ii) all amounts payable
under NTGI's 14% Senior Subordinated Notes due 2010 and related Indenture dated
as of April 1, 2003 (the "Subordinated Notes") (including any interest accrued
thereon as of the applicable date and all prepayment premiums and penalties and
any other fees and expenses payable pursuant to the Subordinated Notes upon
payment in full of the Subordinated Notes as of the applicable date), (iii) all
amounts payable under the Company's 10% Senior Note due November 2011, all
related notes issued as interest payments and related Indenture dated November
1, 2001 (the "Senior Notes") (including any interest accrued thereon as of the
applicable date and all prepayment premiums and penalties and any other fees and
expenses payable pursuant to such Senior Note and related interest payment notes
upon payment in full of such Senior Note and related interest payment notes as
of the applicable date), (iv) the Note issued to Xxxxxxx X. Xxxxxxx, dated
December 6, 2002, in the aggregate amount of $1,377,116.89 (including any
interest accrued thereon as of the applicable date and all prepayment premiums
and penalties and any other fees and expenses payable pursuant to such Note upon
payment in full of such Note as of the applicable date), (v) the Note issued to
Xxxxxxx X. Xxxxxxx, dated December 6, 2002, in the aggregate amount of
$1,323,007.02 (including any interest accrued thereon as of the applicable date
and all prepayment premiums and penalties and any other fees and expenses
payable pursuant to such Note upon payment in full of such Note as of the
applicable date), (vi) the Note issued to Xxxxxxxx X. Xxxxxx, dated December 6,
2002, in the aggregate amount of $299,876.08 (including any interest accrued
thereon as of the applicable date and all prepayment premiums and penalties and
any other fees and expenses payable
5
pursuant to such Note upon payment in full of such Note as of the applicable
date), (vii) all amounts payable under the credit facility pursuant to the
Confirmation of Credit, dated August 11, 2003, between DAP and Royal Bank of
Canada and (viii) all amounts payable pursuant to any other indebtedness for
borrowed money incurred or guaranteed by any of the Neptune Companies (which
amounts shall be disclosed to Purchaser in accordance with Sections 3.7(b) and
7.6(a) of this Agreement) (the amounts described in this clause (viii) are
referred to herein as the "Supplemental Debt").
"Funds Flow Statement" shall have the meaning specified in Section 7.14
of this Agreement.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" means any federal, state or local or foreign
government, any political subdivision thereof or any court, administrative or
regulatory agency, department, instrumentality, body or commission or other
governmental authority or agency, domestic or foreign.
"Governmental Permits" shall have the meaning specified in Section 3.9
of this Agreement.
"Guarantee" means (a) any guarantee of the payment or performance of,
or any contingent obligation in respect of, any indebtedness or other obligation
of any other Person, (b) any other arrangement whereby credit is extended to one
obligor on the basis of any promise or undertaking of another Person (i) to pay
the indebtedness of such obligor, (ii) to purchase any obligation owed by such
obligor, (iii) to purchase or lease assets (other than inventory in the Ordinary
Course) under circumstances that would enable such obligor to discharge one or
more of its obligations, or (iv) to maintain the capital, working capital,
solvency or general financial condition of such obligor, and (c) any liability
as a general partner of a partnership or as a venturer in a joint venture in
respect of indebtedness or other obligations of such partnership or venture.
"HSR Act" shall have the meaning specified in Section 3.16 of this
Agreement.
"III" shall have the meaning specified in the recitals of this
Agreement.
"Insurance Coverage Expenses" shall mean the aggregate amount paid at
the Closing to obtain the insurance coverage for the fourth, fifth and sixth
years following the Closing Date, if requested under Section 6.5(b) of this
Agreement.
"Insurance Coverage Premiums" shall mean the aggregate amount payable
to obtain the insurance coverage as required under Section 6.5(b) of this
Agreement.
"Intellectual Property" shall have the meaning specified in Section
3.12(a) of this Agreement.
"Laws" means any federal, state, local or foreign law, code, regulation
rule or decree.
6
"Leased Real Property" shall have the meaning specified in Section
3.11(a) of this Agreement.
"Material Adverse Effect" shall have the meaning specified in Section
3.1 of this Agreement.
"NTGI" shall have the meaning specified in the Funded Indebtedness
definition.
"Neptune Companies" shall mean the Company and each Subsidiary of the
Company.
"Neptune Predecessor Entities" shall mean each of the Neptune
Companies, Schlumberger Resource Management Services, Inc., a Delaware
corporation, Schlumberger Canada Limited, a corporation amalgamated under the
laws of the Province of Ontario, Schlumberger Distribucion S.A. de C.V., a
Mexican corporation, Schlumberger Servicios S.A de C.V., a Mexican corporation
and each predecessor entity of each of the foregoing.
"Net Cash" means an amount equal to the total amount of cash and cash
equivalents of the Neptune Companies as of the close of business on the
Settlement Date, as determined in accordance with GAAP, consistently applied..
"Net Funded Indebtedness" means an amount equal to (a) the aggregate
amount sufficient to prepay in full all of the Funded Indebtedness as of the
Settlement Date less (b) the Net Cash.
"Notional Exercise Price" shall have the meaning specified in Section
2.3(a)(vi) of this Agreement.
"Notional Options" means the notional shares described in item (ii) of
Schedule 1.1(b).
"Option Agreements" shall have the meaning specified in Section 3.3(c)
of this Agreement.
"Option Exercise Price" shall have the meaning specified in Section
2.3(a)(v) of this Agreement.
"Option Holders" shall have the meaning specified in the recitals of
this Agreement.
"Options" shall have the meaning specified in the recitals of this
Agreement.
"Ordinary Course" shall mean the ordinary course of business consistent
with past practice.
"Owned Real Property" shall have the meaning specified in Section
3.10(a) of this Agreement.
"Patent Agreement" shall have the meaning specified in Section 3.12(e)
of this Agreement.
"Permitted Encumbrances" shall have the meaning specified in Section
3.10(a) of this Agreement.
7
"Per Share Amount" shall mean an amount (carried up to 6 decimal places
as designated by the Company) equal to (a) the sum of (i) the Purchase Price,
(ii) the Option Exercise Price, and (iii) the Notional Exercise Price divided by
(b) the Fully Diluted Number.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, trust, unincorporated organization, Governmental
Entity or other legally recognized entity.
"Preferred Stock" shall have the meaning specified in Section 3.3(a) of
this Agreement.
"Purchase Price" shall have the meaning specified in Section 2.2 of
this Agreement.
"Purchaser" shall have the meaning specified in the preamble of this
Agreement.
"Purchaser Indemnified Parties" shall have the meaning specified in
Section 10.1 of this Agreement.
"Recapitalization" shall mean the recapitalization of the Company
pursuant to the Purchase Agreement, dated as of April 1, 2003, by and among the
Company and "Purchasers" named therein.
"Registration Statement" shall have the meaning specified in Section
6.8 of this Agreement.
"Scheduled Leases" shall have the meaning specified in Section 3.11(a)
of this Agreement.
"Securities Act" shall have the meaning specified in Section 5.5 of
this Agreement.
"Seller Transaction Expenses" means the legal, accounting, financial
advisory and other third party advisory or consulting fees and expenses incurred
from and after the Settlement Date and prior to the Closing Date for the account
of any of the Neptune Companies or any of the Sellers in connection with the
transactions contemplated hereby and other related matters (including, without
limitation, amounts payable to (a) Xxxxxx, Xxxx & Xxxxxxxx LLP, (b) III or any
Affiliates of III other than payments in respect of Shares pursuant to this
Agreement, (c) Xxxx Xxxxxx Xxxxx & Xxxxx, LLP, and (d) White & Case LLP).
Notwithstanding the foregoing, the term "Seller Transaction Expenses" shall not
include any fees or expenses incurred by any of the Neptune Companies in
connection with Purchaser's financing for the transaction contemplated hereby
(including, without limitation, any fees and expenses incurred by the Neptune
Companies in providing the information requested by Purchaser pursuant to the
second sentence of Section 6.10).
"Sellers" shall have the meaning specified in the recitals of this
Agreement.
"Seller's Percentage" means as to each Seller, the percentage set forth
beside such Seller's name on Exhibit 10.1.
8
"Senior Credit Facility" shall have the meaning specified in the Funded
Indebtedness definition.
"Settlement Date" means August 31, 2003.
"Shareholder Loans" shall have the meaning specified in Section 3.23 of
this Agreement.
"Shares" shall have the meaning specified in Section 2.1 of this
Agreement.
"Stockholder Agreement" shall mean the Stockholder Agreement, dated
April 1, 2003, by and among the Company and certain shareholders of the Company
signatory thereto.
"Subordinated Notes" shall have the meaning specified in the Funded
Indebtedness definition.
"Subsidiary" shall have the meaning specified in Section 3.4 of this
Agreement.
"Supplemental Debt" shall have the meaning specified in the Funded
Indebtedness definition.
"Tax Return" means any report, return, declaration, claim for refund,
or other information, return or statement required to be supplied to a
Governmental Entity in connection with Taxes, including any schedule or
attachment thereto and any amendment thereof.
"Taxes" means all taxes, assessments, charges, duties, fees, levies and
other governmental charges, including income, franchise, capital stock, real
property, personal property, tangible, withholding, employment, payroll, social
security, social contribution, unemployment compensation, disability, transfer,
sales, use, excise, gross receipts, value-added and all other taxes of any kind,
whether disputed or not, and any charges, interest or penalties imposed thereon,
and including any obligation to indemnify, assume or otherwise succeed to any
Tax liability of any other Person.
"Transaction Payments" shall mean the Bonus Expenses, the Seller
Transaction Expenses, the Insurance Coverage Expenses, the Insurance Coverage
Premiums, the DAP Option Purchase Expenses and the DAP Purchase Price.
"Treasury Regulations" means the Income Tax Regulations, promulgated
under the Code.
"Undesignated Common Stock" shall have the meaning specified in Section
3.3(a) of this Agreement.
ARTICLE II
PURCHASE AND REDEMPTION OF SHARES AND TREATMENT OF OPTIONS
Section 2.1. Agreement for the Purchase and Sale of Shares. Subject to
the terms and conditions hereof, at the Closing, (a) the Class A Stockholders
and the Class D Stockholders will sell, transfer and deliver to Purchaser, and
Purchaser will purchase and acquire from the Class A
9
Stockholders and the Class D Stockholders all of the outstanding Class A Common
Stock and Class D Common Stock, free and clear of all Encumbrances, (b) the
Convertible Preferred Stockholders will sell, transfer and deliver to Purchaser,
and Purchaser will purchase and acquire from the Convertible Preferred
Stockholders all of the outstanding Class B Common Stock issued upon conversion
of the Convertible Preferred Stock not otherwise redeemed on the Closing Date in
accordance with the Certificate of Designation, free and clear of all
Encumbrances (together with the Class A Common Stock and Class D Common Stock,
the "Shares"), (c) the Options will be cancelled and (d) the Company will redeem
the Convertible Preferred Stock to be redeemed on the Closing Date in accordance
with the Certificate of Designation. Notwithstanding any other provision in the
Certificate of Designation, the parties agree that, for the purposes of this
Agreement, all shares of Convertible Preferred Stock which are converted into
shares of Class B Common Stock pursuant to Section 6.1 of the Certificate of
Designation shall be deemed converted immediately prior to the Closing and the
shares of Class B Common Stock issued pursuant to such conversion shall be
deemed issued and outstanding immediately prior to Closing.
Section 2.2. Aggregate Purchase Price. The aggregate cash amount to be
paid by Purchaser at the Closing shall be Five Hundred Million Dollars
($500,000,000) minus the sum of (i) the Net Funded Indebtedness, (ii) the
aggregate amount of all Seller Transaction Expenses, (iii) the aggregate amount
of all Bonus Expenses, (iv) the aggregate amount of all Insurance Coverage
Expenses, (v) Three Million Nine Hundred Thousand Dollars ($3,900,000), (vi) One
Million Seven Hundred Fifty Thousand Dollars ($1,750,000), (vii) the aggregate
amount of all DAP Option Purchase Expenses, (viii) the Adjustment Amount, if
any, (ix) the aggregate amount paid by the Company from and after the Settlement
Date to redeem or repurchase any shares of Class A Common Stock pursuant to
Section 6.1(a)(iv) of this Agreement and (x) the aggregate amount payable to
redeem the Convertible Preferred Stock to be redeemed on the Closing Date in
accordance with the Certificate of Designation as set forth in Section 2.3(a)(i)
(such net cash amount being referred to herein as the "Purchase Price").
Section 2.3. Payment of Purchase Price.
(a) On the Closing Date, Purchaser shall:
(i) on behalf of the Company, pay to each
Convertible Preferred Stockholder whose shares of Convertible Preferred
Stock are required to be redeemed pursuant to the Certificate of
Designation, to such account or accounts as such Convertible Preferred
Stockholder specifies to Purchaser in writing at least two Business
Days prior to the Closing Date, an amount equal to (A) the aggregate
number of shares of Convertible Preferred Stock owned by such
Convertible Preferred Stockholder that are to be redeemed in accordance
with the Certificate of Designation as of the Closing multiplied by (B)
the applicable redemption price per share for such Convertible
Preferred Stock as of the Closing Date, calculated pursuant to the
Certificate of Designation;
(ii) pay to each Class A Stockholder, to such
account or accounts as such Class A Stockholder specifies to Purchaser
in writing at least two Business Days prior to the Closing Date, an
amount equal to (A) the Per Share Amount multiplied by
10
(B) the number of shares of Class A Common Stock owned by such Class A
Common Stockholder as of the Closing provided, however, that, with
respect to any Class A Stockholder who is the obligor on any
Shareholder Loan outstanding as of the Closing, the amount payable to
such Class A Stockholder shall be reduced by the outstanding principal
and accrued interest on such Class A Stockholder's Shareholder Loan
through the Closing;
(iii) pay to each Class D Stockholder, to such
account or accounts as such Class D Stockholder specifies to Purchaser
in writing at least two Business Days prior to the Closing Date, an
amount equal to (A) the Per Share Amount multiplied by (B) the number
of shares of Class D Common Stock owned by such Class D Common
Stockholder as of the Closing;
(iv) pay to each Convertible Preferred
Stockholder whose shares of Convertible Preferred Stock are to be
automatically converted into Class B Common Stock pursuant to the
Certificate of Designation, to such account or accounts as such
Convertible Preferred Stockholder specifies to Purchaser in writing at
least two Business Days prior to the Closing Date, an amount equal to
(A) the Per Share Amount multiplied by (B) the number of shares of
Class B Common Stock held by such Convertible Preferred Stockholder as
of the Closing;
(v) pay to each Option Holder of vested Options,
to such account or accounts as each such Option Holder specifies to
Purchaser in writing at least two Business Days prior to the Closing
Date, an amount (rounded to the nearest whole cent) equal to (I)(A) the
Per Share Amount multiplied by (B) the number of shares of Class A
Common Stock issuable on the exercise of such Option owned by such
Option Holder as of the Closing minus (II) the aggregate option
exercise price for such Option (as set forth on Exhibit A) (the total
option exercise price for all such Options cancelled hereunder which
have an exercise price per share less than the Per Share Amount is
referred to herein as the "Option Exercise Price"); and
(vi) Subject to the Company's prior written
notification to Purchaser that applicable shareholder approval meeting
the requirements of Section 280G(b)(5) of the Code has been obtained,
pay to Xxxxxx Xxxxxx, to such account or accounts as Xxxxxx Xxxxxx
specifies to Purchaser in writing at least two Business Days prior to
the Closing Date, an amount (rounded to the nearest whole cent) equal
to (I) the product of (A) the Per Share Amount multiplied by (B)
2,136.1257 minus (II) Two Hundred Fifty-Six Thousand Three Hundred
Thirty-Five Dollars ($256,335) (the "Notional Exercise Price") (which
represents the product of $120.00 multiplied by 2,136.1257).
(b) All payments required pursuant to Section 2.3(a)
shall be made by wire transfer of immediately available funds (in each case,
against delivery of (i) the applicable stock certificates representing the
shares of Class A Common Stock, Class D Common Stock, Class B Common Stock and
Convertible Preferred Stock, as applicable, being sold or redeemed or (ii) the
applicable receipts representing acknowledgment of cancellation of the Options
being cancelled, in each case in proper form and duly endorsed for transfer).
11
(c) With respect to each payment made pursuant to Section
2.3(a)(v) to a Seller who is an employee of any of the Neptune Companies,
Purchaser shall be entitled to deduct, withhold and remit to the appropriate
Governmental Entities (or cause to be deducted, withheld and remitted) any and
all Taxes required by Law with respect to such payment. Any such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the party who otherwise would have received such amounts but for such
withholding of Taxes.
Section 2.4. Funds Flow Statement. Notwithstanding anything in this
Agreement to the contrary, it is understood that Purchaser shall be fully
entitled to rely upon the accuracy of, and to make payments in accordance with,
the Funds Flow Statement and shall have no responsibility or liability
whatsoever to the Sellers and the Convertible Preferred Stockholders (in their
capacity as holders of equity securities and not debt securities of the Company)
for any inaccuracies or omissions in the Funds Flow Statement.
Section 2.5. Payments of Other Amounts Payable at Closing. On the
Closing Date, Purchaser shall:
(a) on behalf of the Company, pay to such account or
accounts as the Company specifies to Purchaser in writing at least two Business
Days prior to the Closing Date, the aggregate amount of all Funded Indebtedness
as of the Closing Date to the extent not paid prior to the Closing Date;
(b) on behalf of the Company, pay to such account or
accounts as the Company specifies to Purchaser in writing at least two Business
Days prior to the Closing Date, the aggregate amount of all Seller Transaction
Expenses to the extent not paid prior to the Closing Date;
(c) on behalf of the Company, pay to such account or
accounts as the Company specifies to Purchaser in writing at least two Business
Days prior to the Closing Date, the aggregate amount of all Bonus Expenses to
the extent not paid prior to the Closing Date;
(d) on behalf of the Company, pay to such account or
accounts as the Company specifies to Purchaser in writing at least two Business
Days prior to the Closing Date, the aggregate amount of Insurance Coverage
Premiums to the extent not paid prior to the Closing Date; and
(e) on behalf of the Company or any of its direct or
indirect Subsidiaries, pay to such account or accounts as the Company specifies
to Purchaser in writing at least two Business Days prior to the Closing Date,
the aggregate amount of the DAP Purchase Price and DAP Option Purchase Expenses.
Section 2.6. Closing Date. Subject to the terms and conditions hereof,
the consummation of the transactions provided for in this Article II (the
"Closing") shall take place on the latest of (a) the fifth Business Day after
the date on which each of the conditions set forth in Articles VII and VIII have
been satisfied or waived by the party or parties entitled to the benefit of such
conditions (it being understood that, in the case of a waiver of any conditions
for the benefit of the Company, the Sellers and the Convertible Preferred
Stockholders, such waiver may be made by the Company on behalf of itself and
each of the Sellers and the Convertible
12
Preferred Stockholders; provided, that only a Convertible Preferred Stockholder
required pursuant to Section 2.1 to sell its Class B Common Stock may waive the
Purchaser's obligation pursuant to Sections 2.1 and 2.3 to purchase such Class B
Common Stock), (b) the date which is the earlier of (1) February 27, 2004 or (2)
the first Business Day after the 90th day after the Effective Date, and (c) such
other date as Purchaser and the Company (on behalf of itself and the Sellers and
the Convertible Preferred Stockholders) mutually agree. The date on which the
Closing actually occurs is hereinafter referred to as the "Closing Date." The
Company shall provide notice of the proposed Closing Date to the other parties
hereto at least two Business Days prior to such date. Such notice shall attach
the proposed Funds Flow Statement, and the Company shall update the other
parties hereto with respect to any changes in such proposed Funds Flow
Statement. The Closing shall take place at the offices of King & Spalding LLP,
000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 or at such other place as Purchaser
and the Company (on behalf of itself and the Sellers and the Convertible
Preferred Stockholders) mutually agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to Purchaser as follows:
Section 3.1. Corporate Organization. Each of the Neptune Companies is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization. Each of the Neptune Companies is duly qualified to transact
business as a foreign corporation and is in good standing in each other
jurisdiction in which the ownership or leasing of its properties or assets or
the conduct of its business requires such qualification, except where the
failure to so qualify or to be in good standing has not had and would not have a
Material Adverse Effect. Schedule 3.1 lists all jurisdictions in which each
Neptune Company is duly qualified to conduct business. As used herein, "Material
Adverse Effect" means any circumstance, change or effect that, individually or
when taken together with all other such circumstances, changes or effects, is
materially adverse to the results of operations, financial condition or business
of the Company and its Subsidiaries taken as a whole, except for effects and
changes (i) resulting from any general national, international or regional
economic or financial conditions or securities markets, including any such
effects or changes resulting from acts of war (whether or not declared) or
terrorism, (ii) generally affecting the industry in which the Company and its
Subsidiaries operate and (iii) resulting from the announcement of the
transactions contemplated hereby. Each of the Neptune Companies has the
requisite corporate power to own or lease and to operate and use its properties
and assets and to carry on its business as now conducted. The Company has
delivered to Purchaser complete and correct copies of the certificate of
incorporation and bylaws (or comparable governing documents) of each of the
Neptune Companies, each as in effect on the date hereof.
Section 3.2. Corporate Authority.
(a) The Company has the requisite corporate power to
execute and deliver this Agreement and to fulfill its obligations herein. The
execution, delivery and performance of this
13
Agreement by the Company have been duly authorized by all requisite corporate
action. This Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company enforceable in
accordance with its terms, except that such enforceability (a) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally, and (b) is subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(b) Except as set forth in Schedule 3.2, neither the
execution and delivery by the Company or any Seller of this Agreement nor the
consummation by the Company or any Seller of the transactions contemplated
hereby, nor compliance by the Company or any Seller with or fulfillment of its
respective obligations hereunder will:
(i) conflict with or violate any provision of
the Company's Charter, Certificate of Designation or bylaws;
(ii) materially contravene any Law;
(iii) result in the acceleration of, or entitle
any party to accelerate (whether after the giving of notice or lapse of
time or both), any debt obligation of any of the Neptune Companies in
excess of $2,500,000 in the aggregate;
(iv) constitute a default under or violate, or
result, with giving of notice or lapse of time or both in any default
under or violation of, or result in the creation or imposition of, any
Encumbrance upon any of the assets or properties any of the Neptune
Companies or any of the Shares pursuant to any provision of, any
mortgage, lease, agreement, indenture, license or instrument to which
any of the Neptune Companies is a party or by which any of them or any
of their respective properties or assets is bound, other than
conflicts, violations, creations and impositions that would not result
in a Material Adverse Effect;
(v) constitute an event permitting modification,
amendment or termination of a mortgage, lease, agreement, indenture,
license, instrument, order, arbitration award, judgment or decree to
which any of the Neptune Companies is a party or by which any of them
or any of their assets or properties is bound, other than
modification(s), amendment(s) or termination(s) that would not result
in a Material Adverse Effect; or
(vi) require the approval, consent, authorization
or act of, or the making by any of the Neptune Companies, of any
declaration, filing or registration with any Governmental Entity or
other Person, except to the extent that the failure to obtain or make
any of the foregoing would not result in a Material Adverse Effect.
Section 3.3. Capital Stock.
(a) The authorized capital stock of the Company consists
of (i) 1,026,652.6674 shares of Common Stock, par value $0.01 per share (the
"Undesignated Common Stock"), (ii) 897,500 shares of Class A Common Stock, (iii)
128,000 shares of Class B
14
Common Stock, (iv) 1,152.6674 shares of Class D Common Stock, and (v) 500,000
shares of Preferred Stock, par value $0.01 per share (the "Preferred Stock"),
127,029.6432 shares of which have been designated as Convertible Preferred
Stock.
(b) As of the date hereof, (i) 459,914.4413 shares of
Class A Common Stock are outstanding, (ii) 1,152.6674 shares of Class D Common
Stock are outstanding, (iii) 127,029.6432 shares of Convertible Preferred Stock
are outstanding, (iv) no other shares of Preferred Stock are outstanding and (v)
no shares of Undesignated Common Stock or Class B Common Stock are outstanding.
As of the date hereof, all of the outstanding shares of Class A Common Stock are
held by the Class A Stockholders in the respective amounts listed on Exhibit A
hereto. As of the date hereof, all of the outstanding shares of Class D Common
Stock are held by the Class D Stockholders in the respective amounts listed on
Exhibit A hereto. As of the date hereof, all of the Convertible Preferred Stock
is held by the Convertible Preferred Stockholders in the respective amounts
listed on Exhibit A hereto.
(c) As of the date hereof, the Options consist of stock
options to purchase 32,328.2891 shares of Class A Stock pursuant to stock option
agreements ("Option Agreements") entered into pursuant to the 2001 Stock
Incentive Plan of the Company as amended and restated (the "Company Option
Plan"). As of the date hereof, all of the Options are held by the Option Holders
in the respective amounts listed on Exhibit A hereto and, as of the Closing,
100% of such Options are expected to be exercisable pursuant to Section 3(b) of
the Option Agreements governing such Options. The exercise price of each Option
is listed on Exhibit A hereto. Except for this Agreement, the Options and as
disclosed in Schedule 3.3(c), there are no agreements, warrants, puts, calls,
rights, options or other commitments of any character to which the Company is a
party relating to the issuance, sale, purchase, redemption, conversion,
exchange, registration, voting or transfer of any shares of capital stock of the
Company.
(d) All of the outstanding shares of Class A Common
Stock, Class D Common Stock and Convertible Preferred Stock are duly authorized,
validly issued, fully paid and nonassessable, free of any preemptive or
subscription rights (except as set forth in Schedule 3.3(d)), and, upon delivery
to Purchaser pursuant to Article II hereof, the then outstanding shares of Class
A Common Stock, Class B Common Stock and Class D Common Stock hereof will be
free of any preemptive or subscription rights and, to the Company's knowledge,
free and clear of all Encumbrances, other than those contained in the Company's
Second Amended and Restated Certificate of Incorporation as filed with the
Delaware Secretary of State (the "Charter") including the Certificate of
Designation with respect to the Convertible Preferred Stock as filed with the
Delaware Secretary of State as amended pursuant to Section 6.11 (the
"Certificate of Designation") and other than limitations imposed by federal and
state securities laws.
(e) There are no dividends which have accrued or been
declared but are unpaid on any of the capital stock of the Company. declared but
are unpaid on any of the capital stock of the Company.
(f) All of the information on Exhibit A is true and
complete as of the date hereof. All of the information on the Closing Date
Exhibit A shall be true and complete as of the Closing Date.
15
(g) All of the information on the Funds Flow Statement
shall be true and complete as of the Closing Date.
Section 3.4. Subsidiaries. Schedule 3.4 lists each Subsidiary of the
Company. As used in this Agreement, "Subsidiary" means any corporation,
partnership, joint venture or other legal entity of which the Company owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holders of which generally are entitled to vote for the election of the board of
directors or other governing body of such corporation, partnership, joint
venture or other legal entity. Except as set forth in Schedule 3.4, there are no
agreements, warrants, puts, calls, rights, options, subscriptions, preemptive
rights or other commitments of any character to which any of the Neptune
Companies is a party or by which any of the Neptune Companies is bound which
obligates any of the Neptune Companies to issue, deliver or sell any outstanding
or additional shares of capital stock of any Subsidiary or any securities or
instruments convertible into or exchangeable for any such outstanding or
additional shares of capital stock. Each outstanding share of capital stock of
each Subsidiary that is a corporation or other ownership interest of each
Subsidiary is duly authorized, validly issued, fully paid and nonassessable and
free of preemptive rights, and (except as set forth in Schedule 3.4) each such
share is owned by the Company or another Subsidiary, free and clear of
Encumbrances, except any Encumbrances arising under the Senior Credit Facility
and limitations composed by federal and state securities laws. Except for the
Subsidiaries, no Neptune Company owns any equity interest in any Person.
Section 3.5. Financial Statements. The Company has delivered to
Purchaser (a) the audited consolidated balance sheet of the Company and its
Subsidiaries for each of the two fiscal years ended as of December 31, 2001 and
December 31, 2002, and the related audited consolidated statements of
operations, changes in stockholders' equity and cash flows of the Company and
its Subsidiaries at December 31, 2002 and 2001, and results of operations and
cash flows for the Company and its Subsidiaries for the year ended December 31,
2002, the period November 1, 2001 to December 31, 2001, the period January 1,
2001 to October 31, 2001 and the year ended December 31, 2001, together with all
related notes and schedules thereto and (b) the unaudited consolidated balance
sheet of the Company and its Subsidiaries as of and for the month ended August
31, 2003 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows of the Company and its Subsidiaries at
August 31, 2003, and results of operations and cash flows for the Company and
its Subsidiaries for the eight months ended August 31, 2003, together with all
related notes and schedules thereto (collectively the "Financial Statements").
The Financial Statements have been prepared from, and are in accordance with,
the books and records of the Company and its Subsidiaries. The Financial
Statements were prepared in accordance with generally accepted accounting
principles applied on a consistent basis and fairly present, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as of the applicable dates thereof and for the applicable periods
then ended (subject, in the case of unaudited financial statements, to normal
year-end and quarter end adjustments and the absence of notes to such
statements). Since December 31, 2002, there has been no material change in any
accounting (or tax accounting) policy, practice or procedure of the Company or
any of its Subsidiaries.
16
Section 3.6. Absence of Certain Changes. Except as described in
Schedule 3.6 and except for the transactions permitted by this Agreement, since
December 31, 2002:
(a) as of the date hereof, there has not been a Material
Adverse Effect;
(b) the business of the Neptune Companies has been
conducted, in all material respects, in the Ordinary Course; and
(c) none of the Neptune Companies has taken any of the
following actions:
(i) amended its certificate of incorporation or
bylaws or other organizational documents;
(ii) split, combined or reclassified any shares
of its capital stock or declared, set aside or paid any dividends or
made any other distributions (whether in cash, stock or other property)
in respect of such shares, except for dividends and distributions
payable by a Subsidiary of the Company to another Subsidiary of the
Company or to the Company;
(iii) redeemed, purchased or otherwise acquired
for any consideration any outstanding shares of its capital stock or
securities carrying the right to acquire or which are convertible into
or exchangeable or exercisable for such capital stock, except in
connection with the Recapitalization and except for the cancellation of
Options and the redemption or repurchase of shares of Class A Common
Stock in connection with termination of employment;
(iv) issued, authorized for issue, transferred,
sold or delivered any shares of its capital stock (or options or other
securities convertible into or exchangeable or exercisable for, with or
without additional consideration, such capital stock) or any other
interest therein, except in connection with the exercise of Options or
conversion of the Convertible Preferred Stock;
(v) incurred any indebtedness for borrowed
money, except the issuance of the Subordinated Notes, borrowings under
the Senior Credit Facility, and borrowings not in excess of $2,000,000
in the Ordinary Course;
(vi) made any acquisition or disposition of stock
or other securities or other ownership interests or assets of any
Person except (A) acquisitions or dispositions of inventory, equipment
and services in the Ordinary Course and (B) other acquisitions or
dispositions of assets not in excess of $2,500,000;
(vii) created, assumed or suffered to be incurred
any Encumbrance on any of its properties or assets other than in
connection with the Senior Credit Facility, Permitted Encumbrances and
other Encumbrances not in excess of $1,000,000;
(viii) since the Settlement Date, made any payment
with respect to any portion of the Funded Indebtedness other than
payments required to be made pursuant to the terms of any note or other
document related to the Funded Indebtedness, in which
17
case such required payment will be the minimum amount required to be
paid pursuant thereto;
(ix) except in connection with the
Recapitalization, made any payment or distribution to any Seller or any
Affiliate of any Seller other than payments or distributions required
to be made pursuant to any contract, license, agreement, commitment,
arrangement, understanding or other instrument disclosed in Schedule
3.23 of this Agreement and made in the Ordinary Course;
(x) amended, supplemented or modified any
agreement material to the Neptune Companies taken as a whole except in
the Ordinary Course; or
(xi) committed to do any of the foregoing.
Section 3.7. No Undisclosed Liabilities.
(a) Except as set forth in the Financial Statements, none
of the Neptune Companies are subject to any claims, obligations or liabilities
of any nature (whether accrued, absolute, contingent or otherwise) of the type
required to be reflected on a balance sheet prepared in accordance with GAAP,
other than (a) obligations pursuant to or in connection with this Agreement or
the transactions contemplated hereby, (b) liabilities and obligations incurred
in the Ordinary Course (c) liabilities incurred in connection with the
Recapitalization and (d) other liabilities not exceeding $1,000,000 in the
aggregate.
(b) Except as set forth on Schedule 3.7, as of the
Settlement Date, no Neptune Company had any Debt outstanding other than the
Funded Indebtedness. Schedule 3.7 sets forth the amount, if any, of Supplemental
Debt which was outstanding as of the Settlement Date.
Section 3.8. Taxes. Except as set forth in Schedule 3.8:
(a) each of the Neptune Companies has timely filed or
caused to be timely filed all Tax Returns (taking into account applicable
extension periods) to the extent required to be filed by the Neptune Companies
under applicable Law;
(b) all Taxes due have been paid in full and no Neptune
Company is currently the beneficiary of any extension of time within which to
file a Tax Return;
(c) all Tax Returns are true, complete and accurate in
all material respects and have been prepared in substantial compliance with all
applicable Laws;
(d) there are no Encumbrances (other than Permitted
Encumbrances) on any of the assets of the Neptune Companies that arose in
connection with any failure (or alleged failure) to pay any Tax;
(e) no taxing authority in a jurisdiction where any
Neptune Company does not file Tax Returns has claimed in writing that a Neptune
Company is or may be subject to taxation by that jurisdiction;
18
(f) each Neptune Company has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, leased employee, independent contractor, creditor, stockholder,
or other third party;
(g) no foreign, federal, state, or local Tax audits or
administrative or judicial Tax proceedings are pending or being conducted with
respect to any Neptune Company, and no Neptune Company has received from any
federal, foreign, state, or local taxing authority any (i) notice indicating an
intent to open or reopen an audit or other review, (ii) request for information
related to Tax matters, or (iii) notice of deficiency or proposed adjustment for
any amount of Tax proposed, asserted, or assessed by any taxing authority
against any Neptune Company;
(h) the Neptune Companies have delivered to Purchaser
correct and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by any
Neptune Company filed or received since December 31, 2001;
(i) no Neptune Company has waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to the assessment of Taxes;
(j) all accounting periods and methods used by each
Neptune Company for Tax purposes are permissible periods and methods, and no
Neptune Company is or will be required to make any adjustment to its income
under Section 481 of the Code in connection with a change in accounting method
used in taxable years for which Tax Returns have been filed prior to the date
hereof;
(k) no Neptune Company has made any payment, is obligated
to make any payment, or is a party to any agreement, contract, arrangement, or
plan that, has resulted or would result, separately or in the aggregate, in any
payment not deductible under Section 280G of the Code;
(l) no Neptune Company is a party or bound by any Tax
allocation or sharing agreement;
(m) no Neptune Company (i) has been a member of an
affiliated group filing a consolidated federal income Tax return in any taxable
year (other than the group of which the Company is the Common Parent) or (ii)
has liability for the Taxes of any Person (other than a Neptune Company) under
Treasury Regulation Section 1.1502-6 or any similar provision of state, local,
or foreign Law, as a transferee or successor, by contract, or otherwise;
(n) the Company has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code;
and
(o) the unpaid Taxes of the Neptune Companies (i) did
not, as of the date of the most recent Financial Statements, exceed the reserve
for Tax liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the balance
sheet included with the most recent Financial Statements and (ii) do not
19
exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Neptune Companies in
filing their Tax Returns.
Section 3.9. Governmental Permits. Each of the Neptune Companies has
all governmental notifications, licenses, franchises, permits, privileges,
immunities, approvals and other authorizations or documents which are reasonably
necessary for the ownership, leasing, operation and use of its assets and
properties and which are reasonably required for their carrying on and
conducting their respective businesses in all material respects (considered as a
whole) as currently conducted (herein collectively called "Governmental
Permits"). Each Governmental Permit is valid and in full force and effect in all
material respects and, to the knowledge of the Company, no suspension or
cancellation of any of them is threatened. The execution of the transactions
contemplated by this Agreement shall not adversely affect in any material
respect any Governmental Permit held by any of the Neptune Companies.
Section 3.10. Owned Real Property.
(a) All real property owned by any of the Neptune
Companies is identified in Schedule 3.10 and is hereinafter referred to as the
"Owned Real Property". The Neptune Company shown on such Schedule 3.10 as owning
such Owned Real Property holds good, marketable fee title to the Owned Real
Property shown as so owned, free of all Encumbrances except (i) for easements,
covenants, restrictions and other matters that do not impair in any material
respect the use, or enjoyment of the property, (ii) for liens for Taxes not yet
due and payable or being contested in good faith by appropriate proceedings,
(iii) for liens of carriers, warehousemen, mechanics, materialmen and other
similar liens incurred in the Ordinary Course and not yet delinquent (the
matters set forth in the foregoing clauses (i), (ii) and (iii) are referred to
herein as "Permitted Encumbrances"), (iv) liens created pursuant to the Senior
Credit Facility, and (v) as set forth in Schedule 3.10.
(b) As of the date hereof, the Company does not have
actual knowledge that any improvements on the Owned Real Property do not conform
in any respect to applicable zoning and other land use ordinances and building
codes or are not in compliance with any applicable Laws except where the failure
to conform or comply would not have a Material Adverse Effect. As of the date
hereof, to the actual knowledge of the Company, there are no pending or any
threatened condemnation, eminent domain or similar proceeding with respect to
any of the Owned Real Property that would have a Material Adverse Effect.
Section 3.11. Real Property Leases.
(a) Schedule 3.11 contains an accurate and complete list
of all real property leased by any of the Neptune Companies (the "Scheduled
Leases"). The applicable Neptune Company holds good and valid leasehold title to
each of the properties which are the subject of the Scheduled Leases (the
"Leased Real Property"), in each case free of all Encumbrances, except for liens
created pursuant to the Senior Credit Facility and Permitted Encumbrances.
(b) Except as disclosed in Schedule 3.11, there are no
existing material defaults under any Scheduled Lease, and no event has occurred
which with notice or lapse of time, or both, would constitute a material event
of default under any Scheduled Lease.
20
(c) To the knowledge of the Company, no portion of the
Leased Real Property, or any building or improvement located thereon, violates,
in any material respect, any Law, including those Laws relating to zoning,
building, land use, environmental, health and safety, fire, air, sanitation and
noise control.
(d) The Owned Real Property and the Leased Real Property
constitute all of the material real property occupied or operated by the Neptune
Companies in the operation of their businesses.
Section 3.12. Intellectual Property.
(a) Schedule 3.12 lists all patents, patent applications,
registered trademarks, trademark applications, registered service marks, service
xxxx applications, trade names and registered copyrights which are material to
the business of the Neptune Companies taken as a whole (the "Intellectual
Property").
(b) The right, title or interest of the Neptune Companies
in each item of Intellectual Property is free and clear of Encumbrances, other
than liens created pursuant to the Senior Credit Facility, Permitted
Encumbrances and other Encumbrances not in excess of $1,000,000.
(c) To the knowledge of the Company, none of the Neptune
Companies has received written notice that is still pending to the effect that
any of the Neptune Companies has infringed any patent, trademark, service xxxx,
trade name, copyright, brand name, logo, symbol or other intellectual property
right of any third party and there is no action pending or, to the Company's
knowledge, threatened against any of the Neptune Companies claiming that any of
the Neptune Companies has infringed or misappropriated any Intellectual Property
of any third party, except in each case for matters which would not have a
material adverse effect on the use of such intellectual property by the Neptune
Companies or which could reasonably be expected to expose the Neptune Companies
to damages in excess of $1,000,000.
(d) The Neptune Companies have not notified in writing
any other Person that such Person is infringing any Intellectual Property,
except for matters which would not have a Material Adverse Effect.
(e) The Company has delivered to Purchaser a true and
complete copy of the Patent Assignment Agreement (the "Patent Agreement"), dated
as of September 26, 2003, among Schlumberger S.A. ("Assignor"), Schlumberger
Sema, Inc. and Neptune Technology Group Inc. ("Assignee"). On or prior to
October 3, 2003, Assignee paid Assignor $1,750,000 in accordance with Section
1.4 of the Patent Agreement.
Section 3.13. Labor Relations. Except as set forth on Schedule 3.13,
(a) no Neptune Company is a party to any collective bargaining agreement,
contract or legally binding commitment to any trade union or employee
organization or group in respect of or affecting employees; (b) no Neptune
Company is currently engaged in any negotiation with any trade union or employee
organization; (c) no Neptune Company has engaged in any unfair labor practice
within the meaning of the National Labor Relations Act, and, there is no pending
or, to the knowledge of the Company, threatened complaint regarding any alleged
unfair labor
21
practices as so defined; (d) there is no strike, labor dispute, work slow down
or stoppage pending or, to the knowledge of the Company, threatened against any
Neptune Company; (e) there is no grievance or arbitration proceeding arising out
of or under any collective bargaining agreement which is pending or, to the
knowledge of the Company, threatened against any Neptune Company; (f) no Neptune
Company has experienced any material work stoppage; and (g) no Neptune Company
is subject of any union organization effort.
Section 3.14. Employee Benefit Plans. As used in this Agreement, the
term "Employee Plan" means any pension, retirement, profit-sharing, deferred
compensation, stock purchase, stock option, bonus or incentive plan, any
medical, vision, dental or other health plan, any life insurance plan, vacation,
severance, disability or other employee benefit plan, program, policy, or
arrangement, whether written or unwritten, including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which any of the Neptune
Companies maintains or contributes to or for which any of the Neptune Companies
has any actual, contingent, primary or secondary liability. Except as set forth
in Schedule 3.14, no Neptune Company, or any entity which is considered to be
one company with any of such Companies pursuant to Section 1001 of ERISA or
Section 414 of the Internal Revenue Code of 1986, as amended (the "Code") (an
"ERISA Affiliate") has sponsored, maintained or had any obligation with respect
to any Employee Plan which is a defined benefit plan as defined in Section 3(35)
of ERISA, or contributed to, participated in or had any obligation with respect
to, any multiemployer plan within the meaning of Section 3(37) of ERISA. Each
Employee Plan that purports to be qualified under Section 401(a) of the Code and
any trust under any such Employee Plan that purports to be exempt from income
tax under Section 501(a) of the Code has received one or more favorable
determination letters from the U.S. internal revenue service to such effect or
there is currently pending a request for such determination letter, or the
deadline for filing a request for such determination letter has not yet expired.
To the knowledge of the Company, each Employee Plan intended to be qualified
under Section 401 of the Code has been administered in all material respects
according to its terms, and, to the knowledge of the Company, nothing has
occurred which would be reasonably likely to adversely affect its qualified
status or the qualified status of any related trust. The Employee Plans are in
compliance in all material respects with all other Laws (including, without
limitation, ERISA and the Code) applicable to Employee Plans. All material
reports and material disclosures relating to the Employee Plans required to be
filed with or furnished to any Governmental Entity have been filed or furnished
in a timely manner and in accordance with applicable Laws. With respect to any
Employee Plan, no prohibited transaction (within the meaning of Section 406 of
ERISA and/or Section 4975 of the Code) exists which could subject any of the
Neptune Companies or any "disqualified person" to any excise tax or penalty
pursuant to Section 502(1) of ERISA or under Section 4975 of the Code, except in
each case as have not resulted or would not result in damages to the Neptune
Companies in excess of $1,000,000. Each of the Neptune Companies has made full
and timely payment of all amounts which are required to be paid as contributions
to each Employee Plan that is an employee pension benefit plan (as defined in
Section 3(2) of ERISA). Each of the Neptune Companies has complied in all
material respects with the continuation coverage requirements of Part 6 of Title
I of ERISA, as amended. There is no contract, agreement, plan or arrangement
with any person which provides for any payment to any employee by any of the
Neptune Companies, which payment would not be deductible under Code Sections
162(m)(i) or 404 or would fail to be deductible by reason of Section 280G of the
Code.
22
Section 3.15. Certain Contracts. Except as set forth in Schedule 3.15,
none of the Neptune Companies is a party to, or bound by, nor are any of their
respective properties subject to, or bound by any contract, license, agreement,
commitment, arrangement, understanding, or other instrument (in each case
whether oral or written) relating to the following ("Company Contracts"):
(a) payments by or to any of the Neptune Companies of
more than $2,500,000 in any 12-month period (other than the Funded
Indebtedness);
(b) the employment of any officer or employee (other than
any contract which is terminable without liability upon notice of 90 days or
less), or any contract of employment with a former officer or employee, in each
case pursuant to which payments in excess of $125,000 in any 12-month period are
required to be made by any of the Neptune Companies after the date hereof;
(c) any outstanding indebtedness or guarantees for
borrowed money by any of the Neptune Companies, other than borrowings under the
Funded Indebtedness and borrowings not in excess of $1,000,000 in the Ordinary
Course;
(d) except for guarantees of obligations between or among
the Neptune Companies and except pursuant to the Funded Indebtedness, any
guarantee or other contingent liability in respect of any indebtedness or
obligation of any Person outside of the Ordinary Course;
(e) any collective bargaining agreement;
(f) any agreement prohibiting, partially restricting, or
otherwise limiting the ability of any Neptune Company to compete, solicit
customers, or otherwise conduct any business anywhere in the world;
(g) through the date hereof, capital expenditures other
than those forecasted in the current operating budget;
(h) any joint venture or partnership agreement providing
for the sharing of profits;
(i) any agreement requiring the consent of any party
thereto to the consummation of the transactions contemplated by this Agreement
where the failure to obtain such consent could cause a Material Adverse Effect;
(j) any executory agreement relating to the acquisition
or sale of any company, business, division, or other enterprise;
(k) any material agreement for the purchase and sale of
any goods or services at rates or terms which are materially different from
generally available rates or terms;
23
(l) any agreement that provides for an increased payment,
bonus or benefit, or accelerated vesting, upon the execution hereof or the
Closing or in connection with the transactions contemplated hereby;
(m) any agreement granting to any Person an option or a
first refusal, first-offer or similar preferential right to purchase or acquire
any assets of any of the Neptune Companies;
(n) any agreement with any agent, distributor or
representative that is not terminable without penalty on sixty (60) days' or
less notice; and
(o) any agreement providing for the indemnification or
holding harmless of any officer, director, manager employee or Seller.
True, correct and complete copies of all Company Contracts have been made
available to Purchaser. To the knowledge of the Company, there is no existing
material default or breach by any Neptune Company under any material Company
Contract (or event or condition that, with notice or lapse of time or both could
constitute a material default or material breach).
Section 3.16. Governmental Consents and Approvals. Except as set forth
in Schedule 3.16 or as may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976, as amended (the "HSR Act"), no filing with, or notice
to, and no permit, authorization, consent or approval of any Governmental Entity
is necessary for the execution and delivery by the Company of this Agreement or
the consummation of the transactions contemplated hereby, except where the
failure to obtain such permits, authorization, consents or approvals or to make
such filings or give such notice would not have a Material Adverse Effect.
Section 3.17. Litigation.
(a) Except as set forth in Schedule 3.17(a), there is no
suit, claim, action, proceeding or investigation pending or, to the knowledge of
the Company, threatened against any of the Neptune Companies or any of their
respective properties or assets before any Governmental Entity which could
reasonably be expected to expose the Neptune Companies to damages in excess of
$1,000,000. Except as set forth in Schedule 3.17(a), no Neptune Company is
subject to any writ, injunction or decree of any Governmental Entity.
(b) Except for the lawsuits listed on Schedule 3.17(b),
to the knowledge of the Company, no Neptune Company has been a party to any
suit, claim, action, proceeding or investigation relating to asbestos. Except as
may be otherwise specified in Schedule 3.17(b), each of the lawsuits listed on
Schedule 3.17(b) has been dismissed with respect to all of the Neptune
Companies.
Section 3.18. Environmental Matters. Except as set forth in Schedule
3.18, (a) each of the Neptune Companies is in compliance in all material
respects with all applicable Environmental Laws; (b) each of the Neptune
Companies has all of the material permits and material licenses required by all
applicable Environmental Laws; (c) none of the Neptune Companies is aware of any
proposed new requirements of any applicable Environmental Law which would
require the expenditure of more than $1,000,000 to bring any Neptune Company
24
into compliance with the new requirement; (d) none of the Neptune Companies is
subject to any notice of violation, enforcement proceeding, compliance order,
consent decree or injunction issued by any Governmental Entity relating to any
Environmental Law which could reasonably be expected to expose the Neptune
Companies to damages or require expenditure of more than $1,000,000; (e) none of
the Neptune Companies has been notified in writing that it may be a responsible
party or potentially responsible party under or in violation of or out of
compliance with any Environmental Law which could reasonably be expected to
expose the Neptune Companies to damages or require expenditure of more than
$1,000,000; (f) to the knowledge of the Company, there are no events or facts
that would cause any of the Neptune Companies to be such a responsible party or
potentially responsible party or in violation of or not in compliance with any
Environmental Law which could reasonably be expected to expose the Neptune
Companies to damages or require expenditure of more than $1,000,000; (g) to the
knowledge of the Company, no real property owned or operated by any of the
Neptune Companies is contaminated with any hazardous substance to an extent or
in a manner or condition now requiring remediation under any Environmental Law
which could reasonably be expected to expose the Neptune Companies to damages or
require expenditure of more than $1,000,000; and (h) none of the Neptune
Companies manufactures any product containing asbestos and none of the Neptune
Predecessor Entities has in the past manufactured any water meter or water meter
reading system containing asbestos. As used herein, "Environmental Laws" means
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. ss. 9601 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. ss. 6901, the Federal Water Pollution Control Act, 33 U.S.C. ss. 1201,
the Clean Water Act, 33 U.S.C. ss. 1321, the Clean Air Act, 42 U.S.C. ss. 7401
and the Toxic Substances Control Act, 15 U.S.C. ss. 2601, in each case, as
amended from time to time, or any other enforceable federal, state, local or
foreign law, ordinance, regulation or rule dealing with the protection of
natural resources or the environment or public health and safety.
Section 3.19. Insurance. Schedule 3.19 lists all currently effective
material insurance policies or binders of insurance which relate to the business
of the Neptune Companies (excluding insurance funded Employee Plans).
Section 3.20. Finders. Except as set forth on Schedule 3.20, no Neptune
Company will be obligated to pay any fee or commission to any broker, finder or
similar intermediary for or on account of the transactions contemplated by this
Agreement.
Section 3.21. Title to Assets. Except as set forth on Schedule 3.21,
the Neptune Companies have good title to all of their respective property and
assets that are material to the Neptune Companies taken as a whole, free and
clear of all Encumbrances except Permitted Encumbrances.
Section 3.22. Transactions with Affiliates. Except as set forth on
Schedule 3.22 or on Exhibit A hereto, no officer or director of any Neptune
Company, no Person with whom any such officer or director has any direct or
indirect relation by blood, marriage or adoption, no entity in which any such
officer, director or Person owns any beneficial interest (other than a publicly
held corporation whose stock is traded on a national securities exchange or in
the over-the counter market and less than five percent of the stock of which is
beneficially owned by all such officers, directors and Persons in the
aggregate), no Affiliate of any of the foregoing, no
25
current or former Affiliate of any Neptune Company, and no Seller has any
interest in: (a) any contract, arrangement or understanding with, or relating
to, any Neptune Company or the properties or assets of any Neptune Company; (b)
any loan, arrangement, understanding, agreement or contract for or relating to
any Neptune Company or the properties or assets of any Neptune Company; or (c)
any property (real, personal or mixed), tangible or intangible, used or
currently intended to be used by any Neptune Company. Schedule 3.22 also sets
forth a complete list as of the date hereof, of all accounts receivable, notes
receivable and other receivables and accounts payable owed to or due from any
Affiliate (other than a Subsidiary) of any Neptune Company.
Section 3.23. Notes. All notes receivable (the "Shareholder Loans") of
any of the Neptune Companies owing by any director, officer or employee of any
Neptune Company or any Seller has been paid in full prior to the date hereof or
shall have been paid as of the Closing. Schedule 3.23 sets forth a complete list
of all Shareholder Loans and the outstanding balance and applicable interest
rate under each Shareholder Loan as of the date hereof.
Section 3.24. Product and Service Warranties. To the knowledge of the
Company, there are no facts or circumstances that would cause any of the Neptune
Companies to be subject to any extraordinary product recall or warranty exposure
in excess of the aggregate net amount reserved for warranty expenses on the
Company's consolidated balance sheet as of August 31, 2003 plus $3,000,000.
Section 3.25. Closing Date Transaction Expense Statement. The Closing
Date Transaction Expense Statement shall be true and accurate.
ARTICLE IV
INDIVIDUAL
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
AND THE CONVERTIBLE PREFERRED STOCKHOLDERS
Section 4.1. Representations of Convertible Preferred Stockholders.
Each Convertible Preferred Stockholder severally (as to himself, herself or
itself and not as to any other Convertible Preferred Stockholder) hereby
represents and warrants to Purchaser as follows:
(a) Each Convertible Preferred Stockholder has full legal
right, power, capacity and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby and, for Convertible
Preferred Stockholders other than natural persons, such Convertible Preferred
Stockholder is duly organized, validly existing and in good standing (to the
extent applicable) under the laws of its jurisdiction of organization and has
taken all corporate action necessary to authorize the execution, delivery and
performance by such Convertible Preferred Stockholder of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly authorized, executed and delivered by such Convertible Preferred
Stockholder and constitutes a valid and legally binding obligation of such
Convertible Preferred Stockholder enforceable against such Convertible Preferred
Stockholder in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors'
26
rights generally, and (ii) is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
(b) Each Convertible Preferred Stockholder has good title
to the aggregate number and class of shares of capital stock of the Company
listed beside its name on Exhibit A and such shares are the only shares of
capital stock of the Company owned by such Convertible Preferred Stockholder.
Except for this Agreement and the transactions contemplated hereby, and except
as provided in the Certificate of Designation and the Preferred Stock
Registration Rights Agreement entered into in connection with the
Recapitalization, there are no agreements, arrangements, warrants, options,
puts, calls, or other rights, of any character to which such Convertible
Preferred Stockholder is a party or by which any shares of capital stock of the
Company or options convertible into capital stock of the Company owned by such
Convertible Preferred Stockholder are bound relating to the issuance, sale,
purchase, redemption, conversion, exchange, registration, voting or transfer of
any such shares or options, other than those which, pursuant to their terms,
will terminate immediately on the Closing Date. As of the Closing Date, the
shares of Class B Common Stock, if any, to be sold by the Convertible Preferred
Stockholder will be transferred to Purchaser free of any preemptive or
subscription rights and free and clear of all Encumbrances (other than those
contained in the Charter, including the Certificate of Designation, and other
than such limitations as may be imposed by federal and state securities laws).
Section 4.2. Representations of Sellers. Each Seller severally (as to
himself, herself or itself and not as to any other Seller) hereby represents and
warrants to Purchaser as follows:
(a) Each Seller has full legal right, power, capacity and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and, for Sellers other than natural persons,
such Seller is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has taken all corporate action
necessary to authorize the execution, delivery and performance by such Seller of
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by such Seller
and constitutes a valid and legally binding obligation of such Seller
enforceable against such Seller in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights
generally, and (ii) is subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
(b) Each Seller has good title to the aggregate number
and class of shares of capital stock of the Company or options convertible into
capital stock of the Company listed beside its name on Exhibit A and such shares
or options are the only shares of capital stock of the Company or options
convertible into capital stock of the Company owned by such Seller. Except for
this Agreement and the transactions contemplated hereby, and except as provided
in the Certificate of Designation and the Registration Rights Agreement, dated
March 26, 2003, there are no agreements, arrangements, warrants, options, puts,
calls, or other rights, of any character to which such Seller is a party or by
which any shares of capital stock of the Company or options convertible into
capital stock of the Company owned by such Seller are bound relating to the
issuance, sale, purchase, redemption, conversion, exchange, registration, voting
or transfer
27
of any such shares or options, other than those which, pursuant to their terms,
will terminate immediately on the Closing Date. As of the Closing Date, the
shares or options to be sold by the Seller will be transferred to Purchaser free
of any preemptive or subscription rights and free and clear of all Encumbrances
(other than those contained in the Charter, including the Certificate of
Designation, and other than such limitations as may be imposed by federal and
state securities laws).
(c) The execution, delivery and performance by Seller of
this Agreement and the consummation by Seller of the transactions contemplated
hereby do not or shall not (as the case may be), and with the passing of time or
the giving of notice or both do not or shall not:
(i) violate, conflict with, result with the
giving of notice or lapse of time or both in a breach of the terms,
conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, amendment,
termination or cancellation or a loss of rights under, or result in the
creation or imposition of any Encumbrance upon, any of the assets or
properties of such Seller or any of the Neptune Companies, any articles
of organization, bylaws, trust agreement, partnership agreement or
certificate of partnership or other constitutive documents of such
Seller, or, except as would not prevent or materially delay the
consummation of the transactions contemplated hereby, any note,
instrument, agreement, mortgage, lease, license, franchise,
Governmental Permit or judgment, order, award or decree to which such
Seller is a party or by which the Seller is bound, or any Law affecting
such Seller; or
(ii) except for compliance with the HSR Act,
require the approval, consent, authorization or act of, or the making
by such Seller of any declaration, filing or registration with, any
Governmental Entity or other Person.
(d) Except as set forth in Schedule 3.20, Seller has not
made any arrangement which would obligate Purchaser or the Company to pay any
fee or commission (or reimburse expenses) to any broker, finder or similar
intermediary for or on account of the transactions contemplated by this
Agreement.
(e) Except as set forth on Schedule 3.23 or Exhibit A
hereto, no Seller (nor any Affiliate thereof) has any contract, arrangement,
agreement or contract with any of the Neptune Companies.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company, the Sellers
and the Convertible Preferred Stockholders as follows:
Section 5.1. Organization. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Purchaser has delivered to the Company true and
correct copies of its certificate of incorporation and bylaws as in effect on
the date hereof and as proposed to be in effect immediately prior to the Closing
Date.
28
Section 5.2. Authority Relative to this Agreement. Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Purchaser and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by all
necessary corporate action and no other corporate proceedings on the part of
Purchaser are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes a valid and binding
agreement of Purchaser, enforceable against it in accordance with its terms,
except that such enforceability (a) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally, and (b) is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
Section 5.3. Noncontravention. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
(a) conflict with or result in any violation of any provision of the articles of
incorporation or bylaws (or equivalent governing instruments) of Purchaser or
any of its Subsidiaries, (b) except as set forth on Schedule 5.3, require any
consent, approval or notice under, or conflict with or result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any contracts of Purchaser
or any of its Subsidiaries or (c) subject to the approvals, filings and consents
referred to in Section 5.4, violate any legal requirements applicable to
Purchaser or any of its Subsidiaries, except, in the case of clauses (b) and
(c), with respect to matters that would not impair the ability of Purchaser to
perform its obligations under this Agreement in any material respect or
otherwise delay in any material respect or prevent the consummation of any of
the transactions contemplated by this Agreement.
Section 5.4. Governmental Consents. No consent, approval or
authorization of, or declaration or filing with, any Governmental Entity on the
part of Purchaser or any of its Subsidiaries that has not been obtained or made
is required in connection with the execution or delivery by Purchaser of this
Agreement or the consummation by Purchaser of the transactions contemplated
hereby, other than (a) compliance with the notification and waiting period
requirements of the HSR Act, (b) such filings as may be required by any
applicable state securities or "blue sky" laws or state takeover laws, and (c)
consents, approvals, authorizations, declarations or filings that, if not
obtained or made, would not impair the ability of Purchaser to perform its
obligations under this Agreement in any material respect or otherwise delay in
any material respect or prevent the consummation of any of the transactions
contemplated hereby.
Section 5.5. Investment Intent. Purchaser is purchasing the shares of
capital stock of the Company pursuant to Article II solely for its own account
and with no intention of distributing or reselling such shares or any part
thereof, or interest therein, in any transaction that would be in violation of
the Securities Act of 1933, as amended (the "Securities Act"), or any other
securities laws of the United States of America or any state thereof.
Section 5.6. Status as Accredited Investor. Purchaser is an "accredited
investor" (as that term is defined in Rule 501 of Regulation D under the
Securities Act). Purchaser has such knowledge and experience in business and
financial matters so that Purchaser is capable of
29
evaluating the merits and risks of an investment in the shares being acquired
hereunder. Purchaser understands the full nature and risk of an investment in
such shares. Purchaser further acknowledges that it has had access to the books
and records of the Company, is generally familiar with the business being
conducted by the Company and has had an opportunity to ask questions concerning
the Company and the Company's securities.
Section 5.7. Financial Capability; Solvency.
(a) Purchaser has entered into the Commitment Letter for
the purpose of ensuring that it has, immediately prior to the Closing, funds
sufficient to consummate the transactions contemplated hereby. The Commitment
Letter is in full force and effect. Purchaser acknowledges and agrees that its
obligations to consummate the transactions contemplated hereby are not
contingent upon its ability to obtain any third party financing.
(b) Immediately following the Closing, the Company will
be Solvent. For purposes of this Agreement, "Solvent" when used with respect to
the Company, means that, immediately following the Closing Date, (i) the amount
of the Present Fair Salable Value of its assets will, as of such date, exceed
all of its liabilities, contingent or otherwise, as of such date, (ii) the
Company will not have, as of such date, an unreasonably small amount of capital
for the business in which it is engaged or will be engaged and (iii) the Company
will be able to pay its Debts as they become absolute and mature, taking into
account the timing of and amounts of cash to be received by it and the timing of
and amounts of cash to be payable on or in respect of its indebtedness. The term
"Solvency" shall have its correlative meaning. For purposes of the definition of
"Solvent," (A) "Debt" means liability on a "Claim;" and (B) "Claim" means (i)
any right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (ii) the right to an
equitable remedy for breach on performance if such breach gives rise to a right
to payment, whether or not such equitable remedy is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured. "Present Fair Salable Value"
means the amount that may be realized if the aggregate assets of the Company
(including goodwill) are sold as an entirety with reasonable promptness in an
arms length transaction under present conditions for the sale of comparable
business enterprises.
Section 5.8. No Outside Reliance. Purchaser has not relied on nor is it
relying on any statement, representation or warranty concerning the Company, any
of its Subsidiaries or the Sellers or the Convertible Preferred Stockholders
other than those expressly made in this Agreement.
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1. Conduct of Business of the Neptune Companies. For the
period commencing on the date hereof and ending on the Closing Date, except as
expressly contemplated by this Agreement, or set forth in Schedule 6.1, or
otherwise consented to in
30
advance in writing by Purchaser (which consent shall not be unreasonably
withheld), the Company hereby agrees that:
(a) None of the Neptune Companies shall:
(i) amend its articles of incorporation or
bylaws or other organizational documents;
(ii) issue, authorize for issue, transfer, sell
or deliver any shares of its capital stock (or options or other
securities convertible into or exchangeable or exercisable for, with or
without additional consideration, such capital stock) or any other
interest therein, except in connection with the exercise of Options or
conversion of Convertible Preferred Stock;
(iii) split, combine or reclassify any shares of
its capital stock or declare, set aside or pay any dividends or make
any other distributions (whether in cash, stock or other property) in
respect of such shares, except for dividends and distributions payable
by a Subsidiary of the Company to another Subsidiary of the Company
(except DAP) or to the Company;
(iv) redeem, purchase or otherwise acquire for
any consideration any outstanding shares of its capital stock or
securities carrying the right to acquire or which are convertible into
or exchangeable or exercisable for, with or without additional
consideration, such capital stock, except the redemption or repurchase
of shares of Class A Stock from employees in connection with the
termination of such employee's employment (in which event, the Company
and the Sellers will prior to the Closing Date amend Exhibit A to
reflect such redemption or repurchase);
(v) incur any indebtedness for borrowed money,
except borrowings under the Funded Indebtedness and other borrowings
not in excess of $1,000,000;
(vi) create any Subsidiary or make any
acquisition or disposition of stock or other securities or assets of
any Person except acquisitions or dispositions of inventory and
equipment in the Ordinary Course;
(vii) merge or consolidate with any corporation or
other entity;
(viii) (A) create, grant, assume or suffer to be
incurred any Encumbrance of any kind on any of its properties or assets
other than liens created pursuant to the Senior Credit Facility and
Permitted Encumbrances and other Encumbrances not to exceed $1,000,000,
(B) incur any liability or obligation (absolute, accrued or
contingent), except liabilities and obligations incurred in the
Ordinary Course and other liabilities and obligations not in excess of
$1,000,000, (C) make any commitment for any capital expenditure to be
made on or following the date hereof other than capital expenditures
that are not materially in excess of those forecasted in the Company's
current operating budget;
31
(ix) enter into, amend, supplement or modify any
agreement material to the Neptune Companies taken as a whole except in
the Ordinary Course;
(x) other than in the Ordinary Course, dispose
of or permit to lapse any right to the use of any patent, trademark,
trade name, service xxxx, license or copyright of any Neptune Company
which is material to the business of the Neptune Companies taken as a
whole (including any of the Intellectual Property), or dispose of or
disclose to any Person, any material trade secret, formula, process,
technology or know-how of any Neptune Company not heretofore a matter
of public knowledge;
(xi) increase in any manner the base compensation
of, or enter into any new bonus or incentive agreement or arrangement
with, any of its Affiliates, employees, officers, directors or
consultants, except in the Ordinary Course of business consistent with
past practice;
(xii) adopt, amend or terminate any Employee Plan
or increase the benefits provided under any Employee Plan, or promise
or commit to undertake any of the foregoing in the future or enter into
any new collective bargaining agreement;
(xiii) make any payment with respect to any portion
of the Funded Indebtedness other than payments required to be made
pursuant to the terms of the Funded Indebtedness, in which case such
required payment will be the minimum amount required to be paid
pursuant thereto;
(xiv) make any payment or distribution to any
Seller or any Affiliate of any Seller other than (A) payments or
distributions required to be made pursuant to any contract, license,
agreement, commitment, arrangement, understanding or other instrument
disclosed in Schedule 3.22 of this Agreement and made in the Ordinary
Course and (B) payments or distributions in respect of salary, benefits
and other compensation paid or provided in the Ordinary Course to Class
A Stockholders who are employees of a Neptune Company in their capacity
as such employees; or
(xv) commit, authorize or agree to do or do, as
applicable, any of the foregoing; and
(b) Each of the Neptune Companies shall:
(i) conduct its business in the Ordinary Course;
(ii) use its commercially reasonable efforts to
preserve intact the goodwill and business organization of each Neptune
Company, keep the officers and employees of each Neptune Company
available to Purchaser and preserve the relationships and goodwill of
each Neptune Company with customers, distributors, suppliers, employees
and other Persons having business relations with any Neptune Company;
32
(iii) maintain its existence and good standing in
its jurisdiction of organization and in each jurisdiction in which the
ownership or leasing of its property or the conduct of its business
requires such qualification; and
(iv) duly and timely, including applicable
extensions, file or cause to be filed all material reports and returns
required to be filed with any Governmental Entity and promptly pay or
cause to be paid when due, including applicable extensions, all Taxes,
assessments and governmental charges, including interest and penalties
levied or assessed, unless contested in good faith by appropriate
proceedings.
In connection with the continued operation of the Neptune Companies
during the period commencing on the date hereof and ending on the Closing Date,
the Company shall confer, and shall cause the Neptune Companies to confer, in
good faith on a regular and frequent basis with Purchaser regarding operational
matters and the general status of on-going operations of the Neptune Companies
to the extent reasonably requested by Purchaser. Each Seller hereby acknowledges
that Purchaser does not and shall not waive any right it may have hereunder as a
result of such consultations.
Section 6.2. Confidentiality. Any information provided to Purchaser or
its representatives pursuant to this Agreement shall be held by Purchaser and
its representatives in accordance with, and shall be subject to the terms of,
the Confidentiality Agreement dated February 1, 2003 by and between Purchaser
and III. Notwithstanding any conditions of confidentiality imposed by this
Agreement or such Confidentiality Agreement, the parties (and each employee,
representative, or other agent of the parties) may disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure of
the transactions contemplated herein and all materials of any kind (including
opinions or other tax analyses) provided to such party relating to such tax
treatment and tax structure; provided, however, that no party (and no employee,
representative, or other agent thereof) shall disclose any information that is
not necessary to understanding the tax treatment and tax structure (as such
terms are used in Sections 6011 and 6112 of the Code and the regulations
thereunder) of the transactions contemplated herein (including the identity of
the parties, any information that could lead another to determine the identity
of the parties, any pricing or financial information (except to the extent such
pricing or financial information is related to the transaction's tax treatment
or tax structure), any other term or detail not relevant to the transaction's
tax treatment or the tax structure, or any other information to the extent that
such disclosure could result in a violation of any federal or state securities
law). The foregoing is not intended to waive the attorney-client privilege or
other privileges, including the tax advisor privilege under Section 7525 of the
Code.
Section 6.3. Certain Efforts. Each of the parties hereto shall use his,
her or its reasonable best efforts to perform such party's obligations hereunder
and to take, or cause to be taken, or do, or cause to be done, all things
necessary, proper, or advisable under applicable Law to obtain all regulatory
approvals and to cause the transactions contemplated hereby to be completed in
accordance with the terms hereof and shall cooperate fully with each other party
and their respective officers, directors, employees, agents, counsel,
accountants, and other designees in connection with any steps required to be
taken as a part of their respective obligations under this Agreement, including
without limitation:
33
(a) Promptly upon execution and delivery of this
Agreement, each of Purchaser, the Company and the Sellers will use their
reasonable best efforts to prepare and file as promptly as possible, or cause to
be prepared and filed, with the appropriate Governmental Entity, a notification
with respect to the transactions contemplated by this Agreement pursuant to the
HSR Act, supply all information requested by such Governmental Entity in
connection with the HSR Act notification and cooperate with each other in
responding to any such request. Each of the parties shall cooperate with each
other in promptly filing any other necessary applications, reports or other
documents with any Governmental Entity having jurisdiction with respect to this
Agreement and the transactions contemplated hereby, and in seeking necessary
consultation with and prompt favorable action by such Governmental Entity.
Notwithstanding any provision of this Agreement to the contrary, Purchaser shall
not be required under the terms of this Agreement to dispose of or hold separate
all or any portion of the businesses or assets of Purchaser or any of its
Affiliates or any of the Neptune Companies in order to remedy or otherwise
address the concerns (whether or not formally expressed) of any Governmental
Entity under the HSR Act or any other antitrust statute or regulation.
(b) In the event any claim, action, suit, investigation,
or other proceeding by any Governmental Entity or other Person is commenced
which questions the validity or legality of the transactions contemplated hereby
or seeks damages in connection therewith, the parties agree to cooperate and use
all reasonable efforts to defend against such claim, action, suit,
investigation, or other proceeding and, if an injunction or other order is
issued in any such action, suit, or other proceeding, to use all reasonable
efforts to have such injunction or other order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the
transactions contemplated hereby; and
(c) Each party shall give prompt written notice to the
others of (i) the occurrence, or failure to occur, of any event which occurrence
or failure would be likely to cause any representation or warranty of such party
contained in this Agreement or any agreement or document contemplated hereby to
be untrue or inaccurate at any time from the date hereof until the Closing or
that will or may result in the failure to satisfy any of the conditions
specified in Articles VII and VIII and (ii) any failure of any party hereto to
comply with or satisfy any covenant, condition, or agreement to be complied with
or satisfied by it hereunder. No such notification shall limit or otherwise
affect the terms of this Agreement or the Schedules delivered by the parties
pursuant to this Agreement on the date hereof.
(d) The Company will use its reasonable best efforts to
obtain, prior to the Closing Date, shareholder approval meeting the requirements
of Section 280G(b)(5) of the Code and Treasury Regulations Section 1.280G-1 (as
if such Treasury Regulations were effective prior to January 1, 2004) with
respect to the acceleration of the vesting of the Options (as contemplated by
this Agreement). Within a reasonable period of time prior to seeking such
shareholder approval, the Company will deliver to Purchaser and its counsel a
copy of (i) the consent form on which such approval will be obtained and (ii)
the disclosure statement that will accompany such form.
Section 6.4. No Public Announcement. Prior to the Closing Date, neither
Purchaser, the Company nor any Seller shall, without the approval of Purchaser
and the Company (which shall not be unreasonably withheld), make any press
release or other public announcement to the
34
financial community, government agencies or the general public concerning the
transactions contemplated by this Agreement, except as and to the extent that
any such party shall be so obligated by Law or applicable rules of the New York
Stock Exchange, in which case Purchaser and the Company shall be advised, and
Purchaser and the Company shall use their reasonable efforts to give the other
party the advance opportunity to review and comment on such release or
announcement.
Section 6.5. Directors' and Officers' Indemnification.
(a) Purchaser agrees that (i) the certificate of
incorporation or the bylaws of the Company and its Subsidiaries immediately
after the Closing shall contain provisions with respect to indemnification and
exculpation from liability that are at least as favorable to the beneficiaries
of such provisions as those provisions that are set forth in the certificate of
incorporation and bylaws of the Company and its Subsidiaries, respectively, on
the date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years following the Closing in any manner
that would adversely affect the rights thereunder of Persons who at or prior to
the Closing were directors, officers, employees or agents of the Company or any
of its Subsidiaries, unless such modification is required by law and (ii) all
rights to indemnification as provided in any indemnification agreements with any
current or former directors, officers and employees of the Company or any of its
Subsidiaries as in effect as of the date hereof with respect to matters
occurring at or prior to the Closing shall survive the Closing.
(b) The parties agree that the Company (or a third party
at the direction of the Company) will pay an amount sufficient to enable the
Company to purchase "tail" coverage for a period of three years following the
Closing Date (or such longer period, up to a maximum of six years after the
Closing Date as shall be requested in writing by the Company to Purchaser at
least five (5) Business Days prior to the Closing Date) under the directors and
officers liability insurance policy of the Company, as in effect on the Closing
Date.
(c) In the event Purchaser or the Company or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, Purchaser shall use its reasonable best
efforts to ensure that proper provisions shall be made so that the successors
and assigns of Purchaser or the Company (as applicable) assume the obligations
set forth in this Section 6.5.
(d) This Section 6.5, which shall survive the Closing and
shall continue for the periods specified herein, is intended to benefit any
Person or entity referenced in this Section 6.5 or indemnified hereunder, each
of whom may enforce the provisions of this Section 6.5 (whether or not parties
to this Agreement).
(e) Notwithstanding any provision in this Agreement or
the insurance policies contemplated by this Section 6.5, no provision or
indemnification right in such insurance policies shall limit in any way the
right of any Purchaser Indemnified Party or the obligation of any Seller
pursuant to Article X of this Agreement.
35
Section 6.6. Investigation of the Company by Purchaser. From the date
hereof until Closing or termination of this Agreement pursuant to Article IX
hereof, which ever occurs earlier, upon reasonable advance notice, the Company
shall afford to the officers and authorized representatives of Purchaser
(including, without limitation, independent public accountants and attorneys)
reasonable access during normal business hours to the offices, properties,
senior management, and business and financial records (including Tax Returns
filed and those in preparation) of the Neptune Companies, and shall furnish to
Purchaser or its authorized representatives such additional information
concerning the Neptune Companies and their respective properties, assets,
businesses and operations as shall be reasonably requested. Nothing in this
Section shall be interpreted so as to grant Purchaser the right to perform
invasive or subsurface investigations of the properties or locations of any of
the Neptune Companies.
Section 6.7. No Solicitation; Acquisition Proposals. The Company and
each of the Sellers agree that from the date hereof through the Closing Date or
the date of termination of this Agreement in accordance with Article IX, as the
case may be, neither the Company nor any Seller will, directly or indirectly,
through any officer, director, employee, leased employee, partner, stockholder,
agent, or Affiliate or otherwise, except in furtherance of the transactions
contemplated by this Agreement (a) solicit, initiate, or encourage submission of
proposals or offers from any Person relating to any transactions contemplated
herein or to the direct or indirect purchase of a material amount of the assets
of, or any equity interest in, or any merger, consolidation, or business
combination with, any Neptune Company (collectively, an "Acquisition Proposal"),
(b) participate in any discussions or negotiations regarding, or furnish to any
other Person any information with respect to, or otherwise cooperate in any way
with or assist, facilitate, or encourage, any Acquisition Proposal by any
Person, (c) enter into any agreement, arrangement, or understanding with respect
to an Acquisition Proposal, or (d) sell, transfer, or otherwise dispose of, or
enter into any agreement, arrangement, or understanding with respect to, any
interest in the assets, capital stock or other equity interests of any Neptune
Company.
Section 6.8. Registration Statement on Form S-3. As promptly as
reasonably practible but not later than November 14, 2003, Purchaser will
prepare and file with the Securities and Exchange Commission a registration
statement on Form S-3 or any other similar form (the "Registration Statement")
registering debt and equity securities, which may be sold by Purchaser from time
to time, and Purchaser will use its commercially reasonable efforts to cause
such Registration Statement to be declared effective as promptly as possible
after filing.
Section 6.9. Employee Benefit Plans.
(a) Prior to the Closing Date, the Neptune Companies
shall make all required contributions and pay all premiums required under each
Employee Plan, including any employer matching and profit sharing contributions,
and periodic premium payments for retired employee health benefits. Purchaser
acknowledges that, on and after the Closing, the Neptune Companies shall remain
liable for all accumulated postretirement benefit obligations of the Neptune
Companies under Financial Accounting Standard No. 106.
(b) Prior to the Closing Date, the Neptune Companies
shall take all action required (i) to make any amendments to the Employee Plans
required to comply with applicable
36
Law for periods on or before the Closing Date; (ii) to provide pro rata matching
and non-elective contributions from January 1, 2004, to the Closing Date for
each Employee Plan that is a pension plan as defined in ERISA Section 3(2)
("Employee Pension Plan"); and (iii) to file or furnish all documentation
related to the Employee Plans that are required to be filed with or furnished to
any Governmental Entity to comply with applicable Laws for periods on or before
the Closing Date. Prior to the Closing Date, the Neptune Companies shall provide
to Purchaser all documentation reasonably requested by Purchaser related to all
Employee Pension Plans. After the Closing, Purchaser agrees to assume
sponsorship of the Employee Pension Plans sponsored by the Neptune Companies in
accordance with their respective terms.
(c) With respect to employees of the Neptune Companies
(and their dependents and beneficiaries where appropriate), Purchaser shall as
of the Closing: (i) provide coverage under its employee benefit plans that is no
less favorable than the plans it makes available to other similar employees of
Purchaser including Group RRSP or other retiree arrangements for DAP employees;
(ii) recognize such employees' employment service with the Neptune Companies
(including credit for service with predecessor employers as currently recognized
under the applicable Neptune Company plan) for participation, vesting and
benefit eligibility purposes under any employee benefit plan Purchaser may
provide to such employees; (iii) not require such employees, in the plan year in
which the Closing occurs, to satisfy any deductible, co-payment, out of pocket
maximum or similar requirements under Purchaser's plans to the extent of amounts
previously credited for such purposes under the applicable Neptune Company plan,
but, if the Closing occurs after January 1, 2004, Purchaser will credit such
employees with payments toward the deductible, co-payment and out-of-pocket
maximum of Purchaser's plan provided that such employee provides Purchaser with
documentation that is reasonably satisfactory to Purchaser; (iv) not apply to
such employees any waiting periods, pre-existing condition exclusions and
requirements to show evidence of good health contained in Purchaser's plans
under the definitions of the Health Insurance Portability and Accountability Act
of 1996; and (v) honor in full all accrued vacation not taken for the calendar
year in which the Closing occurs.
(d) The Neptune Companies shall be permitted to pay its
respective employees bonuses with respect to the calendar year 2003 in the
Ordinary Course upon prior written consent of Purchaser, which consent shall not
be unreasonably withheld. In the event such bonuses become payable after the
Closing, Purchaser shall cause the Neptune Companies to pay such bonuses.
Section 6.10. Interim Financials; Cooperation with Financing. During
the period prior to the Closing Date, the Company shall provide to Purchaser
consolidated monthly balance sheets, statements of operations, stockholders'
equity (deficiency), and cash flow within twenty (20) Business Days after the
end of each month. Further, the Company shall, and shall cause the other Neptune
Companies to, cooperate in connection with the arrangement of Purchaser's
financing including, without limitation, (a) cooperating with Purchaser to
provide the banks and other institutions arranging or providing Purchaser's
financing all information (financial and other) with respect to the Neptune
Companies and the transactions contemplated by this Agreement reasonably
requested by Purchaser, (b) causing the Company's senior officers and other
Company representatives to be available to Purchaser and the banks and other
institutions arranging or providing Purchaser's financing to participate in due
diligence sessions and to
37
participate in presentations related to any transaction comprising Purchaser's
financing, including "road show" presentations to rating agencies, potential
lenders and other investors, (c) assisting in the preparation of one or more
appropriate offering documents and assisting Purchaser and the banks and other
institutions arranging or providing Purchaser's financing in preparing other
appropriate marketing materials, in each case to be used in connection with such
financing, and (d) requesting the Company's independent auditors to prepare and
deliver "comfort letters", dated the date of each offering document used in
connection with any transaction comprising Purchaser's financing (with
appropriate bring down comfort letters delivered on the closing date for each
financing), in compliance with professional standards.
Section 6.11. Charter and Stockholder Agreement. The Sellers shall, and
shall cause the Neptune Companies to, take all appropriate steps to terminate
the Stockholder Agreement, which termination shall be effective as of the
Closing and to amend the Certificate of Designation to the effect attached
hereto as Exhibit 6.11. Each Seller hereby agrees to waive (and agrees to cause
the Company to waive) any rights of first refusal or other rights to acquire,
bid for or otherwise purchase any Class A Common Stock, Class B Common Stock,
Class D Common Stock, Convertible Preferred Stock or Options or approve the
transactions contemplated by this Agreement, as the case may be.
Section 6.12. DAP. Prior to the Closing, the Company or one of its
direct or indirect Subsidiaries shall take all actions necessary in order to
purchase and/or cancel (the "DAP Option Purchase") all of the options
outstanding as of the date hereof (the "DAP Options") to purchase shares of DAP
from the holders of such options. The DAP Option Purchase shall be effected
solely through a cash payment to be made on or before the Closing Date and
pursuant to documents which are reasonably satisfactory to Purchaser.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions:
Section 7.1. No Misrepresentation or Breach of Covenants and
Warranties.
(a) The Company shall have performed in all material
respects all agreements required to be performed by it at or prior to Closing.
(b) (i) The representations and warranties of the
Company, the Sellers and the Convertible Preferred Stockholders contained in
Sections 3.2(a), 3.3, 3.4, 3.7(b), 3.18(h), 3.20, 4.1(a), 4.1(b), 4.2(a), 4.2(b)
and 4.2(d) shall be true and correct as of the date hereof and shall be true and
correct as of the Closing Date as though made on and as of the Closing Date and
(ii) the remaining representations and warranties of the Company and the Sellers
contained in Article III and Article IV shall have been true and correct as of
the date hereof and shall be true and correct as of the Closing Date as though
made on and as of the Closing Date (except for representations and warranties
that speak as of a specific date prior to the Closing Date which need only be
true
38
and correct as of such earlier date); provided, however, that the condition in
this Section 7.1(b)(ii) shall be deemed satisfied unless any and all
inaccuracies in such representations and warranties, in the aggregate, result in
a Material Adverse Effect (ignoring for the purposes of this Section 7.1(b)(ii)
any qualifications by Material Adverse Effect or otherwise by material adversity
and any materiality qualification or words of similar import contained in such
representations or warranties). Notwithstanding anything herein to the contrary,
the representation and warranty contained in Section 3.7(b) shall be deemed to
be true and accurate as of the date hereof and as of the Closing Date so long as
the calculations reflected in the Funds Flow Statement accurately take into
consideration the full amount of the Funded Indebtedness as of the Settlement
Date.
(c) Each Seller shall have performed in all material
respects all agreements required to be performed by such Seller at or prior to
Closing.
(d) The Purchaser shall have received a certificate
executed by the Company and the Sellers as to compliance with this Section 7.1.
Section 7.2. Resignations of Directors. The Company shall have
furnished Purchaser with signed resignations, effective as of the Closing, of
each director of each Neptune Company, other than those directors of the Neptune
Companies identified at least two (2) Business Days prior to the Closing as
Persons whose resignations are not required by Purchaser.
Section 7.3. Litigation.
(a) As of the Closing Date, there shall be no Law,
injunction, writ, preliminary restraining order, restraining order or decree of
any nature of any court or other Governmental Entity of competent jurisdiction
that is in effect that restrains or prohibits the consummation of the
transactions or other material obligations of the parties hereto as contemplated
hereby; and
(b) No proceeding or lawsuit shall have been commenced
before any court or other Governmental Entity for the purpose of obtaining such
injunction, writ, preliminary restraining order, restraining order or decree;
provided that this condition set forth in this Section 7.3(b) shall be deemed
satisfied unless proceeding with the Closing is likely to result in a Material
Adverse Effect.
Section 7.4. Governmental Approvals. The filing and waiting period
requirements of the HSR Act shall have been complied with to the extent
applicable. Similarly, the filing and waiting period requirements (and, if
required, governmental approvals) under the Laws of Canada and Mexico shall have
been complied with (or obtained) to the extent applicable. All other required
authorizations, consents and approvals of (or filings with) any Governmental
Entity shall have been obtained or made except for those authorizations,
consents and approvals which if not obtained would not have a Material Adverse
Effect.
Section 7.5. No Material Adverse Effect. The Neptune Companies shall
not have suffered a Material Adverse Effect or any development likely to result
in a Material Adverse Effect from the date of this Agreement through the Closing
Date. Purchaser shall have received a certificate executed by the Company as to
compliance with this Section 7.5.
39
Section 7.6. Closing Date Payoff Letters; Release of Liens. The Company
shall have delivered to Purchaser:
(a) evidence reasonably satisfactory to Purchaser of the
aggregate amount that would have been necessary to prepay in full the Funded
Indebtedness as of the Settlement Date;
(b) evidence reasonably satisfactory to Purchaser of the
aggregate amount of principal outstanding and interest accrued under the Senior
Credit Facility, the Subordinated Notes and the Supplemental Debt through the
Closing Date; and
(c) (i) a payoff letter from the administrative agent for
the lenders party to the Senior Credit Facility which includes (A) the aggregate
amount outstanding of indebtedness under the Senior Credit Facility on the
Closing Date (including any interest accrued thereon, any prepayment premiums
and penalties and any accrued fees and expenses associated with the prepayment
of the Senior Credit Facility, in each case, outstanding as of and payable on
the Closing Date) and (B) an agreement that, if such aggregate amount so
identified is paid to the administrative agent, on the Closing Date, the
administrative agent on behalf of the lenders, will release any and all
Encumbrances granted to the lenders under the Senior Credit Facility and will
take all actions reasonably requested to evidence such release and (ii) upon
satisfaction of the relevant requirements set forth in the Indenture related to
the Subordinated Notes, an instrument from the trustee under the Indenture
acknowledging satisfaction and discharge of the Indenture, on the terms set
forth in Section 8.03 of the Indenture; provided that, acceptance by Purchaser
of such payoff letter and instrument on the Closing Date shall evidence
satisfaction of the condition set forth in this Section 7.6(b).
Section 7.7. Closing Date Transaction Expense Statement. The Company
shall have delivered to Purchaser a statement from the Company (executed by the
President and the Chief Financial Officer of the Company) (the "Closing Date
Transaction Expense Statement") which sets forth, by payee, the amount of
Transaction Payments which have been or will be made to any Person by the
Company after the Settlement Date and which further specifically sets forth (i)
the aggregate amount of such portion of the Transaction Payments which have been
or will be paid to such Person after the Settlement Date but prior to the
Closing Date and (ii) the aggregate amount of such portion of the Transaction
Payments which are to be paid to such Person on the Closing Date. In addition to
the Closing Date Transaction Expense Statement, the Company shall have delivered
to Purchaser documents which confirm to the reasonable satisfaction of Purchaser
that upon payment of the respective amounts specified in such Statement, each
Person that is to be paid in accordance with such Statement shall have been paid
in full by the Neptune Companies and the Sellers for all services rendered and
expenses incurred, to or on behalf of the Neptune Companies, on or prior to the
Closing Date.
Section 7.8. Stockholder Agreement. All necessary actions shall have
been taken by the Sellers to terminate the Stockholder Agreement as of the
Closing.
Section 7.9. Redemption. The Convertible Preferred Stock shall be
redeemed concurrently with the Closing in accordance with Section 2.3(a)(i) of
this Agreement to the extent required pursuant to the Certificate of
Designation.
40
Section 7.10. Stock and Option Certificates. In accordance with Section
2.3(b) of this Agreement, the Sellers and the Company shall have delivered to
Purchaser (a) stock certificates representing all of the issued and outstanding
shares of Class A Common Stock, Class B Common Stock and Class D Common Stock
and Convertible Preferred Stock (including the Convertible Preferred Stock to be
redeemed on the Closing Date in accordance with the Certificate of Designation)
and accompanying stock powers duly executed by the applicable Seller, evidencing
the transfer of such shares to Purchaser or the Company, as applicable, and (b)
documentation reasonably satisfactory to Purchaser that all of the outstanding
Options shall be terminated as of the Closing.
Section 7.11. General. All corporate proceedings required to be taken
on the part of any Neptune Company in connection with the transactions
contemplated by this Agreement shall have been taken. Purchaser shall have
received copies of such customary good standing certificates and incumbency
certificates in connection with the transactions contemplated hereby.
Section 7.12. FIRPTA Affidavit. The Company shall have delivered to
Purchaser an affidavit (which shall be signed under penalties of perjury, dated
as of the Closing Date, and in form and substance required by Treasury
Regulation ss. 1.897-2(h) so that Purchaser shall be exempt from withholding any
portion of the Purchase Price under Section 1445 of the Code) stating that the
Company is not and has not been during the period specified in Section
897(c)(1)(A)(ii) of the Code a United States real property holding corporation.
Section 7.13. Closing Date Exhibit A. The Company shall have delivered
to Purchaser a final form of Exhibit A which is certified by the Company and the
Sellers as being true and correct as of the Closing Date (the "Closing Date
Exhibit A").
Section 7.14. Funds Flow Statement. The Company shall have delivered to
Purchaser a statement (the "Funds Flow Statement") setting forth (i) the
calculation of the Fully Diluted Number and the Per Share Amount and (ii) the
amount of each payment to be made pursuant to Sections 2.3 and 2.5. The Funds
Flow Statement shall be accompanied by acknowledgements signed by each Seller,
Convertible Preferred Stockholder, Option Holder and Xxxxxx Xxxxxx in the form
of Exhibit 7.14.
Section 7.15. DAP. The Company or one of its direct or indirect
Subsidiaries shall have consummated the DAP Option Purchase and provided
reasonably satisfactory evidence of such to Purchaser.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY, THE SELLERS AND THE CONVERTIBLE PREFERRED STOCKHOLDERS
The obligations of the Company, the Sellers and the Convertible
Preferred Stockholders to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions:
41
Section 8.1. No Misrepresentation or Breach of Covenants and
Warranties.
(a) Purchaser shall have performed in all material
respects all agreements required to be performed by it at or prior to Closing;
and
(b) each of the representations and warranties of
Purchaser contained in Article V of this Agreement shall be true and correct in
all material respects on the Closing Date as though made on the Closing Date.
Section 8.2. Litigation.
(a) As of the Closing Date, there shall be no Law,
injunction, writ, preliminary restraining order, restraining order or decree of
any nature of any court or other Governmental Entity of competent jurisdiction
that is in effect that restrains or prohibits the consummation of the
transactions or other material obligations of the parties hereto as contemplated
hereby; and
(b) No proceeding or lawsuit shall have been commenced
before any court or other Governmental Entity for the purpose of obtaining such
injunction, writ, preliminary restraining order, restraining order or decree;
provided that this condition set forth in this Section 8.2(b) shall be deemed
satisfied unless proceeding with the Closing is likely to result in a Material
Adverse Effect.
Section 8.3. Governmental Approvals. The filing and waiting period
requirements of the HSR Act shall have been complied with to the extent
applicable. Similarly, the filing and waiting period requirements (and, if
required, governmental approvals) under the Laws of Canada and Mexico shall have
been complied with (or obtained) to the extent applicable. All other required
authorizations, consents and approvals of (or filings with) any Governmental
Entity shall have been obtained or made except for those authorizations,
consents and approvals which if not obtained would not have a Material Adverse
Effect.
ARTICLE IX
TERMINATION
Section 9.1. Termination. This Agreement may be terminated and the
transaction contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) by written consent of Purchaser and the Company (on
behalf of itself, the Sellers and the Convertible Preferred Stockholders);
(b) by Purchaser or the Company (on behalf of itself, the
Sellers and the Convertible Preferred Stockholders) if:
(i) any court or other Governmental Entity of
competent jurisdiction shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting
such transaction and such order, decree, ruling or other action shall
have become final and nonappealable; or
42
(ii) the Closing shall not have occurred on or
prior to February 27, 2004; provided, however, that the right to
terminate the Agreement under this Section 9.1(b)(ii) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or before such date;
(c) by Purchaser in the event of a material breach by the
Company or the Sellers of this Agreement which has not been cured within 30 days
after the giving of written notice to the Company or which is incapable of being
cured prior to February 27, 2004;
(d) by the Company (on behalf of itself, the Sellers and
the Convertible Preferred Stockholders) in the event of a material breach by
Purchaser of this Agreement, which has not been cured within 30 days after the
giving of written notice to Purchaser or which is incapable of being cured prior
to February 27, 2004; or
(e) by the Company (on behalf of itself, the Sellers and
the Convertible Preferred Stockholders) in the event the Effective Date has not
occurred on or prior to February 1, 2004.
(f) No party may terminate this Agreement pursuant to
Sections 9.1(b), (c), or (d) if the failure of the condition (or failure of the
condition to be reasonably capable of being satisfied within the applicable time
period) giving rise to the right to terminate results from the breach by such
party of any of its obligations in this Agreement. If this Agreement is
terminated pursuant to this Section 9, all obligations of the parties under this
Agreement shall be terminated without liability or penalty on the part of any
party or its officers, directors or shareholders to any other party; provided,
however, that no such termination shall relieve any party from liability for
damages resulting from any breach by such party of this Agreement or otherwise
limit any remedy available to a party or parties on account of any such breach.
ARTICLE X
INDEMNIFICATION
Section 10.1. Article III Indemnification Obligations. Each Seller
shall, pro rata according to each Seller's Seller's Percentage, indemnify,
defend and hold harmless Purchaser and its Affiliates, each of their respective
officers, directors, employees, agents and representatives and each of the
heirs, executors, successors and assigns of any of the foregoing (the "Purchaser
Indemnified Parties") from, against, and in respect of, any and all claims,
liabilities, obligations, damages, losses, costs, expenses, penalties, fines and
judgments (at equity or at law, including statutory and common) and damages
whenever arising or incurred (including amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to any breach or inaccuracy of any representation or warranty made by
any Seller or the Company in Sections 3.3, 3.4 and 3.7(b) of this Agreement.
Section 10.2. Article IV Indemnification Obligations. Each Seller and
each Convertible Preferred Stockholder shall severally indemnify, defend and
hold harmless the Purchaser Indemnified Parties from, against, and in respect
of, any and all claims, liabilities, obligations,
43
damages, losses, costs, expenses, penalties, fines and judgments (at equity or
at law, including statutory and common) and damages whenever arising or incurred
(including amounts paid in settlement, costs of investigation and reasonable
attorneys' fees and expenses) arising out of or relating to any breach or
inaccuracy of any representation or warranty made by such Seller or such
Convertible Preferred Stockholder in Sections 4.1(a), 4.1(b), 4.2(a) or 4.2(b),
as applicable, of this Agreement.
Section 10.3. Claims Period. All claims by any Purchaser Indemnified
Party pursuant to Section 10.1 and Section 10.2 must be made on or before the
first anniversary of the Closing Date.
Section 10.4. Limitations. Notwithstanding anything in this Article X,
the aggregate amount of indemnification obligations with respect to any Seller
or Convertible Preferred Stockholder shall be limited to the amount such Seller
or Convertible Preferred Stockholder receives as payment pursuant to Sections
2.3(a)(i) through 2.3(a)(iv), as applicable.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Amendment and Modification. This Agreement may be amended
only by a written agreement signed by Purchaser, the Sellers and the Company, as
well as any Convertible Preferred Stockholder adversely affected by such
amendment, at any time prior to the Closing Date with respect to any of the
terms contained herein.
Section 11.2. Non-Survival of Representations and Warranties. Except
for the representations and warranties in Sections 3.3, 3.4, 3.7(b), 4.1(a),
4.1(b), 4.2(a) and 4.2(b) of this Agreement, which shall survive for a period of
one year following the Closing Date, the respective representations and
warranties of Purchaser, the Convertible Preferred Stockholders and the Company
contained in Articles III, IV and V of this Agreement shall terminate at, and
not survive, the Closing.
Section 11.3. Partial Invalidity. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in the case that any provision contained herein shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision or provisions had never been contained herein
unless the deletion of such provision or provisions would result in such a
material change as to cause completion of the transactions contemplated hereby
to be unreasonable.
Section 11.4. Execution in Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties and delivered to each of the Company and Purchaser.
44
Section 11.5. Assignment; Successors and Assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other parties except that Purchaser may, without the obligation to obtain the
prior written consent of any other party, assign this Agreement or all or any
part of its rights or obligations hereunder to one (1) or more direct or
indirect wholly-owned subsidiaries of Purchaser (in all or any of which cases
Purchaser shall remain responsible for the performance of all of its obligations
under this Agreement). Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors or permitted assigns, heirs, legatees, distributees, executors,
administrators and guardians.
Section 11.6. Titles and Headings. Titles and headings to sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement. Unless
otherwise specified herein, all references to Articles, Sections, Exhibits and
Schedules shall refer to the Articles, Sections, Exhibits and Schedules,
respectively, of this Agreement. Unless this Agreement states otherwise, all
references to dollars in this Agreement shall refer to United States dollars.
Section 11.7. Schedules and Exhibits. The schedules and exhibits
referred to in this Agreement shall be construed with and as an integral part of
this Agreement to the same extent as if the same had been set forth verbatim
herein. Except as expressly set forth herein, disclosure of any fact or item in
any schedule hereto shall, to the extent reasonably apparent by cross-reference
from the face of such schedule and relevant to any other schedule or schedules,
be deemed to be disclosed in such other schedule or schedules, notwithstanding
the lack of a specific cross-reference.
Section 11.8. Knowledge. In each provision of this Agreement in which a
representation or warranty is qualified to the "knowledge" of a Person or to the
"best of the knowledge" of a person, unless otherwise stated in such provision,
each such phrase means that the Person does not have actual knowledge after due
investigation thereof of any state of facts which is different from the facts
described in the warranty or representation. With respect to the Company, such
knowledge shall refer solely to the "knowledge" of one or more of the Persons
identified in Schedule 11.8. In Article III of this Agreement where a
representation or warranty is qualified to the "actual knowledge" of a Person
each such phrase means that the Person does not have actual knowledge of any
state of facts which is different from the facts described in the warranty or
representation. With respect to the Company, such actual knowledge shall refer
solely to the "actual knowledge" of one or more of those Persons identified in
Schedule 11.8.
Section 11.9. Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof, in each case in writing. The failure of any
party hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
45
Section 11.10. Waiver of Jury Trial. Each party acknowledges and agrees
that any controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this Agreement or the transactions contemplated hereby. Each party
certifies and acknowledges that (i) no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each
party understands and has considered the implications of this waiver, (iii) each
party makes this waiver voluntarily, and (iv) each party has been induced to
enter into this agreement by, among other things, the mutual waivers and
certifications in this Section 11.10.
Section 11.11. Expenses. In accordance with Section 2.5(b), to the
extent applicable, the Company will pay all costs and expenses incurred by the
Company or the Sellers in connection with the transactions contemplated by this
Agreement (including, without limitation, attorneys', accountants', brokers',
finders', and investment banking fees and expenses). Purchaser shall bear all
such costs and expenses incurred by Purchaser in connection with the
transactions contemplated by this Agreement. The fees and expenses related to
any filing made pursuant to the HSR Act shall be paid one half by Purchaser and
one half by the Company.
Section 11.12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given (a) upon receipt
if given by delivery in Person; or (b) on the next business day when sent by
overnight courier service, to the parties at the following addresses (or such
other address for a party as shall be specified by like notice):
If to Purchaser, to:
Xxxxx Industries, Inc.
0000 Xxxxxxxxx Xxxx.
Xxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxx X'Xxxxx
Xxxxxxx X. Xxxxx
with a copy to:
King & Spalding LLP
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
If to the Company, to:
Neptune Technology Group Holdings Inc.
c/o Neptune Technology Group Inc.
0000 Xxxxxxx Xxxxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx XxXxxxx (if prior to the Closing Date)
Xxxxx Xxxxxxxxx (if after the Closing Date)
46
with a copy to:
Investcorp International, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxxx
and
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: E. Xxxxxxx Xxxxxxx
If to the Sellers or the Convertible Preferred Stockholders, to:
the addresses set forth on Exhibit A hereto;
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: E. Xxxxxxx Xxxxxxx
Section 11.13. Entire Agreement. This Agreement (including the exhibits
and other documents referred to herein) and the Confidentiality Agreement embody
the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and thereof and supersede all prior agreements and
understandings, both written and oral, among the parties, or between any of
them, with respect to the subject matter hereof and thereof.
Section 11.14. No Third Party Beneficiaries. Except as expressly
provided in Section 6.5, this Agreement is not intended to, and does not, create
any rights or benefits of any party other than the parties hereto.
Section 11.15. Governing Law; Jurisdiction; Forum. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without regard to principles of conflicts or choice of laws. Any case,
proceeding or action concerning any dispute arising out of or relating to this
Agreement must be brought in a court situated in the State of Delaware, and each
party hereto consents and submits to the jurisdiction of any state or federal
court sitting in the State of Delaware for any such case, proceeding or action.
Each party hereto waives any objection to the laying of venue in such courts and
any claim that any such action has been brought in an inconvenient forum. To the
extent permitted by law, any judgment in respect of a dispute arising out of or
relating to this Agreement may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified copy of such
judgment being conclusive evidence of the fact and amount of such judgment.
47
Section 11.16. No Implied Representations. Notwithstanding any other
provision of this Agreement, Purchaser acknowledges and agrees that neither the
Company, the Sellers, nor any other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding the Company and its Subsidiaries except as expressly set
forth in this Agreement, and Purchaser is not relying on any information
concerning the Company and its Subsidiaries except as so expressly set forth in
this Agreement. Without limiting the foregoing, it is further expressly
understood and agreed that any projections or estimates that may have been
furnished to the Purchaser or its Affiliates or advisors are not and shall not
be deemed to be representations or warranties of the Company or any other
Person.
[Signature Pages Immediately Follow]
48
A-2
IN WITNESS WHEREOF, each of the parties has caused this Stock Purchase
Agreement to be duly executed as of the day and year first above written.
NEPTUNE TECHNOLOGY GROUP HOLDINGS INC.
By: /s/ Xxxxxxx X. XxXxxxx
----------------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: President
XXXXX INDUSTRIES, INC.
By: /s/ C. T. X'Xxxxx
----------------------------------------
Name: C. T. X'Xxxxx
Title: VP, Mergers & Acquisitions
(signatures continue on next page)
[Signature page to Stock Purchase Agreement]
CLASS A SELLERS:
ANDALUSIA LIMITED
By: /s/ Xxxxx Xxxxx
------------------------------
Name: Martonmere Services Ltd.
Title: Director
CLAIBORNE LIMITED
By: /s/ Xxxxx Xxxxx
------------------------------
Name: Martonmere Services Ltd.
Title: Director
FOSTERS LIMITED
By: /s/ Xxxxx Xxxxx
------------------------------
Name: Martonmere Services Ltd.
Title: Director
XXXXXXXX LIMITED
By: /s/ Xxxxx Xxxxx
------------------------------
Name: Martonmere Services Ltd.
Title: Director
INVESTCORP NEPTUNE LIMITED
PARTNERSHIP
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Meter International
Limited
Title: Sole General Partner
EQUITY NEA LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
METER EQUITY LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
METER HOLDINGS LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
METER INVESTMENTS LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
NEPTUNE EQUITY LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
NEPTUNE IIP LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
[Signature page to Stock Purchase Agreement]
NEPTUNE INTERNATIONAL LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
TRIDENT EQUITY LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
WATER EQUITY LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
WATER HOLDINGS LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
WATER INVESTMENTS LIMITED
By: /s/ Sydney X. Xxxxxxx
------------------------------
Name: The Director Ltd.
Title: Director
(signatures continue on next page)
[Signature page to Stock Purchase Agreement]
/s/ Xxxxxxx X. XxXxxxx
------------------------------
XXXXXXX X. XXXXXXX
/s/ Xxx Xxxxxx Breeding
------------------------------
XXX XXXXXX BREEDING
/s/ Xxxxxx X. Xxxxxxx
------------------------------
XXXXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxx
------------------------------
XXXX X. XXXXXX
/s/ Xxxxxxx Xxxxxxx
------------------------------
XXXXXXX XXXXXXX
/s/ Xxxxx Xxxxxxxx
------------------------------
XXXXX XXXXXXXX
/s/ Xxxxx X. Xxxxxx
------------------------------
XXXXX X. XXXXXX
[Signature page to Stock Purchase Agreement]
/s/ Xxxxxxxx X. Xxxxx
------------------------------
XXXXXXXX X. XXXXX
/s/ Xxxxx X. Xxxxxxx
------------------------------
XXXXX X. XXXXXXX
(signatures continue on next page)
[Signature page to Stock Purchase Agreement]
CLASS D SELLERS:
INVESTCORP INVESTMENT EQUITY LIMITED
By:/s/ Sydney X. Xxxxxxx
--------------------------------------------
Name: The Director Ltd.
Title: Director
BALLET LIMITED
By: /s/ Xxxxx Xxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxx
Title: Authorized Representative
DENARY LIMITED
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Authorized Representative
GLEAM LIMITED
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Authorized Representative
HIGHLANDS LIMITED
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Authorized Representative
NOBLE LIMITED
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Authorized Representative
[Signature page to Stock Purchase Agreement]
OUTRIGGER LIMITED
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Authorized Representative
QUILL LIMITED
By: /s/ Xxxxx X'Xxxx
-------------------------------------------
Name: Xxxxx X'Xxxx
Title: Authorized Representative
RADIAL LIMITED
By: /s/ Xxxx Xxx
-------------------------------------------
Name: Xxxx Xxx
Title: Authorized Representative
SHORELINE LIMITED
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Authorized Representative
ZINNIA LIMITED
By: /s/ Xxxxx Xxxxxxxxxxx
-------------------------------------------
Name: Harin Wijeyerante
Title: Authorized Representative
(signatures on next page)
[Signature page to Stock Purchase Agreement]
CONVERTIBLE PREFERRED STOCKHOLDERS:
DLJ INVESTMENT PARTNERS II, L.P.
By: DLJ Investment Partners II, Inc.,
its Managing General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Principal
DLJ INVESTMENT PARTNERS, L.P.
By: DLJ Investment Partners II, Inc.,
its Managing General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Principal
DLJIP II HOLDINGS, L.P.
By: DLJ Investment Partners II, Inc.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Principal
(signatures continue on next page)
YORK STREET MEZZANINE PARTNERS, L.P.
By: York Street Capital Partners, L.L.C.,
its general partner
By: /s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: MD
(signatures continue on next page)
964536 ONTARIO LIMITED
By: /s/ J. Xxxx XxxXxxxxx
-------------------------------------------
Name: J. Xxxx XxxXxxxxx
Title: Authorized Signatory
(signatures continue on next page)
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ Xxxxx Xxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxx
Title: Director