ACQUISITION AGREEMENT
AND
PLAN OF MERGER
by and among
MAIL-WELL INC.,
a Colorado corporation,
MAIL-WELL I CORPORATION,
a Delaware corporation,
XXXXXX PRINTING, CO.,
a Texas corporation
and
XXXXXXX X. X. XXXX,
the sole shareholder of Xxxxxx Printing, Co.
May 15, 1998
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 - PRINCIPAL TERMS OF THE MERGER. . . . . . . . . . . . . . . . . . 1
1.1 Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 No Further Rights of Transfer. . . . . . . . . . . . . . . . . . 2
1.3 Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . 3
1.4 [Intentionally omitted.] . . . . . . . . . . . . . . . . . . . . 3
1.5 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Surrender of Certificates. . . . . . . . . . . . . . . . . . . . 4
1.7 Working Capital Settlement . . . . . . . . . . . . . . . . . . . 5
1.8 Additional Post-Closing Adjustments. . . . . . . . . . . . . . . 7
1.9 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.10 MW Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . 9
1.11 Investment Letter. . . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
SHAREHOLDER. . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.1 Organization, Standing, Corporate Authorization,
and Enforceability . . . . . . . . . . . . . . . . . . . . . . .11
2.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . .12
2.3 Articles of Incorporation and Bylaws; Certain Records. . . . . .13
2.4 Compliance with Other Instruments and Laws . . . . . . . . . . .13
2.5 Governmental Authorizations; Consents. . . . . . . . . . . . . .13
2.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2.7 Financial Statements; Conduct of the Business;
No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . .14
2.8 Absence of Certain Changes or Events . . . . . . . . . . . . . .14
2.9 Title to Property, Absence of Liens and Encumbrances . . . . . .16
2.10 Full Authority; Compliance with Laws . . . . . . . . . . . . . .17
2.11 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . .18
2.12 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
2.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
2.14 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
2.15 Environmental Quality. . . . . . . . . . . . . . . . . . . . . .24
2.16 Intellectual Property. . . . . . . . . . . . . . . . . . . . . .25
2.17 Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . .25
2.18 Related Party Transactions . . . . . . . . . . . . . . . . . . .25
2.19 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . .26
2.20 Customers and Vendors. . . . . . . . . . . . . . . . . . . . . .26
2.21 Other Disclosures. . . . . . . . . . . . . . . . . . . . . . . .27
2.22 Parachute Payments . . . . . . . . . . . . . . . . . . . . . . .27
2.23 Product Warranty and Liability.. . . . . . . . . . . . . . . . .27
2.24 Accuracy . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
2.25 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . .28
-i-
ARTICLE 3 - ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER . . . .28
3.1 Ownership of Shares. . . . . . . . . . . . . . . . . . . . . . .28
3.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . .28
3.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT . . . . .28
4.1 Organization and Standing of Purchaser . . . . . . . . . . . . .28
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . .29
4.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . .29
4.4 Compliance with Other Instruments and Laws . . . . . . . . . . .29
4.5 Governmental Authorizations, Consents. . . . . . . . . . . . . .29
4.6 MW Common Stock. . . . . . . . . . . . . . . . . . . . . . . . .29
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . .29
4.8 Securities Act of 1933 . . . . . . . . . . . . . . . . . . . . .30
4.9 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . .30
4.10 Purchaser's Knowledge. . . . . . . . . . . . . . . . . . . . . .30
4.11 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . .30
4.12 Accuracy . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
4.13 Investigation. . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE 5 - COVENANTS OF THE COMPANY AND SHAREHOLDER . . . . . . . . . . . .31
5.1 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . .31
5.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
5.3 No Solicitation or Negotiation . . . . . . . . . . . . . . . . .33
5.4 Filings and Consents . . . . . . . . . . . . . . . . . . . . . .33
5.5 Updated Disclosure Schedules . . . . . . . . . . . . . . . . . .34
ARTICLE 6 - COVENANTS OF PARENT AND PURCHASER. . . . . . . . . . . . . . . .34
6.1 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . .34
6.2 Filings and Consents . . . . . . . . . . . . . . . . . . . . . .34
6.3 Filing of Final Tax Returns. . . . . . . . . . . . . . . . . . .35
ARTICLE 7 - COVENANTS OF ALL PARTIES . . . . . . . . . . . . . . . . . . . .35
7.1 Commercially Reasonable Efforts; Further Assurances. . . . . . .35
7.2 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . .36
7.3 Certain Filings, Etc . . . . . . . . . . . . . . . . . . . . . .36
7.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . .36
7.5 Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE 8 - CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE . . . . . . . . .37
8.1 Accuracy of Representations and Warranties . . . . . . . . . . .37
8.2 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . .37
8.3 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . .37
-ii-
8.4 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . .37
8.5 Debt Certificates and Payoff Letters.. . . . . . . . . . . . . .37
8.6 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . .37
8.7 No Material Adverse Effect . . . . . . . . . . . . . . . . . . .37
8.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
8.9 Shareholder Representation and Affiliate Letter. . . . . . . . .38
8.10 Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . .38
8.11 Certificate of Secretary . . . . . . . . . . . . . . . . . . . .38
8.12 Escrow Agreements. . . . . . . . . . . . . . . . . . . . . . . .38
8.13 Non-Compete Agreements . . . . . . . . . . . . . . . . . . . . .38
8.14 UCC-3s . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
8.15 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
8.16 Accounting, Tax Matters. . . . . . . . . . . . . . . . . . . . .38
8.17 Real Estate Purchases. . . . . . . . . . . . . . . . . . . . . .38
8.18 No Discovery . . . . . . . . . . . . . . . . . . . . . . . . . .38
8.19 Documentation. . . . . . . . . . . . . . . . . . . . . . . . . .38
8.20 Approval of Purchaser's Board. . . . . . . . . . . . . . . . . .39
ARTICLE 9 - CONDITIONS TO OBLIGATIONS OF THE COMPANY TO CLOSE. . . . . . . .39
9.1 Accuracy of Representations and Warranties . . . . . . . . . . .39
9.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . .39
9.3 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . .39
9.4 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . .39
9.5 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . .39
9.6 Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . .39
9.7 Escrow Agreements. . . . . . . . . . . . . . . . . . . . . . . .39
9.8 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
9.9 Documentation. . . . . . . . . . . . . . . . . . . . . . . . . .40
9.10 Material Adverse Effect. . . . . . . . . . . . . . . . . . . . .40
ARTICLE 10 - TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . .40
10.1 Right to Terminate Agreement . . . . . . . . . . . . . . . . . .40
10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . .40
ARTICLE 11 - CERTAIN REMEDIES AND LIMITATIONS. . . . . . . . . . . . . . . .41
11.1 Survival of Representations, Warranties and Covenants. . . . . .41
11.2 Indemnification by Shareholder . . . . . . . . . . . . . . . . .41
11.3 Limitations on Representations, Warranties and
Liabilities of Shareholder . . . . . . . . . . . . . . . . . . .43
11.4 Indemnification by Parent and Purchaser. . . . . . . . . . . . .43
11.5 Limitations on Liability of Purchaser. . . . . . . . . . . . . .44
11.6 Indemnification Claims . . . . . . . . . . . . . . . . . . . . .44
11.7 Defense of Third Party Actions . . . . . . . . . . . . . . . . .45
11.8 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . .46
11.9 Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . .46
11.10 Retention of Records . . . . . . . . . . . . . . . . . . . . . .47
-iii-
ARTICLE 12 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .47
12.1 Certain Definitions. . . . . . . . . . . . . . . . . . . . . . .47
12.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
12.3 Notices; Etc . . . . . . . . . . . . . . . . . . . . . . . . . .48
12.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . .49
12.5 Entire Agreement; Amendment; Governing Law; Etc. . . . . . . . .49
12.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . .49
12.7 Third Party Rights . . . . . . . . . . . . . . . . . . . . . . .49
12.8 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . .50
12.9 Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
12.10 Authority and Execution. . . . . . . . . . . . . . . . . . . . .50
12.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . .50
12.12 Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . .50
12.13 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . .50
12.14 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . .50
Exhibit A Certificate of Merger
Exhibit B Escrow Agreement
Exhibit C Affiliate Letter
Exhibit D Legal Opinion of Company's Counsel
Exhibit E Non-Compete Agreement
Exhibit F Legal Opinion of Purchaser's Counsel
-iv-
ACQUISITION AGREEMENT AND PLAN OF MERGER
THIS ACQUISITION AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of May 15, 1998, by and among MAIL-WELL, INC., a Colorado
corporation ("Parent"), MAIL-WELL I CORPORATION, a Delaware corporation
("Mail-Well" or "Purchaser"), and XXXXXX PRINTING, CO., a Texas corporation
(the "Company"), and XXXXXXX X. X. XXXX, the sole shareholder of the Company
("Shareholder").
WITNESSETH:
WHEREAS the Company is engaged in the commercial printing business (the
"Business");
WHEREAS, the respective Boards of Directors of Parent, Mail-Well, and the
Company have approved the acquisition of the Company by Mail-Well;
WHEREAS, to complete such acquisition the respective Boards of Directors of
Parent, Mail-Well and the Company have approved the merger of the Company with
and into Mail-Well (the "Merger"), pursuant to and subject to the terms and
conditions of this Agreement;
WHEREAS, the Directors of the Company have unanimously determined that the
Merger is fair to and in the best interests of its Shareholder, approved the
Merger and this Agreement and the transactions contemplated hereby, and
recommended the approval of the Merger and approval and adoption of this
Agreement by Shareholder; and
WHEREAS, the Merger is intended to be accounted for as a pooling of
interests.
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein and of the mutual benefits to be derived herefrom,
the Company, Parent and Purchaser hereby agree as follows:
ARTICLE 1
PRINCIPAL TERMS OF THE MERGER
1.1 PLAN OF MERGER. Subject to the terms and conditions of this
Agreement, the Merger will be carried out in the following manner:
(a) The Company, Parent and Purchaser will cooperate and use their
respective best efforts to consummate the transactions contemplated by this
Agreement.
(b) Subject to the provisions of this Agreement, a Certificate of
Merger, substantially in the form of EXHIBIT A, shall be duly executed and, on
the Closing Date (as defined in Section 1.5 hereof), or as soon thereafter as
reasonably practicable, filed with the Delaware Secretary of State in accordance
with the General Corporation Law of the State of Delaware (the "DGCL"). In
addition, Articles of Merger shall be duly prepared, executed and acknowledged
by
the Company in accordance with the Texas Business Corporation Act (the "TBCA")
and shall be filed on the Closing Date with the Texas Secretary of State. The
Merger shall become effective at the date and time set forth in the Certificate
of Merger and the Articles of Merger (the "Effective Time").
(c) At the Effective Time, the Company shall merge with and into
Mail-Well, the separate existence of the Company shall cease, and Mail-Well
shall continue as the surviving corporation. (Mail-Well, in its capacity as the
corporation surviving the Merger, is hereinafter sometimes referred to as the
"Surviving Corporation.")
(d) From and after the Effective Time, the Merger shall have the
effects set forth in Section 259 of the DGCL and Article 5.06 of the TBCA.
(e) The "Merger Consideration" which shall be paid by Parent and
Purchaser in the Merger, to be paid to Shareholder, shall be equal to (i)
$11,387,000 less (ii) the amount of Debt as defined in Section 1.5; less (iii)
the amount of unpaid Company Expenses, as defined in Section 12.2; plus or minus
(iv) the adjustment under Section 1.7(b) hereof. The Merger Consideration shall
be paid in duly authorized, validly issued, fully paid and nonassessable Parent
common stock ("MW Common Stock") valued at $43.93 per share (the "MW Common
Stock Valuation"), which MW Common Stock shall be issued of record on the
Closing Date on the Parent's (and its transfer agent's) books.
(f) In the event of any stock split, combination, reclassification
or stock dividend with respect to MW Common Stock, any change or conversion of
MW Common Stock into other securities or any other dividend or distribution with
respect to MW Common Stock (other than quarterly cash dividends issued in the
ordinary course consistent with past practice), including without limitation,
any distribution by Parent of shares of capital stock of any of its Affiliates
(as defined in Section 2.18), or if a record date with respect to any of the
foregoing should occur, prior to the Effective Time, appropriate adjustments
shall be made to the MW Common Stock Valuation, and thereafter all references in
this Agreement to the MW Common Stock Valuation shall be deemed to be the MW
Common Stock Valuation as so adjusted.
(g) At the Effective Time and subject to the terms of this
Agreement, each share of common stock, par value $10.00 per share, of the
Company (the "Common Stock") then issued and outstanding (other than any shares
of Common Stock which are held in the treasury of the Company (the "Treasury
Shares") shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into and represent the right to receive a pro
rata share of the Merger Consideration ("Pro Rata Share") which shall be equal
to the fraction obtained by dividing one by the total number of shares of Common
Stock outstanding at the Effective Time (other than the Treasury Shares).
1.2 NO FURTHER RIGHTS OF TRANSFER. At and after the Effective Time,
each holder of a certificate for Common Stock (a "Certificate") shall cease to
have any rights as a shareholder, except for the right to surrender his or her
Certificate (other than Certificates representing Treasury Shares) in exchange
for payment of the Merger Consideration deliverable in respect
2
thereof, and no transfer of shares of Common Stock shall be made on the stock
transfer books of the Company. Certificates presented to the Surviving
Corporation after the Effective Time shall be canceled and exchanged for MW
Common Stock and cash as provided in this Article I. At the close of business
on the day of the Effective Time, the stock ledger of the Company with respect
to Common Stock shall be closed.
1.3 SURVIVING CORPORATION. The Certificate of Incorporation of
Mail-Well, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation. The Bylaws of
Mail-Well, as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation. At the Effective Time, the directors and
officers of Mail-Well immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Certificate of
Incorporation and Bylaws of the Surviving Corporation, until the next annual
shareholder's meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified.
1.4 [INTENTIONALLY OMITTED.]
1.5 THE CLOSING. The closing of the transactions contemplated by this
Article 1 (the "Closing") shall be held at the offices of Rothgerber Xxxxxxx &
Xxxxx LLP in Denver, Colorado at 9:00 a.m. (local time) on May 29, 1998, or at
such other place, time and date as may be jointly designated by Purchaser, the
Company and Shareholder (the date on which the Closing takes place, the "Closing
Date"). At or before the Closing, each of the following shall occur:
(a) As soon as practicable but no later than four business days
before the scheduled Closing Date, the Company shall deliver to Purchaser (i) a
certificate (the "Debt Certificate") executed by the president of the Company
setting forth the amount of the outstanding principal balance and the interest
of any kind, as well as the amount of early retirement or prepayment fees and/or
penalties of any kind (the "Prepayment Fees") that will be due and payable as of
the Closing Date by the Company pursuant to any Debt that will be outstanding as
of the Closing Date to each creditor to whom any such Debt is owed (the
"Creditors") and (ii) a letter (the "Payoff Letters"), executed by the Company
and an authorized representative of each Creditor that is a bank, leasing
company or other financial institution or who is listed in SCHEDULE 1.5(a) to
whom any Debt is owed (other than the Debt set forth on Schedule 1.5(b)),
setting forth the amount of principal, interest and Prepayment Fees, that will
be due and payable by the Company to each of such Creditors as of the Closing
Date and undertaking to terminate, either at or immediately after the Closing,
all liens or other security interests securing such Debt upon payment of the
amounts due and owing. "Debt" shall include all funded long term, short term or
"line of credit" indebtedness, to banks and financial institutions, Shareholder
and other third parties, including the current portion thereof, accrued interest
thereon, and Prepayment Fees, together with the unamortized principal amount
including the current portion, interest expense required to be accrued thereon
and Prepayment Fees of all capitalized lease obligations that are properly
classified as liabilities on the balance sheet of the Company at Closing in
conformity with GAAP, the amounts of which shall be determined consistent with
the Company's audited Financial Statements; provided, however, that Debt shall
3
not include those prepayment fees for Debt listed on SCHEDULE 1.5(b) which is
not going to be discharged at Closing.
(b) At the Closing, that portion of the Debt owed to each Creditor
executing a Payoff Letter or whose Debt is otherwise acknowledged to Parent's
reasonable satisfaction, except that listed in SCHEDULE 1.5(b), shall be paid by
Purchaser to such Creditor by wire transfer of immediately available funds to an
account or accounts designated by such Creditors and in the amounts specified in
the Payoff Letters or otherwise established with such Creditors.
(c) At the Closing, Purchaser shall pay any unpaid Company Expenses
accrued on the books of the Company by wire transfer of immediately available
funds or by certified bank check.
(d) [INTENTIONALLY OMITTED.]
(e) At the Closing, from the Merger Consideration the Purchaser
shall deliver stock certificates representing 19,441 shares of MW Common Stock
to the Escrow Agent acting pursuant to the Escrow Agreement referred to below
(such amount, together with dividends thereon, additions thereto, and releases
therefrom, as more specifically set forth in such Escrow Agreement, is referred
to herein as the "Indemnification Escrow Amount").
(f) At the Closing, from the Merger Consideration the Purchaser
shall deliver stock certificates representing 1,852 shares of MW Common Stock to
the Escrow Agent acting pursuant to the Escrow Agreement referred to below (such
amount, together with dividends thereon, additions thereto, and releases
therefrom, as more specifically set forth in such Escrow Agreement, is referred
to herein as the "Working Capital Escrow Amount").
(g) The Working Capital Escrow Amount and the Indemnification
Escrow Amount (collectively, the "Escrow Amount") shall be held and distributed
by such Escrow Agent in accordance with the terms of the Escrow Agreement,
substantially in the form attached hereto as EXHIBIT B (the "Escrow Agreement"),
which shall be entered into by the Escrow Agent named therein, Purchaser and
Shareholder prior to or on the Closing Date.
1.6 SURRENDER OF CERTIFICATES.
(a) At any time after the Effective Time, upon surrender for
cancellation to the Purchaser of his Certificate(s), Shareholder shall be
entitled to receive in exchange for each share of Common Stock represented by
such surrendered Certificate the Initial Distribution Amount. The "Initial
Distribution Amount" shall be the Merger Consideration less the Escrow Amount
delivered to the Escrow Agent pursuant to Section 1.5. Promptly upon
termination of each of the escrows pursuant to the terms of this Agreement,
Shareholder shall be entitled to receive the particular Escrow Amount
distributed to Shareholder. The amounts so payable to a holder of a
Certificate(s) shall be paid with a certificate for the number of shares of MW
Common Stock having a value (based on the MW Common Stock Value and rounded down
to the nearest whole share) equal to the amount so due plus cash in lieu of
fractional shares and in the amount of any
4
unpaid dividends or other distributions payable on such shares of MW Common
Stock with a record date after the Effective Time. The Certificate(s) so
surrendered shall be canceled. Until so surrendered, each Certificate shall be
deemed, for all corporate purposes, to evidence only the right to receive the
Merger Consideration deliverable in respect thereof.
For purposes of this Agreement, "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department or
agency thereof.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to Mail-Well any transfer or other taxes
payable by reason of the foregoing or establish to the satisfaction of Mail-Well
that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, and upon such Person's
agreement to indemnify the Parent and Mail-Well against any claim that may be
made against the Parent or Mail-Well with respect to the Certificate claimed to
have been lost, stolen or destroyed, or, if required by Mail-Well, upon such
Person's obtaining a lost instrument bond in form and amount satisfactory to
Mail-Well, Mail-Well will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof as
determined in accordance with this Article 1.
(d) No certificates or scrip representing fractional shares of MW
Common Stock shall be issued upon the surrender for exchange of Certificates
pursuant to this Article 1 or as part of a distribution from the Escrow Amount;
no dividend or other distribution by Parent and no stock split, combination or
reclassification shall relate to any such fractional share; and no such
fractional share shall entitle the record or beneficial owner thereof to vote or
to any other rights of a stockholder of Parent. In lieu of any such fractional
share, each holder of Shares who would otherwise have been entitled thereto upon
the surrender of Certificate(s) for exchange pursuant to this Article 1 will be
paid an amount in cash (without interest) rounded to the nearest whole cent,
determined by multiplying (i) the MW Common Stock Valuation by (ii) the
fractional share to which such holder would otherwise be entitled. Purchaser
shall make available the cash necessary for this purpose at the Effective Time.
1.7 WORKING CAPITAL SETTLEMENT.
(a) Prior to the Closing Date, the Company shall estimate its
working capital position (the "Working Capital") as of the close of business on
the Closing Date (the "Computation Date"). Working Capital shall mean (x) the
sum of (i) the book value of current assets plus (ii) the amount of capital
expenditures listed on SCHEDULE 1.7; less (y) the book value
5
of current liabilities excluding any amount of Debt or Company Expenses paid by
Purchaser at Closing pursuant to Section 1.5(c). The Company shall provide
Purchaser a copy of the calculation of the estimated Working Capital (the
"Estimated Working Capital Statement") three business days prior to the Closing
Date. The book value of all amounts and the determination of Working Capital
shall be determined in accordance with generally accepted accounting principles,
consistently applied ("GAAP") on a basis consistent with the Company's last
audited Financial Statements.
(b) If the amount of the Working Capital as shown on the Estimated
Working Capital Statement (the "Estimated Working Capital") is greater than
$2,331,000, the Merger Consideration shall be increased by the difference
between the Estimated Working Capital and $2,331,000. If the amount of the
Estimated Working Capital is less than $2,331,000, the Merger Consideration
shall be reduced by the difference between $2,331,000 and the Estimated Working
Capital.
(c) Purchaser shall prepare and deliver to Shareholder a "Final
Working Capital Statement" on or before the thirtieth day following Closing. In
preparing the Final Working Capital Statement, inventory shall be valued at the
lesser of cost or market using FIFO in accordance with GAAP, and shall be based
upon a physical count taken by the Company and observed by the Purchaser
(one-half the cost of which shall be a Company Expense) within three business
days prior to the Closing Date. Except as provided in the preceding sentence,
all amounts set forth on the Final Working Capital Statement shall be determined
in accordance with GAAP on a basis consistent with the accounting principles
used in connection with determining the Estimated Working Capital. The Final
Working Capital Statement shall become final and binding on Shareholder and
Purchaser (in such instance, the "Final Closing Statement") unless Shareholder
gives written notice to the Purchaser of his disagreement with respect to any
matter contained therein ("Notice of Working Capital Disagreement") within 10
days after the receipt thereof. A Notice of Working Capital Disagreement shall
not be permitted unless the aggregate amount in dispute exceeds Ten Thousand
Dollars ($10,000). A Notice of Working Capital Disagreement shall specify in
reasonable detail the nature of any disagreement so asserted. For a period of
30 days after the delivery of the Notice of Working Capital Disagreement,
Shareholder and the Purchaser shall attempt to resolve in writing all of the
differences with respect to each matter specified in the Notice of Working
Capital Disagreement, in which case any such resolution of the Final Working
Capital Statement shall be final and binding on the parties (in such instance,
the "Final Closing Statement"). If, at the end of such 30-day period,
Shareholder and Purchaser have not resolved in writing all of the differences
with respect to any such matter, then each unresolved matter ("Disputed Working
Capital Matter") shall be submitted to and reviewed by the accounting firm of
Price Waterhouse LLP or, if such firm is unwilling or unable to act, to another
"big six" accounting firm selected by a panel of three arbitrators in accordance
with the rules of the American Arbitration Association (the "Neutral
Accountant"). The Neutral Accountant shall consider only the Disputed Working
Capital Matters and shall act promptly to resolve in writing all Disputed
Working Capital Matters, and its decisions with respect to the Disputed Working
Capital Matters shall be final and binding on Shareholder and Purchaser;
provided that no such resolution of the Disputed Working Capital Matters shall
require payment of an amount greater than the highest amount or less than the
lowest amount suggested for such
6
resolution by Shareholder or the Purchaser. The Neutral Accountant shall notify
Shareholder and the Purchaser of its resolution of the Disputed Working Capital
Matters and shall prepare a revised Working Capital Statement reflecting the
resolution of all Disputed Working Capital Matters promptly after such
resolution (in such instance the "Final Closing Statement") and shall deliver it
to Purchaser and Shareholder.
(d) Purchaser shall be responsible for and shall pay the fees and
expenses incurred in connection with the Neutral Accountant. Upon payment by
the Purchaser, one-half of such fees of the Neutral Accountant will be a claim
of Purchaser against the Escrow Amount payable first from the Working Capital
Escrow Amount and then from the Indemnification Escrow Amount.
(e) Within 10 days after receipt of the Final Closing Statement:
(i) if the Working Capital as set forth in the Final Closing
Statement is less than the Estimated Working Capital, the Merger
Consideration payable to Shareholder shall be adjusted by the difference
(based on the MW Common Stock Valuation) by Shareholder giving instructions
to the Escrow Agent to distribute to Purchaser the MW Common Stock
representing such adjustment, first from the Working Capital Escrow Amount
and, to the extent there is not a sufficient amount in the Working Capital
Escrow Amount, then from the Indemnification Escrow Amount.
(ii) If the Working Capital as set forth in the Final Closing
Statement is greater than the Estimated Working Capital, Purchaser, subject
to the provisions of Section 1.6(d), shall issue additional MW Common Stock
(based on the MW Common Stock Valuation) as additional Merger Consideration
to Shareholder.
1.8 ADDITIONAL POST-CLOSING ADJUSTMENTS.
(a) If Purchaser reasonably determines, within 90 days of the
Closing Date, in accordance with GAAP and consistent with the Company's past
practices and historical turnover rates, that the allowance for obsolete or
unsaleable items in the raw materials, work-in-progress and finished goods
inventory, as reflected in the Working Capital included in the Final Closing
Statement, was insufficient based upon facts known at the date of such
subsequent determination, the Purchaser shall provide Shareholder with written
notice thereof. Shareholder shall have 10 days after receipt of Purchaser's
notice to give written notice to the Purchaser of his disagreement ("Notice of
Inventory Disagreement"). If a Notice of Inventory Disagreement is issued by
Shareholder, it shall specify in reasonable detail the nature of any
disagreement so asserted. For a period of 30 days after the delivery of such
Notice of Inventory Disagreement, Shareholder and the Purchaser shall attempt to
resolve in writing all of the differences with respect to each matter specified
in the Notice of Inventory Disagreement, in which case any such resolution of
such matters shall be final and binding on the parties. If, at the end of such
30-day period, Shareholder and Purchaser have not resolved in writing all of the
differences with respect to any such matter, then each unresolved matter
("Disputed Inventory Matter") shall be submitted to and reviewed by the Neutral
Accountant. The Neutral Accountant shall consider only the Disputed Inventory
7
Matters and shall act promptly to resolve in writing all Disputed Inventory
Matters, and its decisions with respect to the Disputed Inventory Matters shall
be final and binding on each of Shareholder and Purchaser; provided that no such
resolution of the Disputed Inventory Matters shall require payment of an amount
greater than the highest amount or less than the lowest amount suggested for
such resolution by either Shareholder or the Purchaser. The Neutral Accountant
shall notify Shareholder and the Purchaser of its resolution of the Disputed
Inventory Matters and shall deliver written confirmation of same to Purchaser
and Shareholder. If Shareholder does not issue a Notice of Inventory
Disagreement or upon the resolution of the Disputed Inventory Matters by the
Neutral Accountant, the Purchaser, at Shareholder's written instructions, shall
sell such obsolete and/or unsaleable inventory. The Merger Consideration
payable to Shareholder shall be adjusted by the difference (based on the MW
Common Stock Valuation) by an amount equivalent to the additional payment, if
any, that would have been payable by Shareholder to the Purchaser pursuant to
Section 1.7(e)(i) on the basis of the difference between the allowance for
obsolete or unsaleable items as restated pursuant to this Section 1.8(a) and as
originally stated at in the Final Closing Statement, less the aggregate proceeds
from the sale of said obsolete and/or unsaleable inventory through Shareholder
giving instructions to the Escrow Agent to distribute to Purchaser the MW Common
Stock representing such adjustment, first from the Working Capital Escrow Amount
and, to the extent there is not a sufficient amount in the Working Capital
Escrow Amount, then from the Indemnification Escrow Amount.
(b) If the gross amount collected by Purchaser upon the accounts
receivable reflected in the Working Capital included in the Final Closing
Statement ("Accounts Receivable") during the 120 days after the Closing Date is
less than the book value of such Accounts Receivable after giving effect to the
allowance for doubtful accounts as reflected on the Final Closing Statement,
Shareholder shall pay to Purchaser, by giving instructions to the Escrow Agent
to distribute to Purchaser MW Common Stock (based on the MW Common Stock
Valuation) first from the Working Capital Escrow Amount and, to the extent there
is not a sufficient amount in the Working Capital Escrow Amount, then from the
Indemnification Escrow Amount, on the basis of the difference between the amount
collected and the book value of such Accounts Receivable after giving effect to
the allowance for doubtful accounts as reflected as originally stated at in the
Final Closing Statement; provided, however, that during the aforementioned
120-day period Purchaser shall not write off or settle any uncollected Accounts
Receivable or retain a collector to collect any such Accounts Receivable without
written consent of Shareholder. Subsequent to such 120 days after the Closing
Date, Purchaser shall continue to use reasonable efforts to collect any Accounts
Receivable not collected during the 120 days after the Closing Date, and the net
amounts of such Accounts Receivable collected by Purchaser, after accounting for
third party collection costs, shall be remitted to Shareholder, in MW Common
Stock (based on the MW Common Stock Valuation) after the payment by Shareholder
of the amounts due Purchaser under this Section 1.8(b). On or prior to the 15th
day of each month, Purchaser shall deliver to Shareholder an Accounts Receivable
report identifying the gross collections made by Purchaser through and including
the end of the preceding calendar month. Any amounts collected by Purchaser
shall be applied against the longest outstanding receivables except as to any
receivable as to which the Person paying such amount has given Purchaser notice
of a dispute.
8
(c) Upon the later of the 135th day after the Closing Date, or the
10th day after receipt by both Shareholder and Purchaser of the Final Closing
Statement, or the payment by Shareholder to Purchaser of any amount claimed by
Purchaser pursuant to Section 1.7 or this Section 1.8, any remaining Working
Capital Escrow Amount shall be distributed from the Working Capital Escrow
Account to Shareholder.
1.9 TRANSFER TAXES. Any transfer taxes or stamp duties, or other similar
taxes, fees, charges or expenses (collectively "Transfer Taxes") imposed on the
Company shall be divided equally between the Purchaser and the Company, and the
total accrued and unpaid amount thereof allocated to the Company shall be
treated as a Company Expense. Any Transfer Taxes imposed on Shareholder shall
be paid by Shareholder.
1.10 MW COMMON STOCK.
(a) The MW Common Stock to be delivered to Shareholder will not be
registered under federal or state securities laws, but rather, issued pursuant
to an exemption therefrom. As a result, Shareholder acknowledges and agrees
that such MW Common Stock is "restricted" stock as such term is defined under
such securities laws and cannot be sold, pledged or transferred unless
subsequently registered or unless an exemption is available allowing its resale.
(b) Parent, at its expense, shall file a shelf registration
statement (the "Registration Statement") as soon as reasonably practicable after
the Closing Date, pursuant to Rule 415 under the Securities Act of 1933, as
amended (the "Securities Act") with respect to all the MW Common Stock issued by
Parent in connection with consummating the transactions contemplated by this
Agreement (including, without limitation, those shares deposited in escrow under
the Escrow Agreement) (collectively, "Registrable Shares"). Parent shall use
its best efforts to: (i) have the Registration Statement declared effective on
or before July 15, 1998; and (ii) keep the Registration Statement continuously
effective and to supplement and amend it as required by the Securities Act and
the regulations thereunder from the date the Registration Statement is declared
effective (the "Initial Effective Date") until the earliest to occur of the
following events: (A) such time as Shareholder may transfer the MW Common Stock
pursuant to the safe harbor provisions of Rule 144 under the Securities Act
without having to comply with any volume limitations under such rule;
(B) notification to Parent that all Registrable Shares have been sold for the
account of Shareholder; or (C) a request by Shareholder that the Registration
Statement be terminated (the period between the Initial Effective Date and
earliest to occur of such events is hereinafter referred to as the "Registration
Statement Period"). If the Registration Statement ceases to be effective at any
time during the Registration Statement Period, Parent, at its expense, shall
within thirty days of such cessation cause to be filed an additional shelf
registration statement covering the unsold balance of the Registrable Shares and
shall use its best efforts to have such registration statement declared
effective as soon as practicable thereafter and keep such registration statement
effective until the end of the Registration Statement Period.
9
(c) Parent agrees to furnish Shareholder with such number of
conformed copies of any registration statement and prospectus included therein
(including each preliminary prospectus) covering the Registrable Shares as
Shareholder reasonably may request in order to facilitate the public sale of the
Registrable Shares covered by such registration statement.
(d) All expenses incurred by Parent, Purchaser and Shareholder in
connection with any registration under this Agreement shall be paid by Parent
and Purchaser, including without limitation all registration and filing fees,
printing expense, fees and disbursements of counsel and independent public
accountants for the Parent and the Purchaser, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of securities exchanges or the National Association of
Securities Dealers, Inc., fees of transfer agents and registrars, but excluding
any selling commissions and transfer taxes applicable to the sale of the MW
Common Stock and any legal fees and expenses of counsel or other advisers and
agents of the selling Shareholder.
(e) To ensure that Shareholder is able to benefit from the
Registration Statement and to make available the benefits of certain rules and
regulations of the Securities and Exchange Commission ("SEC") that may permit
the offer and/or sale of MW Common Stock to the public without registration by
Shareholder, Parent agrees to:
(i) supplement and amend the Registration Statement in a
timely manner if required by the registration form utilized by the Parent,
or by the instructions applicable to such form or by the Securities Act or
the rules and regulations thereunder or if reasonably requested by
Shareholder and to furnish Shareholder with copies of any such amendment or
supplement at least twenty-four hours prior to its being filed with the
SEC;
(ii) file with the SEC in a timely manner all reports and
other documents required of Parent under the Securities Act and the
Securities Exchange Act of 1934, as amended ("Exchange Act");
(iii) make and keep public information regarding Parent
available (as those terms are understood and defined in Rule 144) at all
times during the Registration Period or such longer period ending on the
date upon which Shareholder no longer need rely on Rule 144; and
(iv) so long as Shareholder owns any MW Common Stock, furnish
to Shareholder upon written request a written statement by Parent that all
reports and filings that are necessary to be filed by Parent for
Shareholder to avail himself of Rule 144 or 145 have been filed, and
provide a copy of the most recent annual or quarterly report of Parent, and
any other reports and documents as Shareholder may reasonably request in
availing himself of any rule or regulation of the SEC.
(f) Parent and Mail-Well, jointly and severally, shall indemnify
Shareholder (and any Person who is an Affiliate of Shareholder within the
meaning of the Securities Act) whose shares of MW Common Stock are included in
any registration statement as Registrable
10
Shares against all expenses, claims, losses, damages, or liabilities, including,
without limitation, reasonable attorneys' fees and court costs (collectively, a
"Liability"), to which Shareholder may become subject under the Securities Act,
the Exchange Act or any rule or regulation under either of them or other statute
or at common law, arising out of or based upon: (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement, and any document incorporated by reference therein
(a "Registration Document"); or (ii) any omission or alleged omission to state a
material fact required to be stated in any Registration Document or necessary in
order to make any statement in any Registration Document not misleading.
Notwithstanding the foregoing, neither Parent nor Mail-Well will be liable to a
Shareholder to the extent that any liability arises out of or is based upon any
untrue statement or omission made in any Registration Document in reliance upon
and in conformity with written information furnished to Parent or Mail-Well for
incorporation in any such Registration Document by or on behalf of Shareholder.
Parent and Mail-Well's joint and several indemnification obligation will remain
in full force and effect regardless of any investigation made by or on behalf of
Shareholder and will survive transfer of the Registrable Shares by Shareholder.
1.11 INVESTMENT LETTER. Pursuant to Section 8.9 hereof, and in
acknowledgment of the restrictions on transfer of the MW Common Stock
(i) described in this Section 1.10 above; and (ii) if applicable, required by
the pooling of interests accounting method contemplated herein, Shareholder
shall deliver to Purchaser prior to Closing an executed letter in the form of
Exhibit C hereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SHAREHOLDER
The Schedules attached to this Agreement are sometimes referred to herein
as the "Disclosure Schedules." The Company and Shareholder represent and
warrant to Purchaser that except as otherwise disclosed in the Disclosure
Schedules the following statements are true as of the date of this Agreement and
as of the Closing Date:
2.1 ORGANIZATION, STANDING, CORPORATE AUTHORIZATION, AND ENFORCEABILITY.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except where
the failure to so qualify would not have a Material Adverse Effect on the
financial condition or business of the Company.
11
(b) This Agreement and all other agreements, documents and
instruments executed or to be executed by the Company in connection herewith
(the "Related Agreements") constitute the valid and legally binding obligations
of the Company and are enforceable in accordance with their terms, except as
such enforceability may be limited by equitable principles and by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws
relating to or affecting the rights of creditors generally. The Company has the
requisite corporate power and authority to enter into this Agreement and the
Related Agreements.
(c) The execution and delivery of this Agreement, the Related
Agreements, and all other documents and instruments executed or to be executed
by the Company pursuant to this Agreement, and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate and other action on the part of the Company, subject to
obtaining the requisite approvals from Shareholder in accordance with applicable
law. This Agreement and the Related Agreements have been or will have been, at
the time of their respective executions and deliveries, duly executed and
delivered by a duly authorized officer of the Company.
(d) Except as set forth in SCHEDULE 2.1(d), the Company does not
own, directly or indirectly, any capital stock or other equity interest in any
Person or have any direct or indirect equity or ownership interest in any
Person, and the Company is not subject to any obligation or requirement to
provide funds for or to make any investment (in the form of a loan, capital
contribution or otherwise) to or in any Person.
2.2 CAPITALIZATION. As of the date of this Agreement, the
capitalization of the Company (including all capital stock authorized, issued
and outstanding) is as set forth on SCHEDULE 2.2. All of the outstanding shares
of the Company's Common Stock are owned by Shareholder as set forth on SCHEDULE
2.2. The Company has no authorized or outstanding bonds, debentures, notes or
other indebtedness the holders of which have the right to vote (or convertible
or exchangeable into or exercisable for securities having the right to vote)
with Shareholder on any matter ("Voting Debt"). Except as contemplated by this
Agreement, after the Effective Time, the Surviving Corporation will have no
obligation to issue, transfer or sell any shares of MW Common Stock as a result
of any obligation existing, or created by the Company, at or prior to the
Effective Time, including pursuant to any stock incentive plan or warrant. All
prior issuances of securities by the Company and all prior repurchases,
redemptions or exchanges affecting the outstanding securities of the Company
have complied with all applicable Legal Requirements (as defined below)
(including federal and state securities laws), preemptive rights and contractual
restrictions. All issued and outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. Except as disclosed on SCHEDULE 2.2, the Company does not have
shares of its capital stock authorized, issued or outstanding and there are no
outstanding convertible or exchangeable securities, subscriptions, calls,
options, warrants, rights (contractual or arising by operation of law,
including, without limitation, rights of first refusal and preemptive rights),
or other agreements or commitments of any character to which the Company is a
party or by which it is bound, relating to the issuance, purchase, other
acquisition or voting of any shares of the capital stock of, or other equity or
ownership interest (collectively, "Equity Rights") in the Company. Except as
disclosed on
12
SCHEDULE 2.2 and on SCHEDULE 2.11, there are no agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which any
person or entity is or may be entitled to receive any payment based on the
revenues or earnings, or calculated in accordance therewith, of the Company.
Except as set forth in SCHEDULE 2.2, there are no voting trusts, proxies or
other agreements or understandings to which the Company or Shareholder is a
party or by which the Company or Shareholder is bound with respect to the voting
of any shares of capital stock or other Equity Interests of the Company. Except
as set forth on Schedule 2.2, any such voting trusts will be terminated as of
the Closing.
For purposes of this Agreement, the term "Legal Requirement" shall mean any
federal, state or local law, statute, legislation, ordinance, code, rule,
regulation, decree, award, order, permit, franchise, consent or authorization
of, any federal, state, local or other governmental body or agency, department,
commission, bureau, board, council, court, magistrate, panel or instrumentality
of the United States, any political subdivision thereof or any state or local
governmental authority in effect as of the date hereof.
2.3 ARTICLES OF INCORPORATION AND BYLAWS; CERTAIN RECORDS. Copies of the
Articles of Incorporation, Bylaws, minute books and stock records of the Company
have been made available to Purchasers, and each such copy is true, correct and
complete as amended to date. All material records of any type and description
in whatever form or medium that presently exist and that relate to the business
or properties of the Company and which in the ordinary course of business the
Company would normally retain are in the possession or control of the Company
and are located at the offices of the Company or of its counsel, independent
auditors, consultants, or other advisors, and the Surviving Corporation will
have the right to possession of all such records upon the consummation of the
transactions contemplated by this Agreement.
2.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. Except as set forth in
SCHEDULE 2.4, the execution and delivery of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby will not conflict with or result in any violation of or default under
any provision of the Articles of Incorporation or Bylaws of the Company or any
material violation of, or default under, any mortgage, indenture, trust, lease,
partnership or other agreement or other instrument, permit, concession, grant,
franchise, license, judgment, order, decree, or Legal Requirement applicable to
the Company or Shareholder or any of the properties of the Company, nor will
they result in the creation or imposition of any lien, security interest,
charge, claim or other encumbrance of any nature whatsoever on any of the
properties or assets of the Company or the Common Stock, nor will they prevent
or materially delay the consummation of the transactions contemplated hereby.
2.5 GOVERNMENTAL AUTHORIZATIONS; CONSENTS. Except as set forth on
SCHEDULE 2.5, no consents, licenses, approvals or authorizations of, or
registrations or declarations with, any governmental authority, agency, bureau
or commission, or any third party which have not already been obtained, are
required to be obtained or made by the Company or Shareholder in connection with
the execution, delivery, performance, validity and enforceability of this
Agreement or any Related Agreement or the sale or transfer of the Common Stock
and will not prevent or materially
13
delay the consummation of the transactions contemplated hereby other than and
except for consents, licenses, approvals, authorizations or registrations which
are not material.
2.6 LITIGATION. No action, suit, proceeding or governmental
investigation is pending or, to the Knowledge (as defined below) of the Company
and Shareholder, threatened, at law or in equity, which seeks to question, delay
or prevent, or could have the effect of delaying or preventing, the consummation
of all or any portion of the transactions contemplated hereby.
2.7 FINANCIAL STATEMENTS; CONDUCT OF THE BUSINESS; NO UNDISCLOSED
LIABILITIES. Except as set forth on SCHEDULE 2.7:
(a) The Company has delivered to Purchaser (i) the audited balance
sheets of the Company as of December 31, 1997, 1996 and 1995 and the related
audited statements of income, retained earnings and cash flows for the fiscal
years then ended, accompanied in each case by an opinion thereon of the
independent certified public accountant of the Company (such financial
statements, including the notes thereto, hereinafter being referred to as the
"Annual Financial Statements"), and (ii) the unaudited balance sheet of the
Company as of March 31, 1998, and the related unaudited statements of income for
the three months ended March 31, 1998 (the "Interim Financial Statements").
(The Annual Financial Statements and the Interim Financial Statements including
the notes thereto together hereinafter being referred to as the "Financial
Statements"). All of the Financial Statements have been prepared in accordance
with GAAP (subject to the modifications and exceptions set forth in SCHEDULE 2.7
and, in the case of Interim Financial Statements, to end of year audit
adjustments and preparation of footnotes) consistently applied for all relevant
periods (except as indicated therein) and present fairly in all material
respects the financial position of the Company as of the dates thereof and the
results of its operations for the periods then ended.
(b) The Company does not have any debts, obligations, guaranties of
the obligations of others or liabilities except: (i) debts, obligations,
guaranties and liabilities to the extent reflected or reserved against in the
Financial Statements, (ii) debts, obligations, guaranties and liabilities
incurred or entered into subsequent to March 31, 1998, in the ordinary course of
business and otherwise not in contravention of this Agreement, and (iii) debts,
obligations and liabilities relating to this Agreement and the Related
Agreements and instruments being executed and delivered in connection herewith
and the transactions referred to herein and therein (including obligations to
pay legal fees, financial advisory fees, bank fees, accounting fees and other
amounts in connection therewith) so long as such obligations are included in
determining Company Expenses.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for (i) matters set
forth on SCHEDULE 2.8, (ii) matters disclosed in the Annual Financial Statements
or (iii) as contemplated by
14
this Agreement, the Company has not, since December 31, 1997, except as
otherwise specified herein:
(a) undergone any change in its condition (financial or otherwise),
properties, assets, liabilities, business or operations, except for changes in
the ordinary course of business which have not either individually or in the
aggregate had a Material Adverse Effect;
(b) except as set forth on SCHEDULE 2.8, changed any of its methods
of accounting or accounting practices or classifications of assets or
liabilities, or failed to maintain its books of account in the usual, regular
and ordinary manner in accordance with GAAP unless required by regulation or
GAAP;
(c) modified the material terms of, or canceled or terminated, any
Material Contract (as defined below) other than in the ordinary course of
business;
(d) terminated, discharged or received any written notice regarding
the resignation, discharge or termination of any officer other than in the
ordinary course of business or as contemplated by this Agreement;
(e) since December 31, 1995, established or adopted any Benefit
Plan (as defined below), or increased the amount of the wages, bonus, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
any of its directors, officers or employees, except in any case in the ordinary
course of business in accordance with past practice and, in the case of the
senior management employees and Shareholder (listed on SCHEDULE 2.8(e)), in an
amount not exceeding 3% in any one case or a payment of bonuses in an aggregate
amount of $25,000;
(f) since December 31, 1995, declared, set aside, made or paid any
dividend or other distribution in respect of its capital stock or purchased or
redeemed, directly or indirectly, any shares of its capital stock, or split up,
combined, reclassified, redeemed, repurchased or otherwise reacquired any of its
capital stock other than distributions to Shareholder to pay income taxes and
charged against their respective Accumulated Adjustments Account, if applicable;
(g) since December 31, 1995, issued or sold any shares of its
capital stock of any class or any subscriptions, options, warrants, calls or
other rights to purchase directly or indirectly any such shares or any
securities directly or indirectly convertible into or exchangeable for such
shares or made any other change in its capital structure;
(h) since December 31, 1995, except for borrowings under its normal
line of credit and Debt described in SCHEDULE 2.8(h), incurred any direct or
contingent liability for borrowed money or guaranteed the monetary obligations
of any other person or entity other than indebtedness to be included in the Debt
to be discharged at Closing, or made any monetary investment in, advance to or
loan to any person or entity other than in the ordinary course of business;
15
(i) mortgaged, pledged or subjected to any material lien, lease,
security interest or other charge or encumbrance any of its properties or
assets, tangible or intangible, except those securing Debt to be discharged at
Closing and except for Permitted Liens (as defined below);
(j) made any material change in its practices, operations or
policies with respect to the method for selling goods or services, or other
method for accounting for sales, the conduct of accounts receivable collection
or accounts payable payment activities or the maintenance of inventory levels
other than changes in the ordinary course of business;
(k) since December 31, 1995, merged or consolidated with or into
any other entity or initiated or participated in negotiations with any person or
entity with respect to any of the foregoing;
(l) implemented or adopted any change in its tax methods,
principles or elections;
(m) since December 31, 1995, acquired or disposed of any material
assets or properties or made any capital improvement other than in the ordinary
course of business; or
(n) suffered any damage, destruction or loss (whether or not
covered by insurance) which has had or could reasonably be expected to have a
Material Adverse Effect on the Company.
2.9 TITLE TO PROPERTY, ABSENCE OF LIENS AND ENCUMBRANCES.
(a) The Company has good title to its owned material assets,
including the owned tangible assets reflected on the balance sheet included in
the Company's most recent Interim Financial Statements, other than assets
disposed of or used after the date thereof in the ordinary course of business
for fair value. Except as disclosed in SCHEDULE 2.9(a), the tangible assets
owned by the Company are owned free and clear, of all liens, mortgages, pledges,
charges, security interests or encumbrances, except for Permitted Liens (as
defined below). The Company owns, leases or licenses, and has adequate rights
to use all material real and personal property and other material assets
necessary to conduct its business as a going concern on a basis consistent with
past practices. To the Knowledge of the Company, the assets of the Company
necessary for the operation of its business consistent with past practices are
in operating condition and repair (subject to normal wear and tear). Neither
the whole nor any part of the real property used in the Business have been
condemned by any public authority, nor, to the Knowledge of the Company and
Shareholder, is any such condemnation or taking threatened or contemplated.
There exists free and uninterrupted egress and ingress over a public roadway to
all operating facilities.
For the purposes of this Agreement, the term "Permitted Liens" shall
mean (i) liens for current taxes, assessments or governmental charges not yet
due, (ii) deposits or pledges to secure bids, tenders, contracts, leases,
statutory obligations, surety and appeal bonds, and other obligations of like
nature arising in the ordinary course of the Company's business, (iii) liens
16
arising out of deposits in connection with workers' compensation, unemployment
insurance, old age pensions or other social security or retirement benefits
legislation, (iv) liens imposed by law, such as mechanics', workers',
materialmen's, carriers' or other like liens arising in the ordinary course of
the Company's business which secure the payment of obligations which are not
past due or which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP are
maintained on the Financial Statements, (v) imperfections of title, liens and
encumbrances which do not materially and adversely affect the use, value or
marketability of the property affected thereby, and (vi) the imperfections of
title, liens, mortgages, pledges, charges, security interests and encumbrances
set forth on SCHEDULE 2.9(a).
(b) The Company validly holds the real property described on
SCHEDULE 2.9(b) (the "Real Property") free and clear of all liens, encumbrances,
mortgages or security interests, except for Permitted Liens.
(c) Except as set forth on SCHEDULE 2.9(c), the Company is not a
party to any leases of real property. The Company validly holds the leaseholds
created by the leases (true, complete and correct copies of which have been
provided to Purchaser) as described on SCHEDULE 2.9(c) (the "Leased Property"),
and such leases are enforceable by the Company as the lessee thereunder in
accordance with their terms.
(d) The Company is not a party to any agreement granting any third
party the right or an option to purchase or lease all or any portion of the Real
Property, Leased Property or any personal property of the Company.
(e) There is not pending, nor has the Company received any written
notice of, (i) any Claim or proceeding asserting or seeking to establish a title
interest in the Real Property or Leased Property, or any Claim of default under
any of the leases under which leaseholds have been created ("Title Notice"), or
(ii) the existence of any facts or proceedings of which the Company or
Shareholder has Knowledge which may result in the issuance of such a Title
Notice.
2.10 FULL AUTHORITY; COMPLIANCE WITH LAWS. Except as set forth on
SCHEDULE 2.10, the Company is in compliance in all material respects with all
applicable Legal Requirements. Set forth on SCHEDULE 2.10 is a list of any and
all material permits, licenses, consents, orders, approvals, franchises,
certificates or other authorizations under any applicable Legal Requirement
(collectively the "Permits"), issued to the Company in connection with the
ownership, operation and maintenance of its business or assets. The Company has
obtained and maintained all Permits. Each of the Permits is in full force and
effect, and the Company is in compliance in all material respects with all the
provisions of such Permits.
17
2.11 BENEFIT PLANS.
(a) Except as set forth in SCHEDULE 2.11, the Company does not
maintain, sponsor, participate in or contribute to, or is required to contribute
to, directly or indirectly, or has any obligation under:
(i) Any employee benefit plan, employee pension benefit
plan, employee welfare benefit plan (including any medical, dental,
disability, accident or sickness, salary continuation or life insurance
plan or arrangement), or multiemployer plan, all as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), regardless of
whether or not a plan is exempt from some or all of the otherwise
applicable requirements of ERISA; or
(ii) Except as disclosed on the Financial Statements, any
material bonus, commission, deferred compensation, incentive compensation,
restricted stock, stock purchase, stock option, stock appreciation right,
debenture, supplemental pension, profit sharing, royalty pool, vacation,
sick leave, severance or termination pay policies, supplemental
unemployment benefits plan, loan guarantee, relocation assistance, employee
loan or other extensions of credit, or other similar material plan,
program, agreement, policy, commitment, arrangement or benefit currently in
effect under which current or former employees or their dependents,
beneficiaries, representatives or estates are currently or will in the
future be entitled to benefits.
(b) With respect to each plan, program, agreement, policy,
commitment, arrangement or benefit described on SCHEDULE 2.11 (a "Benefit
Plan"), the Company has furnished to the Purchaser true, correct and complete
copies of such Benefit Plans that are in written form, including amendments, if
applicable, summary plan descriptions, if applicable, the Internal Revenue
Service determination letter, if applicable, and the two most recent Forms 5500,
5500-C or 5500-R, as applicable, and has made available to the Purchaser the
most recent actuarial reports of or regarding such Benefit Plan. As to each
Benefit Plan not reduced to writing, the Company has made available to the
Purchaser a description of all material elements of such plan.
(c) Except as set forth in SCHEDULE 2.11:
(i) Each Benefit Plan has been operated and administered in
all material respects in accordance with its terms and applicable laws,
including but not limited to ERISA and the Internal Revenue Code of 1986 as
amended (the "Code") (as defined below). Each Benefit Plan that is intended
to be qualified under Section 401(a) of the Code either has received from
the Internal Revenue Service, or timely applied for, a determination letter
on such Benefit Plan's qualified status.
(ii) Neither the Company nor any other party in interest
(within the meaning of ERISA) has engaged in any non-exempt prohibited
transaction with respect to any Benefit Plan under ERISA, the Code, and
there is no pending assertion of the occurrence of any such transaction.
18
(iii) All contributions required under applicable law or the
terms of any Benefit Plan, collective bargaining agreement or other
agreement relating to a Benefit Plan to be paid by the Company for all
periods prior to the Closing Date have been or will have been completely
and timely made to each Benefit Plan when due, and the Company has
established adequate reserves on its books (which will be treated as a
current liability for purposes of determining Working Capital at Closing)
to meet liabilities for contributions accrued but that have not been made
because they are not yet due and payable.
(iv) To the Knowledge of the Company and Shareholder, there
is no current or pending investigation or audit by the Internal Revenue
Service, the Department of Labor or any other governmental entity of any
Benefit Plan, nor has the Company received notification from any such
governmental entity of such a pending audit or investigation, and there are
no actions, suits or claims pending (other than routine claims for
benefits) or threatened, with respect to any Benefit Plan or against the
assets of any such Benefit Plan.
(v) No Benefit Plan is or ever has been a plan subject to
Title IV of ERISA, Part 3 of Subtitle B of Title I of ERISA or Section 412
of the Code ("Pension Plan"), or is or ever has been a multiemployer plan
as defined in Section 3(37) of ERISA or Section 414(f) of the Code
("Multiemployer Plans"); neither the Company nor any other party in
interest has incurred any liability to the Pension Benefit Guaranty
Corporation ("PBGC") with respect to any Pension Plan, except for required
premium payments, which payments have been made when due; no accumulated
funding deficiency (within the meaning of Section 412 of the Code or
Section 302 of ERISA) or reportable event (as defined in Section 4043 of
ERISA) has occurred with respect to any Pension Plan; no event has occurred
in connection with any Pension Plan which could subject any Company or any
Pension Plan, or Purchaser, its Affiliates or any of their respective
benefit plans, to liability under Section 4062, 4063 or 4064 of ERISA, and,
no event has occurred which might give rise to any liability of the Company
or any Pension Plan, or Purchaser, its Affiliates or any of their
respective benefit plans, to the PBGC under Title IV of ERISA or which
could reasonably be anticipated to result in any claims being made against
the Company or any Pension Plan; and the Company has not incurred nor, as a
result of the transactions contemplated by this Agreement, will incur any
withdrawal liability (including any contingent or secondary withdrawal
liability) within the meaning of Section 4201 and 4204 of ERISA to any
Multiemployer Plan; upon a complete withdrawal or a partial withdrawal (as
those terms are defined in Section 4203 and 4205, respectively, of ERISA)
from a Multiemployer Plan occurring on or before the close of the most
recent fiscal year of each such Multiemployer Plan ended prior to the
Closing Date, to the Knowledge of the Company and Shareholder, the Company
would not have been subject to withdrawal liability under Title IV,
Subtitle E, Part 1 of ERISA and, there has been no material change in the
financial condition of any Multiemployer Plan that would result in the
imposition of such liability due to such complete or partial withdrawal on
or before the Closing Date.
19
(vi) The Company has complied in all material respects with
all notice and continuation coverage requirements applicable to group
health plans under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), with respect to all medical and health benefits
provided by the Company that are subject to COBRA.
(vii) No Benefit Plan amendments have been adopted nor will
any such amendments be adopted prior to the Closing Date except as may be
necessary for compliance purposes with the Code or ERISA and there is no
arrangement, commitment or understanding to create any additional plan
which would constitute a Benefit Plan or increase the rate of benefit
accrual or contribution requirement under any of the Benefit Plans or
modify, change or terminate any existing Benefit Plan.
(viii) The Company is not a member of a "controlled group" of
organizations (as defined in Sections 414(b), (c), (m) or (o) of the Code)
which sponsors or maintains any employee benefit plan within the meaning of
Section 3(3) of ERISA which under Title IV of ERISA or any section of the
Code or ERISA would subject Purchaser or Company or any of their respective
employee benefit plans or the fiduciaries thereof or their respective
assets to any taxes, encumbrances, penalties or other liabilities.
2.12 CLAIMS. There are no Claims against, or to the Knowledge of
Shareholder or the Company, threatened against, the Company or its properties,
at law or in equity or before any court, governmental department, commission,
board, agency, authority, instrumentality, domestic or foreign which, if
adversely determined, could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company before or after the
Closing Date. The Company is not subject to any judgment, stipulation, order or
decree arising from any action, suit, proceeding or any investigation of which
it has Knowledge which could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on the business or financial condition
of the Company before or after the Closing Date.
As used in this Agreement, "Claim" means any and all claims, causes of
action, arbitrations, audits, hearings, investigations of which the Company has
Knowledge, proceedings, complaints, litigation or suits, whether in contract,
tort or otherwise, whether statutory or common law, whether civil, criminal,
administrative, investigative, formal or informal, fixed or contingent.
2.13 TAXES.
(a) For purposes of this Agreement, "Taxes" in the plural and "Tax"
in the singular shall refer to any and all taxes, charges, fees, levies, or
other assessments of whatever kind or nature, including, but not limited to, any
federal, state, local or foreign net income, gross income, gross receipts,
unitary, license, payroll, unemployment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including, but not limited to, taxes
under section 59A of the Code), occupational, leasing, lease, fuel, customs,
duties, capital stock, franchise, profits, withholding, Social Security,
unemployment, disability, ad valorem, real
20
property, personal property (tangible and intangible), sales, use, transfer,
registration, value added, alternative or minimum, estimated, or any other kind
of tax whatsoever, including the recapture of any tax items, and including any
interest, addition, penalty or other associated charge thereto, whether disputed
or not.
(b) Except as set forth on SCHEDULE 2.13
(i) The Company has filed or will file or cause to be filed,
within the applicable period prescribed by law, (i) all federal, state,
local, foreign or other material Tax Returns, as that term is defined
below, required by such law to be filed by the Company for all taxable
periods ending on or prior to the Closing Date or (ii) valid extensions of
the time for filing such Tax Returns. For purposes of this Agreement, "Tax
Returns" shall mean any returns, reports or statements with respect to
Taxes which are required to be filed with any taxing authority.
(ii) The Company has not obtained nor will it obtain prior to
the Closing Date any extensions of time in which to file any Tax Returns
for any taxable period ending on or prior to the Closing Date.
(iii) The Company has paid, within the time and in the manner
prescribed by law, all Taxes shown as due on all such Tax Returns and, with
respect to all Tax Returns which the Company has not yet filed, but will
file prior to the Closing Date, shall pay, within the time and in the
manner prescribed by law, all Taxes shown as due on such Tax Returns.
(iv) No written notice has been received by the Company from
any Tax authority in any jurisdiction in which the Company has not filed a
Tax Return that the Company is or may be subject to taxation of any sort in
such jurisdiction or otherwise is required to file a Tax Return in such
jurisdiction.
(v) Except for Permitted Liens, there are no Tax liens or
other security interests or encumbrances of any type resulting from Tax
liabilities on any of the assets of the Company.
(vi) There is no dispute, Claim or any other controversy
concerning any material Tax liability of the Company raised or asserted by
any Tax authority in writing.
(vii) No income Tax Returns of the Company for any open tax
year has been audited by any taxing authority. The Company has made
available to Purchaser a correct and complete copy of each federal income
Tax Return, examination report, statement of deficiency, or any other
administrative or judicial assertion, assessment or determination of
federal income Tax liability with respect to the Company for the past three
years.
21
(viii) The Company has employed a permissible method of Tax
accounting, validly elected for each taxable period ending on or prior to
the Closing Date. The Company has not changed, nor requested to be
permitted to change, any method of Tax accounting.
(ix) The Company has not waived any statute of limitations
with respect to any Taxes or has agreed to any extension of time with
respect to a Tax assessment or deficiency, except for such waivers or
extensions which, by their terms, have elapsed as of the date of this
Agreement, nor are any requests for such waivers or extensions pending.
(x) The Company (i) has not filed a consent under Section
341(f) of the Code concerning collapsible corporations, (ii) has not made
any payments, is obligated to make any payments, or is a party to any
agreement that will render it (or the payor of compensation under the
agreement) subject to the provision of section 280G of the Code regarding
payments as a result of a change in control, (iii) has not been a United
States real property holding company within the meaning of section
897(c)(2) of the Code and (iv) is not a party to any Tax allocation or Tax
sharing agreement.
(xi) The unpaid Taxes of the Company, including Taxes
attributable to all periods ending on or prior to the Closing Date which
are not yet due and payable, do not materially exceed the reserve on the
Financial Statements for the Company's tax liability as of the respective
dates of such Financial Statements.
2.14 CONTRACTS. Except as set forth in this Agreement or on SCHEDULE
2.14 (the agreements listed thereon being referred to as the "Material
Contracts"), the Company is not a party to, bound by or obligated under any:
(a) material mortgage, indenture, note or installment obligation or
other instrument or contract for or relating to any borrowing by the Company;
(b) material guaranty by the Company of any obligation (excluding
any endorsement made in the ordinary course of business for collection);
(c) material license agreement;
(d) material lease of real or personal property under which the
Company is a lessor or lessee;
(e) material agreement for the purchase by the Company of
equipment;
(f) agreement purporting to limit the right of the Company to
compete in any line of business, with any person or other entity or in any
geographic area;
22
(g) material agreement for the purchase or sale of raw materials,
products or goods or the provision of services at prices that vary from the
prices therefor generally prevailing in customary, arms-length transactions;
(h) material contract with any governmental or quasi-governmental
authority;
(i) material bond, deposit, financial assurance requirement or
insurance coverage individually required to be submitted to customers of the
Company under any sale, lease or service arrangement or to any governmental
authority under any Permit or Legal Requirement;
(j) agreement or instrument relating to the acquisition by the
Company of any entity or all or substantially all of the assets of any person or
entity;
(k) other material agreement, contract or obligation of the
Company;
(l) agreement or commitment relating to the borrowing of money or
the guaranty or indemnity (direct or indirect) in respect of or the granting of
security for any obligation for the borrowing of money, by the Company or any
other person or entity, in excess of, including, without limitation,
guarantees, accommodation collateral, letters of credit, mortgages, deeds of
trust, indentures, loan agreements and credit agreements;
(m) agreement or commitment relating to clean-up or remediation
involving Hazardous Materials (as hereinafter defined);
(n) agreement that creates an encumbrance or any restriction on the
ability of the Company to (i) pay dividends or make similar distributions; (ii)
make loans or advances to any person or entity, or (iii) sell, lease or transfer
any of its properties or assets, except (in each case) for such restrictions or
encumbrances existing under or by reason of (1) applicable Legal Requirements,
(2) customary non-assignment provisions in leases and other contracts entered
into in the ordinary course of business, or (3) any instrument governing the
Debt;
(o) indemnification obligations in favor of any person or entity,
and any escrow agreements related to any indemnification or obligation;
(p) confidentiality, secrecy, screening, development or settlement
agreement pertaining to any Intellectual Property; or
(q) contract with any customer of the Company other than contacts
for the purchase and sale of goods, products and services entered into in the
ordinary course of business.
All of the Material Contracts are legal, valid, binding and in full force and
effect, no default exists thereunder on the part of the Company, and except as
set forth in Schedule 2.14, the consummation of the transactions contemplated by
this Agreement will not cause any default or condition in respect of any such
Material Contracts, the effect of which is to cause, permit, create or perfect
the right in any party (a) to repudiate or disavow its obligations to the
Company
23
thereunder, (b) to require or have the right to require the Company to perform
its obligations thereunder (including obligations to pay indebtedness) prior to
such time on which, or on terms and conditions otherwise different from those
that, are provided therein or (c) to recover from the Company any damages or
fines. To the Knowledge of the Company and Shareholder, no party to any such
Material Contract is in default thereunder. True, correct and complete copies of
all the Material Contracts have been delivered to the Purchaser.
2.15 ENVIRONMENTAL QUALITY.
(a) Except as set forth in SCHEDULE 2.15, to the Knowledge of the
Company and Shareholder, neither the Company nor any previous (to the Company)
owner, tenant, occupant, user or operator of any real property now or ever owned
or leased by the Company (the "Property") released or disposed of any "Hazardous
Materials" (as defined below) on, under, in or about the site of the Property,
except in compliance in all material respects with applicable Environmental Laws
(as defined below). For the purposes of this Agreement, the term "Hazardous
Materials" shall mean any substance, material or waste which is regulated by any
local government authority or state with jurisdiction, or the United States
Government, including, without limitation, any material or substance which is
(a) defined as a "hazardous waste," "hazardous material," "hazardous
substances," "extremely hazardous waste," "regulated substance" or "restricted
hazardous waste" under any provision of the existing laws of any state, or any
other applicable existing law, including, but not limited to, the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 ET SEQ. ("RCRA"), and the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 ET SEQ. ("CERCLA") and (b) petroleum, including crude oil and any
fraction thereof and any refined petroleum products and derivatives thereof.
(b) To the Knowledge of the Company and Shareholder, except as set
forth in SCHEDULE 2.15, the Property complies in all respects with all
applicable Environmental Laws. For purposes of this Agreement, the term
"Environmental Laws" shall mean all federal, state and local laws, ordinances
and regulations pertaining to air and water quality, soils and subsurface
strata, natural resources, Hazardous Materials, waste generation, management,
transportation and disposal or other environmental matters, including the Clean
Water Act, the Clean Air Act, the Federal Water Pollution Control Act, the Solid
Waste Disposal Act, RCRA, CERCLA, and the applicable environmental protection
rules, regulations and ordinances of the city and county in which the Property
is located, the Environmental Protection Agency and all other applicable
federal, state, regional and local agencies which are in existence, and are in
effect as of the date hereof. Without limiting the generality of the foregoing,
to the Knowledge of the Company and Shareholder, Company is not liable nor
potentially liable for any response costs or natural resource damages under
Sections 107(a) or 113(f) of CERCLA, or under any other so-called "superfund" or
"superlien" law or similar Legal Requirement currently in existence, at or with
respect to the Property and, to the Knowledge of the Company and Shareholder, no
circumstances exist, which with notice or lapse of time or both would result in
such liability.
(c) To the Knowledge of the Company and Shareholder, the conduct of
the business of the Company complies in all respects with all applicable
Environmental Laws.
24
(d) To the Knowledge of the Company and Shareholder, except as set
forth in SCHEDULE 2.15, the Company has not sent any Hazardous Material to a
site that, pursuant to any applicable Environmental Laws, (i) has been placed on
the "National Priorities List" of hazardous waste sites or any similar state
list, (ii) is otherwise designated or identified as a potential site for
remediation, cleanup, closure or other environmental remedial activity, or (iii)
is subject to a claim, an administrative order or other request to take
"removal" or "remedial" action, as defined in any applicable Environmental Laws,
or to make payment for the costs of cleaning up the site.
(e) Except as set forth in SCHEDULE 2.15, the Company (i) is not
involved in any suit or proceeding with respect to a release or threatened
release of any Hazardous Material or a violation or alleged violation of any
applicable Environmental Laws, nor has the Company received any notice of any
claims from any person or entity relating to property damage or to personal
injuries from exposure to any Hazardous Material, nor has the Company received
any notice or request for information from any governmental agency or authority
or other third party with respect to any of the foregoing, and (ii) has not
failed to timely file any report required to be filed, failed to acquire all
necessary certificates, approvals and permits or failed to generate and maintain
all required data, documentation and records under all applicable Environmental
Laws.
(f) To the Knowledge of the Company and Shareholder, except as set
forth in SCHEDULE 2.15, there are currently no underground storage tanks in or
under the Property, and no underground storage tank was removed from the
Property during the period that the Company maintained an interest in such
Property.
(g) The Company has made available to Purchaser all information in
its and, to the Knowledge of the Company and Shareholder, Shareholder's
possession regarding the environmental condition of the Property.
2.16 INTELLECTUAL PROPERTY. The Company either owns or has the right to
use by license, sublicense, or other tangible agreement, all of the inventions,
improvements, domestic and foreign patents and applications therefor, customer
lists, copyrights, copyright-registrations and applications therefor,
trademarks, trade names, service marks, trade dress, logos, rights in computer
software, and all rights granted or retained in licenses under any of the
foregoing which are material to the conduct of the business of the Company as
presently conducted (collectively, the "Intellectual Property"). None of the
Intellectual Property used in connection with the conduct of the business of the
Company is, or has been in the past five years, involved in, or the subject of,
any pending or, to the Knowledge of the Company and Shareholder, threatened
infringement, interference, opposition or similar action, suit or proceeding to
which the Company was a party. The material license fees, royalties and other
amounts payable by the Company in connection with the use of the Intellectual
Property, together with the terms and conditions on which, and periods for which
such amounts are payable, are set forth in SCHEDULE 2.16.
2.17 PREPAID EXPENSES. All prepaid expenses shown on the balance sheet
of the most recent Financial Statements or subsequently paid by the Company and
shown on the Final Closing Statement have been incurred solely in connection
with the business and assets of the Company.
25
2.18 RELATED PARTY TRANSACTIONS. Set forth on SCHEDULE 2.18 is a list of
all material transactions (including, without limitation, employment contracts,
debts, loans, advances, or other obligations, guarantees, indemnities, accounts
and notes payable or receivable and service agreements) between the Company and
any current officer, director or employee, Shareholder, or Affiliate of the
Company (collectively, "Related Parties") which (a) were entered into and/or
consummated subsequent to January 1, 1998; (b) are or will be effective as of
the date hereof or at Closing, (c) constitutes a present or future liability or
obligation of the Company to any Related Party; or (d) constitutes a present or
future liability of any Related Party to the Company. For purposes of this
Agreement, an "Affiliate" of a party is any individual, company or other entity
that owns five percent (5%) or more of the voting or capital stock or other
equity interest of such party or of which five percent (5%) of the voting or
capital stock or other equity interest is owned or otherwise controlled by that
party or an Affiliate of that party, as the case may be.
2.19 LABOR MATTERS. Except as set forth on SCHEDULE 2.19, (a) the
Company has not entered into and is not a party to any collective bargaining
agreement, memorandum of understanding or other written document binding on the
Company respecting terms and conditions of employment with respect to an
identified group of employees with any labor union that would cover any
employees of the Company and (b) none of the employees of the Company is
subject to any collective bargaining agreement, memorandum of understanding or
other written document binding on the Company respecting terms and conditions
of employment with respect to an identified group of employees nor are any such
employees, in their capacities as employees, represented by any labor union. As
to the collective bargaining agreements disclosed on SCHEDULE 2.19, the Company
is not in material default thereunder. Except as set forth in SCHEDULE 2.19,
there are no Claims, controversies, labor disturbances, or investigations
pending, or to the Knowledge of the Company and Shareholder, threatened, by any
governmental agency or by employees of the Company or any party or parties
representing any of such employees against the Company before any court,
arbitrator or other tribunal. To the Knowledge of the Company and Shareholder,
there are no organizational efforts presently being made or threatened by or on
behalf of any labor union with respect to the employees of the Company nor has
there been in the last five (5) years. The Company has not experienced a work
stoppage, strike, lock-out or other labor disturbance within the past five (5)
years, and there is no work stoppage, strike, lock-out or other labor
disturbance presently occurring, or, to the Knowledge of the Company and
Shareholder, threatened. The Company has complied in all material respects
with all applicable Legal Requirements relating to its employees, the employment
of labor, and the safety and health of employees, including, without limitation,
all applicable Legal Requirements relating to occupational health and safety,
discrimination, unemployment, wages, hours, the Family and Medical Leave Act,
collective bargaining, and the collection and payment of withholding taxes and
similar taxes in respect of the business of the Company. Except as set forth in
SCHEDULE 2.19, there are no unfair labor practice charges, charges of
discrimination, or other complaints pending against the Company involving
employees now or previously employed by the Company.
2.20 CUSTOMERS AND VENDORS. SCHEDULE 2.20 hereto is a correct and
current list of the 20 largest customers and the 10 largest vendors of the
Company during the 12-month period ended December 31, 1997, with the amount of
sales made to each such customer or by each such
26
vendor, as the case may be, during such period as reasonably ascertained from
readily available information, such amounts being estimated in good faith as
being within five percent (5%) of the actual sales made to or by such customer
or vendor, as the case may be. Except as set forth on SCHEDULE 2.20, the
Company does not have any information indicating that any of such customers or
such vendors intends to cease doing business with the Company or materially
alter the amount of the business that it conducts with the Company from the
amount of business such customers or such vendors conducted with the Company
during the last fiscal year.
2.21 OTHER DISCLOSURES. In addition to the other disclosures required
hereby, the following documents and information pertaining to the Company have
been made available to the Purchaser:
(a) true, correct and complete copies of each policy of insurance
maintained by the Company, together with information on premiums, coverage,
insurers, expiration dates and deductibles;
(b) the location and name of each bank or other financial
institution in which the Company has an account or line of credit, and the
identity of each such account or line of credit, and each bank in which the
Company has a safe deposit box, together with the names of all persons
authorized to draw upon or have access thereto;
(c) SCHEDULE 2.21(c) lists each corporate or trade name under which
the Company or its predecessors, if any, has conducted business and the state
and county in which any Real Property or personal property of the Company is
located or has been located.
(d) SCHEDULE 2.21(d) lists each power-of-attorney given by or on
behalf of the Company.
2.22 PARACHUTE PAYMENTS. Any bonuses or other compensation or amounts
paid or payable by the Company, including amounts payable as a result of the
transaction contemplated by this Agreement, have not resulted in and will not
result in payments to "Disqualified Individuals" (as defined in Section 280G(c)
of the Code) of the Company which, individually or in the aggregate, will
constitute "excess parachute payments" (as defined in Section 280G(b) of the
Code) resulting in the imposition of the excise tax under Section 4999 of the
Code or the disallowance of deductions under Section 280G of the Code.
2.23 PRODUCT WARRANTY AND LIABILITY. All finished goods inventories
manufactured by the Company in the operation of the Business (the "Products")
have been in material conformity with all applicable contractual commitments and
all express or implied warranties (including warranties imposed by the
application of law) and, to the Knowledge of the Company and Shareholder, no
material liability exists or will arise for replacement or damage in connection
with such sales or deliveries, except as are adequately reserved for on the
Financial Statements. No Products heretofore sold by the Company are now
subject to any guaranty, warranty, claim for product liability or patent or
other indemnity, other than those sold in accordance with the
27
standard terms and conditions of sale of the Business, true and complete copies
of which have been made available to the Purchaser.
2.24 ACCURACY. The representations and warranties made by the Company
and Shareholder to Purchaser set forth in this Agreement, the Disclosure
Schedules to this Agreement, including any Updated Disclosure Schedule (as
defined below) delivered to Purchaser prior to Closing, and the Related
Agreements delivered and to be delivered pursuant to or in connection with this
Agreement, do not include an untrue statement of material fact or omit to state
any material fact necessary to make them, when taken together and in light of
the circumstances in which they were or are made, not misleading in any material
respect.
2.25 BROKERS AND FINDERS. Except as set forth in SCHEDULE 2.25, no person
or entity is entitled to any brokerage commission, finder's fee or like payment
in connection with the transactions contemplated in this Agreement.
ARTICLE 3
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Shareholder represents and warrants to Purchaser as follows:
3.1 OWNERSHIP OF SHARES. Shareholder is now, and immediately prior to
the Closing, Shareholder will be, the owner of the Shares of the Company as set
forth opposite the name of Shareholder on SCHEDULE 2.2.
3.2 AUTHORIZATION. Shareholder has full right and power to execute and
deliver this Agreement and perform his obligations hereunder. This Agreement and
all other documents and instruments executed or to be executed by Shareholder
pursuant to this Agreement have been, or will have been, duly executed and
delivered by Shareholder.
3.3 ENFORCEABILITY. This Agreement constitutes the valid and legally
binding obligation of Shareholder, enforceable in accordance with its terms,
except as such enforceability may be limited by equitable principles and by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
similar laws relating to or affecting the rights of creditors generally.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT
Parent and Purchaser, jointly and severally, represent and warrant to
Shareholder and the Company as follows:
4.1 ORGANIZATION AND STANDING OF PURCHASER. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Colorado. Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of
28
the State of Delaware. Parent and Purchaser have all requisite corporate power
and authority to enter into this Agreement, to carry out the transactions
contemplated hereby and to perform their obligations hereunder. Parent owns all
of the outstanding capital stock of Purchaser.
4.2 AUTHORIZATION. The execution and delivery of this Agreement, and
all other agreements, documents and instruments executed or to be executed by
the Purchaser and Parent in connection herewith (the "Purchaser Related
Agreements"), and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate and other action
on the part of Parent and Purchaser. This Agreement, and the Purchaser Related
Agreements have been, or will have been, at the time of their respective
executions and deliveries, duly executed and delivered by a duly authorized
officer of Parent and Purchaser.
4.3 ENFORCEABILITY. This Agreement constitutes, and each of the
Purchaser Related Agreements when duly executed and delivered will constitute,
the valid and legally binding joint and several obligations of Parent and
Purchaser, enforceable against Parent and Purchaser, jointly and severally, in
accordance with its terms, except as such enforceability may be limited by
equitable principles and by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar laws relating to or affecting the rights of
creditors generally.
4.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution and
delivery of this Agreement, and the Purchaser Related Agreements, and the
consummation of the transactions contemplated hereby and thereby, will not
conflict with or result in any violation or default under any provision of the
Certificate of Incorporation or Bylaws of Parent or Purchaser, or of any
material mortgage, indenture, trust, lease, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or Purchaser or any of
their respective properties, the result of which (either individually or in the
aggregate) will prevent or materially delay the consummation of the transactions
contemplated hereby.
4.5 GOVERNMENTAL AUTHORIZATIONS, CONSENTS. No consents, licenses,
approvals or authorizations of, and registrations or declarations with, any
governmental authority, bureau, agency or commission, or any third party, are
required to be obtained or made by Parent or Purchaser in connection with the
execution, delivery, performance, validity and enforceability of this Agreement
or the Purchaser Related Agreements or the Merger contemplated hereby.
4.6 MW COMMON STOCK. The MW Common Stock when issued will have been
duly authorized, validly issued, fully paid and nonassessable, and the record
date of issuance on the Parent's (and its transfer agent's) books shall be the
Closing Date, and each share of MW Common Stock issued to Shareholder hereunder
shall be free and clear of any lien, pledge, charge, adverse claim, security
interest, restriction, encumbrance (including any imposed by law in any
jurisdiction), title retention agreement, option or right to purchase of any
kind.
4.7 LITIGATION. No action, suit, proceeding or governmental
investigation is pending or, to the best of Parent's and Purchaser's knowledge,
threatened, at law or in equity, which seeks
29
to question, delay or prevent the consummation of all or any portion of the
transactions contemplated hereby.
4.8 SECURITIES ACT OF 1933. Purchaser is an "accredited investor" as
defined under Rule 501 of Regulation D under the Securities Act of 1933, as
amended
4.9 BROKERS AND FINDERS. No person or entity is entitled to any
brokerage commission, finder's fee or like payment from Parent or Purchaser in
connection with the transactions contemplated in this Agreement.
4.10 PURCHASER'S KNOWLEDGE. No officer or director of Parent or
Purchaser has actual knowledge, as of the date hereof, of any state of facts
which, in the judgment of Parent or Purchaser, will give rise to a Shareholder
Indemnified Obligation or a Purchaser Indemnified Obligation, except for such
matters as have been previously disclosed in writing to Shareholder, the Company
or their representatives.
4.11 SEC DOCUMENTS. Parent has timely filed all required reports,
schedules, forms, statements, exhibits and other documents with the SEC since
December 31, 1996 (the "SEC Documents") and is qualified, and has obtained or
will obtain, without delay to the registration process, all appropriate waivers
necessary to allow Parent to register the MW Common Stock on SEC Form S-3. As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of Parent and its subsidiaries included in the
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited financial statements, as permitted by SEC Form 10-Q) applied on a
consistent basis during the period involved (except as may be indicated in the
notes thereto) and fairly present the financial position of Parent and its
subsidiaries as of the date thereof and their statements of operations, changes
in Shareholder's equity and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). Except
as set forth in the SEC Documents, neither Parent nor any of its subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of Parent and its subsidiaries or in the notes thereto, other than
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the date of its last filed
Form 10-K or 10-Q.
4.12 ACCURACY. The representations and warranties made by the Parent and
Purchaser to Company and Shareholder set forth in this Agreement and the
Purchaser Related Agreements, instruments and documents delivered and to be
delivered pursuant to or in connection with this Agreement do not include an
untrue statement of material fact or omit to state any material fact
30
necessary to make them, when taken together and in light of the circumstances in
which they were or are made, not misleading in any material respect.
4.13 INVESTIGATION. Parent and Purchaser have conducted inspections of
the properties and financial and other records of the Company and other due
diligence with respect to the Company. Parent and Purchaser have had an
opportunity to ask questions of the Company and Shareholder relating to the
Company and management and financial affairs of the Company, which questions
have been answered to Parent and Purchaser's satisfaction, and to examine all
books and records of the Company. Parent and Purchaser acknowledge that they
have made their own independent investigation, examination, analysis and
evaluation of the Company including, without limitation, Parent and Purchaser's
own estimate of the value of the Company's business.
ARTICLE 5
COVENANTS OF THE COMPANY AND SHAREHOLDER
5.1 CONDUCT OF BUSINESS. The Company agrees that, between the date of
this Agreement and the Closing Date, except as contemplated by this Agreement or
referred to in a Disclosure Schedule, and except as may be necessary to carry
out the transactions contemplated by this Agreement, the Company without
Purchaser's written consent (which consent will not be unreasonably withheld or
delayed) or as requested by Purchaser, did not or will not:
(a) amend its Articles of Incorporation or Bylaws;
(b) make any material change in its practices, operations or
policies with respect to the selling of goods or services, collecting accounts
receivable and/or paying accounts payable except in the ordinary course of
business;
(c) conduct its business in a manner that materially departs from
the manner in which such business was being conducted prior to the date of this
Agreement;
(d) except as set forth in SCHEDULE 2.8 increase the rate or change
the form of compensation payable to any director, officer or employee of the
Company or increase any employee benefits, except in the ordinary course of
business in accordance with past practice in an amount not to exceed 3% in any
one case or the payment of bonuses in an aggregate amount of $25,000;
(e) purchase or dispose of any properties or other assets, except
in the ordinary course of business or as set forth in SCHEDULE 1.7;
(f) declare, set aside, pay or make any dividend or other
distribution in respect of any outstanding shares of the Company's capital stock
other than distributions to Shareholder to pay income taxes and distributions to
Shareholder charged against his Sub-S accumulated adjustments account, if
applicable;
31
(g) issue or sell any shares of the Company's capital stock
(whether or not from the treasury) or any other securities; grant any options,
convertibility rights, rights to subscribe for shares of capital stock or
securities convertible into or exchangeable for shares of capital stock,
warrants, calls or other agreements relating to the Company's capital stock;
split up, combine, reclassify, redeem, repurchase or otherwise reacquire any of
the Company's capital stock, or otherwise change its capitalization;
(h) except as required by regulation or generally accepted
accounting principles, maintain its books of account other than in the usual,
regular and ordinary manner in accordance with generally accepted accounting
principles and on a basis consistent with prior periods, make any change in any
of its books, accounting methods or practices, or reclassify any assets or
liabilities;
(i) cancel, terminate, renew or amend any Material Contract or
enter into any contract, agreement, lease, license or commitment which would be
a Material Contract if such had existed on the date hereof, except in the
ordinary course of business;
(j) merge or consolidate with or into any other person or entity or
sell or dispose of all or substantially all of the Company's assets to any
person or entity, or initiate or participate in negotiations with any person or
entity with respect to any of the foregoing;
(k) invest in certificates of deposit in any one bank if such
investment in the aggregate exceeds $100,000 at any time;
(l) incur any direct or contingent liability for borrowed money or
guarantee the monetary obligations of any other person or entity, other than
indebtedness to be included in the Debt, or make any monetary investment in,
advance to or loan to any person or entity other than in the ordinary course of
business;
(m) fail to make maintenance expenditures and maintain inventories
in the amounts and at the times required to operate its business in the ordinary
course consistent with past practice;
(n) implement or adopt any change in its tax methods, principles or
elections;
(o) fail to pay accounts payable or collect accounts receivable in
accordance with past practices;
(p) enter into any transaction outside the ordinary course of
business; or
(q) agree or commit to do any of the foregoing.
Nothing contained in this Section 5.1 or elsewhere in this Agreement shall
be deemed in any way as prohibiting the Company from using cash, cash
equivalents or other current assets to reduce or pay off Debt prior to Closing.
32
5.2 ACCESS. The Company agrees that, between the date of this Agreement
and the Closing Date, the Company shall, after receiving reasonable advance
notice from Purchaser, give Parent, Purchaser and their Associates (as defined
in Section 6.1) reasonable access (during normal business hours) to the books,
records, contracts and offices of the Company for the purpose of enabling such
parties to further investigate and inspect the business, operations and
financial and legal affairs of the Company.
5.3 NO SOLICITATION OR NEGOTIATION. The Company and Shareholder agree
that between the date of this Agreement and the earlier of the Closing Date or
the date this Agreement otherwise terminates, they will not, nor will they
permit any officer, director, Shareholder or agent of Shareholder or the Company
to, (i) solicit any proposal or offer from any person or entity (other than
Purchaser) relating to the sale of the Company, its capital stock or any
material portion of its assets, (ii) provide any non-public information to any
person or entity (other than Purchaser) for use in preparing any proposal or
offer relating to the sale of the Company or its capital stock or any material
portion of its assets, or (iii) respond to or enter into any negotiations
regarding any proposal or offer from any person or entity (other than Purchaser)
with respect to the foregoing.
5.4 FILINGS AND CONSENTS. Where required by applicable law, the Company
and Shareholder shall use commercially reasonable efforts to do each of the
following:
(a) as soon as practicable after the date of this Agreement, file
with the appropriate governmental authority any notification form required to be
filed by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") with respect to this Agreement and the
transactions contemplated hereby, together with a request for early termination
of the applicable waiting period;
(b) after consultation with Purchaser, make any additional filing
required to be made by the Company under the HSR Act and promptly furnish to the
appropriate governmental authority such additional information as may be
requested under the HSR Act;
(c) make or give each filing or notice required to be made or given
pursuant to any applicable Legal Requirement, Material Contract or Permit by the
Company or Shareholder in connection with the execution and delivery of any of
this Agreement or in connection with the consummation or performance of any of
the transactions contemplated hereby; and
(d) obtain an agreement from each Creditor to terminate its lien
and lien filings upon payment of the amounts specified in such Creditor's
respective Payoff Letter to the extent that Purchaser decides to pay off a Debt
at Closing and each consent required to be obtained pursuant to any applicable
Legal Requirement, Permit or Material Contract by the Company or Shareholder in
connection with the execution and delivery of any of this Agreement or in
connection with the consummation or performance of the transactions contemplated
hereby. Except as to liens related to Leased Property to be acquired by
Purchaser pursuant to Section 7.5, Company shall pay all reasonable costs of
obtaining such releases and consents which costs shall be a Company Expense.
33
5.5 UPDATED DISCLOSURE SCHEDULES. Between the date of this Agreement
and the Closing Date, if Shareholder or the Company becomes aware of any fact or
condition that causes any of the representations and warranties in this
Agreement to become untrue, misleading, or inaccurate in any material respect,
such party will promptly deliver to Purchaser an updated Disclosure Schedule
("Updated Disclosure Schedule") setting forth the facts or conditions that cause
such representation, warranty, or Disclosure Schedule to become untrue,
misleading, or inaccurate.
ARTICLE 6
COVENANTS OF PARENT AND PURCHASER
Parent and Purchaser each agree with the Company that:
6.1 CONFIDENTIALITY. Parent and Purchaser shall hold in strict
confidence, and cause their respective affiliates, directors, officers,
employees, agents, attorneys, accountants, financing sources and representatives
and those of its affiliates ("Associates") to hold in strict confidence, all
documents and information obtained with respect to the Company ("Confidential
Information"). Neither Parent nor Purchaser shall permit any Confidential
Information to be utilized or to be disclosed or conveyed to any other person or
entity other than their Associates in furtherance of this Agreement. Without
limiting the generality of the foregoing, and except as required by law or as
permitted by Section 7.4, (i) neither Parent nor Purchaser shall disclose to any
person or entity, and shall not permit any of their Associates to disclose to
any person or entity, the existence of this Agreement or any of the terms or
provisions hereof and (ii) except in the ordinary course of business, neither
Parent nor Purchaser shall contact any customers or employees of the Company,
and neither Parent nor Purchaser shall not permit any of their Associates to
contact any customers or employees of the Company, without the prior consent of
an officer of the Company. This Section 6.1 shall terminate if and when the
Closing occurs in accordance with Article 1 of this Agreement, or within three
years of the date of execution of this Agreement, whichever occurs first.
6.2 FILINGS AND CONSENTS. Where required by applicable law, Parent and
Purchaser shall use commercially reasonable efforts to do each of the following:
(a) as soon as practicable after the date of this Agreement, file
with the appropriate governmental authority any notification form required to be
filed by Parent or Purchaser under the HSR Act with respect to this Agreement
and the transactions contemplated hereby, together with a request for early
termination of the applicable waiting period;
(b) after consultation with Shareholder, make any additional filing
required to be made by Parent or Purchaser under the HSR Act and promptly
furnish to the appropriate governmental authority such additional information as
may be requested under the HSR Act;
34
(c) make or give each other filing or notice required to be made or
given pursuant to any applicable Legal Requirement by Purchaser in connection
with the execution and delivery of this Agreement or in connection with the
consummation or performance of any of the transactions contemplated hereby; and
(d) obtain each consent required to be obtained by Parent or
Purchaser pursuant to any applicable Legal Requirement or material contract to
which Parent or Purchaser is a party or by which either of them is bound in
connection with the execution and delivery of any of this Agreement or in
connection with the consummation or performance of the transactions contemplated
hereby.
6.3 FILING OF FINAL TAX RETURNS. Parent and Purchaser agree to timely
file all final Tax Returns for and on behalf of the Company which are required
to be filed subsequent to the Closing, and to deliver copies thereof to
Shareholder promptly after filing the same.
6.4 OFFICER AND DIRECTOR INDEMNIFICATION. Parent and Purchaser agree to
include and maintain provisions in the Certificate of Incorporation and Bylaws
of the Surviving Corporation which provide indemnification for the directors and
officers of the Company immediately prior to the Effective Time to the maximum
extent provided by such documents and applicable corporate law and to indemnify
such directors and officers to the maximum extent provided by applicable
corporate law. In addition, Parent and Purchaser shall include such persons as
additional insureds under Parent's Director and Officer Insurance Policy if they
can do so without substantial additional cost.
6.5 BENEFIT PLANS AND RELATED MATTERS. Except for employees subject to
collective bargaining agreements and subject to the provisions of Parent's
policies and programs, any employee of the Company retained by Purchaser or its
affiliates after the Closing Date (each, a "Transferred Employee") shall be
eligible to participate or eligible for accrual of benefits, vesting and
contributions or accruals to be made or credited following the Closing Date
under each of Parent's employee benefit plans, programs or arrangements
available to all or substantially all of Parent's employees, subject to the
terms upon which such plans allow new participation by Purchaser's employees.
Each Transferred Employee shall be credited with the time-in-service that the
employee accrued with the Company.
ARTICLE 7
COVENANTS OF ALL PARTIES
The parties hereto agree that:
7.1 COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES. Subject to the
terms and conditions of this Agreement, each party will use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable Legal
Requirements to consummate the transactions contemplated by this Agreement. The
Company, Shareholder, Parent and Purchaser each agree to execute and deliver
35
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement.
7.2 POOLING OF INTERESTS. Each of Parent, Purchaser and the Company
shall use its respective commercially reasonable efforts to cause the
transactions contemplated by this Agreement, including the Merger, to be
accounted for as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations, and such accounting
treatment to be accepted by each of Parent's and the Company's independent
certified public accountants, respectively, and to be accepted by the SEC, and
each of Parent, Purchaser and the Company and Shareholder agree that they will
not knowingly take any action that would cause such accounting treatment not to
be obtained.
7.3 CERTAIN FILINGS, ETC. The Company, Parent and Purchaser shall
cooperate with one another (a) in determining whether any action by or in
respect of, or filing with, any governmental body, agency, official or authority
is required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (b) in
taking such actions or making any such filings, in furnishing such information
as may be required in connection therewith, and in seeking timely to obtain any
such actions, consents, approvals or waivers.
7.4 PUBLIC ANNOUNCEMENTS. The parties agree not to issue any press
release or make any public statement with respect to this Agreement or the
transactions contemplated hereby prior to the Closing without the prior consent
of Purchaser and Company (which consent shall not be unreasonably withheld or
delayed), except to the extent that any party hereto is required by law to make
any such disclosure and such party notifies the other parties hereto a
reasonable time before making such disclosure of the nature and content of the
intended disclosure, and consults with such other parties regarding the nature
and content of such disclosure.
7.5 REAL ESTATE. The parties agree to negotiate, execute and deliver
prior to Closing, mutually acceptable real estate purchase and sale contracts
(the "Real Estate Documents") for the Leased Property currently occupied by the
Company which is owned directly or indirectly by Shareholder and which must be
acquired by the Purchaser as part of the acquisition of the Company in order for
the transactions described herein to be accounted for as a pooling of interests.
Notwithstanding the form of the transaction pursuant to which the Leased
Property is to be so transferred, the Real Estate Documents shall contain
(a) terms and conditions which are essential to effectuate the transfer of the
Leased Property in a form acceptable to Purchaser and (b) provisions similar to
those set forth in Sections 1.1(f) and 1.10 hereof relating to the MW Common
Stock delivered in connection therewith. The Real Estate Documents shall
provide for a purchase price of the greater of nine times current annual rentals
or fair market value and shall be net of any mortgages assumed by Purchaser.
The purchase price and the amount of any pre-payment penalties incurred by
Shareholder for pre-paying any mortgages shall be paid by Purchaser to
Shareholder in MW Common Stock based on the MW Common Valuation.
36
ARTICLE 8
CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to consummate the Merger, pay the Merger
Consideration, discharge the Debt, and otherwise consummate the transactions
contemplated hereunder is subject to the satisfaction as of the Closing Date, of
the following conditions (any of which may be waived by Purchasers in whole or
in part):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties and covenants set forth in Articles 2 and 3 and Section 5.1, without
giving effect to any Updated Disclosure Schedule delivered to Purchaser after
the date hereof, do not contain any misrepresentation or breach of warranty
which is likely to cause a Material Adverse Effect as of the date of this
Agreement and as of the Closing Date, with the same effect as though made on and
as of the Closing Date, except to the extent that (a) any of such
representations and warranties refers specifically to a date other than the
Closing Date or (b) the accuracy of any of such representations and warranties
is affected by any of the transactions contemplated by this Agreement.
8.2 SHAREHOLDER APPROVAL. Approval of this Agreement and the
transactions contemplated hereby shall have been validly obtained by the
requisite vote of Shareholder of the Company under applicable law.
8.3 PERFORMANCE. Shareholder and the Company having performed, in all
material respects, all obligations required by this Agreement to be performed by
Shareholder and the Company on or before the Closing Date including without
limitation the covenants set forth in Article 5.
8.4 CERTIFICATE. Purchaser having received from a duly authorized
officer of the Company a certificate dated the Closing Date confirming that the
conditions in Section 8.1 and 8.2 have been met and confirming, to the best of
such persons' knowledge, that the condition of Section 8.3 has been met.
8.5 DEBT CERTIFICATES AND PAYOFF LETTERS. Purchaser having received the
Debt Certificate and the Payoff Letters.
8.6 NO INJUNCTION. There not being in effect, at the Closing, any
injunction or other binding order of any court or other tribunal having
jurisdiction over Purchaser that prohibits the consummation of the transactions
contemplated in this Agreement.
8.7 NO MATERIAL ADVERSE EFFECT. There having been no Material Adverse
Effect on the Company since December 31, 1997.
8.8 CONSENTS. All required consents, licenses, approvals, estoppel
certificates, releases of Encumbrances, acknowledgments of payment in full and
authorizations, as set forth on SCHEDULE 2.5, having been obtained and delivered
to Purchaser.
37
8.9 SHAREHOLDER REPRESENTATION AND AFFILIATE LETTER. Shareholder having
executed and delivering a letter in the form of EXHIBIT C.
8.10 LEGAL OPINIONS. Purchaser having received from counsel to the
Company an opinion in substantially the form of EXHIBIT D attached hereto.
8.11 CERTIFICATE OF SECRETARY. The Company having delivered a
certificate, signed by the secretary of the Company, certifying (i) current
copies, as amended, of the Articles of Incorporation and Bylaws of the Company
and (ii) the resolutions of the board of directors and Shareholder of the
Company authorizing this Agreement and the transactions contemplated hereby.
8.12 ESCROW AGREEMENTS. Shareholder, the Company, and the Escrow Agent
(as defined in the Escrow Agreement) having executed and delivered the Escrow
Agreement.
8.13 NON-COMPETE AGREEMENTS. Shareholder having executed non-compete
agreements in the form attached as EXHIBIT E providing for a covenant not to
compete of five years from the date of Closing and three years from the date of
Shareholder's termination of employment with Purchaser or one of its Affiliates,
whichever is later.
8.14 UCC-3S. The Company having delivered UCC-3 Termination Statements
for all the secured Debt to be paid off at Closing, or a Payoff Letter from the
holder thereof agreeing to deliver the same after receipt of immediately
available funds sufficient to pay off in full the secured Debt.
8.15 HSR ACT. All applicable waiting periods under the HSR Act relating
to transactions contemplated hereby having expired or been terminated.
8.16 ACCOUNTING, TAX MATTERS. Purchaser is not aware of any fact or
circumstance that would (i) prevent the transactions contemplated hereby from
qualifying as a tax-free reorganization under the Code, or (ii) prevent the
transaction from qualifying for the pooling of interests method of accounting.
8.17 REAL ESTATE PURCHASES. The Real Estate Documents shall have been
executed and delivered by the Purchaser and Shareholder and the conditions to
purchase of the subject real estate shall have been satisfied.
8.18 NO DISCOVERY. Purchaser not being informed of or otherwise having
discovered any matter or matters which would constitute a Purchaser Indemnified
Obligation or which would represent a Material Adverse Effect on the Company.
8.19 DOCUMENTATION. All agreements, documents and instruments incidental
to the performance of the transactions contemplated by this Agreement being in a
form and substance
38
reasonably satisfactory to Purchaser and its legal counsel and Purchaser having
received copies of all documents that they may have reasonably requested in
connection with such transactions.
8.20 APPROVAL OF PURCHASER'S BOARD. The Board of Directors of Purchaser
and Parent shall have approved this Agreement and the transactions contemplated
herein.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF THE COMPANY TO CLOSE
The obligation of the Company to consummate the transactions that are to be
consummated at the Closing is subject to the satisfaction, as of the Closing
Date, of the following conditions (any of which may be waived in whole or in
part by Shareholder):
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Purchaser set forth in Article 4 being accurate in all
material respects (except for the representations and warranties set forth in
Section 4.6, which shall be true and accurate) as of the date of this Agreement
and as of the Closing, as though made on and as of the Closing Date.
9.2 PERFORMANCE. Parent and Purchaser having performed, in all material
respects, all obligations required by this Agreement to be performed by Parent
and Purchaser on or before the Closing Date.
9.3 CERTIFICATE. The Company having received from duly authorized
officers of Purchaser a certificate dated the Closing Date confirming that the
condition in Section 9.1 has been met and confirming, to the best of such
persons' knowledge, that the condition of 9.2 has been met.
9.4 NO INJUNCTION. There not being in effect, at the Closing, any
injunction or other binding order of any court or other tribunal having
jurisdiction over Shareholder or the Company that prohibits the consummation of
the transactions contemplated by this Agreement.
9.5 LEGAL OPINION. The Company having received from counsel to
Purchaser and Parent an opinion in substantially the form of EXHIBIT F attached
hereto.
9.6 TAX OPINION. The Company and Shareholder having received an opinion
of Rothgerber Xxxxxxx & Xxxxx LLP, in form and substance reasonably satisfactory
to the Company, to the effect that the Merger and the issuance of shares of MW
Common Stock in connection therewith, as described herein, shall constitute a
tax-free reorganization under Section 368 of the Internal Revenue Code of 1986,
as amended.
9.7 ESCROW AGREEMENTS. Purchaser and the Escrow Agent having executed
and delivered the Escrow Agreement and the Working Capital Escrow Agreement.
39
9.8 HSR ACT. All applicable waiting periods under the HSR Act relating
to transactions contemplated hereby having expired or been terminated.
9.9 DOCUMENTATION. All agreements, documents and instruments incidental
to Purchaser's and Parent's performance of the transactions contemplated by this
Agreement, being in a form and substance reasonably satisfactory to Shareholder
and their legal counsel.
9.10 MATERIAL ADVERSE EFFECT. There having been no material adverse
effect on Purchaser or Parent since December 31, 1997.
9.11 REAL ESTATE PURCHASES. The Real Estate Documents shall have been
executed and delivered by the Purchaser and Shareholder and the conditions to
purchase of the subject real estate shall have been satisfied.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1 RIGHT TO TERMINATE AGREEMENT. This Agreement may be terminated
prior to the Closing:
(a) by the mutual agreement of the Company and Purchaser;
(b) by Purchaser at any time after June 30, 1998 if any condition
set forth in Article 8 shall not have been satisfied or waived and Parent or
Purchaser is not in material breach of this Agreement;
(c) by the Company at any time after May 29, 1998 if any condition
set forth in Article 9 shall not have been satisfied or waived and the Company
is not in material breach of this Agreement;
(d) by Purchaser at any time if it determines that any
representation or warranty set forth in Section 2 or Section 3 is inaccurate in
any material respect;
(e) by Purchaser if any Updated Disclosure Schedule delivered to
Purchaser under Section 5.5 causes any representation or warranty set forth in
Section 2 or 3 to be inaccurate in any material respect; or
(f) by the Company at any time if it determines that any
representation or warranty set forth in Section 4 is inaccurate in any material
respect.
40
10.2 EFFECT OF TERMINATION. Upon the termination of this Agreement
pursuant to Section 10.1:
(a) Purchaser shall promptly destroy or cause to be returned to the
Company all Confidential Information, including any copies made by or supplied
to Purchaser or any of Purchaser' Associates of any such Confidential
Information;
(b) Each party shall pay its own costs and expenses and no party
hereto shall have any obligation or liability to the other parties hereto;
PROVIDED, HOWEVER that the parties hereto shall remain bound by the provisions
of Sections 6.1 and 7.4 and Article 12.
ARTICLE 11
CERTAIN REMEDIES AND LIMITATIONS
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties made by the Company and Shareholder in this
Agreement, in any Schedule or in any certificate delivered pursuant hereto,
shall survive the Closing until May 10, 1999, provided that there shall be no
termination of the obligation to indemnify for a claim involving any such
representation or warranty provided a Claim Notice has been delivered prior to
May 10, 1999. The representations and warranties of any party shall be
unaffected by any investigation made by or on behalf of the other parties or by
knowledge obtained as a result thereof or otherwise. All representations and
warranties made by Parent and the Purchaser as to any fact or condition on or
before the Closing Date, in this Agreement, or in any certificate delivered
pursuant hereto, shall survive the Closing.
11.2 INDEMNIFICATION BY SHAREHOLDER.
(a) The Purchaser and the Company and their respective Affiliates
and their respective officers, directors, shareholders, agents, representatives,
consultants, employees and affiliates, and all of their respective heirs,
successors and permitted assigns (collectively, the "Purchaser Indemnified
Parties") shall be indemnified and held harmless by Shareholder solely out of
the portion of the Merger Consideration deposited in the Escrow Account, against
and in respect of the net amount (determined after deduction of the amount of
any insurance proceeds recovered and any benefits inuring to the Purchaser as a
result of the timing for income tax purposes of deductions for such losses as
compared to the timing of recoveries under insurance or this Section 11.2):
(i) of any and all liabilities, obligations, losses,
damages, diminutions of value, liens and deficiencies of any kind or nature
("Losses") not accrued or reserved for in the Final Closing Statement which
exist, or which are imposed on, incurred by or asserted against any one or
more of the Purchaser Indemnified Parties,
(A) based upon, resulting from or arising out of, or as to
which there was, any breach or inaccuracy of any representation,
warranty, statement,
41
certification, agreement or covenant made by the Company or
Shareholder in this Agreement, any Related Agreement, any Disclosure
Schedule hereto or thereto;
(B) based upon, resulting from or arising out of any claim,
litigation or proceeding brought by any third-party based upon,
resulting from, arising out of or concerning any event, fact or
circumstance, if and to the extent that such event, fact or
circumstance arises out of or relates to the ownership or operation
of the Company prior to Closing;
(C) arising out of the cost of any required remediation
under Environmental Laws of any of the properties now or previously
owned, leased, used, occupied or contaminated by the Company, if
the materials and/or conditions requiring such remediation existed
as of the Closing;
(D) in the nature of Taxes for periods through the Closing
for which the Company is liable to the extent that an appropriate
tax authority has asserted a claim and (i) such Taxes are not
reflected on the Financial Statements and did not arise in the
ordinary course of business after the date thereof, (ii) such Taxes
should have been but were not reflected in any return filed by the
Company prior to the Closing, (iii) such Taxes were required to be
paid prior to the Closing and were not so paid, or (iv) such Taxes
result from the failure by the Company prior to the Closing to
comply with any legal requirements relating to information reporting
or withholding and payment over of taxes with respect to payments
made to third parties;
(E) the amount of any brokerage commission, finder's fee or
like payment in connection with the transactions contemplated in
this Agreement to the extent not included in Company Expenses
included in the calculation of the Merger Consideration;
(ii) of any cost or expenses (including, without limitation,
settlement costs and reasonable attorneys', accountants' and experts' fees
and court costs) incurred by Purchaser Indemnified Parties in connection
with any of the foregoing (including, without limitation, any reasonable
cost or expense incurred by Purchaser Indemnified Parties in enforcing
their rights pursuant to this Section 11.2).
Each of the above is for purposes of this Agreement a "Purchaser
Indemnified Obligation."
(b) Claims for indemnification under Section 11.2(a)(i)(B), (C) or
(D), above, may be made regardless of whether or not the matter giving rise to
such claim would constitute a breach of a representation and warranty made in
this Agreement, any Related Agreement, any Disclosure Schedule hereto and
thereto or any other written document. No Purchaser Indemnified Party shall be
required to make any claim or demand against any other person or entity prior to
the making of any claim or demand for indemnification or at any other time.
Shareholder agrees that, notwithstanding any other provision of this Agreement,
any Related
42
Agreement or applicable Legal Requirements, Purchaser Indemnified Parties shall
offset all valid claims for indemnification against the Escrow Account in
accordance with the terms of the Escrow Agreement.
11.3 LIMITATIONS ON REPRESENTATIONS, WARRANTIES AND LIABILITIES OF
SHAREHOLDER.
(a) Notwithstanding anything to the contrary in this Agreement,
Shareholder shall not be liable to the Purchaser Indemnified Parties, except
under the Escrow Agreement as provided therein. The total amount of payments
that Shareholder may be required to make thereunder shall be limited in the
aggregate to the Escrow Amount, which is the sole source of Purchaser's
indemnification and Shareholder's cumulative liability shall in no event exceed
the Escrow Amount.
(b) No payment shall be required to be made for Purchaser
Indemnified Obligations unless a Claim Notice (as defined below) with respect
thereto has been delivered to Shareholder on or prior to May 10, 1999.
(c) Notwithstanding anything to the contrary in this Agreement, and
except for "willful," knowing or intentional breaches of the representations and
warranties contained herein, no claim for indemnification may be made by any
Purchaser Indemnified Party unless and until the aggregate amount of Losses
and/or other amounts claimed for indemnification by the Purchaser Indemnified
Parties exceeds $25,000, and then only for the amount by which such Losses and
other amounts claimed exceed $25,000.
11.4 INDEMNIFICATION BY PARENT AND PURCHASER.
(a) Parent and Purchaser will, jointly and severally, indemnify and
hold harmless Shareholder and his respective affiliates, officers, directors,
partners, stockholders, agents, representatives, consultants and employees, and
all of their respective heirs, successors and permitted assigns (collectively,
the "Shareholder Indemnified Parties") from and against the net amount
(determined after deduction of the amount of any insurance proceeds recovered):
(i) of any and all Losses which exist, or which are imposed
on, incurred by or asserted against any one or more of Shareholder
Indemnified Parties:
(A) based upon, resulting from or arising out of or as to
which there was any breach or inaccuracy of any representation,
warranty, statement, certification, agreement, obligation or
covenant made by Parent or Purchaser in this Agreement, any
Purchaser Related Agreement or in any other written document;
(B) based upon, resulting from or arising out of any claim,
litigation or proceeding brought by any third party based upon,
resulting from arising out of or concerning any event, fact or
circumstance, if and to the extent that such event, fact or
circumstance arises out of or relates to the ownership or operation
of the Company after the Closing;
43
(C) arising out of the cost of remediating under
Environmental Laws any of the properties now owned, leased, used,
occupied or contaminated by the Company, if the conditions requiring
such remediation did not exist prior to the Closing;
(D) in the nature of Taxes which arise subsequent to the
Closing;
(E) the amount of any brokerage commission, finder's fee or
like payment in connection with the transactions contemplated in
this Agreement;
(ii) of any cost or expenses (including, without limitation,
settlement costs and reasonable attorneys', accountants' and experts' fees
and court costs) incurred by Shareholder Indemnified Parties in connection
with any of the foregoing (including, without limitation, any reasonable
cost or expense incurred by Shareholder Indemnified Parties in enforcing
their rights pursuant to this Section 11.4).
Each of the above is for purposes of this Agreement a "Shareholder
Indemnified Obligation."
(b) Claims for indemnification under Section 11.4(a)(i)(B), (C) or
(D), above, may be made regardless of whether or not the matter giving rise to
such claim would constitute a breach of a representation and warranty made in
this Agreement, any Related Agreement, any Disclosure Schedule hereto and
thereto or any other written document. No Shareholder Indemnified Party shall
be required to make any claim or demand against any other person or entity prior
to the making of any claim or demand for indemnification or at any other time.
11.5 LIMITATIONS ON LIABILITY OF PURCHASER.
(a) No payment shall be required to be made for Shareholder
Indemnified Obligations unless a Claim Notice with respect thereto has been
delivered to Purchaser on or prior to the third anniversary of the Closing.
(b) Any amounts payable by Purchaser to Shareholder under this
Article 11 shall be payable in MW Common Stock at the MW Common Stock Valuation.
11.6 INDEMNIFICATION CLAIMS.
(a) If either a Purchaser Indemnified Party, on the one hand, or a
Shareholder Indemnified Party, on the other hand, (the "Claimants") wishes to
assert an indemnification claim hereunder, the Claimant shall deliver to
Shareholder, if a Purchaser Indemnified Party, or to Purchaser, if the Claimant
is a Shareholder Indemnified Party, a written notice (a "Claim Notice") setting
forth:
(i) the matter giving rise to the Claim for indemnification,
44
(ii) a detailed description of all of the facts and
circumstances known to Claimant giving rise to the Claim, and
(iii) a detailed description of, and a reasonable estimate of
the total amount of, the monetary amounts actually incurred or expected to
be incurred for which indemnification is sought.
(b) Purchaser Indemnified Parties and Shareholder Indemnified
Parties are referred to herein as "Indemnified Parties," and the persons from
whom indemnification may be sought pursuant to this Section 11.6 are referred to
as an "Indemnifying Party". Within twenty (20) days after receipt of any Claim
Notice, the Indemnifying Parties will (i) acknowledge in writing their
responsibility for all or part of such matter for which indemnification is
sought under this Article 11, and will either (x) pay or otherwise satisfy the
portion of such matter as to which responsibility is acknowledged, or (y) take
such other action as is reasonably satisfactory to the Indemnified Party to
provide reasonable security or other assurances for the performance of their
obligations hereunder, and/or (ii) give written notice to the Indemnified Party
of their intention to dispute or contest all or part of such responsibility.
Upon delivery of such notice of intention to contest, the parties will negotiate
in good faith to resolve as promptly as possible any dispute as to
responsibility for, or the amount of, any such matter.
11.7 DEFENSE OF THIRD PARTY ACTIONS. If an Indemnified Party receives
notice or otherwise obtains Knowledge of any Claim or any threatened Claim that
may give rise to an indemnification claim against an Indemnifying Party, then
the Indemnified Party shall promptly deliver to the Indemnifying Party a written
notice describing such Claim in reasonable detail. The untimely delivery of such
written notice by the Indemnified Party to the Indemnifying Party shall relieve
the Indemnifying Party of liability with respect to such Claim to the extent it
has been prejudiced by lack of timely notice under this Article 11 with respect
to such Claim. The Indemnifying Party shall have the right, at its option to
assume the defense of any such Claim with its own counsel, reasonably
satisfactory to the Indemnified Party, provided that Shareholder may not assume
the defense of any Claim unless there are sufficient amounts in the
Indemnification Escrow Amount to fully indemnify Purchaser Indemnified Parties
against the amount of such Claim and all other pending Claims against the Escrow
Amount. If the Indemnifying Party elects to assume the defense of and
indemnification for any such Claim, then:
(a) notwithstanding anything to the contrary contained in this
Agreement, the Indemnifying Party shall not be required to pay or otherwise
indemnify the Indemnified Party against any attorneys' fees or other expenses
incurred on behalf of the Indemnified Party in connection with such matter
following the Indemnifying Party's election to assume the defense of such matter
so long as the Indemnifying Party continues to diligently conduct such defense;
(b) the Indemnified Party shall make available to the Indemnifying
Party all books, records and other documents and materials that are under the
direct or indirect control of the Indemnified Party or any of the Indemnified
Party's Associates that the Indemnifying Party considers such necessary or
desirable for the defense of such matter at the expense of the
45
Indemnifying Party and shall make available to the Indemnifying Party reasonable
access to Indemnified Party's personnel;
(c) the Indemnified Party shall execute such documents and take
such other actions as the Indemnifying Party may reasonably request for the
purpose of facilitating the defense of, or any settlement, compromise or
adjustment relating to, such Claim (with the Indemnifying Party to reimburse
Indemnified Party for third-party, out-of-pocket expenses) and the Indemnified
Party shall not be required to take any such action or execute any document
which imposes any equitable or unindemnified liability remedy on any Indemnified
Party or would adversely affect the business or operations of the Company;
(d) the Indemnified Party shall otherwise fully cooperate as
reasonably requested by the Indemnifying Party in the defense of such Claim
(with the Indemnifying Party to reimburse Indemnified Party for third-party,
out-of-pocket expenses); and
(e) the Indemnified Party shall not admit any liability with
respect to such Claim.
If the Indemnifying Party fails or refuses to assume the defense of and
indemnification for such Claim, then the Indemnified Party shall proceed
diligently to defend such Claim with the assistance of counsel, and the
Indemnifying Party shall thereafter reimburse Indemnified Party on a current
basis, in accordance with the procedures set forth in this Agreement, as
requested by Indemnified Party for all costs and expenses of defense for which
Indemnified Party is entitled to indemnification pursuant to the terms of this
Agreement. No third party Claim may be settled by the Indemnified Party without
notice to, and the written consent of, the Indemnifying Party which consent must
not be unreasonably withheld. If such consent is not given, or written notice
that it is being withheld and the reasons therefor has not been received, by the
Indemnified Party within 15 days after such notice has been received by the
Indemnifying Party, the consent of the Indemnifying Party to such settlement
shall be deemed given.
11.8 SUBROGATION. To the extent that the Indemnifying Party makes or is
required to make any indemnification payment to any Indemnified Party, the
Indemnifying Party shall be entitled to exercise, and shall be subrogated to,
any rights and remedies (including rights of indemnity, rights of contribution
and other rights of recovery) that the Indemnified Party or any of the
Indemnified Party affiliates may have against any other person (other than any
Purchaser Indemnified Party or Shareholder Indemnified Party) with respect to
any Losses, circumstances or matter to which such indemnification payment is
directly or indirectly related. The Indemnified Party shall permit the
Indemnifying Party to use the name of the Indemnified Party and the names of the
Indemnified Party's affiliates in any transaction or in any proceeding or other
matter involving any of such rights or remedies; and the Indemnified Party shall
take such actions as the Indemnifying Party may reasonably request for the
purpose of enabling the Indemnified Party to perfect or exercise the
Indemnifying Party's right of subrogation hereunder.
11.9 EXCLUSIVITY. The right of each party hereto to assert
indemnification claims and receive indemnification payments pursuant to this
Article 11 shall be the sole and exclusive right
46
and remedy exercisable by any person or entity entitled to indemnification
hereunder with respect to any breach by the other party hereto of any
representation or warranty or any other indemnity obligation hereunder.
11.10 RETENTION OF RECORDS. From and after the date of this Agreement,
Purchaser shall preserve, and shall cause the Company to preserve, all books,
records and other documents, materials and information relevant to the
representations, warranties and covenants set forth in this Agreement until the
later of four (4) years following the Closing Date or for such longer period as
the rights of the parties hereunder may exist. At all times after the Closing
Date, Purchaser and the Company shall give Shareholder and Shareholder's
Associates reasonable access to such books, records and other documents,
materials and information of the Company relating to the operation of the
business of the Company up to and including the Closing Date.
ARTICLE 12
MISCELLANEOUS
12.1 CERTAIN DEFINITIONS. For purposes of this Agreement, a contract,
obligation, liability, transaction, change, breach, encumbrance, proceeding or
other matter or event shall not be deemed "material" if the monetary amount
involved is less than 0.1% of the Merger Consideration. A "Material Adverse
Effect" is a material adverse effect on the business, operations, assets or
financial condition or results of the Company taken as a whole. "Knowledge"
means, with respect to an individual, the actual present Knowledge of such
individual. A Person (other than an individual), including the Company, will be
deemed to have Knowledge of a particular fact or matter if any individual who
serves as an officer or director of such Person has actual present Knowledge of
such fact or matter.
12.2 EXPENSES. The term "Company Expenses" shall mean: (i) all costs and
expenses of the Company in connection with the negotiation of this Agreement and
the consummation of the transactions contemplated hereby including any broker's
fee set forth in SCHEDULE 2.25; (ii) one-half of the Company's costs of all HSR
filings, and any transfer taxes or stamp incurred by the Company in connection
with the transactions contemplated by this Agreement and of Neutral Accountants;
and (iii) all other costs and expenses required to be borne by the Company under
the terms of this Agreement. Company Expenses shall not include costs, expenses
or fees of Shareholder incurred in connection with the Merger or other
transactions contemplated by this Agreement which costs, expenses and fees shall
be paid directly by Shareholder. The Company shall pay the fees and expenses of
the Company incidental to the preparation of this Agreement, the performance and
compliance with all agreements contained in this Agreement to be performed or
complied with by it and the consummation of the transactions contemplated
hereby, including the legal and accounting fees and expenses. Purchaser shall
be responsible for its fees and expenses incidental to the preparation of this
Agreement, the performance and compliance with all agreements contained in this
Agreement to be performed or complied with by it and the consummation of the
transactions contemplated hereby, including the legal and accounting fees and
expenses and the fees and expenses associated with any environmental assessment
conducted in connection with this transaction.
47
12.3 NOTICES; ETC. All notices, instructions and other communications
given hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered three business days after it is sent prepaid, or one business day
after it is sent via a reputable nationwide overnight courier service.
If to Purchaser, to:
Mail-Well, Inc.
00 Xxxxxxxxx Xxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Chairman
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Mail-Well, Inc.
00 Xxxxxxxxx Xxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx, Vice President, General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Company or to Shareholder:
Xxxxxxx X. X. Xxxx
0000 Xxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx
Xxx & Xxxxx Incorporated
000 Xxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
or, in each case, to such other address as may be specified in writing to the
other parties.
48
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including personal delivery, telecopy
or ordinary mail), but no such notice, instruction or communication shall be
deemed to have been delivered unless and until it is actually received by the
party to whom it was sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the other parties
to this Agreement notice thereof in the manner set forth in this Section 12.3.
12.4 ASSIGNMENT. Neither the Company nor Shareholder may assign or
otherwise transfer this Agreement or any of their rights hereunder to any person
or entity, without the prior written consent of Purchaser. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding upon
Shareholder and his successors, personal representatives, heirs, and permitted
assigns. Notwithstanding the foregoing, this Agreement shall not be terminated
by the death or incapacity of Shareholder, and if, after the execution hereof,
Shareholder shall die or become incapacitated, this Agreement shall be binding
upon the successors and assigns of Shareholder as if such death or incapacity
had not occurred and regardless of notice thereof. Except as expressly permitted
by this Section 12.4, Purchaser shall not voluntarily or by operation of law
assign or otherwise transfer this Agreement or any of its rights or obligations
hereunder except to Parent or any of its wholly owned subsidiaries, without the
prior written consent of Shareholder and provided that any permitted assignment
or transfer shall not relieve Purchaser or Parent of any of their joint and
several obligations hereunder. Purchaser may collaterally assign and/or grant a
security interest in its rights under this Agreement and under other closing
documents to any financial institution(s) or their affiliates as required
pursuant to any existing or future financing arrangements with the prior written
consent of Shareholder (which consent will not be unreasonably withheld or
delayed).
12.5 ENTIRE AGREEMENT; AMENDMENT; GOVERNING LAW; ETC. This Agreement
(together with the Exhibits and Disclosure Schedules) embodies the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof. This Agreement may be amended, modified, waived, discharged or
terminated only by (and any consent hereunder shall be effective only if
contained in) an instrument in writing signed by the party against which
enforcement of such amendment, modification, waiver, discharge, termination or
consent is sought. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware as it applies to contracts to be
performed entirely with the State of Delaware. No representation or warranty
(either express, implied or otherwise) is being made by any party with respect
to the subject matter hereof other than as expressly set forth herein.
12.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which is an original, but all of which shall constitute
one instrument. Facsimile signatures to this Agreement shall be binding upon
the parties.
12.7 THIRD PARTY RIGHTS. The parties do not intend to confer any benefit
hereunder on any person or entity other than the parties hereto, the Indemnified
Parties and their respective successors in interest.
49
12.8 EXHIBITS AND SCHEDULES. Each of the Exhibits and Schedules referred
to herein and attached hereto is an integral part of this Agreement and is
incorporated herein by this reference.
12.9 PRONOUNS. All pronouns and any variations thereof used in this
Agreement shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as appropriate.
12.10 AUTHORITY AND EXECUTION. Each person executing this Agreement on
behalf of a party hereto represents and warrants that he is duly and validly
authorized to do so on behalf of such party, with full right and authority to
execute this Agreement and to bind such party with respect to all of its
obligations hereunder.
12.11 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction, as to such jurisdiction, shall be
ineffective to the extent of such invalidity or unenforceability, without
rendering invalid or unenforceable the retraining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
12.12 TIME OF ESSENCE. Time is of the essence of this Agreement.
12.13 INTERPRETATION. Each party acknowledges that such party, either
directly or through such party's representatives, has participated in the
drafting of this Agreement, and any applicable rule of constructions that
ambiguities are to be resolved against the drafting party should not be applied
in connection with the construction or interpretation of this Agreement.
12.14 ARBITRATION.
(a) Any controversy or claim arising out of or related to this
Agreement, or a breach hereof, is to be settled by arbitration in accordance
with the procedures set forth in SCHEDULE 12.14.
(b) Notices of demand for arbitration must be filed in writing with
the other parties hereto and in accordance with SCHEDULE 12.14. A demand for
arbitration is to be made within a reasonable time after the claim or
controversy has arisen, but in no event later than the date when institution of
legal or equitable proceedings based on such claim or controversy would be
barred by the applicable statute of limitations.
(c) No arbitration hereunder may include, by consolidation, joinder
or any other manner, any Person other than Parent, Purchaser, Company,
Shareholder, and other Persons substantially involved in a common question of
fact or law whose presence is required if complete relief is to be accorded in
arbitration. No Person other than Parent, Purchaser, Company or Shareholder may
be included as an original third party or additional third party to an
arbitration whose interest or responsibility is insubstantial. Consent to
arbitration involving an additional Person does not constitute consent to
arbitration of a dispute not described therein or with a
50
Person not named or described therein. This Section 12.14 is enforceable by
specific performance under applicable law in a court of competent jurisdiction.
(d) The award rendered by the arbitrators, including as to legal
fees in accordance with SCHEDULE 12.14, is final, and judgment may be entered
upon it in accordance with applicable law in any court of competent
jurisdiction.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
51
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed as of the date first above written.
PARENT
MAIL-WELL, INC., a Colorado corporation
By:
------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
PURCHASER
MAIL-WELL I CORPORATION, a Delaware corporation
By:
------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
THE COMPANY
XXXXXX PRINTING, CO.
By:
------------------------------------------------
Name: Xxxxxxx X. X. Xxxx
Title: President
SHAREHOLDER
-------------------------------------------------------
Xxxxxxx X. X. Xxxx
52
SCHEDULE 12.14
ARBITRATION PROCEDURES
Purchaser and Shareholder hereto agree that in the event of a dispute
between them relating to or arising out of this Agreement, the involved parties
shall submit such dispute to binding arbitration as provided herein. All
arbitrations would be conducted in Denver, Colorado, or at another location
mutually approved by the parties, pursuant to the Commercial Arbitration Rules
of the American Arbitration Association except as herein may be provided. If
the panel used will consist of three arbitrators, such arbitrators will have
experience in the printing industry and the decision of the arbitrators would be
final and binding on all parties. All arbitration shall be undertaken pursuant
to the Federal Arbitration Act, where applicable, and the decision of the
arbitrators shall be enforceable in any court of competent jurisdiction. All of
the parties shall agree to waive their respective rights to further appeal or
redress in any other court or tribunal except solely for the purpose of
obtaining execution of the decision resulting from the arbitration proceeding.
In any dispute where a party seeks $200,000.00 or more in damages or if the
dispute involves whether the Purchaser or the Company properly determined to
terminate the Agreement or refused to close the transactions contemplated by
this Agreement, three arbitrators shall be employed to arbitrate the dispute.
In the event that the dispute involves less than $200,000.00, there shall be one
arbitrator. In the event of any arbitration or other legal proceeding brought
by any party against another party with regard to any matter arising out of or
related to this Agreement, each party hereby expressly agrees that the final
award decision would also provide for all allocation and division between or
among the parties to the arbitration, on a basis which is just and equitable
under the circumstances, of all costs and expenses of the dispute, including
without limitation court costs and arbitrators', reasonable attorneys',
accountants' and expert witness fees, costs and expenses (including
disbursements) incurred in connection with such proceedings. In resolving all
disputes between the parties, the arbitrators shall apply the substantive law of
the State of Delaware. The arbitrators are directed, by this Agreement, to
conduct the arbitration hearing no later than three months from the service of
the statement of claim and demand for arbitration unless good cause is shown
establishing that the hearing cannot fairly and practically be so convened.
Depositions shall be taken only as deemed appropriate by the arbitrator(s)
and only where good cause is shown. Good cause is agreed to exist with respect
to the depositions of officers and management personnel to the extent Knowledge,
as defined in the Agreement at Section 12.1 therein, is relevant to the issue.
Parties shall be entitled to conduct document discovery by requesting production
of documents. Responses or objections shall be served twenty days after receipt
of a request. The arbitrators shall resolve any discovery disputes of such
preheating conferences as may be needed. All parties shall agree that the
arbitrators and any counsel of record to the proceeding shall have the power or
subpoena process as provided by law.
53
DEFINITIONS
PAGE
----
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mail-Well. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Shareholde . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
TBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
MW Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
MW Common Stock Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Treasury Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Pro Rata Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Debt Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Prepayment Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Creditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Payoff Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Indemnification Escrow Amount. . . . . . . . . . . . . . . . . . . . . . . . . 4
Working Capital Escrow Amount. . . . . . . . . . . . . . . . . . . . . . . . . 4
Escrow Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Initial Distribution Amount. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Working Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Computation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Estimated Working Capital Statement. . . . . . . . . . . . . . . . . . . . . . 6
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Estimated Working Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Final Working Capital Statement. . . . . . . . . . . . . . . . . . . . . . . . 6
Final Closing Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notice of Working Capital Disagreement . . . . . . . . . . . . . . . . . . . . 6
Disputed Working Capital Matter. . . . . . . . . . . . . . . . . . . . . . . . 6
54
Neutral Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Final Closing Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notice of Inventory Disagreement . . . . . . . . . . . . . . . . . . . . . . . 7
Disputed Inventory Matter. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Registrable Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Initial Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Registration Statement Period. . . . . . . . . . . . . . . . . . . . . . . . . 9
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Registration Document. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Voting Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Equity Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Legal Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Annual Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . .14
Interim Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .14
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Leased Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Title Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Multiemployer Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
COBRA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
RCRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
55
Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Related Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Purchaser Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . .29
SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Updated Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . . . . . .34
Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Transferred Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Real Estate Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Debt Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Purchaser Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . .41
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Purchaser Indemnified Obligation . . . . . . . . . . . . . . . . . . . . . . .42
Shareholder Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . .43
Shareholder Indemnified Obligation . . . . . . . . . . . . . . . . . . . . . .44
Claimants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Claim Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Company Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
56
