EXHIBIT 2.1
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
by and among
XXXXX INVESTMENT ASSOCIATES VI, L.P.,
THE OTHER SELLERS NAMED HEREIN,
THL BUILDCO HOLDINGS, INC.
and
THL BUILDCO, INC.
Dated as of July 15, 2004
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS
Section 1.1 Definitions................................................................ 2
ARTICLE II PURCHASE AND SALE
Section 2.1 Purchase and Sale.......................................................... 15
Section 2.2 Purchase Price............................................................. 15
Section 2.3 The Closing; Closing Deliveries............................................ 16
Section 2.4 Sellers' Representative.................................................... 20
Section 2.5 Access to Records; Disputes................................................ 22
Section 2.6 Paying Agent............................................................... 22
Section 2.7 Post-Closing Payments...................................................... 24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Section 3.1 Due Organization and Good Standing......................................... 25
Section 3.2 Authorization of Transaction............................................... 25
Section 3.3 Ownership of Class A Common Stock, Series B Preference Stock and Options... 26
Section 3.4 Consents and Approvals; No Violations...................................... 26
Section 3.5 Litigation................................................................. 27
Section 3.6 Investment Representations................................................. 27
Section 3.7 Finders' and Other Fees.................................................... 28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS IN RESPECT OF THE COMPANY
Section 4.1 Corporate Existence and Power.............................................. 28
Section 4.2 Consents and Approvals; No Violations...................................... 29
Section 4.3 Capitalization............................................................. 30
Section 4.4 Subsidiaries............................................................... 31
Section 4.5 SEC Documents.............................................................. 32
Section 4.6 Financial Statements; No Undisclosed Liabilities........................... 32
Section 4.7 Absence of Material Adverse Changes........................................ 33
Section 4.8 Taxes...................................................................... 33
Section 4.9 Employee Benefit Plans..................................................... 34
Section 4.10 Environmental Matters...................................................... 36
Section 4.11 Litigation; Compliance with Law............................................ 37
Section 4.12 Intellectual Property...................................................... 37
Section 4.13 Material Contracts......................................................... 38
Section 4.14 Indebtedness............................................................... 40
Section 4.15 Real Estate................................................................ 41
Section 4.16 Labor Relations and Employment............................................. 42
Section 4.17 Suppliers and Customers.................................................... 43
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Section 4.18 Product Liability.......................................................... 44
Section 4.19 Solicitation Documents..................................................... 44
Section 4.20 Insurance.................................................................. 44
Section 4.21 Transactions with Affiliates............................................... 44
Section 4.22 Finders' and Other Fees.................................................... 45
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER HOLDINGS AND BUYER
Section 5.1 Corporate Existence and Power; Capitalization.............................. 45
Section 5.2 Authorization.............................................................. 45
Section 5.3 Consents and Approvals; No Violations...................................... 46
Section 5.4 Solvency................................................................... 47
Section 5.5 Financing.................................................................. 47
Section 5.6 Litigation................................................................. 47
Section 5.7 Investment Representations................................................. 48
Section 5.8 Solicitation Documents..................................................... 48
Section 5.9 Finders' and Other Fees.................................................... 49
ARTICLE VI COVENANTS OF THE PARTIES
Section 6.1 Conduct of the Business of the Company..................................... 49
Section 6.2 Access to Information...................................................... 52
Section 6.3 Director and Officer Liability............................................. 53
Section 6.4 Reasonable Best Efforts.................................................... 55
Section 6.5 Certain Filings............................................................ 55
Section 6.6 Public Announcements....................................................... 56
Section 6.7 Employee Matters........................................................... 57
Section 6.8 Certain Notifications...................................................... 59
Section 6.9 Financing; Cooperation..................................................... 59
Section 6.10 Consent Solicitation; Offer; Redemption.................................... 60
Section 6.11 Termination of Certain Contracts........................................... 62
Section 6.12 Certain Transactions....................................................... 63
Section 6.13 Tax Matters................................................................ 63
Section 6.14 Fee ....................................................................... 64
Section 6.15 Stockholder Approval of Certain Benefit Arrangements....................... 64
Section 6.16 Exclusivity................................................................ 64
Section 6.17 Confidentiality............................................................ 65
Section 6.18 Non-Solicitation........................................................... 65
Section 6.19 Notice of Developments..................................................... 65
Section 6.20 Option Transaction......................................................... 65
Section 6.21 LaCornue .................................................................. 66
ARTICLE VII CONDITIONS
Section 7.1 Conditions to Each Party's Obligations..................................... 67
Section 7.2 Conditions to the Sellers' Obligations..................................... 67
Section 7.3 Conditions to Buyer's Obligations.......................................... 69
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ARTICLE VIII TERMINATION
Section 8.1 Termination................................................................ 71
Section 8.2 Effect of Termination...................................................... 72
Section 8.3 Limitation on Breach....................................................... 72
ARTICLE IX SURVIVAL; INDEMNIFICATION
Section 9.1 Survival................................................................... 73
Section 9.2 Indemnification by Sellers................................................. 73
Section 9.3 Indemnification by Buyers.................................................. 74
Section 9.4 Indemnification Generally.................................................. 74
ARTICLE X MISCELLANEOUS
Section 10.1 Notices ................................................................... 74
Section 10.2 Representations and Warranties; Covenants.................................. 76
Section 10.3 Interpretation............................................................. 76
Section 10.4 Amendments, Modification and Waiver........................................ 77
Section 10.5 Successors and Assigns..................................................... 77
Section 10.6 Specific Performance....................................................... 78
Section 10.7 Governing Law.............................................................. 78
Section 10.8 Jurisdiction; Forum; No Jury Trial......................................... 78
Section 10.9 Severability............................................................... 79
Section 10.10 Acknowledgement of Severance Adjustment.................................... 79
Section 10.11 Third Party Beneficiaries.................................................. 79
Section 10.12 Entire Agreement........................................................... 79
Section 10.13 Counterparts; Effectiveness................................................ 79
Section 10.14 Financial Advisory Agreement............................................... 79
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Exhibit A: Share Ownership
Subsection 1: Series B Preference Stock
Subsection 2: Management Stockholders ownership of Class A Common Stock
Subsection 3: Third Party Stockholders
Exhibit B: Option Sellers
Exhibit C: Stockholders Agreement Term Sheet
Exhibit D: Management Term Sheet
Exhibit E: Equity Commitment Letter
Exhibit F: New Option Plan Term Sheet
Schedule 2.3(f) Additional Deduction Amount
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STOCK PURCHASE AGREEMENT, dated as of July 15, 2004 (this
"Agreement"), by and among Sellers (as defined herein), THL Buildco Holdings,
Inc., a Delaware corporation ("Buyer Holdings"), and THL Buildco, Inc., a
Delaware corporation and a wholly owned subsidiary of Buyer Holdings ("Buyer").
Except as otherwise indicated, capitalized terms herein shall have the meanings
set forth in ARTICLE I.
RECITALS
WHEREAS, as of the date of this Agreement, Xxxxx Investment
Associates VI, L.P., a Delaware limited liability partnership, KEP VI, LLC, a
Delaware limited liability company, and Xxxxx Nortek Investors, LLC, a Delaware
limited liability company ("Xxxxx Nortek Investors" and together with Xxxxx
Investment Associates VI, L.P., and KEP VI, LLC, the "Xxxxx Stockholders")
collectively own all of the issued and outstanding shares of Series B Preference
Stock, as listed on subsection 1 of Exhibit A hereto;
WHEREAS, as of the date of this Agreement, the members of
Company's management listed on subsection 2 of Exhibit A hereto (collectively,
the "Management Stockholders") and the other parties listed on subsection 3 of
Exhibit A hereto (the "Third Party Stockholders," and together with the
Management Stockholders, the "Common Stockholders," and together with the
Management Stockholders and Xxxxx Stockholders, "Sellers") collectively own all
of the issued and outstanding shares of Class A Common Stock;
WHEREAS, it is intended that prior to the Closing, certain
investors shall purchase from Buyer Holdings a number of shares of Buyer
Holdings' common stock, and that Buyer Holdings shall in turn contribute the
proceeds from such sale to Buyer;
WHEREAS, at the Closing, upon the terms and subject to the
conditions set forth herein, Buyer shall purchase from the Sellers, and the
Sellers shall sell to Buyer, 100% of the shares of Class A Common Stock and
Series B Preference Stock;
WHEREAS, at the Closing, upon the terms and subject to the
conditions set forth herein, the Cashed Out Options shall be cancelled and Buyer
shall pay to the Paying Agent the amounts provided for herein;
WHEREAS, immediately following the Closing, Buyer intends to
merge with and into the Company (the "Buyer Merger"), and each issued and
outstanding share of stock in Buyer shall be converted into one share of Class A
Common Stock of the Company, and each Cancelled Option will be converted into
the amounts provided for in the Option Plan;
WHEREAS, immediately following the Buyer Merger, Buyer
Holdings shall effect the Option Transaction with respect to Exchanged Options;
and
WHEREAS, immediately following the Closing, the Company
intends to merge with and into OpCo and each issued, and outstanding share of
stock in the Company shall be converted into one share of common stock of OpCo
and the separate corporate existence of the Company shall cease (the "Company
Merger" and together with the Buyer Merger, the "Mergers").
NOW, THEREFORE, in consideration of the representations,
warranties, covenants, agreements and conditions set forth herein, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The terms defined in this ARTICLE I,
whenever used herein, shall have the following meanings for all purposes of this
Agreement (such meanings to be equally applicable to both the singular and
plural forms of the terms defined).
"50% Option Equity Number" shall have the meaning set forth in
Section 6.7(c)(vi)(2).
"Action" shall have the meaning set forth in Section 3.5.
"Active Company Subsidiary" shall have the meaning set forth
in Section 4.4(a).
"Acquisition Proposal" shall have the meaning set forth in
Section 6.16(b).
"Additional Deduction Amount" shall have the meaning set forth
in Section 2.3(f).
"Affiliate" shall mean, with respect to any specified Person,
a Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such specified
Person. For purposes of this definition, "control," when used with respect to
any specified Person, shall mean (a) the direct or indirect ownership of more
than twenty percent (20%) of the total voting power of securities or other
evidences of ownership interest in such Person or (b) the power to direct or
cause the direction of the management and policies of such Person, directly or
indirectly, whether through ownership of voting securities, by Contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate Equity Number" shall mean the sum of the number of
shares of Class A Common Stock outstanding as of immediately prior to Closing,
plus the number of shares of Series B Preference Stock outstanding as of
immediately prior to Closing, plus the maximum aggregate number of shares of
Class A Common Stock that could have been obtained by all holders of Options had
such holders exercised all of their Options at Closing (assuming all such
Options were fully vested and exercisable) and that all Options are exercised
through the cash payment of exercise price (i.e. not through cashless exercise).
For the avoidance of doubt, "Aggregate Equity Number" shall include the number
of shares of Class A Common Stock subject to all Exchanged Options outstanding
immediately prior to the Closing.
"Aggregate Exercise Price Amount" shall mean the amount
obtained by aggregating the Exercise Prices of all Options.
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"Agreement" shall have the meaning set forth in the
introductory paragraph hereof and shall include the Exhibits and Schedules
hereto and the Company Disclosure Letter with respect hereto.
"Amended Xxxxxx Employment Agreement" shall mean the amended
employment agreement to be entered into on the Closing Date, by and among Xx.
Xxxxxxx Xxxxxx and the Company, which has terms substantially as set forth in
Exhibit D hereto.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in the United States are closed generally.
"Buyer" shall have the meaning set forth in the introductory
paragraph hereof.
"Buyer Holdings" shall have the meaning set forth in the
introductory paragraph hereof.
"Buyer Holdings Common Stock" shall mean the common stock,
$0.01 par value per share, of Buyer Holdings.
"Buyer Holdings Common Stock Per Share Consideration" shall
mean the per share consideration paid by the THL Fund, its limited partners and
affiliated investors for Buyer Holdings Common Stock as their equity investment
in Buyer Holdings.
"Buyer Indemnified Parties" shall have the meaning set forth
in Section 9.2.
"Buyer Material Adverse Effect" shall mean, with respect to
one or more changes, events and effects, a material adverse effect on the
ability of Buyer and Buyer Holdings to consummate the transactions contemplated
by this Agreement.
"Buyer Merger" shall have the meaning set forth in the
recitals to this Agreement.
"Buyer's Representatives" shall have the meaning set forth in
Section 6.2.
"Cancelled Option Consideration" shall mean, with respect to
each Cancelled Option, an amount equal to (A) the product of (x) the Per Share
Deal Price multiplied by (y) the number of shares of Class A Common Stock
subject to such Cancelled Option minus (B) the total Exercise Price with respect
to such Cancelled Option.
"Cancelled Options" shall mean all Options outstanding as of
the Closing other than Cashed Out Options and Exchanged Options, which shall
automatically be converted (with or without the holder's consent), effective as
of the Closing, pursuant to Section 12 of the Option Plan into the right to
receive cash (subject to Tax withholding), with respect to each such Cancelled
Option, in an amount equal to the Cancelled Option Consideration.
"Cash" shall mean, with respect to any Person, all cash and
cash equivalents of such Person, determined in accordance with GAAP; provided
that (i) "Cash" shall not include cash held by the Company or any of its
Subsidiaries for the benefit of current or former stockholders (or for current
or former holders of options) of the Company, OpCo or any their
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respective predecessors that are entitled to, but have not yet received,
payments pursuant to the Recapitalization Agreement and (ii) for the avoidance
of doubt, "Cash" shall include Cash segregated or restricted with respect to the
capital lease related to Poplar Bluff (it being understood that the related
capital lease obligations are included in "Indebtedness").
"Cash Amount" shall mean an amount equal to (i) the aggregate
Cash held by the Company and its Subsidiaries as of 11:59 p.m. on the Business
Day immediately prior to the Closing Date as finally determined in accordance
with Section 2.5, minus (ii) $4.0 million, minus (iii) the amount of any cash
received by the Company or any of its Subsidiaries as a result of the exercise
of any Options after the date of this Agreement and prior to the Closing, minus
(iv) Foreign Cash.
"Cashed Out Options" shall mean all Options outstanding as of
the Closing and set forth opposite each Option Seller's name on Exhibit B hereto
under the heading "Cashed Out Options," which exhibit may be updated prior to
Closing by the Sellers' Representative to reflect the provisions of Section
6.7(c), which shall be cancelled in consideration for payment in accordance with
ARTICLE II.
"Certificate of Incorporation" shall have the meaning set
forth in Section 4.1.
"CFO Certificates" shall have the meaning set forth in Section
2.5.
"Class A Common Stock" shall have the meaning set forth in
Section 4.3.
"Class B Common Stock" shall have the meaning set forth in
Section 4.3.
"Closing" shall have the meaning set forth in Section 2.3(a).
"Closing Date" shall have the meaning set forth in Section
2.3(a).
"Closing Indebtedness Amount" shall mean, as of 11:59 pm on
the Business Day immediately prior to Closing Date, the amount of Indebtedness
of the Company and its Subsidiaries, as finally determined in accordance with
Section 2.5.
"Closing Indebtedness Financing" shall have the meaning set
forth in Section 5.5(a).
"Code" shall have the meaning set forth in Section 4.8(c).
"Commitment Letters" shall have the meaning set forth in
Section 5.5(a).
"Common Stockholders" shall have the meaning set forth in the
recitals to this Agreement.
"Company" shall mean Nortek Holdings, Inc., a Delaware
corporation.
"Company 10-K" shall have the meaning set forth in Section
4.6(b).
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"Company Disclosure Letter" shall have the meaning set forth
in ARTICLE IV.
"Company Fee Property" shall have the meaning set forth in
Section 4.15(a).
"Company Leased Property" shall have the meaning set forth in
Section 4.15(a).
"Company Lease" shall have the meaning set forth in Section
4.15(a).
"Company Material Adverse Effect" shall mean, with respect to
any one or more changes, events or effects, a material adverse effect on (i) the
condition (financial or otherwise), business, assets, liabilities, prospects or
results of operations of the Company and its Subsidiaries, taken as a whole,
other than any event, change or effect resulting from, or relating to, (x) the
economy or financial markets in general, or (y) in general, the industries in
which the Company and its Subsidiaries operate and not specifically relating to,
or having a materially disproportionate effect (relative to the effect on other
similar companies) on, the Company and its Subsidiaries, taken as a whole, or
(ii) the ability of the Company and its Subsidiaries to consummate the
transactions contemplated by this Agreement.
"Company Merger" shall have the meaning set forth in the
recitals to this Agreement.
"Company Real Property" shall have the meaning set forth in
Section 4.15(a).
"Company SEC Documents" shall have the meaning set forth in
Section 4.5(a).
"Company Securities" shall have the meaning set forth in
Section 4.3.
"Company Voting Indebtedness" shall have the meaning set forth
in Section 6.1(c).
"Confidentiality Agreement" shall have the meaning set forth
in Section 6.2.
"Consolidated Balance Sheet" shall have the meaning set forth
in Section 4.6(b).
"Contract" shall mean any contract, agreement, lease, license,
sales order, purchase order, instrument or other commitment or arrangement,
whether written or oral, that is binding on any Person or entity or any part of
its property under applicable Law, including any amendments thereto.
"Controlled Affiliate" shall mean, with respect to any
specified Person, a Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such specified Person. For purposes of this definition, "control," when used
with respect to any specified Person, shall mean the direct or indirect
ownership of more than fifty percent (50%) of the total voting power of
securities or other evidences of ownership interest in such Person.
"Converted Option Common Share" shall have the meaning set
forth in Section 6.7(c)(ii).
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"Deferred Share Right" shall have the meaning set forth in
Section 6.7(c)(ii).
"Depositary" means the depositary with respect to the Floating
Rate Notes Offer, the Subordinated Notes Offer or the Discount Notes Offer, as
applicable.
"Discount Notes" shall mean the Company's 10% Senior Discount
Notes due 2011.
"Discount Notes Amendments" shall have the meaning set forth
in Section 6.10(a)(ii).
"Discount Notes Consent Solicitation" shall have the meaning
set forth in Section 6.10(a)(ii).
"Discount Notes Indenture" shall mean the Indenture, dated as
of November 24, 2003, between the Company and U.S. Bank National Association, as
Trustee, relating to the Company's 10% Senior Discount Notes due 2011, as may be
amended from time to time.
"Discount Notes Offer" shall have the meaning set forth in
Section 6.10(a)(ii).
"Discount Notes Offer Amount" shall have the meaning set forth
in Section 6.10(a)(v).
"Discount Notes Redemption" shall have the meaning set forth
in Section 6.10(b)(i).
"Discount Notes Redemption Amount" shall have the meaning set
forth in Section 6.10(b)(i).
"Discount Notes Redemption Notice" shall have the meaning set
forth in Section 6.10(c)(i).
"Discount Notes Supplemental Indenture" shall have the meaning
set forth in Section 6.10(a)(v).
"EC Merger Regulation" shall mean Council Regulation (EC) No.
139/2004 of 20 January 2004 on the control of concentrations between
undertakings.
"Encumbrance" shall mean, with respect to any asset, security
or property, any mortgage, lien, license, pledge, charge, security interest,
encumbrance, option or any restriction on the right to sell or otherwise dispose
of such asset, security or property, in each case, in respect of such asset,
security or property, and, in addition, with respect to securities only, any
limitation of any kind including any restrictions on the right to vote such
securities, except, in the case of securities, for limitations on transfer
imposed by federal or state securities Laws.
"Environmental Laws" shall mean all foreign, federal, state
and local laws, regulations, rules and ordinances relating to pollution or
protection of human health or the environment, including Laws relating to
Releases or threatened Releases of Hazardous
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Substances into the environment (including ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances and all laws and regulations with
regard to record keeping, notification, disclosure and reporting requirements
respecting Hazardous Substances, and all laws relating to endangered or
threatened species of fish, wildlife and plants and the management or use of
natural resources.
"Environmental Permits" shall have the meaning set forth in
Section 4.10(a).
"Equity Commitment Letter" shall have the meaning set forth in
Section 5.5(a).
"Equity Value" shall have the meaning set forth in Section
6.7(c)(vi)(1).
"ERISA" shall have the meaning set forth in Section 4.9(a).
"ERISA Affiliate" shall have the meaning set forth in Section
4.9(a).
"Exchange Act" shall have the meaning set forth in Section
4.2(b).
"Exchanged Option Consideration" shall mean, with respect to
each Exchanged Option, (A) the product of (x) the Per Share Deal Price
multiplied by (y) the number of shares of Class A Common Stock subject to such
Exchanged Option minus (B) the total Exercise Price with respect to such
Exchanged Option.
"Exchanged Option Holder" shall mean each holder of an
Exchanged Option.
"Exchanged Options" shall mean all Options outstanding as of
the Closing and set forth opposite each Seller's name on Exhibit B hereto under
the heading "Exchanged Options" (which exhibit may be updated prior to Closing
by the Sellers' Representative in accordance with the provisions of Section
6.7(c)(v)) or held by any holder not a party to this Agreement but who enters
into a separate option exchange agreement prior to the Closing (which such
separate agreement shall specify the number of Exchanged Options held by such
holder), in either case, which shall be cancelled and exchanged for Deferred
Share Rights in accordance with Section 6.7(c).
"Exercise Price" shall mean, with respect to each Option, the
aggregate price set for the exercise of such Option.
"Fee" shall have the meaning set forth in Section 6.14.
"Financial Advisory Agreement" shall have the meaning set
forth in Section 6.11(a)(ii).
"Financing" shall have the meaning set forth in Section
5.5(a).
"Floating Rate Notes" shall mean OpCo's Senior Floating Rate
Notes due 2010.
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"Floating Rate Notes Amendments" shall have the meaning set
forth in Section 6.10(a)(iii).
"Floating Rate Notes Consent Solicitation" shall have the
meaning set forth in Section 6.10(a)(iii).
"Floating Rate Notes Indenture" shall mean the Indenture,
dated as of March 1, 2004, between OpCo and U.S. Bank National Association, as
Trustee, relating to OpCo's Senior Floating Rate Notes due 2010, as may be
amended from time to time.
"Floating Rate Notes Offer" shall have the meaning set forth
in Section 6.10(a)(iii).
"Floating Rate Notes Offer Amount" shall have the meaning set
forth in Section 6.10(a)(vi).
"Floating Rate Notes Redemption" shall have the meaning set
forth in Section 6.10(b)(ii).
"Floating Rate Notes Redemption Amount" shall have the meaning
set forth in Section 6.10(b)(ii).
"Floating Rate Notes Redemption Notice" shall have the meaning
set forth in Section 6.10(c)(ii).
"Floating Rate Notes Supplemental Indenture" shall have the
meaning set forth in Section 6.10(a)(vi).
"Foreign Cash" shall mean any and all Cash held by a direct or
indirect Subsidiary of the Company that is organized in a jurisdiction outside
the United States, other than excess Cash held by those Subsidiaries of the
Company that are organized in Canada (it being understood that the determination
of whether such Cash held in Canada is "excess" will be made in good faith by
the Chief Financial Officer of the Company).
"Foreign Monopoly Laws" shall have the meaning set forth in
Section 4.2(b).
"GAAP" shall have the meaning set forth in Section 4.6(a).
"Governmental Entity" shall have the meaning set forth in
Section 4.2(b).
"Hazardous Substance" shall mean any substance, whether solid,
liquid or gaseous, which is listed, defined or regulated as a "hazardous
substance," "hazardous waste," "oil," "pollutant," "toxic substance," "hazardous
material waste," or "contaminant" or is otherwise classified as hazardous or
toxic, in or pursuant to any Environmental Laws; or which is or contains any
asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation,
explosive, nuclear, or radioactive material, or motor fuel or other petroleum
hydrocarbons, or pesticides, insecticides, fungicides, or rodenticides, or
biohazardous materials or waste.
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"HSR Act" shall have the meaning set forth in Section 4.2(b).
"Indebtedness" of any Person shall mean (i) all obligations of
such Person for borrowed money (including reimbursement obligations with respect
to drawn letters of credit), (ii) all obligations of such Person evidenced by
bonds, debentures, notes, bankers' acceptances or similar instruments, (iii) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person with payment
due six (6) months or later from the date of commencement of such arrangement,
(iv) all obligations of such Person for the deferred purchase price of property,
assets or services with payment due six (6) months or later from the date of
sale, (v) all capital lease obligations (determined in accordance with GAAP) of
such Person, (vi) all off-balance sheet financing of such Person, including
synthetic leases and project financing, (vii) any liability of such Person with
respect to interest rate swaps, collars, caps and similar hedging obligations,
(viii) all securities (including preferred stock and any accrued dividends
thereon, other than the Series B Preference Stock) or other similar instruments
convertible or exchangeable into any of the foregoing, (ix) any and all accrued
and unpaid interest on obligations referred to in clauses (i) through (viii)
above, and (x) any obligations referred to in clauses (i) through (ix) above of
any other Person which is either guaranteed by, or secured by any Encumbrance
upon any property or assets owned by, such Person; provided, however, that the
foregoing definition of Indebtedness shall not include ordinary course trade
payables and accrued expenses.
"Indebtedness Commitment Letter" shall have the meaning set
forth in Section 5.5(a).
"Indemnifiable Claim" shall have the meaning set forth in
Section 6.3(b).
"Indemnified Party" shall mean a Seller Indemnified Party or a
Buyer Indemnified Party, as the case may be.
"Indemnifying Party" shall mean a Seller or Buyer Holdings, as
the case may be.
"Indemnitees" shall have the meaning set forth in Section
6.3(b).
"Indemnity Notice" shall mean a written notification pursuant
to Section 9.4 of a claim for indemnity under ARTICLE IX by an Indemnified
Party, reasonably specifying the nature of and basis for such claim in light of
the circumstances then known, together with the amount or, if not then
reasonably determinable, the estimated amount, determined in good faith, of the
Loss arising from such claim.
"Individual Option Seller Consideration" shall mean, with
respect to each Option Seller, an amount equal to (A) the product of (x) the Per
Share Deal Price multiplied by (y) the number of shares of Class A Common Stock
subject to all Cashed Out Options held by such Option Seller as set forth
opposite such Option Seller's name on Exhibit B hereto under the heading "Cashed
Out Options" and which such Option Seller has tendered for cancellation in
accordance with Section 2.6(b) minus (B) the aggregate Exercise Prices with
respect to all such Cashed Out Options.
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"Individual Seller Consideration" shall mean, with respect to
each Seller, an amount equal to the product of (A) the Per Share Deal Price
multiplied by (B) the number of shares of Class A Common Stock or Series B
Preference Stock, as the case may be, transferred by such Seller pursuant to
Section 2.6(b).
"Individual Stock Certificates" shall have the meaning set
forth in Section 2.6(b).
"Intellectual Property" shall mean all rights, privileges and
priorities provided under any Law relating to intellectual property or
proprietary rights of any kind, relating to intellectual property, including all
rights arising out of or related to (x) (1) patents, patent applications, patent
disclosures, and all rights related thereto including all reissues,
re-examinations, divisions, continuations and continuations-in-part; (2)
proprietary inventions, discoveries, processes, formulae, algorithms designs and
methods, whether or not patented or eligible for patent protection; (3)
copyrights and original works of authorship fixed in any tangible medium of
expression including computer applications, programs, software, databases and
design rights; (4) trademarks, service marks, trade names, brands, logos, trade
dress, and domain names, and the goodwill of the business symbolized thereby,
and all common-law rights relating thereto; (5) trade secrets, proprietary data
and other confidential information and (6) rights of privacy or publicity; and
(y) all registrations and applications for any of the foregoing.
"IRS" shall have the meaning set forth in Section 4.9(c).
"Xxxxx" shall mean Xxxxx & Company, L.P., a Delaware limited
partnership.
"Xxxxx Nortek Investors" shall have the meaning set forth in
the recitals to this Agreement.
"Xxxxx Stockholders" shall have the meaning set forth in the
recitals to this Agreement.
"Law" shall mean any law (including common law), treaty,
statute, ordinance, rule, regulation, executive order, order, writ, judgment,
injunction (preliminary or permanent) or decree of any Governmental Entity,
including the Code.
"Licenses" shall have the meaning set forth in Section 4.1.
"Losses" shall mean any and all damages, losses, deficiencies,
liabilities, taxes, obligations, penalties, judgments, settlements, claims,
payments, fines, interest, costs and expenses (including reasonable legal fees
and expenses), but excluding punitive damages (other than punitive damages
awarded to any third party against an Indemnified Party).
"Management Representative" shall have the meaning set forth
in Section 2.4(c).
"Management Stockholders" shall have the meaning set forth in
the recitals of this Agreement.
"Material Adverse Consequence" shall have the meaning set
forth in Section 7.3(j).
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"Material Contracts" shall have the meaning set forth in
Section 4.13(a).
"Material Customers and Suppliers" shall have the meaning set
forth in Section 4.17.
"Material IP Licenses" shall have the meaning set forth in
Section 4.12(b).
"Material Subsidiary" shall have the meaning set forth in
Section 6.16(b).
"Maximum Amount" shall have the meaning set forth in Section
6.3(c).
"Mergers" shall have the meaning set forth in the recitals to
this Agreement.
"multiemployer plans" shall have the meaning set forth in
Section 4.9(e).
"New Option Plan" shall mean the 2004 Stock Option Plan of
Buyer Holdings containing the terms substantially as set forth in Exhibit D and
Exhibit F hereto.
"OpCo" shall have the meaning set forth in Section 4.5(a).
"Option Acknowledgment" shall have the meaning set forth in
Section 2.6(b).
"Option Plan" shall have the meaning set forth in Section 4.3.
"Option Seller" shall mean each holder of a Cashed Out Option.
"Option Transaction" shall have the meaning set forth in
Section 6.20.
"Options" shall mean the options granted pursuant to the
Option Plan that are outstanding immediately prior to the Closing to acquire
Class A Common Stock of the Company.
"Partially Owned Subsidiaries" shall have the meaning set
forth in Section 4.4(d).
"Paying Agent" shall have the meaning set forth in Section
2.6(a).
"Paying Agent Agreement" shall have the meaning set forth in
Section 2.6(a).
"Per Share Deal Price" shall mean the amount equal to the
Purchase Price divided by the Aggregate Equity Number.
"Person" or "person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, trust, estate,
association, organization, Governmental Entity or other entity of any kind or
nature.
"Plans" shall have the meaning set forth in Section 4.9(a).
"Preference Stock" shall have the meaning set forth in
Section 4.3.
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"Pre-Closing Stockholders Agreement" shall have the meaning
set forth in Section 6.11(a)(i).
"Product" shall have the meaning set fort in Section 4.18.
"Property Restrictions" shall have the meaning set forth in
Section 4.15(b).
"Purchase Price" shall have the meaning set forth in Section
2.2.
"Recapitalization Agreement" shall mean the Agreement and Plan
of Recapitalization by and among the Company, OpCo, and K Holdings, Inc., dated
as of June 20, 2002, as amended.
"Registration Rights Agreement" shall have the meaning set
forth in Section 6.11(a)(iii).
"Regulatory Law" shall mean, collectively, the Xxxxxxx Act, as
amended, the Xxxxxxx Act, as amended, the HSR Act, the Federal Trade Commission
Act, as amended, the EC Merger Regulation, and the regulations and decisions of
the Council or Commission of the European Community or other organs of the
European Union or the European Community implementing such regulations, and all
other federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate (i) foreign investment, (ii)
foreign exchange or currency controls or (iii) actions having the purpose or
effect of monopolization or restraint of trade or lessening of competition.
"Related Agreements" shall mean, collectively, the
Stockholders Agreement, the Amended Xxxxxx Employment Agreement, the New Option
Plan, the Paying Agent Agreement and the Trust Agreement.
"Release" shall mean any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the environment, including the movement of Hazardous Substances through or
in the air, soil, surface water or groundwater.
"Representative" shall mean, with respect to any Person, any
director, officer or employee and any agent, consultant, advisor, or other
representative authorized by such Person to represent or act on behalf of such
Person, including legal counsel, accountants, and financial advisors.
"Restrictive Agreement" shall have the meaning set forth in
Section 4.13(a)(iv).
"Xxxxxxxx-Xxxxx Act" shall mean the Xxxxxxxx-Xxxxx Act of
2002, as amended from time to time, including the rules and regulations
promulgated thereunder.
"SEC" shall have the meaning set forth in Section 4.5.
"Securities Act" shall have the meaning set forth in Section
4.2(b).
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"Seller Indemnified Parties" shall have the meaning set forth
in Section 9.3.
"Sellers" shall have the meaning set forth in the recitals to
this Agreement.
"Sellers' Representative" shall have the meaning set forth in
Section 2.4(a).
"Series B Preference Stock" shall have the meaning set forth
in Section 4.3.
"S-K Contracts" shall have the meaning set forth in Section
4.13(a).
"Solicitation Documents" shall mean, collectively, all of the
documents (including any amendments or supplements thereto) necessary to effect
each of the Subordinated Notes Consent Solicitation, the Discount Notes Consent
Solicitation and the Floating Rate Notes Consent Solicitation.
"Solvent" shall mean, with respect to any Person, that (a) the
property of such Person, at a fair valuation, exceeds the sum of its debts
(including contingent and unliquidated debts); (b) the present fair saleable
value of the property of such Person exceeds the amount that will be required to
pay such Person's probable liability on its existing debts as they become
absolute and matured; (c) such Person does not have unreasonably small capital
with which to conduct its business; and (d) such Person does not intend or
believe that it will incur debts beyond its ability to pay as they mature. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become actual or matured liabilities.
"Stockholder Representative" shall have the meaning set forth
in Section 2.4(b).
"Stockholders Agreement" shall mean the Stockholders
Agreement, to be entered into on the Closing Date, by and among Buyer Holdings
and certain other parties thereto which has terms substantially as set forth in
Exhibit C and Exhibit D hereto.
"Subordinated Notes" shall mean OpCo's 9 7/8% Senior
Subordinated Notes due 2011.
"Subordinated Notes Amendments" shall have the meaning set
forth in Section 6.10(a)(i).
"Subordinated Notes Consent Solicitation" shall have the
meaning set forth in Section 6.10(a)(i).
"Subordinated Notes Indenture" shall mean the Indenture, dated
as of June 12, 2001, between OpCo and State Street Bank and Trust Company, as
Trustee, relating to OpCo's 9 7/8% Senior Subordinated Notes (as may be amended
from time to time).
"Subordinated Notes Offer" shall have the meaning set forth in
Section 6.10(a)(i).
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"Subordinated Notes Offer Amount" shall have the meaning set
forth in Section 6.10(a)(iv).
"Subordinated Notes Supplemental Indenture" shall have the
meaning set forth in Section 6.10(a)(iv).
"Subsequent Indebtedness Financing" shall have the meaning set
forth in Section 5.5(a).
"Subsidiary" shall mean, with respect to any Person, any
corporation or other legal entity of which such Person owns, directly or
indirectly, fifty percent (50%) or more of the outstanding stock or other equity
interests, the holders of which are entitled to vote for the election of the
board of directors or other governing body of such corporation or other legal
entity.
"Successful Consent Solicitation" shall mean, (i) with respect
to the Subordinated Notes Consent Solicitation, a consent solicitation in which
the Subordinated Notes Amendments effected pursuant to the Subordinated Notes
Supplemental Indenture shall have become effective or will automatically become
effective at or substantially concurrently with the Closing, (ii) with respect
to the Discount Notes Consent Solicitation, a consent solicitation in which the
Discount Notes Amendments effected pursuant to the Discount Notes Supplemental
Indenture shall have become effective or will automatically become effective at
the Closing, or (iii) with respect to the Floating Rate Notes Consent
Solicitation, a consent solicitation in which the Floating Rate Notes Amendments
effected pursuant to the Floating Rate Notes Supplemental Indenture shall have
become effective or will automatically become effective at or substantially
concurrently with the Closing.
"Target Working Capital Amount" shall have the meaning set
forth in Section 7.3(l).
"Tax Return" shall mean any report, return, statement,
declaration or other written information required to be supplied to a taxing or
other governmental authority in connection with Taxes.
"Taxes" shall mean all taxes, levies or other like
assessments, charges or fees (including estimated taxes, charges and fees),
including, income, corporation, advance corporation, gross receipts, transfer,
excise, property, sales, use, value-added, license, payroll, withholding, social
security and franchise or other governmental taxes or charges, imposed by the
United States or any state, county, local or foreign government or subdivision
or agency thereof, any liability for taxes, levies or other like assessments,
charges, fees of another Person pursuant to Treasury Regulation Section 1.1502-6
or any similar or analogous provision of applicable Law or otherwise (including
by Contract) and such term shall include any interest, penalties or additions to
tax attributable to such taxes.
"Termination Date" shall have the meaning set forth in Section
8.1(b).
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"Third Party Stockholders" shall have the meaning set forth in
the recitals to this Agreement.
"THL Fund" means Xxxxxx X. Xxx Equity Fund V, L.P., a Delaware
limited partnership.
"Treasury Regulations" shall mean the final, temporary and
proposed regulations promulgated by the United States Treasury Department and
the Code.
"Trust Agreement" shall mean the trust agreement to be entered
into as of the Closing Date, by and among Buyer Holdings, a Person to be
designated by Buyer and the Management Representative, as trustee and the
Exchanged Option Holders, in a form to be mutually agreed upon by Buyer and the
Management Representative.
"Trust Indenture Act" shall have the meaning set forth in
Section 4.2(b).
"WARN Act" shall have the meaning set forth in Section
4.16(c).
"Working Capital" shall mean the amount, calculated as of
11:59 p.m. on the Business Day immediately prior to the Closing Date in
accordance with GAAP, by which (i) accounts receivable (net of reserves),
inventory (net of reserves), other current assets and prepaid expenses
(excluding prepaid income taxes) exceed (ii) accounts payable and accrued
expenses (not including accrued interest payable or accrued taxes based on
income). Cash and Indebtedness shall not be part of the determination of working
capital. Accrued expenses will exclude the following (i) the Additional
Deduction Amount, (ii) the accrued and unpaid severance / bonuses and
transaction payments to employees of the Company and its Subsidiaries in
connection with the transactions contemplated by this Agreement, (iii) the Fee
and (iv) change of control payments to employees of the Company and its
Subsidiaries in connection with the transactions contemplated by this Agreement.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale. Each Seller, severally and not
jointly, and Buyer hereby agree that upon the terms and subject to the
satisfaction or waiver, to the extent permitted by Law, of the conditions of
this Agreement, on the Closing Date such Seller shall sell, convey, assign,
transfer and deliver to Buyer, and Buyer shall purchase, acquire and accept from
such Seller, all right, title and interest of such Seller in and to the number
of shares of Class A Common Stock and Series B Preference Stock, as applicable,
set forth opposite the name of such Seller on Exhibit A under the heading "Share
Ownership" (which exhibit may be supplemented between the date of this Agreement
and the Closing Date to reflect the exercise of Options, subject to the
provisions of Section 6.1(c)) free and clear of all Encumbrances.
Section 2.2 Purchase Price. The aggregate purchase price to be
paid by Buyer for the purchase, acquisition and receipt of the Class A Common
Stock and Series B Preference Stock and the cancellation of the Cashed Out
Options, Cancelled Options and
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Exchanged Options at Closing shall be an amount equal to $1,740,013,000, minus
(a) the Closing Indebtedness Amount, plus (b) the Aggregate Exercise Price
Amount, plus (c) the Cash Amount, minus (d) the Additional Deduction Amount (the
"Purchase Price"); it being understood that the actual aggregate cash purchase
price so paid by Buyer will be less than the "Purchase Price" because of (x) the
deduction of the Exercise Prices applicable to the amounts paid in respect of
Cashed Out Options and Cancelled Options, and (y) the fact that holders of
Exchanged Options will receive Deferred Share Rights in lieu of cash payment as
provided in Section 6.7(c). For purposes of calculating "Purchase Price," the
Closing Indebtedness Amount, the Cash Amount and the Additional Deduction Amount
shall be as finally determined in accordance with Section 2.5.
Section 2.3 The Closing; Closing Deliveries.
(a) Upon the terms and subject to the satisfaction or
waiver of the conditions contained in this Agreement (other than those
conditions which are to be satisfied on the Closing Date), the closing of the
transactions contemplated by this Agreement (the "Closing") shall be held at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, located at Four Times
Square, New York, New York (or such other place as the parties may mutually
agree) at 10:00 a.m. local time on August 27, 2004 or (subject to Section 2.5
hereof), on such other date (subject to Section 2.5 hereof) as the Company shall
determine and notify the Buyer in writing at least three business days prior
thereto in writing. The date on which the Closing actually occurs is hereinafter
referred to as the "Closing Date."
(b) On the Closing Date, subject to the terms and
conditions of this Agreement, each Seller or Option Seller, as applicable, shall
deliver or cause to be delivered (except as delivered prior to the Closing Date)
the following:
(i) to the Paying Agent, Individual
Stock Certificate(s) representing the number of shares of
Class A Common Stock or Series B Preference Stock, as the case
may be, set forth opposite such Seller's name on Exhibit A
hereto duly endorsed (or accompanied by a duly executed stock
transfer power and with all required stock transfer tax stamps
attached) and in form for transfer (including a duly executed
letter of transmittal and such other documents as the Paying
Agent, the Sellers' Representative and Buyer may reasonably
mutually agree to require) to Buyer;
(ii) to the Paying Agent, with respect
to the Option Sellers, all Option Acknowledgments evidencing
the cancellation of the Cashed Out Options held by such Option
Seller (the number of Cashed Out Options shall be set forth
opposite such Option Seller's name on Exhibit B hereto under
the heading "Cashed Out Options," which exhibit may be updated
prior to Closing by the Sellers' Representative in accordance
with the provisions of Section 6.7(c), together with such
other documents as the Paying Agent, the Sellers'
Representative and Buyer may reasonably mutually agree to
require);
(iii) to the Buyer, the certificate
referred to in Section 7.3(g);
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(iv) to Buyer Holdings, the Related
Agreements, duly executed by such Seller (to the extent it is
contemplated to be a party thereto) to the extent not
completed, executed and delivered prior to the Closing Date;
and
(v) to the Buyer, all other documents
required to be delivered by (or on behalf) of such Seller, the
Company or OpCo on or prior to the Closing Date pursuant to
this Agreement.
(c) On the Closing Date, subject to the terms and
conditions of this Agreement, Buyer shall deliver or cause to be delivered
(except as delivered prior to the Closing Date) the following:
(i) to the Paying Agent, by wire
transfer of immediately available funds, an amount of cash
sufficient for the Paying Agent to make the payments to the
Sellers contemplated by Section 2.3(e)(iii);
(ii) to the Paying Agent, by wire
transfer of immediately available funds, an amount of cash
sufficient for the Paying Agent to make the payments to the
Option Sellers contemplated by Section 2.3(e)(iv), it being
understood that Buyer or OpCo will retain an amount of cash
sufficient for OpCo as the surviving company of the Company
Merger to withhold any amounts in respect of Options necessary
pursuant to Section 6.7(c)(iii) for Tax purposes;
(iii) if the Discount Notes Consent
Solicitation does not result in a Successful Consent
Solicitation, to the Trustee under the Discount Notes
Indenture, on behalf of the Company, by wire transfer of
immediately available funds to such account or accounts as
such Trustee specifies in writing not fewer than two Business
Days prior to the Closing Date, the Discount Notes Redemption
Amount (pursuant to Section 6.10(b)(i));
(iv) if the Floating Rate Notes Consent
Solicitation does not result in a Successful Consent
Solicitation, to the Trustee under the Floating Rate Notes
Indenture, on behalf of OpCo, by wire transfer of immediately
available funds to such account or accounts as such Trustee
specifies in writing not fewer than two Business Days prior to
the Closing Date, the Floating Rate Notes Redemption Amount
(pursuant to Section 6.10(b)(ii));
(v) if the Subordinated Notes Consent
Solicitation resulted in a Successful Consent Solicitation,
the Subordinated Notes Offer Amount by wire transfer of
immediately available funds to such account or accounts as the
Depositary specifies in writing not fewer than two Business
Days prior to the Closing Date (pursuant to Section
6.10(a)(iv));
(vi) if the Discount Notes Consent
Solicitation resulted in a Successful Consent Solicitation,
the Discount Notes Offer Amount by wire transfer of
immediately available funds to such account or accounts as the
17
Depositary specifies in writing not fewer than two Business
Days prior to the Closing Date (pursuant to Section
6.10(a)(v));
(vii) if the Floating Rate Notes Consent
Solicitation resulted in a Successful Consent Solicitation,
the Floating Rate Notes Offer Amount by wire transfer of
immediately available funds to such account or accounts as the
Depositary specifies in writing not fewer than two Business
Days prior to the Closing Date (pursuant to Section
6.10(a)(vi));
(viii) to the Sellers' Representative, the
certificate of the Buyer's Chief Executive Officer referred to
in Section 7.2(c);
(ix) the Related Agreements, duly
executed by Buyer Holdings (to the extent it is contemplated
to be a party thereto) to the extent not executed and
delivered prior to the Closing Date;
(x) to the Company or OpCo, by wire
transfer of immediately available funds, an amount of cash
sufficient for the Company or OpCo to make the payments to the
holders of Cancelled Options pursuant to Section 6.7(c)(i);
and
(xi) all other documents required to be
delivered by Buyer or Buyer Holdings (or on its behalf) on or
prior to the Closing Date pursuant to this Agreement.
(d) On the Closing Date, subject to the terms and
conditions of this Agreement (except as delivered prior to the Closing Date),
Sellers shall cause the Company to deliver, or cause the Company to cause OpCo
to deliver (except that Sellers shall use their reasonable best efforts to cause
the Company to deliver, and to cause the Company to cause OpCo to deliver the
items set forth in clause (iv) below), as applicable:
(i) if the Discount Notes Consent
Solicitation does not result in a Successful Consent
Solicitation, to the holders of the Discount Notes, the
Discount Notes Redemption Notice (pursuant to Section
6.10(c)(i));
(ii) if the Floating Rate Notes Consent
Solicitation does not result in a Successful Consent
Solicitation, to the holders of the Floating Rate Notes, the
Floating Rate Notes Redemption Notice (pursuant to Section
6.10(c)(ii));
(iii) a certificate of good standing for
each of the Company and OpCo issued by the Secretary of State
of the State of Delaware as of a date reasonably close to the
Closing Date;
(iv) written resignations of each
director of the Company and OpCo listed on Section 2.3(d)(iv)
to the Company Disclosure Letter, effective as of the Closing
Date;
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(v) the FIRPTA certificate pursuant to
Section 7.3(k);
(vi) the certificate of the Company's
Chief Financial Officer referred to in Section 7.3(n);
(vii) the certificate of the Company's
Chief Executive Officer referred to in Section 7.3(d);
(viii) the Related Agreements, duly
executed by the Company or OpCo (to the extent either is
contemplated to be a party thereto) to the extent not executed
and delivered prior to the Closing Date; and
(ix) all other documents required to be
delivered by Sellers, the Company or OpCo on or prior to the
Closing Date pursuant to this Agreement.
(e) On the Closing Date, subject to the terms and
conditions of this Agreement (including the delivery requirements of Section
2.6(b)), the Sellers' Representative and Buyer shall each cause the Paying Agent
to deliver (except as delivered prior to the Closing Date) the following:
(i) to Buyer, with respect to the
Sellers, Individual Stock Certificates representing the number
of shares of Class A Common Stock or Series B Preference
Stock, as the case may be, set forth opposite each Seller's
name on Exhibit A hereto duly endorsed (or accompanied by a
duly executed stock transfer power and with all required stock
transfer tax stamps attached) and in form for transfer to
Buyer;
(ii) to Buyer, with respect to the
Option Sellers, all Option Acknowledgments evidencing the
cancellation of the Cashed Out Options held by each Option
Seller (the number of Cashed Out Options shall be set forth
opposite such Option Seller's name on Exhibit B hereto under
the heading "Cashed Out Options," which exhibit may be updated
prior to Closing by the Sellers' Representative in accordance
with the provisions of Section 6.7(c));
(iii) to each Seller, by wire transfer of
immediately available funds to such account or accounts as
such Seller specifies in writing not fewer than two Business
Days prior to the Closing Date, an amount equal to such
Seller's Individual Seller Consideration; and
(iv) to each Option Seller (subject to
any withholding provisions pursuant to Section 6.7(c)(iii)),
by wire transfer of immediately available funds to such
account or accounts as such Option Seller specifies in writing
not fewer than two Business Days prior to the Closing Date, an
amount equal to such Option Seller's Individual Option Seller
Consideration.
(f) At least three (3) Business Days prior to the Closing
Date, the Sellers' Representative shall deliver, or cause the Company's Chief
Financial Officer to prepare and
19
deliver, to Buyer a certificate setting forth a good faith estimate of (i) the
aggregate amount, as of 11:59 p.m. on the Business Day immediately prior to the
Closing Date, of the items set forth on Schedule 2.3(f) hereto, as finally
determined in accordance with Section 2.5 (the "Additional Deduction Amount"),
(ii) the Cash Amount, (iii) the Closing Indebtedness Amount, and (iv) the amount
of Working Capital.
Section 2.4 Sellers' Representative.
(a) Each Seller hereby authorizes and directs Xxxxx as
its agent, proxy and attorney-in-fact and representative under this Agreement
(the "Sellers' Representative") to take such action on behalf of such Seller,
and to exercise such rights, power and authority, as are authorized, delegated
and granted to the Sellers' Representative on behalf of Sellers pursuant to this
Agreement (including the right to receive notices and other documentation
pursuant to the terms of the Agreement on behalf of Sellers and the right to
terminate this Agreement on behalf of Sellers). By its execution hereof, each
Seller hereby authorizes, delegates and grants to the Sellers' Representative
authority to take all actions that this Agreement explicitly provides are to be
taken by the Sellers' Representative.
(b) Each of the Xxxxx Stockholders and Third Party
Stockholders hereby authorizes and directs Xxxxx as its agent, proxy and
attorney-in-fact and representative under this Agreement (the "Stockholder
Representative") to take such action on behalf of such Xxxxx Stockholder and
Third Party Stockholder, and to exercise such rights, power and authority, as
are authorized, delegated and granted to the Stockholder Representative on
behalf of such Xxxxx Stockholder and Third Party Stockholder pursuant to this
Agreement (including the right to receive notices on behalf of the Xxxxx
Stockholders and Third Party Stockholders, and to amend this Agreement on behalf
of Xxxxx Stockholders and Third Party Stockholders). By its execution hereof,
each Xxxxx Stockholder and Third Party Stockholder hereby authorizes, delegates
and grants to the Stockholder Representative authority to take all actions that
this Agreement explicitly provides are to be taken by the Stockholder
Representative.
(c) Each of the Management Stockholders hereby authorizes
and directs Xxxxxxx X. Xxxxxx as its agent, proxy and attorney-in-fact and
representative under this Agreement (the "Management Representative") to take
such action on behalf of such Management Stockholders, and to exercise such
rights, power and authority, as are authorized, delegated and granted to the
Management Representative pursuant to this Agreement (including the right to
receive notices on behalf of the Management Stockholders, and to amend this
Agreement on behalf of the Management Stockholders). By its execution hereof,
each Management Stockholder hereby authorizes, delegates and grants to the
Management Representative authority to take all actions that this Agreement
explicitly provides are to be taken by the Management Representative.
(d) Each Seller agrees that none of the Sellers'
Representative, the Stockholder Representative or the Management Representative
shall (i) be liable for any actions taken or omitted to be taken under or in
connection with this Agreement or the transactions contemplated hereby, or (ii)
owe any fiduciary duty or have any fiduciary responsibility to any of Sellers or
the Company as a result of their actions taken as the Sellers' Representative,
the Stockholder Representative or the Management Representative pursuant to this
Agreement,
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except for such actions taken or omitted to be taken resulting from the Sellers'
Representative's, the Stockholder Representative's or the Management
Representative's willful misconduct, respectively. Without limiting the
foregoing, (i) each Seller, jointly and severally, hereby agrees to defend,
indemnify and hold harmless the Sellers' Representative and its Affiliates and
each of their respective officers, directors, employees and agents from and
against all expenses (including fees and expenses of counsel), losses, claims,
fines, liabilities, damages, judgments or amounts paid in settlement in respect
of any threatened, pending or completed claim, action, suit or proceeding,
whether criminal, civil, administrative or investigative, based on, arising out
of or relating to the fact that such Person is or was a Sellers' Representative
hereunder or arising out of acts or omissions of such Person in such capacity
occurring on or prior to the Closing (including in respect of acts or omissions
in connection with this Agreement and the transactions contemplated hereby)
except for, in any case, acts or omissions which involve conduct known to such
Person at the time to constitute a material violation of Law; and (ii) each
Management Stockholder, jointly and severally, hereby agrees to defend,
indemnify and hold harmless the Management Representative and its Affiliates and
each of their respective officers, directors, employees and agents from and
against all expenses (including fees and expenses of counsel) losses, claims,
fines, liabilities, damages, judgments or amounts paid in settlement in respect
of any threatened, pending or completed claim, action, suit or proceeding,
whether criminal, civil, administrative or investigative, based on, arising out
of or relating to the fact that such Person is or was a Management
Representative hereunder or arising out of acts or omissions of such Person in
such capacity occurring on or prior to the Closing (including in respect of acts
or omissions in connection with this Agreement and the transactions contemplated
hereby) except for, in any case, acts or omissions which involve conduct known
to such Person at the time to constitute a material violation of Law; and (iii)
each Xxxxx Stockholder and Third Party Stockholder, jointly and severally,
hereby agrees to defend, indemnify and hold harmless the Stockholder
Representative and its Affiliates and each of their respective officers,
directors, employers and agents from and against all expenses (including fees
and expenses of counsel) losses, claims, fines, liabilities, damages, judgments
or amounts paid in settlement in respect of any threatened, pending or completed
claim, action, suit or proceeding, whether criminal, civil, administrative or
investigative, based on, arising out of or relating to the fact that such Person
is or was a Stockholder Representative hereunder or arising out of acts or
omissions of such Person in such capacity occurring on or prior to the Closing
(including in respect of acts or omissions in connection with this Agreement and
the transactions contemplated hereby) except for, in any case, acts or omissions
which involve conduct known to such Person at the time to constitute a material
violation of Law.
(e) Buyer Holdings and Buyer agree that each of the
Sellers' Representative, the Stockholder Representative and the Management
Representative is serving in such capacity solely for purposes of administrative
convenience, and shall not be personally liable in such capacity for any of the
obligations of Sellers hereunder, and Buyer Holdings and Buyer agree that they
will not look to the personal assets of the Sellers' Representative, the
Stockholder Representative or the Management Representative, in each case,
acting in such capacity, for the satisfaction of any obligations to be performed
by Sellers hereunder. Each Seller agrees that Buyer Holdings and Buyer shall be
entitled to rely upon the power and authority of the Sellers' Representative,
the Stockholder Representative or the Management Representative, as the case may
be, acting in such capacity, to act on such Seller's behalf. Buyer Holdings and
Buyer and
21
their respective successors shall not be liable to any Seller for any actions
taken or omitted by them in reliance upon any instructions, notices or other
instruments delivered by the Sellers' Representative, the Stockholder
Representative or the Management Representative, as the case may be.
Section 2.5 Access to Records; Disputes. Before and following
the delivery of the certificates of the Company's Chief Financial Officer
referred to in Section 7.3(n) and Section 2.3(f) (the "CFO Certificates"),
Sellers shall cause the Company to provide Buyer and its Representatives with
prompt and full access to the personnel, accountants, books and records of the
Company and its Subsidiaries, including the work papers used by the Company and
its Subsidiaries in the preparation of the CFO Certificates (and the calculation
of the amounts set forth therein), to the extent reasonably related to the
preparation of the CFO Certificates. In the event that Buyer notifies the
Sellers' Representative prior to the anticipated Closing that Buyer disputes the
amounts set forth in any of the CFO Certificates, Buyer and the Sellers'
Representative shall use their respective reasonable best efforts to resolve any
such dispute prior to Closing. Notwithstanding the foregoing, the parties agree
that (A) there shall be no presumption that any amount set forth in the CFO
Certificates is correct, and (B) in no event shall the Closing occur prior to
such time as Buyer and Sellers' Representative reasonably agree (i) that the
Company and its Subsidiaries have an amount of Working Capital not less than the
Target Working Capital Amount and (ii) upon the calculations of each of the Cash
Amount, the Closing Indebtedness Amount and the Additional Deduction Amount to
be used in the determination of the Purchase Price.
Section 2.6 Paying Agent.
(a) Deposit with Paying Agent Prior to the Closing Date,
the Sellers' Representative and Buyer shall mutually designate a bank or trust
company to act as agent (the "Paying Agent") for the holders of shares of Class
A Common Stock, Series B Preference Stock and Cashed Out Options in connection
with the transactions contemplated by this Agreement to receive the funds to
which such holders shall become entitled pursuant to Section 2.3. Buyer
Holdings, Buyer, the Sellers' Representative and the Paying Agent shall enter
into a mutually acceptable paying agent agreement (the "Paying Agent
Agreement"). Pursuant to Section 2.3(c), Buyer shall make available to the
Paying Agent immediately available funds in amounts necessary to pay (i) with
respect to each Seller, an amount equal to such Seller's Individual Seller
Consideration, and (ii) with respect to each Option Seller, an amount equal to
such Option Seller's Individual Option Seller Consideration, upon surrender of
Individual Stock Certificate(s) in accordance with Section 2.6(b)(i), or in the
case of Cashed Out Options, upon surrender of Option Acknowledgments in
accordance with Section 2.6(b)(ii). The parties understand and agree that (x)
with respect to those Sellers and Option Sellers that have used their reasonable
best efforts to comply with the provisions of Section 2.6(b) (including
provision of the documents referred to in Section 2.6(d) below), respectively,
within five Business Days after the Closing, any and all interest or other
income earned from and after the Closing Date to (but excluding) the date of
payment of such Person's Individual Seller Consideration or Individual Option
Seller Consideration, as the case may be, on funds made available to the Paying
Agent pursuant to this Section 2.6(a) with respect to such Person's Individual
Seller Consideration or Individual Option Seller Consideration, as the case may
be, shall be paid to such Seller or Option Seller, and (y)
22
any interest or income earned on funds made available to the Paying Agent
pursuant to this Section 2.6(a) with respect to the Sellers or Option Sellers
not described in clause (x) of this sentence, shall belong to and shall be paid
to OpCo. The parties will instruct the Paying Agent to, and the Paying Agent
Agreement shall provide that the Paying Agent will, invest any funds deposited
by the Buyer with the Paying Agent pursuant to this Agreement in overnight
deposits.
(b) Exchange Procedure. At least five Business Days prior
to the Closing Date, the Paying Agent shall hand deliver to (i) each holder of
record of a certificate or certificates (the "Individual Stock Certificates") of
Class A Common Stock and Series B Preference Stock, (x) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Individual Stock Certificates shall pass, only upon actual delivery of
the Individual Stock Certificates to the Paying Agent) and (y) instructions for
use in effecting the surrender of the Individual Stock Certificates in exchange
for the Individual Seller Consideration, and (ii) each holder of record of a
Cashed Out Option, a transfer form and acknowledgment of cancellation
(collectively, the "Option Acknowledgements"), as the case may be, of the Cashed
Out Options held by such Option Seller. The documents referred to in clauses (i)
and (ii) of the preceding sentence shall be subject to the approval of the Buyer
and the Sellers' Representative, which approval will not be unreasonably
withheld or delayed. Upon surrender of Individual Stock Certificate(s)
representing the number of shares of Class A Common Stock or Series B Preference
Stock, as the case may be, set forth opposite such Seller's name on Exhibit A
hereto, to the Paying Agent for transfer to Buyer (or to such other agent or
agents as may be appointed by agreement of Buyer and the Sellers'
Representative), together with a duly executed letter of transmittal and such
other documents as the Paying Agent, the Sellers' Representative and Buyer may
reasonably mutually agree to require, such Seller shall be entitled to receive
its, his or her Individual Seller Consideration in exchange for the shares of
Class A Common Stock or Series B Preference Stock, as the case may be. Until
surrendered as contemplated by this Section 2.6(b), the Individual Stock
Certificates held by any Seller shall be deemed at any time after the Closing
Date to represent only the right to receive upon such surrender the Individual
Seller Consideration as contemplated by this Section 2.6(b). Upon surrender of
an Option Acknowledgment evidencing the cancellation of Cashed Out Options held
by such Option Seller set forth opposite such Option Seller's name on Exhibit B
hereto under the heading "Cashed Out Options" to the Paying Agent for transfer
to Buyer (or to such other agent or agents as may be appointed by agreement of
Buyer and the Sellers' Representative), together with such other documents as
the Paying Agent, the Sellers' Representative and Buyer may reasonably mutually
agree to require, such Option Seller shall be entitled to receive its, his or
her Individual Option Seller Consideration in exchange for the cancellation of
such Cashed Out Options. Until surrendered as contemplated by this Section
2.6(b), the Cashed Out Options held by any Option Seller shall be deemed at any
time after the Closing Date to represent only the right to receive upon such
surrender the Individual Option Seller Consideration as contemplated by this
Section 2.6(b) and shall no longer be exercisable for shares of Class A Common
Stock.
(c) Efforts of Paying Agent; Termination. The parties
will instruct the Paying Agent to, and the Paying Agent Agreement will provide
that the Paying Agent shall, use its reasonable best efforts to disburse funds
to Sellers and Option Sellers on the Closing Date (or such later date as each
such Seller or Option Seller surrenders its Individual Certificate(s) or
23
Option Acknowledgement, as applicable) in same day funds. The parties will
instruct the Paying Agent to, and the Paying Agent Agreement will provide that
the Paying Agent shall, continue to serve as the paying agent for the Sellers so
long as it holds funds to disperse to the Sellers or Option Sellers, as
applicable, but in no event shall the Paying Agent (x) cease to act as paying
agent prior to January 15, 2005 and (y) continue to act as paying agent later
than April 15, 2005, at which time any funds remaining with the Paying Agent
shall be returned to OpCo. The Paying Agent Agreement shall provide that,
subject to receiving the required documentation, including if applicable an
executed letter of transmittal, Individual Stock Certificate and Option
Acknowledgement, the Paying Agent's obligation to deliver the payments
contemplated by this Agreement to the Sellers and Option Sellers shall be
absolute.
(d) Lost, Stolen or Destroyed Certificates. In the event
that any Individual Stock Certificate or Option shall have been lost, stolen or
destroyed, the Paying Agent shall issue in exchange for such lost, stolen or
destroyed Individual Stock Certificate or Option, upon the receipt by OpCo of
customary documentation including an affidavit and an indemnification agreement
from the holder thereof, the Individual Seller Consideration or Individual
Option Seller Consideration, as the case may be.
(e) Upon depositing the funds with the Paying Agent, as
contemplated by Section 2.3(c)(i) and Section 2.3(c)(ii), Buyer shall have no
further obligations to make payments pursuant to this ARTICLE II, except and to
the extent such funds are returned to Buyer, OpCo or Buyer Holdings.
(f) If applicable pursuant to Section 6.21, the Paying
Agent shall also pay the amounts to Sellers relating to the sale of LaCornue
Inc. provided pursuant to Section 6.21.
Section 2.7 Post-Closing Payments. If within ninety (90) days
following the Closing the Buyer or the Sellers' Representative shall become
aware of any items or amounts of expenses of a type set forth as No. 2 in
Section 2.3(f) of the Company Disclosure Letter but which were not included (or
included, but not at the correct amount) in the actual calculation of the
Additional Deduction Amount, as finally determined in accordance with Section
2.5, the Buyer and the Sellers' Representative agree to negotiate in good faith
to determine whether such items or amounts should have been included in the
calculation of the Additional Deduction Amount pursuant to the provisions of
Section 2.3(f) of the Company Disclosure Letter. If the Buyer and the Sellers'
Representative agree that such items or amounts (or any portion thereof) should
have been so included, the Xxxxx Stockholders shall pay to OpCo or its designees
their proportionate share of such items or amounts (or portion thereof) (based
upon the portion of the Purchase Price received by the Xxxxx Stockholders) and
OpCo shall be responsible for the remainder of such expense, provided that OpCo
shall be entitled to obtain reimbursement from the Sellers (other than the Xxxxx
Stockholders) and the Option Sellers for their pro rata portion (provided
further that OpCo and such Option Sellers can mutually agree on an alternative
treatment with respect to such portion).
24
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, severally and not jointly, hereby represents and
warrants as to itself, himself or herself, as applicable, to Buyer as follows:
Section 3.1 Due Organization and Good Standing. If such Seller
is not a natural person, such Seller is duly organized, validly existing and in
good standing under the laws of its state of organization (to the extent such
concept is recognized). With respect to any Seller that is not a natural person,
such Seller has all requisite corporate or other power, as the case may be, and
authority to carry on its business as now conducted. Section 3.2 Authorization
of Transaction.
(a) Such Seller has the requisite power and authority to
execute and deliver this Agreement and the Related Agreements (to which it is
contemplated to be a party) and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Related
Agreements (to which it is contemplated to be a party) and the performance of
such Seller's obligations hereunder and thereunder have been duly and validly
authorized and approved by all required action on the part of such Seller and no
other proceedings on the part of such Seller are necessary to authorize the
execution, delivery and performance of this Agreement and the Related Agreements
(to which it is contemplated to be a party). This Agreement and the Related
Agreements (to which it is contemplated to be a party) have been or will be, as
applicable, duly executed and delivered by such Seller and each constitutes,
assuming due authorization, execution and delivery of this Agreement and the
Related Agreements (to which it is contemplated to be a party) by each of the
other parties hereto and thereto, a valid and binding obligation of such Seller,
enforceable against such Seller in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting the rights and remedies of creditors generally and to
general principles of equity (regardless of whether considered in a proceeding
in equity or at Law).
(b) In the event such Seller is married and his or her
shares of Class A Common Stock or Series B Preference Stock, as applicable, or
Options constitute community property or otherwise would require spousal or
other approval for any provision of this Agreement and the Related Agreements
(to which it is contemplated to be a party) to be legal, valid and binding, this
Agreement and the Related Agreements (to which it is contemplated to be a party)
have been or will be, as applicable, duly authorized, executed and delivered by,
and each constitutes, assuming due authorization, execution and delivery of this
Agreement and the Related Agreements (to which it is contemplated to be a party)
by each of the other parties hereto and thereto (other than such Seller's
spouse), a legal, valid and binding agreement of, such Seller's spouse or such
other person, enforceable against such spouse or other person in accordance with
its terms.
(c) No trust of which such Seller is a trustee requires
the consent of any beneficiary to the execution and delivery of this Agreement
or the Related Agreements (to which
25
it is contemplated to be a party) to the consummation of the transactions
contemplated hereby and thereby.
Section 3.3 Ownership of Class A Common Stock, Series B
Preference Stock and Options. Such Seller is the sole holder of record and
beneficially owns, and has good, valid and marketable title to, the aggregate
number of shares of Class A Common Stock or Series B Preference Stock, as the
case may be, set forth opposite such Seller's name on Exhibit A under the
heading "Share Ownership," and holds and is the owner of the aggregate number of
Options set forth opposite such Seller's name on Exhibit B under the heading
"Option Ownership." Such shares of Class A Common Stock or Series B Preference
Stock, as the case may be, and such Options, are held free and clear of all
Encumbrances or other defects in title (expect as set forth in the Pre-Closing
Stockholders Agreement (which will be terminated in accordance with Section 6.11
at or prior to the Closing) or the Option Plan), and have not been pledged or
assigned to any Person. Such Seller has full right, power and authority to
transfer and deliver to Buyer valid title to such shares of Class A Common Stock
or Series B Preference Stock, as the case may be, free and clear of all
Encumbrances or other defects in title (except as set forth in the Pre-Closing
Stockholders Agreement (which will be terminated in accordance with Section 6.11
at or prior to the Closing) or the Option Plan). Except pursuant to this
Agreement, there is no obligation pursuant to which such Seller has directly or
indirectly granted any option, warrant or other right to acquire any shares of
Class A Common Stock or Series B Preference Stock to any other Person or agreed
to refrain from transferring such shares.
Section 3.4 Consents and Approvals; No Violations. None of the
execution and delivery by such Seller of this Agreement or the Related
Agreements (to which it is contemplated to be a party) nor the performance by
such Seller of its, his or her obligations hereunder or thereunder nor the
consummation of the transactions contemplated hereby or thereby shall (i) with
respect to a Seller which is not a natural person, conflict with or result in
any breach of any provision of the certificate of incorporation or the by-laws
(or other comparable governing or organizational document) of such Seller; (ii)
except as set forth in the Pre-Closing Stockholders Agreement (which is to be
terminated in accordance with Section 6.11 at or prior to the Closing) or the
Option Plan, require any consent or other action by any Person under, result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or obligation to repurchase, repay, redeem or acquire or any
similar right or obligation) under, any of the terms, conditions or provisions
of any note, mortgage, letter of credit, other evidence of indebtedness,
guarantee, Contract or obligation to which such Seller is a party or by which
he, she or it or any of his, her or its assets may be bound or result in the
imposition of any Encumbrance upon any of the shares of Class A Common Stock,
Series B Preference Stock or Options of such Seller; or (iii) assuming that the
filings, registrations, notifications, authorizations, consents and approvals
referred to in Section 4.2(b) below (or that should have been disclosed pursuant
to Section 4.2(b) below) have been obtained or made, as the case may be, violate
any Law to which such Seller is subject (or the shares of Class A Common Stock
or Series B Preference Stock or Options owned by such Seller is subject) or
require any filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity except in the case of clause
(iii) for such violations of Law, filings, registrations, notifications,
authorizations, consents, or approvals which do not have and would not
reasonably
26
be expected to have, individually or in the aggregate, a material adverse effect
on the ability of such Seller to consummate the transactions contemplated hereby
or result in any material liability to Buyer or its successors; provided that no
representation is made in clause (iii) as to any violations, filings,
registrations, notifications, authorizations, consents and approvals which are
applicable solely by reason of such Seller owning the shares of Class A Common
Stock, Series B Preference Stock or Options owned by it and not by reason of (a)
any facts specific to such Seller (including its legal, regulatory or marital
status) or (b) any actions (including pledging, granting any Encumbrances or
taking other actions) with respect to the Class A Common Stock, Series B
Preference Stock or Options) heretofore taken by such Seller.
Section 3.5 Litigation. As of the date of this Agreement,
there is no action, suit, charge, complaint, or proceeding (each, an "Action")
pending against, or to the knowledge of such Seller threatened in writing
against, such Seller which, if adversely determined, would have a material
adverse effect on the ability of such Seller to consummate the transactions
contemplated hereby or result in any material liability to Buyer or its
successors. Such Seller is not subject to any judgment, decree, injunction or
order of any court, except for such decrees, injunctions or orders which do not
have and would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the ability of such Seller to consummate
the transactions contemplated hereby or result in any material liability to
Buyer or its successors.
Section 3.6 Investment Representations. If, as of the Closing
and after giving effect thereto, such Seller has Exchanged Options, such Seller
further represents and warrants that:
(a) Such Seller is acquiring the Deferred Share Rights
and Converted Option Common Shares (and will hold any securities exchanged
therefor pursuant to the Option Transaction) for its own account, solely for the
purpose of investment and not with a view toward, or for sale in connection
with, any distribution thereof, nor with any present intentions of distributions
or selling such Deferred Share Rights and Converted Option Common Shares or
securities exchanged therefor, in violation of the federal securities Laws or
any applicable foreign or state securities Law.
(b) Such Seller is an "accredited investor" as defined in
Rule 501(a) promulgated under the Securities Act.
(c) Such Seller understands that the holding of the
Deferred Share Rights and Converted Option Common Shares (or securities
exchanged therefor pursuant to the Option Transaction) to be held by him, her or
it pursuant to the terms of this Agreement involves substantial risk. Such
Seller has experience as an investor in securities and equity interests of
companies such as the ones being transferred pursuant to this Agreement and
acknowledges that he, she or it can bear the economic risk of his, her or its
investment (which may be for an indefinite period) and has such knowledge and
experience in financial or business matters that such Seller is capable of
evaluating the merits and risks of his, her or its investment in the Deferred
Share Rights and Converted Option Common Shares (or securities exchanged
therefor pursuant to the Option Transaction) to be acquired by him, her or it
pursuant to the transactions contemplated hereby.
27
(d) Such Seller understands that the Deferred Share
Rights and Converted Option Common Shares (or securities exchanged therefor
pursuant to the Option Transaction) to be held by it hereunder have not been
registered under the Securities Act on the basis that the sale provided for in
this Agreement is exempt from the registration provisions thereof. Such Seller
acknowledges that such securities may not be transferred, sold, offered for
sale, pledged, hypothecated or otherwise disposed of without registration under
the Securities Act and any other provisions of applicable state securities Laws
or pursuant to an applicable exemption therefrom.
(e) Such Seller acknowledges that the offer and sale of
the securities to be acquired by such Seller for its Exchanged Options in the
Option Transaction has not been accomplished by the publication of any
advertisement.
Section 3.7 Finders' and Other Fees. Except for UBS Securities
LLC, Credit Suisse First Boston, Inc. and Daroth Capital Advisors LLC, whose
fees shall be paid by the Company and except as provided in Section 6.14, there
is no investment banker, broker, finder or other intermediary which has been
retained by such Seller, or is authorized to act on behalf of, such Seller, or
any employee or consultant of such Seller that would be entitled to any fee,
commission, sale bonus or similar payment from the Company, any Subsidiary of
the Company, Buyer or any of Buyer's Affiliates upon consummation of the
transactions contemplated by this Agreement. The Company heretofore has
delivered to Buyer true and complete copies of any Contracts with or other
obligations to UBS Securities LLC, Credit Suisse First Boston, Inc. or Daroth
Capital Advisors LLC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
SELLERS IN RESPECT OF THE COMPANY
Except as set forth on the Company's disclosure letter
delivered concurrently with the delivery of this Agreement (the "Company
Disclosure Letter") (each section of which qualifies the correspondingly
numbered representation and warranty or covenant of this Agreement to the extent
of the disclosure specified therein and such other representations and
warranties or covenants of this Agreement to the extent a matter in such section
of such disclosure letter is disclosed in such a way as to make its relevance to
the information called for by such other representation and warranty or covenant
in this Agreement reasonably apparent on its face), each Seller hereby,
severally and not jointly, to the knowledge of the Sellers, represents and
warrants to Buyer as follows:
Section 4.1 Corporate Existence and Power. Each of the Company
and OpCo is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has all corporate powers
and all governmental licenses, permits, authorizations, consents and approvals
(collectively, "Licenses") required to carry on its business as now conducted,
and all such Licenses are in full force and effect, except for failures to have
any such Licenses or for such Licenses to be in full force and effect which do
not have and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Each of the Company and OpCo is
duly qualified to do business as a foreign
28
corporation and is in good standing in each jurisdiction (to the extent such
concept is recognized) where the character of the property owned, leased or
operated by it or the nature of its activities makes such qualification
necessary, except in such jurisdictions where failures to be so qualified or in
good standing do not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. The Company
has heretofore made available to Buyer true and complete copies of the
certificate of incorporation of the Company (the "Certificate of Incorporation")
and the by-laws of the Company as currently in effect. OpCo has heretofore made
available to Buyer true and complete copies of the certificate of incorporation
of OpCo and the by-laws of OpCo as currently in effect.
Section 4.2 Consents and Approvals; No Violations.
(a) Neither the execution and delivery of this Agreement
nor the performance by Sellers of their obligations hereunder nor the
consummation of the transactions contemplated hereby (including the execution,
delivery and consummation of the transaction contemplated by Related Agreements
(to the extent contemplated to be a party thereto) and further including actions
that the Sellers agree to cause the Company or any of its Subsidiaries to take)
will (i) conflict with or result in any breach of any provision of the
certificate of incorporation or the by-laws (or other comparable governing or
organizational document) of the Company or any Subsidiary thereof; (ii) require
any consent by any Person under, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or
obligation to repurchase, repay, redeem or acquire or any similar right or
obligation) under, any of the terms, conditions or provisions of any note,
mortgage, letter of credit, other evidence of Indebtedness, guarantee, Contract
or obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their assets may be bound; or (iii) assuming that
the filings, registrations, notifications, authorizations, consents and
approvals referred to in subsection (b) below have been obtained or made, as the
case may be, violate any Law to which the Company or any of its Subsidiaries is
subject or cause the termination, suspension or revocation of any License of the
Company or any of its Subsidiaries, excluding from the foregoing clauses (ii)
and (iii) such violations of Laws, requirements, defaults, breaches, rights,
violations, terminations, suspensions, and revocations which do not have and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect; provided, however, that Sellers are not making
any representation with respect to any term or provision of the Financing to the
extent it is not set forth in the Commitment Letters.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any government or any agency, court,
tribunal, commission, board, bureau, department, political subdivision or other
instrumentality of any government (including any regulatory or administrative
agency), whether federal, state, multinational (including but not limited to,
the European Community), provincial, municipal, domestic or foreign (each, a
"Governmental Entity") is required in connection with the execution and delivery
of this Agreement by Sellers or the Related Agreements (to the extent Sellers
are contemplated to be a party thereto), the performance by Sellers of their
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby (including actions that the Sellers agree to
cause the Company or any of its Subsidiaries to take), except (i) compliance
with
29
any applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"),
or any applicable foreign laws regulating competition, antitrust, investment or
exchange controls ("Foreign Monopoly Laws"); (ii) compliance with any applicable
requirements of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), the Trust Indenture
Act of 1939, as amended, and the rules and regulations promulgated thereunder
(the "Trust Indenture Act"), and the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "Exchange
Act"); (iii) filings in connection with the debt financing contemplated by the
Indebtedness Commitment Letter and (iv) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings the
failure of which to be obtained or made which do not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 4.3 Capitalization. The authorized capital stock of
the Company consists of 19,000,000 shares of Class A Common Stock, par value
$1.00 per share (the "Class A Common Stock"), 14,000,000 shares of Class B
Common Stock, par value $1.00 per share (the "Class B Common Stock") (provided
that, after the redemption of all of its outstanding shares of Class B Common
Stock on January 9, 2003, pursuant to the Certificate of Incorporation, the
Company was no longer authorized to issue any shares of Class B Common Stock),
and 19,000,000 shares of preference stock, $1.00 par value per share (the
"Preference Stock"), of which 9,000,000 shares are designated as Series B
Convertible Preference Stock (the "Series B Preference Stock"). As of June 30,
2004, there were (a) 397,380.26 shares of Class A Common Stock issued and
outstanding, (b) no shares of Class B Common Stock issued and outstanding and
(c) 8,130,441.65 shares of Series B Preference Stock issued and outstanding and,
since June 30, 2004, no shares of capital stock of the Company have been issued,
except for the issuance of shares of Class A Common Stock pursuant to the
exercise of Options outstanding on such date. Other than the 8,130,441.65
outstanding shares of Series B Preference Stock, there are no other outstanding
shares of Preference Stock of the Company. All shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive rights. As of
June 30, 2004, (i) 3,279,220 shares of Class A Common Stock were reserved for
issuance under the Nortek Holdings, Inc. 2002 Stock Option Plan (the "Option
Plan") (and 3,076,453 shares of Class A Common Stock were issuable upon the
exercise of outstanding Options), and (ii) 8,130,441.65 shares of Class A Common
Stock were reserved for issuance upon the conversion of the Series B Preference
Stock into Class A Common Stock pursuant to the terms of the Certificate of
Incorporation and all of such shares of Class A Common Stock were issuable upon
the conversion of the Series B Preference Stock. Except as set forth in the four
preceding sentences or as contemplated by this Agreement, (A) there are
outstanding no (I) shares of capital stock or other voting securities of the
Company, (II) securities of the Company or any Subsidiary of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, and (III) subscriptions, options or other rights to
acquire from the Company, and no obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (including any rights or
"poison pill" plans) or (IV) "phantom" stock, "phantom" stock rights, stock
appreciation rights, restricted stock awards, dividend equivalent awards, or
other stock-based awards or rights pursuant to which any Person is or may be
entitled to receive any payment or other consideration
30
or value based upon, relating to, or valued by reference to, the dividends paid
on the capital stock of the Company or the revenues, earnings or financial
performance or stock performance of the Company or any of its Subsidiaries (the
items in clauses (I), (II), (III) and (IV) being referred to collectively as the
"Company Securities"), and (B) there are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Company Securities. No Subsidiary of the Company owns any capital stock or
other voting securities of the Company.
Section 4.4 Subsidiaries.
(a) Each Subsidiary of the Company that is actively
engaged in any business or owns any assets or has any non de minimis liabilities
(contingent or otherwise) (each, an "Active Company Subsidiary") (i) is an
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization (to the extent such concept is recognized),
(ii) has all corporate or other power, as the case may be, and all Licenses
required to carry on its business as now conducted and all such Licenses are in
full force and effect and (iii) is duly qualified or licensed to do business as
a foreign corporation or organization, as applicable, and is in good standing in
each jurisdiction (to the extent such concept is recognized) where the character
of the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for failures of this representation and warranty
to be true which do not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. All Active
Company Subsidiaries and their respective jurisdictions of organization are
identified on Section 4.4(a) of the Company Disclosure Letter.
(b) All of the outstanding shares of capital stock or
other voting securities of each Subsidiary of the Company are duly authorized,
validly issued, fully paid and nonassessable, and such shares are owned by the
Company or by a Subsidiary of the Company free and clear of any Encumbrances or
limitation on voting rights. There are no subscriptions, options, warrants,
calls, rights, convertible or exchangeable securities or other agreements or
commitments of any character relating to the issuance, transfer, sale, delivery,
voting or redemption (including any rights of conversion or exchange under any
outstanding security or other instrument) for any of the capital stock or other
equity interests of any such Subsidiaries.
(c) Section 4.4(c) of the Company Disclosure Letter sets
forth all Persons in which the Company or a Subsidiary of the Company owns 10%
or more of the outstanding voting or equity interest, the owner thereof and the
amount thereof so owned.
(d) Section 4.4(d) of the Company Disclosure Letter sets
forth (i) all Subsidiaries of the Company that are not wholly owned Subsidiaries
(the "Partially Owned Subsidiaries"), (ii) the ownership interest of the Company
and its Subsidiaries, as applicable, therein, and (iii) as of the date of this
Agreement, the identity of the other owners thereof and their respective
ownership interests. The Partially Owned Subsidiaries do not own an amount of
assets or liabilities that are material to the business, operations and assets
of the Company and its Subsidiaries, taken as a whole, or have any liabilities
other than de minimis liabilities.
31
Section 4.5 SEC Documents.
(a) The Company and Nortek Inc., a Delaware company
("OpCo"), have each filed all reports, proxy statements, registration
statements, forms and other documents (including all certifications and
statements required by Rule 13a-14 or 15d-14 under the Exchange Act or Section
906 of the Xxxxxxxx-Xxxxx Act) required to be filed or furnished by each of them
with the Securities and Exchange Commission (the "SEC") since December 31, 2002
(collectively, including all exhibits and schedules thereto and documents
incorporated by reference therein, the "Company SEC Documents"). Other than
OpCo, no Subsidiary of the Company is required to file any report, proxy
statement, registration statement, form or other document with the SEC. None of
the Company SEC Documents (other than the financial statements contained
therein, as to which representations are made in Section 4.6 hereof) (as amended
prior to the date of this Agreement, if applicable) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All of such Company
SEC Documents (as amended prior to the date of this Agreement, if applicable)
complied as to form in all material respects with the applicable requirements of
the Securities Act, the Exchange Act and the Xxxxxxxx-Xxxxx Act, each as in
effect on the date so filed. The Company is in compliance in all material
respects with the provisions of the Xxxxxxxx-Xxxxx Act applicable to it as of
the date hereof and has implemented such programs and has taken reasonable
steps, upon the advice of the Company's independent auditors and outside
counsel, respectively, to ensure the Company's future material compliance (not
later than the relevant statutory and regulatory deadlines therefor) with all
provisions of the Xxxxxxxx-Xxxxx Act which shall become applicable to the
Company, in light of the nature of the Company's currently outstanding debt and
equity securities, including the nature of the ownership thereof, after the date
hereof.
(b) Except for the Financial Advisory Agreement, since
January 1, 2003 there have been no transactions or Contracts between the Company
or any of its Subsidiaries, on the one hand, and any Affiliate of the Company or
any of its Subsidiaries, on the other hand, that would be required to be
disclosed pursuant to Item 404 of Regulation S-K under the Securities Act and
have not been disclosed publicly.
Section 4.6 Financial Statements; No Undisclosed Liabilities.
(a) The consolidated financial statements of the Company
and OpCo (including, in each case, any notes and schedules thereto) with respect
to periods commencing on or after January 1, 2001, included in the Company SEC
Documents (i) were prepared from the books and records of the Company and its
Subsidiaries, (ii) comply as to form in all material respects with applicable
accounting requirements and the rules and regulations of the SEC with respect
thereto, (iii) were prepared in accordance with United States generally accepted
accounting principles as in effect as of the dates of such financial statements
("GAAP"), applied on a consistent basis (except as may be indicated therein or
in the notes thereto and, in the case of unaudited statements, as permitted by
the rules and regulations of the SEC) during the periods involved and (iv)
fairly present, in all material respects, the consolidated financial position of
the Company or OpCo, as the case may be, and their respective and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods
32
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments (that are not expected to be material in amount)).
(b) Neither the Company nor its Subsidiaries have any
liabilities or obligations of any nature whatsoever (whether absolute, accrued,
contingent or otherwise) and whether or not required by GAAP to be reflected in
the audited financial statements of the Company and its Subsidiaries except
those liabilities and obligations (a) disclosed (but only to the extent reserved
against) in the consolidated balance sheet (the "Consolidated Balance Sheet") of
the Company included in its Annual Report on Form 10-K for the year ended
December 31, 2003 (the "Company 10-K"), (b) incurred in the ordinary course of
business consistent with past practice or in connection with the transactions
contemplated by this Agreement, since December 31, 2003 or (c) which do not have
and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
(c) Each of the Company and each of its Subsidiaries
maintains in all material respects (A) accurate books and records reflecting its
assets and liabilities and (B) proper and adequate internal accounting controls
which provide assurance, to the extent required by Law, that (i) transactions
are executed with management's authorization; (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of the
Company and OpCo and to maintain accountability for the Company's and OpCo's
consolidated assets; (iii) access to the Company's and OpCo's assets is
permitted only in accordance with management's authorization; (iv) the reporting
of the Company's and OpCo's assets is compared with existing assets at regular
intervals; and (v) accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.
Section 4.7 Absence of Material Adverse Changes. Except as
expressly contemplated by this Agreement, since December 31, 2003, the Company
and its Subsidiaries have conducted their respective business only in the
ordinary course consistent with past practice, and there has not been (i) any
change, event or effect which does or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or (ii) any
action taken by the Company or any of its Subsidiaries that, if taken during the
period from the date of this Agreement through the Closing Date, would
constitute a breach of Section 6.1 of this Agreement.
Section 4.8 Taxes.
(a) (1) All material Tax Returns required to be filed by
or on behalf of the Company or any of its Subsidiaries have been timely filed in
the manner prescribed by Law, and all such Tax Returns are true, complete and
accurate in all material respects; (2) all material Taxes due and owing (whether
or not reflected on any Tax Return) by the Company or any Subsidiary of the
Company have been timely paid, or adequately reserved or properly accounted for
in accordance with GAAP; (3) there is no presently pending, scheduled or
commenced audit, examination, deficiency, refund litigation, proposed
adjustment, proceeding (whether judicial or administrative) or matter in
controversy relating to Taxes of the Company or any of its Subsidiaries which
could reasonably be expected to result in a material tax liability; (4) there
are no material liens for Taxes on any asset of the Company or any Subsidiary of
the Company,
33
except for liens for Taxes not yet due and payable; and (5) the Company and each
of its Subsidiaries has complied in all material respects with all rules and
regulations relating to the withholding of Taxes (including employee-related
Taxes or has adequately reserved or properly accounted for such taxes in
accordance with GAAP).
(b) The statutes of limitations for the federal income
Tax Returns of the Company and the Subsidiaries of the Company have expired or
otherwise have been closed for all taxable periods ending on or before December
31, 1999.
(c) The Company is not and has not been a United States
real property holding corporation (as defined in Section 897(c)(2) of the
Internal Revenue Code of 1986, as amended (the "Code")) during the 5-year period
ending on the Closing Date.
(d) Neither the Company nor any of its Subsidiaries has
any liability for the Taxes of any Person other than the Company or any of its
Subsidiaries (i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign Law), (ii) as a transferee or successor or
(iii) by Contract.
(e) Neither the Company nor any of its Subsidiaries is
required to include in income any material adjustment pursuant to Section 481(a)
of the Code (or any similar provisions of state, local or foreign Law) in its
current or in any future taxable period by reason of a change in accounting
method.
Section 4.9 Employee Benefit Plans.
(a) Section 4.9(a) of the Company Disclosure Letter sets
forth each material deferred compensation plan, incentive compensation plan,
equity-based compensation plan, "welfare" plan, fund or program (within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended and the regulations promulgated thereunder ("ERISA")), "pension" plan
fund or program (within the meaning of Section 3(2) of ERISA); each material
employment, termination or severance agreement; and each other material employee
benefit plan, fund, program or agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by the
Company, any of its Subsidiaries or any trade or business, whether or not
incorporated, that together with the Company or any of its Subsidiaries would be
deemed a "single employer" within the meaning of Section 4001(b) of ERISA (an
"ERISA Affiliate"), or to which the Company, any of its Subsidiaries or an ERISA
Affiliate is a party, whether written or oral, for the benefit of any employee
or former employee of the Company or any of the Company's Subsidiaries, or under
which the Company or any of its Subsidiaries has any liability, except for those
plans, funds, programs, agreements or arrangements, relating to employees in
jurisdictions outside of the United States which are not material to the Company
and its Subsidiaries taken as a whole (collectively, the "Plans").
(b) The Company has made available to Buyer copies of
each of the Plans including all amendments thereto to date and copies of the
most recent actuarial statements with respect to each Plan which is subject to
Title IV of ERISA.
34
(c) Each of the Plans that is intended to be qualified
under Section 401(a) of the Code, has received a favorable determination letter
from the Internal Revenue Service (the "IRS") or has been established pursuant
to a prototype plan that has received a favorable opinion letter from the IRS
and, no event has occurred that would reasonably be expected to affect such
determination or opinion.
(d) Each of the Plans complies in all material respects
in form and in operation with the requirements of the Code, ERISA and all other
applicable Laws and no Action or audit (other than routine Actions or audits in
the ordinary course) is pending or, threatened with respect to the Plans, except
for such Actions or audits which would not result in a material liability.
(e) (i) No Plan has an accumulated funding deficiency
within the meaning of Section 412 of the Code, whether or not waived, (ii) no
material liability under Title IV of ERISA has been incurred by the Company, any
of its Subsidiaries or any ERISA Affiliate that has not been satisfied in full,
(iii) the Pension Benefit Guaranty Corporation has not instituted proceedings to
terminate any Plan (except multiemployer plans, within the meaning of Section
4001(a)(3) of ERISA ("multiemployer plans")), (iv) no material "reportable
event," as such term is defined in section 4043(b) of ERISA, has occurred with
respect to any Plan, (v) and no condition exists that presents a material risk
to the Company, any of its Subsidiaries or an ERISA Affiliate of incurring a
material liability to or on account of a Plan pursuant to Title IV of ERISA.
(f) The current value of the assets of each of the Plans
that are subject to Title IV of ERISA, based upon the actuarial assumptions
presently used by the Plans, exceeds the present value of the accrued benefits
under each such Plan.
(g) No liability has been incurred or reasonably is
likely to be incurred by the Company, any of its Subsidiaries or any ERISA
Affiliate in connection with any Plan that is a multiemployer plan on account of
a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA, that has not been
satisfied in full except as does not and would not reasonably be expected to,
individually or in the aggregate, result in material liability.
(h) No Plan provides medical, surgical, hospitalization,
or death benefits (whether or not insured) for employees or former employees of
the Company, any of its Subsidiaries or any ERISA Affiliate for periods
extending beyond their retirement or other termination of service, other than
(i) coverage mandated by applicable law, (ii) death benefits under any "pension
plan," or (iii) benefits the full cost of which is borne by the current or
former employee (or his beneficiary).
(i) The consummation of the transactions contemplated by
this Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee of the Company, any of its Subsidiaries
or any ERISA Affiliate to severance pay, unemployment compensation or any other
material payment, except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due to any such employee, except as expressly contemplated by this
Agreement.
35
Section 4.10 Environmental Matters. Except as disclosed on
Section 4.10 of the Company Disclosure Letter:
(a) The Company and each of its Subsidiaries are and have
been since January 1, 2001 in compliance with all applicable Environmental Laws,
including possessing all permits, authorizations, licenses, exemptions and other
governmental authorizations required for its operations under applicable
Environmental Laws (all of the foregoing, the "Environmental Permits"), except
for such violations, if any, which do not have and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. All such Environmental Permits are in effect, no appeal nor any other
Action is pending to revoke any such Environmental Permit, and the Company and
each of its Subsidiaries are in compliance with all terms and conditions of such
Environmental Permits except for such violations, if any, which do not have and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. To the extent required by applicable
Environmental Laws, the Company and each of its Subsidiaries have filed (or will
have filed by the Closing Date) all applications necessary to renew or obtain
any Environmental Permits in a timely fashion so as to allow the Company and
each of its Subsidiaries to continue to operate their businesses in compliance
with applicable Environmental Laws, except for such failures, if any, which do
not have and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, and the Company does not expect
such new or renewed Environmental Permits to include any new terms or conditions
that will have a material adverse impact on the Company or any of its
Subsidiaries.
(b) There is no pending or threatened claim, lawsuit, or
administrative proceeding against the Company or any of its Subsidiaries, under
or pursuant to any Environmental Law except for such claims, lawsuits or
proceedings which do not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has received written notice from any Person,
including any Governmental Entity, alleging that the Company or any of its
Subsidiaries has been or is in violation or potentially in violation of any
applicable Environmental Law or otherwise may be liable under any applicable
Environmental Law, which violation or liability is unresolved, except for such
violations or liabilities which do not have and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received any written request
for information or indemnification from any Person, including but not limited to
any Governmental Entity, related to any potential liability under or compliance
with any applicable Environmental Law except for such liability which does not
have and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) With respect to the real property that is currently
or formerly owned, leased or operated by the Company or any of its Subsidiaries
(or by any of their respective predecessors in interest), there have been no
Releases of Hazardous Substances on or underneath any of such real property
during the Company's or any of its Subsidiaries' ownership or operation of such
real property, except for those Releases which do not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
36
(d) Neither the Company nor any of its Subsidiaries has
entered into any Contract that may require them to pay to, reimburse, guarantee,
pledge, defend, indemnify or hold harmless any Person from or against any
liabilities or costs arising out of or related to Releases of Hazardous
Substances or otherwise arising in connection with or under Environmental Laws,
except for such liabilities or costs, if any, which do not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(e) The representations and warranties set forth in this
Section 4.10 are Sellers' sole representations and warranties relating to
environmental matters.
Section 4.11 Litigation; Compliance with Law.
(a) There is no Action pending against or threatened in
writing against, the Company or any Subsidiary of the Company or any of their
respective properties, or any of their officers, employees or directors in their
capacity as such, except for such Actions which do not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has,
since January 1, 2001, received notice from a responsible official of a
Governmental Entity indicating that such Governmental Entity has the right or
intends to suspend, modify, cancel or terminate any material License.
(c) The Company and its Subsidiaries are (and since
January 1, 2001 have been) in compliance with all Laws applicable to their
respective businesses and operations, except for such violations which do not
have and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(d) The recapitalization of the Company's capital stock
pursuant to the Recapitalization Agreement (and the transactions consummated
pursuant to or in connection with the Recapitalization Agreement) were conducted
and completed in compliance in all material respects with all applicable Laws
and all material filings and registrations with, notifications to, and
authorizations, consents and approvals of, any Governmental Entity in connection
therewith were made and obtained in accordance in all material respects with
applicable Law.
Section 4.12 Intellectual Property.
(a) The Company and its Subsidiaries own or have the
right to use all material Intellectual Property necessary for the conduct of the
businesses of the Company and its Subsidiaries as each such business is
currently conducted.
(b) Set forth in Section 4.12 of the Company Disclosure
Letter are all (i) registered Intellectual Property owned, and material to, the
Company or any of its Subsidiaries; and (ii) Contracts granting the right to use
Intellectual Property of or to a third party to, and material to, the Company or
any of its Subsidiaries ("Material IP Licenses"). Except as does not
37
have and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect: (i) all of the scheduled
registrations relating to Intellectual Property owned by the Company and its
Subsidiaries are subsisting and unexpired, and such registered Intellectual
Property is free of all Encumbrances, other than Material IP Licenses and
ordinary course licenses; (ii) no third party is challenging, infringing on,
misappropriating or otherwise violating any right of the Company or any of its
Subsidiaries in or to any Intellectual Property owned or exclusively licensed by
the Company or any of its Subsidiaries; and (iii) since January 1, 2001, neither
the Company nor any of its Subsidiaries has received written notice of any
pending or threatened Action that seeks to limit, cancel or question the
validity of, the Company's or any of its Subsidiaries' rights in and to, any
Intellectual Property.
(c) Neither the Company nor any of its Subsidiaries has
received any notice of potential infringement, misappropriation or other
violation of, and the Company and its Subsidiaries do not infringe,
misappropriate or otherwise violate, the Intellectual Property rights of any
third party in any respect that has (either by reason of any damage claims
against the Company or by reason of the Company ceasing to so infringe such
rights) and would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(d) No judgment, decree, injunction, rule or order has
been rendered by any Governmental Entity which would limit, cancel or question
the validity of, or the Company's or any of its Subsidiaries' rights in and to,
any Intellectual Property owned or used by the Company or any of its
Subsidiaries in any respect, except in connection with the prosecution of any
registrations of such Intellectual Property based on any patent, trademark or
copyright office, or the like, in any relevant jurisdiction (including any
opposition, reexamination or reissue proceeding, or the like) and except for
such judgments, decrees, injunctions, rules or orders that do not have and would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(e) The execution and delivery of this Agreement and the
performance by Sellers hereunder will not result in the loss or impairment of
the Company's or any of its Subsidiaries' ownership or use of any Intellectual
Property material to the Company and its Subsidiaries taken as a whole.
(f) Since January 1, 2001, the Company and its
Subsidiaries are and have been in compliance with all applicable Laws concerning
the use of personal data collected from the Company's and its Subsidiaries'
customers, except as does not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 4.13 Material Contracts.
(a) All Contracts described in Item 601(b)(10) of
Regulation S-K to which the Company or any of its Subsidiaries is a party or may
be bound ("S-K Contracts") have been filed as exhibits to, or incorporated by
reference in, the Company 10-K. As used herein, "Material Contracts" shall mean
all S-K Contracts and the following additional Contracts (other than any Company
Leases, which are covered by the provisions of Section 4.15):
38
(i) each Contract involving aggregate
annual consideration payable to the Company or any of its
Subsidiaries for services of more than $1,000,000 or involving
aggregate annual payments by the Company or any of its
Subsidiaries of more than $1,000,000;
(ii) all broker, distributor, dealer,
manufacturer's representative, franchise, agency, sales
promotion, market research, marketing consulting and
advertising Contracts to which the Company or any of its
Subsidiaries is a party involving aggregate annual payments by
the Company or any of its Subsidiaries of more than $500,000
and which are not terminable without penalty by any of the
parties thereto within 90 days;
(iii) all management Contracts (excluding
Contracts for employment) and Contracts with other
consultants, including any Contracts involving the payment of
royalties or other amounts calculated based upon (x) the
revenues or income of the Company or any of its Subsidiaries
or (y) the revenues or income of any product of the Company or
any of its Subsidiaries to which the Company or any of its
Subsidiaries is a party, in each case involving aggregate
annual payments by the Company or any of its Subsidiaries of
more than $500,000;
(iv) all Contracts that (A) limit or
purport to limit the ability of the Company or any of its
Subsidiaries or any key executives of the Company or any of
its Subsidiaries, to compete in any line of business or with
any Person or in any geographic area or location or during any
period of time, (B) require the Company or any of its
Subsidiaries to use any supplier or third party for all or
substantially all of the Company's or any of its Subsidiaries'
requirements or needs in each case with respect to a Contract
involving aggregate annual payments of more than $500,000, (C)
limit or purport to limit in any material respect the ability
of the Company or any of its Subsidiaries to solicit any
customers or clients of the other parties thereto, (D) require
the Company or any of its Subsidiaries to provide to the other
parties thereto "most favored nations" pricing, or (E)
requires that the Company or any of its Subsidiaries refrain
from infringing on the Intellectual Property rights of third
parties (each of (A) through (E), a "Restrictive Agreement");
(v) all Contracts obligating the
Company or any of its Subsidiaries to (A) make a future
purchase of materials, supplies or equipment that (I) has
annual payments by the Company or any such Subsidiary, as the
case may be, in excess of $500,000, or (II) has a term
extending for more than one year from the date of this
Agreement, or (B) deliver materials, products or supplies
(including sales orders) that (x) has annual payments to the
Company or any such Subsidiary in excess of $500,000, or (y)
has a term extending for more than one year from the date of
this Agreement;
39
(vi) all written Contracts between the
Company or any of its Subsidiaries, on the one hand, and any
of their respective officers, directors, employees or
principals, on the other hand;
(vii) all joint venture, partnership or
other similar Contracts outside the ordinary course of
business involving a sharing of profits, losses, costs or
liabilities by the Company or any of its Subsidiaries of more
than $1,000,000 per year with any third party;
(viii) all Contracts entered into since
January 1, 2003 between the Company or any of its Subsidiaries
and any other party providing for the acquisition or
disposition by the Company or such Subsidiary (including by
merger, consolidation, acquisition or disposition of stock or
assets or any other business combination) of any corporation,
partnership, other business organization or division thereof
or an amount of assets material to the business or to such
other party, in each case, for an aggregate purchase price or
sale in excess of (including any non-contingent debt or
liabilities assumed) $1,000,000;
(ix) all Material IP Licenses; and
(x) guarantees of obligations of
Subsidiaries of the Company or of another Person (including in
respect of operating agreements) in excess of $1,000,000 in
the aggregate (other than guarantees of Indebtedness, which
are covered by Section 4.14 below).
(b) Set forth on Section 4.13(b) of the Company
Disclosure Letter is a true and complete list of all Material Contracts
described in clauses (i) through (x) above, and such schedule shall specifically
identify the primary clause above which applies to such Material Contract
(including the Restrictive Agreements).
(c) All Material Contracts are valid and binding and in
full force and effect in all material respects, except to the extent any such
Material Contracts have expired after the date of this Agreement but prior to
the Closing Date in accordance with their terms (other than such expiration
caused by a breach or default by the Company or any of its Subsidiaries, as
applicable). None of the Company, its Subsidiaries, or the other parties
thereto, has violated in any material respect any provision of, or committed or
failed to perform any act which with or without notice, lapse of time or both
would constitute a material default under the provisions of, any Material
Contract.
Section 4.14 Indebtedness.
(a) Except for (x) Indebtedness specifically described in
the notes to the Company's unaudited consolidated financial statements for the
quarter ended April 3, 2004 included on the Form 10-Q filed by the Company with
the SEC for such quarter, (y) Indebtedness included in the amount set forth
under total liabilities on the balance sheet included therein and (z) other
Indebtedness not in excess of $1,000,000 in the aggregate, the Company
40
and its Subsidiaries have no outstanding Indebtedness and no Contracts relating
to Indebtedness, other than Indebtedness incurred after the date hereof in
compliance with Section 6.1 hereof.
(b) For each item of Indebtedness whether or not
described in clauses (x) or (y) of Section 4.14(a) or disclosed on Section
4.14(a) of the Company Disclosure Letter, Section 4.14(b) of the Company
Disclosure Letter sets forth with respect thereto (i) the debtor and creditor,
and (ii) the principal amount of such Indebtedness as of April 3, 2004; provided
that the Company shall complete, within ten (10) Business Days from the date
hereof, certain information in such schedule relating to the identity of the
creditors but not the dollar amounts involved (which information, when supplied,
will be deemed to be part of such schedule).
Section 4.15 Real Estate.
(a) The Company or one of its Subsidiaries has (i) good,
valid and marketable title to each parcel of real property owned in fee by the
Company or any of its Subsidiaries (the "Company Fee Property") and (ii) good,
valid and subsisting leasehold title to each parcel of real property leased by
the Company or any of its Subsidiaries (the "Company Leased Property" and
together with the Company Fee Property, the "Company Real Property"), in each
case where any such real property is necessary to the conduct of the business of
the Company and its Subsidiaries as it is presently conducted, except for any
such failure in title which does not have and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 4.15(a) of the Company Disclosure Schedule sets forth a true and
complete list of all Company Real Property. The Company Real Property represents
all real property necessary to the conduct, in all material respects, of the
business of the Company and its Subsidiaries taken as a whole, as it is
currently conducted. True and complete copies of all Company Leases and all
amendments, modifications, assignments, subleases, renewals, extensions and
agreements relating thereto have been made available to Buyer and/or it
Representatives, in each case which Company Leases are necessary to the conduct,
in all material respects, of the business of the Company and its Subsidiaries
taken as a whole, as it is conducted as of the date of this Agreement. The
Company or one of its Subsidiaries has the right to quiet enjoyment of the
Company Leased Property for the full term of the lease relating thereto (each
such lease, a "Company Lease"), except for any failure which does not have and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Each Company Lease is a legal, valid and
binding agreement, enforceable in accordance with its terms, subject only to
applicable bankruptcy, insolvency and similar Laws affecting rights of creditors
generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
Law) of the parties thereto and there is no, nor has the Company or any of its
Subsidiaries received notice of any, default (or any condition or event, which,
after notice or a lapse of time or both would constitute a default thereunder),
except for any default which does not have and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has assigned its interest under
any Company Lease or sublet any part of the premises covered thereby or
exercised any option or right thereunder except that which does not have and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. No penalties are accrued and unpaid under
41
any Company Lease, except for penalties which do not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) The Company Real Property is not subject to any
liens, restrictions, rights-of-way or other encumbrances (collectively,
"Property Restrictions"), except for: (i) any such Property Restrictions for
taxes, assessments and other governmental charges not yet due and payable, or,
if due, not delinquent or being contested in good faith by appropriate
proceedings during which collection or enforcement against the Company Real
Property is stayed, (ii) Property Restrictions imposed or promulgated by law or
any Governmental Entity with respect to real property, including zoning,
building or similar restrictions where such Property Restrictions do not have
and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect, (iii) easements, licenses, covenants,
conditions, mechanic's liens, rights-of-way and other similar restrictions and
encumbrances, including any other agreements, restrictions or encumbrances which
would be shown on a current title report or survey or similar report or listing
and any other matters of record, provided the same do not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, or (iv) where the existence of any such Property
Restrictions, do not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(c) Except as does not have and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (i) there is no Company Real Property whose building systems are not in
working order, (ii) there is no physical damage to any Company Real Property,
(iii) there is no currently pending and incomplete renovation or restoration to
any Company Real Property and (iv) there are no material structural defects
relating to the Company Real Property. Neither the Company nor any of its
Subsidiaries has received any written notice to the effect that (A) any
condemnation or rezoning proceedings are pending or threatened with respect to
any of the Company Real Property or (B) any zoning, building or similar law,
code, ordinance, order or regulation is or will be violated by the continued
maintenance, operation or use of any buildings or other improvements on any of
the Company Real Property or by the continued maintenance, operation or use of
the parking areas.
Section 4.16 Labor Relations and Employment.
(a) (i) There is no, and since January 1, 2003 there has
been no, labor strike, dispute, slowdown, stoppage, or lockout actually pending
or threatened or being carried out against the Company or its Subsidiaries which
may interfere with the respective business activities of the Company or any of
its Subsidiaries; (ii) no unions claim to represent any employees of the Company
or any of its Subsidiaries except, with respect to any employees who are
employed outside of the United States, for such union representations which are
not material; (iii) neither the Company nor any of its Subsidiaries is a party
to or bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association except, with respect to any such organization or
association that represents employees who are employed outside the United
States, for such collective bargaining or similar agreements or work rules or
practices which do not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; (iv) none
of the employees of the Company or any of its
42
Subsidiaries is represented by any labor organization and neither the Company
nor any of its Subsidiaries have any knowledge of any union organizing
activities among such employees except, with respect to any employees who are
employed outside of the United States, for such union representations which are
not material; (v) except as do not have and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, the
Company and its Subsidiaries are in compliance with all obligations under any
collective bargaining agreements to which the Company or any of its Subsidiaries
are a party; and (vi) there has not occurred a substantial union organizing
event at one or more facilities of the Company or its domestic Subsidiaries in
respect of which there is a reasonable risk that such event would have a
material adverse impact on the labor costs of the Company and its Subsidiaries,
taken as a whole.
(b) There are no material written personnel policies,
collective bargaining agreements, rules or procedures applicable to employees of
the Company or any of its Subsidiaries, other than those set forth on Section
4.16(b) of the Company Disclosure Letter, true and correct copies of which have
heretofore been made available to Buyer. The Company and its Subsidiaries are
(and since January 1, 2003 have been) in compliance with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment, collective bargaining agreements, wages, hours of work and
occupational safety and health, and are not engaged in any unfair labor
practices, except for such violations, if any, which do not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries has
effectuated since June 1, 1998, (i) a "plant closing" (as defined in the Worker
Adjustment and Retraining Notification Act ("WARN Act")) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of the Company or any of its Subsidiaries in the United
States; or (ii) a "mass layoff" (as defined in the WARN Act) affecting any site
of employment or facility of the Company or any of its Subsidiaries in the
United States; nor has the Company or any of its Subsidiaries been affected by
any transaction or engaged in layoffs or employment terminations in the United
States sufficient in number to trigger application of any similar state, local
or foreign Law.
(d) Since June 1, 1998, the Company and its Subsidiaries
have been in material compliance with the WARN Act.
Section 4.17 Suppliers and Customers. As of the date of this
Agreement, Section 4.17 of the Company Disclosure Letter sets forth a true and
accurate list of the (i) ten most significant customers and distributors of the
Company and its Subsidiaries, based on dollar sales volumes and (ii) ten most
significant suppliers of the Company and its Subsidiaries based on amounts
invoiced, in each case for the year ended December 31, 2003 (such significant
customers and suppliers are collectively referred to herein as "Material
Customers and Suppliers"). Since December 31, 2003, no Material Customer or
Supplier has cancelled, terminated or otherwise modified (in a manner materially
adverse to the Company or any of its Subsidiaries) its relationship with the
Company or any of its Subsidiaries and no such Person has notified the Company
or its Subsidiaries of its intention to do so, in each case, except for such
cancellations, terminations, modifications or intentions which do not have and
would not
43
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 4.18 Product Liability. There is no Action pending or
threatened in writing against the Company or any of its Subsidiaries concerning
any product that is designed, produced, manufactured, distributed, or sold by
the Company or any of its Subsidiaries (a "Product"), relating to or resulting
from an alleged defect in the design, manufacture, materials or workmanship of
any Product, or, with respect to any Product, any alleged failure to warn or any
alleged breach of express or implied warranties or representations, except for
any of the foregoing which does not have and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Section 4.19 Solicitation Documents. None of the information
included in the Solicitation Documents will, at the time such documents or any
amendments or supplements thereto are first published, sent or given to holders
of the Discount Notes, the Floating Rate Notes or the Subordinated Notes, as
applicable, contain any untrue statement of a material fact or omit to state any
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; provided that, no representation is hereby made by Sellers with
respect to information supplied by Buyer or its Affiliates in writing
specifically for inclusion in such Solicitation Documents.
Section 4.20 Insurance. As of the date of this Agreement,
Section 4.20 of the Company Disclosure Letter contains a list of all insurance
policies covering the Company and its Subsidiaries for current policy periods.
Section 4.20 of the Company Disclosure Letter includes for each insurance policy
listed thereon, the type of policy, form of coverage, policy number, policy
period, name of insurer, name of insured's, and any premiums, deductibles or
limits of coverage. Except as set forth on Section 4.20 of the Company
Disclosure Letter, as of the date of this Agreement (i) all policies listed on
Section 4.20 of the Company Disclosure Letter are in full force and effect and
all premiums thereon due to date have been paid, (ii) neither the Company nor
any of its Subsidiaries has been advised of any defense to coverage or
reservation of rights in connection with any material claim to coverage asserted
or noticed by or on behalf of the Company or any of its Subsidiaries under or in
connection with any insurance policy, and (iii) no written notice has been
received from or on behalf of any insurance carrier issuing any policy listed on
Section 4.20 of the Company Disclosure Letter that there will be a cancellation,
rescission, reformation, reduction or non-renewal of any such existing policies
or a material increase in deductible or self insurance retention.
Section 4.21 Transactions with Affiliates. Except for the
matters disclosed on Section 4.21 of the Company Disclosure Letter, (i) no
Affiliate of the Company or any of its "material stockholders" (meaning, for
purposes of this Section 4.21, any stockholder that holds, either individually
or together with its Affiliates, an equity interest of more than 5% in the
Company) is, or has been at any time since January 1, 2003: (A) a competitor,
creditor, debtor, customer, distributor, supplier or vendor of the Company or
any of its Subsidiaries or (B) a party to any Contract to which the Company or
any of its Subsidiaries is or was a party, and (ii) no such Contract has been
entered into, consummated, abandoned, amended or terminated since January 1,
2003. Except as disclosed on Section 4.21 of the Company Disclosure Letter, no
Affiliate of the Company or any of its "material stockholders" owns, or has
owned since January
44
1, 2003, any asset or properties used in, or necessary to, the business or
operations of the Company and its Subsidiaries.
Section 4.22 Finders' and Other Fees. Except for UBS
Securities LLC, Credit Suisse First Boston, Inc. and Daroth Capital Advisors
LLC, whose fees will be paid by the Company, and except as provided in Section
6.14, there is no investment banker, broker, finder or other intermediary which
has been retained by, or is authorized to act on behalf of, the Company or any
Subsidiary of the Company, or any employee or consultant of the Company or any
Subsidiary of the Company that would be entitled to any fee, commission, sale
bonus or similar payment from the Company, any Subsidiary of the Company, Buyer
or any of Buyer's Affiliates upon consummation of the transactions contemplated
by this Agreement. The Company heretofore has delivered to Buyer true and
complete copies of any Contracts with or other obligations to UBS Securities
LLC, Credit Suisse First Boston, Inc. or Daroth Capital Advisors LLC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER HOLDINGS AND BUYER
Buyer Holdings and Buyer hereby represent and warrant to the
Company as follows:
Section 5.1 Corporate Existence and Power; Capitalization.
Each of Buyer Holdings and Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all corporate power and all Licenses required
to carry on its business as now conducted, and all Licenses are in full force
and effect except for failures to have any such Licenses or for such Licenses to
be in full force and effect which do not have and would not reasonably be
expected to have, individually or in the aggregate, a Buyer Material Adverse
Effect. Each of Buyer Holdings and Buyer is duly qualified to do business and is
in good standing in each jurisdiction where the character of the property owned,
leased or operated by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where failures to be so
qualified or in good standing do not have and would not reasonably be expected
to have, individually or in the aggregate, a Buyer Material Adverse Effect. Each
of Buyer Holdings and Buyer heretofore has delivered or made available to the
Company true and complete copies of the certificate of incorporation and
by-laws, as currently in effect, of Buyer. All of the issued and outstanding
shares of capital stock of (i) Buyer will, at Closing, be owned by Buyer
Holdings and (ii) Buyer Holdings, are or at Closing will be, owned by the THL
Fund or, subject to Section 6.9(a), its designees, in each case free and clear
of all Encumbrances and defect in title.
Section 5.2 Authorization. Each of Buyer Holdings and Buyer
has the requisite power and authority to execute and deliver this Agreement, the
Commitment Letters and, in the case of Buyer Holdings, the Related Agreements
(to which it is contemplated to be a party) and to perform their respective
obligations hereunder and thereunder. The execution and delivery of this
Agreement, the Commitment Letters and, in the case of Buyer Holdings, the
Related Agreements (to which it is contemplated to be a party) and the
performance of their respective obligations hereunder and thereunder have been,
or will be, as applicable, duly and
45
validly authorized and approved by all required corporate action on the part of
Buyer Holdings and Buyer and no other proceedings on the part of Buyer Holdings
or Buyer are necessary to authorize the execution, delivery and performance of
this Agreement, the Commitment Letters, in the case of Buyer Holdings, and the
Related Agreements (to which it is contemplated to be a party). This Agreement,
the Commitment Letters and, in the case of Buyer Holdings, the Related
Agreements (to which it is contemplated to be a party) have been, or will be, as
applicable, duly executed and delivered by Buyer and Buyer Holdings and each
constitutes, assuming due authorization, execution and delivery of this
Agreement, the Commitment Letters and, in the case of Buyer Holdings, the
Related Agreements by the other parties hereto and thereto, a valid and binding
obligation of Buyer and Buyer Holdings, enforceable against Buyer Holdings and
Buyer, respectively, in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
Section 5.3 Consents and Approvals; No Violations.
(a) Neither the execution and delivery of this Agreement
nor the performance by Buyer Holdings and Buyer of their respective obligations
hereunder nor the consummation of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or the by-laws of Buyer Holdings or Buyer; (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or obligation to repurchase, repay, redeem or acquire or any
similar right or obligation) under any of the terms, conditions or provisions of
any note, mortgage, letter of credit, other evidence of Indebtedness, guarantee,
Contract or similar obligation to which Buyer Holdings or Buyer is a party or by
which it or its assets may be bound; or (iii) assuming that the filings,
registrations, notifications, authorizations, consents and approvals referred to
in subsection (b) below have been obtained or made, as the case may be, violate
any Law to which Buyer Holdings or Buyer is subject, excluding from the
foregoing clauses (ii) and (iii) such violations of Law; requirements, defaults,
breaches, rights or violations that do not have and would not reasonably be
expected to have, individually or in the aggregate, a Buyer Material Adverse
Effect.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required in
connection with the execution and delivery of this Agreement by Buyer and Buyer
Holdings or the performance by Buyer and Buyer Holdings of their respective
obligations hereunder or the consummation of the transactions contemplated
hereby, except (i) compliance with any applicable requirements of the HSR Act,
EC Merger Regulations or other applicable Foreign Monopoly Laws; (ii) compliance
with any applicable requirements of the Securities Act, the Trust Indenture Act
or the Exchange Act; (iii) filings in connection with the debt financing
contemplated by the Indebtedness Commitment Letter and (iv) such other consents,
approvals, orders, authorizations, notifications, registrations, declarations
and filings the failure of which to be obtained or made do not have and would
not reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect.
46
Section 5.4 Solvency. Buyer Holdings and Buyer are not
entering into the transactions contemplated by this Agreement with actual intent
to hinder, delay or defraud either present or future creditors. Immediately
following the Closing and after giving effect to the transactions contemplated
by this Agreement, the Financing, and the transactions contemplated or required
hereby and thereby, Buyer Holdings, OpCo and its Subsidiaries will each be
Solvent, assuming that (i) the Company and its Subsidiaries are Solvent
immediately prior to Closing, and (ii) the representations set forth in ARTICLE
III and ARTICLE IV are true and correct in all respects, without giving effect
to any knowledge qualifications set forth therein.
Section 5.5 Financing.
(a) Buyer has available to it pursuant to the commitment
letter from the THL Fund dated the date hereof, a true, complete and correct
copy of which is attached hereto as Exhibit E (the "Equity Commitment Letter"),
and pursuant to the commitment letter dated on or prior to the date hereof, a
true, complete and correct copy of which has been delivered to the Sellers (the
"Indebtedness Commitment Letter" and together with the Equity Commitment Letter,
the "Commitment Letters"), an amount of funds sufficient for Buyer to consummate
the transactions contemplated by this Agreement, including to (w) pay the
amounts required to be paid by Buyer to the Paying Agent under Section 2.3(c),
(x) finance the Floating Rate Notes Offer and the Floating Rate Notes Consent
Solicitation (and if not successful, the Floating Rate Notes Redemption); the
Discount Notes Offer and the Discount Notes Consent Solicitation (and if not
successful, the Discount Notes Redemption), and the Subordinated Notes Offer and
the Subordinated Notes Consent Solicitation (y) pay the fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (the financing under clauses (x) and (y), collectively, the "Closing
Indebtedness Financing"), and (z) provide for the working capital needs of the
Company following the transactions contemplated by this Agreement (the
"Subsequent Indebtedness Financing" and, together with the financing under
clauses (w), (x) and (y), the "Financing").
(b) As of the date of this Agreement, the Commitment
Letters have not been amended, modified, withdrawn, terminated or replaced. None
of the lenders thereunder has notified Buyer of its intention to terminate such
respective lender's commitment under the Commitment Letters or not to provide in
full the financing contemplated thereby. Prior to the execution of this
Agreement, Buyer has made available to Seller a chart showing a reasonably
detailed breakdown of the contemplated sources and uses of the Financing as of
the date of this Agreement.
Section 5.6 Litigation.
(a) As of the date of this Agreement, there is no Action
pending against, or to the knowledge of Buyer Holdings or Buyer threatened in
writing against, Buyer Holdings, Buyer or any Subsidiary of Buyer or any of
their respective properties, or any of their officers, employees or directors in
their capacity as such, before any arbitrator or Governmental Entity which would
prohibit or impair Buyer or its Affiliates from undertaking any of the
transactions contemplated by this Agreement, except for such Actions that do not
have and would not reasonably be expected to have, individually or in the
aggregate, a Buyer Material Adverse Effect.
47
(b) Buyer Holdings, Buyer and its Subsidiaries are (and
since January 1, 2003 have been) in compliance with all applicable Laws
applicable to their respective businesses and operations, except for such
violations which do not have and would not reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect.
Section 5.7 Investment Representations.
(a) Buyer is acquiring the shares of Class A Common Stock
and Series B Preference Stock to be acquired by it hereunder for its own
account, solely for the purpose of investment and not with a view toward, or for
sale in connection with, any distribution thereof, nor with any present
intentions of distributions or selling such shares, in violation of the federal
securities Laws or any applicable foreign or state securities Law.
(b) Buyer is an "accredited investor" as defined in Rule
501(a) promulgated under the Securities Act.
(c) Buyer understands that the acquisition of the shares
of Class A Common Stock and Series B Preference Stock to be acquired by it
pursuant to the terms of this Agreement involves substantial risk. Buyer and its
officers have experience as an investor in securities and equity interests of
companies such as the ones being transferred pursuant to this Agreement and
acknowledges that it can bear the economic risk of its investment (which may be
for an indefinite period) and has such knowledge and experience in financial or
business matters that Buyer is capable of evaluating the merits and risks of its
investment in the shares of Class A Common Stock and Series B Preference Stock
to be acquired by it pursuant to the transactions contemplated hereby.
(d) Buyer understands that the shares of Class A Common
Stock and Series B Preference Stock to be acquired by it hereunder have not been
registered under the Securities Act on the basis that the sale provided for in
this Agreement is exempt from the registration provisions thereof. Buyer
acknowledges that such securities may not be transferred, sold, offered for
sale, pledged, hypothecated or otherwise disposed of without registration under
the Securities Act and any other provisions of applicable state securities Laws
or pursuant to an applicable exemption therefrom.
(e) Buyer acknowledges that the offer and sale of the
shares of Class A Common Stock and Series B Preference Stock to be acquired by
it in the transactions contemplated hereby has not been accomplished by the
publication of any advertisement.
Section 5.8 Solicitation Documents. None of the information
supplied by Buyer or its Affiliates in writing specifically for inclusion in the
Solicitation Documents will, at the time such documents or any amendments or
supplements thereto are first published, sent or given to holders of the
Discount Notes, the Floating Rate Notes or the Subordinated Notes, as
applicable, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein, in light of the circumstances under
which they were made, not misleading.
48
Section 5.9 Finders' and Other Fees. Except for THL Managers
V, LLC, whose fees will be paid by OpCo, as the surviving company in the Company
Merger, there is no investment banker, broker, finder or other intermediary
which has been retained by, or is authorized to act on behalf of, Buyer or any
Subsidiary of Buyer, or any employee or consultant of Buyer or any Subsidiary of
Buyer that would be entitled to any fee, commission, sale bonus or similar
payment from Sellers, the Company, any Subsidiary of the Company, Buyer or any
of Buyer's Affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE VI
COVENANTS OF THE PARTIES
Section 6.1 Conduct of the Business of the Company. During the
period from the date of this Agreement and continuing until the Closing Date,
Sellers shall cause the Company and its Subsidiaries to take or refrain from
taking, as applicable, the following actions (except as expressly required or
permitted by this Agreement or as set forth in Section 6.1 of the Company
Disclosure Letter or as Buyer shall otherwise consent in writing):
(a) Ordinary Course.
(i) The Company and its Subsidiaries
shall carry on their respective businesses in the usual,
regular and ordinary course and consistent with past practice.
Without limiting the foregoing, the Company and its
Subsidiaries shall preserve substantially intact their present
lines of business, maintain their rights and franchises and
preserve substantially intact their relationships with
customers, suppliers and others having business dealings with
them and keep available the services of their present officers
and employees, in each case to the end that their ongoing
businesses shall not be impaired in a manner which would have
or reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(ii) The Company shall not, and shall
not permit any of its Subsidiaries to, (A) enter into any new
material line of business, (B) enter into any material
Contract other than in the ordinary course of the business
consistent with past practice of the Company or such
Subsidiary or (C) incur or commit to any capital expenditures
except for (1) capital expenditures set forth on, and made
approximately at the times indicated in, a capital expenditure
budget plan delivered to Buyer prior to the date of this
Agreement and (2) capital expenditures not in excess of the
aggregate amount not yet expended in the capital expenditure
budget of the Company for the current year delivered to Buyer,
plus an additional $5,000,000.
(b) Dividends; Changes in Share Capital. The Company
shall not, and shall not permit any of its Subsidiaries to, (i) declare, set
aside or pay any dividend or other distribution with respect to any of its
capital stock (except for (A) cash dividends by the Company made prior to (x)
the date of the calculation of the Company's Working Capital contained in the
certificate contemplated by Section 7.3(n) setting forth the calculation of the
49
Company's Working Capital at Closing and (y) the date of the calculation of the
Cash Amount as contemplated in Section 2.3(f) and (B) dividends by wholly owned
Subsidiaries of the Company), (ii) split, combine or reclassify any of its
capital stock or issue any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such transaction
by a wholly owned Subsidiary of the Company which remains a wholly owned
Subsidiary after consummation of such transaction, or (iii) repurchase, redeem
or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, except for
repurchases, redemptions and acquisitions of such securities of the Company's
wholly owned Subsidiaries. Sellers agree to cause the Company to provide Buyer
with written notice of any cash dividends declared or paid pursuant to clause
(A) above.
(c) Issuance of Securities. The Company shall not, and
shall not permit any of its Subsidiaries to, issue, deliver or sell any shares
of its capital stock or voting securities of any class or any Indebtedness of
the Company or any of its Subsidiaries having the right to vote on any matters
on which stockholders may vote ("Company Voting Indebtedness") or any Company
Securities or other securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares of capital stock or
Company Voting Indebtedness, other than (i) the issuance of shares of Class A
Common Stock upon the exercise of Options outstanding on the date of this
Agreement in accordance with the terms of the Plans in effect as of the date of
this Agreement, or (ii) issuances by a wholly owned Subsidiary of the Company of
capital stock to another wholly owned (direct or indirect) Subsidiary of the
Company or the Company.
(d) Governing Documents; Securities. The Company shall
not, and shall not permit any of its Subsidiaries to, amend (i) their respective
certificates of incorporation, by-laws or other governing or organizational
documents or (ii) subject to the amendments contemplated by Section 6.10, any
material term of any outstanding security issued by the Company or any of its
Subsidiaries.
(e) No Acquisitions. The Company shall not, and shall not
permit any of its Subsidiaries to, acquire (or agree to acquire or take any
steps to facilitate the acquisition of) by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets, stock or operations of another Person.
(f) No Dispositions. The Company shall not, and shall not
permit any of its Subsidiaries to, sell, dispose of, transfer or divest any
assets (including capital stock of its Subsidiaries but excluding excess or
obsolete assets or the sale of inventory in the ordinary course of business),
businesses or divisions other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of the Company and (ii)
dispositions for which the fair market value of the assets disposed of and of
the total consideration, including liabilities assumed, received by the Company
or its Subsidiaries in the aggregate does not exceed $1,000,000.
(g) No Encumbrances. The Company shall not, and shall not
permit any of its Subsidiaries to, create, assume or otherwise incur any
Encumbrances or restriction on transfer of
50
any nature whatsoever on any asset of the Company or its Subsidiaries other than
Encumbrances which would not have or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(h) No Relinquishment of Rights. The Company shall not,
and shall not permit any of its Subsidiaries to, (i) relinquish, waive or
release any material contractual or other right or claim, (ii) settle any
material Action or (iii) knowingly dispose of or permit to lapse (prior to the
full term) any rights in any material Intellectual Property or knowingly
disclose to any Person not an employee of the Company or any of its Subsidiaries
or otherwise knowingly dispose of any material trade secret, process or know-how
not a matter of public knowledge prior to the date of this Agreement, except (x)
pursuant to judicial order or process or (y) as required by Law.
(i) Investments. The Company shall not, and shall not
permit any of its Subsidiaries to make any loans, advances or capital
contributions to, or investments in, any other Person other than (x) in
connection with actions permitted by Section 6.1(e) hereof, (y) by the Company
or a Subsidiary of the Company to or in the Company or any wholly-owned
Subsidiary of the Company or (z) in the ordinary course of business consistent
with past practice in an aggregate amount not in excess of $1,000,000.
(j) Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, have outstanding, create, incur, guarantee or
assume any Indebtedness other than Indebtedness in existence on the date of this
Agreement and additional Indebtedness in an aggregate amount not to exceed, at
any one time outstanding, $1,000,000, and Indebtedness incurred under working
capital facilities not to exceed at any one time outstanding an amount of such
Indebtedness equal to the amount of such Indebtedness outstanding on April 3,
2004, plus $5,000,000.
(k) Compensation; Severance. Except (i) as required by
applicable Law or (ii) to satisfy contractual obligations existing on the date
hereof, the Company shall not, and shall not permit any of its Subsidiaries to,
(A) pay or commit to pay any severance or termination pay other than severance
or termination pay that is required to be paid pursuant to the terms of an
existing Plan, (B) enter into any employment, deferred compensation, consulting,
severance or other similar agreement (or any amendment to any such existing
agreement) with any director or officer or key employee of the Company or any of
its Subsidiaries, (C) increase or commit to increase any employee benefits
payable to any director, officer or employee of the Company or any of its
Subsidiaries, including wages, salaries, compensation, pension, severance,
termination pay or other benefits or payments (except in the case of employees
other than officers and directors in the ordinary course of business consistent
with past practice or as required by an existing Plan or any existing collective
bargaining agreement), (D) adopt or make any commitment to adopt any additional
employee benefit plan, except as may be required pursuant to any existing
collective bargaining agreement, (E) make any contribution, other than regularly
scheduled contributions and contributions required pursuant to the terms
thereof, to any Plan and (F) amend or extend or make any commitments to amend or
extend any Plan.
(l) Accounting Methods; Income Tax Elections. The Company
shall not, and shall not permit any of its Subsidiaries to, (i) change in any
material respect its methods of
51
accounting or accounting practice as in effect at December 31, 2003, except for
any such change as required by reason of a change in SEC guidelines or
requirements, in GAAP or pursuant to local statutory requirements, (ii) change
its fiscal year, (iii) except in the ordinary course of business consistent with
past practice, make or rescind any material Tax election or settle or compromise
any audit, examination, litigation, proceeding (whether judicial or
administrative) or matter in controversy relating to material Taxes of the
Company or any of its Subsidiaries, or (iv) make any change to its method of
reporting income, deductions or other Tax items for Tax purposes; provided that,
in the case of matters described in this Section 6.1(l), Buyer shall not
unreasonably withhold its consent.
(m) Certain Agreements. The Company shall not, and shall
not permit any of its Subsidiaries to, enter into any Contract that limits or
restrains the Company or any of its Subsidiaries or any of their respective
Affiliates or successors, or that could, after the Closing Date, limit or
restrict Buyer, the Company or any of their respective Affiliates or successors,
from engaging or competing in any business or in any geographic area or
location.
(n) Corporate Structure. The Company shall not, and shall
not permit any of its Subsidiaries to, alter (through merger, liquidation,
reorganization, restructuring or any other fashion) the corporate structure or
ownership of the Company or any of its Subsidiaries, except for changes in the
corporate structure or ownership of the Company's Subsidiaries which (1) do not
increase the Tax liability of the Company or its Subsidiaries and (2) do not
adversely affect (x) the ability to obtain, or the terms of, the Financing and
(y) the ability of the Company and its Subsidiaries to transfer assets and
liabilities among the Company's Subsidiaries or to the Company.
(o) Affiliate Transactions. The Company shall not, and
shall not permit any of its Subsidiaries to, enter into any Contract between the
Company or any of its Subsidiaries, on the one hand, and Xxxxx, any Seller or
any Affiliate of the Company or any of its Subsidiaries, on the other hand, or
abandon, amend, waive any material rights under or terminate any such Contract,
except as specially provided for in this Agreement.
(p) Receivables; Payables; Inventories and Discounts. The
Company shall, and shall cause its Subsidiaries to, (a) xxxx and collect
accounts receivable in the ordinary course and consistent with past practice,
(b) incur and pay all accounts payable in the ordinary course and consistent
with past practice, and (c) maintain their respective inventory in the ordinary
course of business consistent with past practice (including with respect to
quantity). The Company shall not, and shall not permit any of its Subsidiaries
to, offer to any customers, clients or other third parties any discounts other
than in the ordinary course and consistent with past practice.
(q) The Company shall not, and shall not permit any of
its Subsidiaries to, agree, propose, authorize or enter into any commitment to
take any action described in the foregoing subsections (a)-(p) of this Section
6.1.
Section 6.2 Access to Information. Upon reasonable advance
notice, between the date of this Agreement and the Closing Date, Sellers shall
cause the Company and its Subsidiaries to (i) give Buyer, its potential
financing sources and, as applicable, its and their
52
respective counsel, financial advisors, auditors and other authorized
representatives (collectively, "Buyer's Representatives") reasonable access
during normal business hours to the offices, properties, books and records
(including all Tax Returns and other Tax-related information) of the Company and
its Subsidiaries, (ii) furnish to Buyer's Representatives such financial and
operating data and other information (including all Tax Returns and other
Tax-related information) relating to the Company, its Subsidiaries and their
respective operations as Buyer's Representatives may reasonably request and
(iii) instruct the employees, counsel and financial advisors of the Company and
its Subsidiaries to cooperate with Buyer in its investigation of the business of
the Company and its Subsidiaries; provided, however, that such access shall only
be provided to the extent that such access would not violate applicable Laws or
the terms of any Company Contract or result in a loss of the attorney-client
privilege; provided, further that if any information is not made available to
Buyer because such access would result in a loss of the attorney-client
privilege, Sellers shall notify Buyer that information is being so withheld, and
Sellers shall cause the Company or its Subsidiaries, as applicable, to provide
the maximum amount of information relating to the matter that would not result
in a loss of the attorney-client privilege (and to the extent such disclosure
will not impair the attorney-client privilege, Sellers shall use cause the
Company or its Subsidiaries, as applicable, to identify and described the
information being withheld). Without limiting the foregoing, to the extent such
actions are required pursuant to the terms of the Closing Indebtedness Financing
and the Subsequent Indebtedness Financing, Buyer and its Representatives shall
be permitted to conduct an environmental investigation of the Company, its
Subsidiaries and their respective properties, including, at Buyer's reasonable
discretion, the performance of environmental sampling. If an environmental
investigation is required to be conducted pursuant to the previous sentence,
Sellers shall cause the Company and its Subsidiaries to fully cooperate with
Buyer and its Representatives in connection with such investigation, including,
making available personnel, outside contractors and outside consultants with
knowledge of environmental matters pertaining to the Company, its Subsidiaries
and their properties, making available relevant documents related to such
matters, and providing necessary assistance with respect to any proposed
environmental sampling, including providing accurate information regarding
subsurface utilities or structures that could interfere with or prevent such
proposed sampling. The parties hereby acknowledge that UBS Securities LLC, on
behalf of the Company, and Xxxxxx X. Xxx Partners L.P. executed a
Confidentiality Agreement, dated May 20, 2004, as the same may be amended,
supplemented or modified (the "Confidentiality Agreement"), and the parties
agree that the Company and Buyer shall continue to be bound by terms and
conditions thereof, which shall remain in full force and effect until the
Closing Date. Any information relating to the Company or its Subsidiaries made
available pursuant to this Section 6.2, shall be subject to the provisions of
the Confidentiality Agreement.
Section 6.3 Director and Officer Liability.
(a) Buyer Holdings agrees (and shall cause the Company to
agree immediately following the Closing) that all rights to indemnification and
all limitations on liability existing in favor of any Indemnitee as provided in
the certificate of incorporation or by-laws of the Company and of each of its
Subsidiaries as in effect as of the date hereof shall, in respect of acts or
omissions occurring on or prior to the Closing Date, continue in full force and
effect in accordance with their terms from and after the Closing Date. Buyer
Holdings agrees
53
(and shall cause the Company to agree immediately following the Closing) that
the certificate of incorporation and by-laws of the Company and OpCo following
the Closing shall contain the provisions with respect to indemnification and
limitations on liability set forth in the certificate of incorporation and
by-laws of the Company and OpCo, respectively, on the date of this Agreement,
which provisions, in respect of acts or omissions occurring on or prior to the
Closing, shall not be amended, repealed or otherwise modified in any manner that
would adversely affect the rights thereunder of the Indemnitees, unless, and
only to the extent, such modification is required by law or the Indemnitee
affected thereby otherwise consents in writing thereto. With respect to acts or
omissions occurring after the Closing, Buyer Holdings agrees (and shall cause
the Company to agree immediately following the Closing) that the certificate of
incorporation and by-laws of the Company and OpCo following the Closing shall
contain the provisions with respect to indemnification and limitations on
liability set forth in the certificate of incorporation and by-laws of the
Company and OpCo, respectively, on the date of this Agreement, which provisions
shall not be amended, repealed or otherwise modified for six years after the
Closing Date in any manner that would adversely affect the rights thereunder of
the Indemnitees, unless, and only to the extent, such modification is required
by law or the Indemnitee affected thereby otherwise consents in writing thereto;
provided, however, that no such amendment, repeal or modification after six
years following the Closing Date shall be made (unless required by Law or the
Indemnitee affected thereby otherwise consents in writing thereto) to the extent
it adversely affects the rights of such Indemnitees in respect of acts or
omissions occurring prior to such six year anniversary. Buyer Holdings agrees
(and shall cause the Company to agree immediately following the Closing) that
all rights to indemnification and all limitations on liability existing in favor
of any Indemnitee as provided in an agreement between an Indemnitee and the
Company or a Subsidiary of the Company as in effect as of the date hereof shall
continue in full force and effect in accordance with their terms from and after
the Closing Date.
(b) In addition to the other rights provided for in this
Section 6.3 and not in limitation thereof (but without in any way limiting or
modifying the obligations of any insurance carrier contemplated by Section
6.3(c)), for six years from and after the Closing Date, Buyer Holdings agrees to
cause the Company (and shall cause the Company to agree immediately following
the Closing) to the fullest extent permitted by applicable Law, to indemnify and
hold harmless (and release from any liability to the Company or any of its
Subsidiaries), the Persons who, on or prior to the Closing Date, were officers,
directors or controlling persons of the Company or served on behalf of the
Company as an officer or director of any of the Company's current or former
Subsidiaries (the "Indemnitees") against all expenses (including fees and
expenses of counsel) losses, claims, fines, liabilities, damages, judgments or
amounts paid in settlement in respect of any threatened, pending or completed
claim, action, suit or proceeding, whether criminal, civil, administrative or
investigative, based on, or arising out of or relating to the fact that such
Person is or was a director, officer or controlling person of the Company or any
of its current or former Subsidiaries or arising out of acts or omissions
occurring on or prior to the Closing Date (including in respect of acts or
omissions in connection with this Agreement and the transactions contemplated
hereby) except for, in any case, acts or omissions which involve conduct known
to such Person at the time to constitute a material violation of Law
(collectively, an "Indemnifiable Claim"); provided that the Company shall not be
responsible for any amounts paid in settlement of any Indemnifiable Claim
without the consent of the Company
54
and Buyer Holdings, which consent shall not be unreasonably withheld. Unless,
but only to the extent, otherwise prohibited by applicable Law, Buyer Holdings
agrees to cause the Company (and shall cause the Company to agree immediately
following the Closing) to advance all expenses (including fees and expenses of
counsel) incurred by or on behalf of an Indemnitee in connection with an
Indemnifiable Claim within 10 days after receipt by the Company of a statement
or statements from such Indemnitee requesting such advance or advances from time
to time; provided that, prior thereto the Indemnitee provides to the Company an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification from the Company. In the event any
Indemnifiable Claim is asserted or made within such six-year period, all rights
to indemnification shall continue until such claim is finally disposed of or all
judgments, orders, decrees or other rulings in connection with such claim are
fully satisfied.
(c) For six years after the Closing Date, Buyer Holdings
agrees to cause the Company (and shall cause the Company to agree immediately
following the Closing) to provide officers' and directors' liability insurance
in respect of acts or omissions occurring prior to the Closing Date covering
each such Person currently covered by the Company's or OpCo's, as applicable,
officers' and directors' liability insurance policies on terms with respect to
coverage and amount no less favorable than those of such policy in effect on the
date hereof; provided, however, that in no event shall the Company or OpCo, as
applicable, be required to expend more than an amount per year equal to 220% of
current annual premiums paid by the Company or OpCo, as applicable, for such
insurance (the "Maximum Amount") to maintain or procure insurance coverage
pursuant hereto; provided, further, that if the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, Buyer Holdings shall use its reasonable best efforts to cause the
Company and OpCo to maintain or procure, for such six-year period, the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount.
(d) The obligations of Buyer Holdings as to itself, and
with respect to the Company and OpCo under this Section 6.3 shall not be
terminated or modified in such a manner as to adversely affect any Indemnitee to
whom this Section 6.3 applies without the consent of such affected Indemnitee
(it being expressly agreed that the Indemnitees to whom this Section 6.3 applies
shall be third party beneficiaries of this Section 6.3).
Section 6.4 Reasonable Best Efforts. Upon the terms and
subject to the conditions of this Agreement, each party hereto shall use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws and regulations to consummate the transactions contemplated by this
Agreement in the most expeditious manner practicable.
Section 6.5 Certain Filings.
(a) Buyer and each Seller shall, and each Seller shall
cause the Company to, cooperate with one another (i) in determining whether any
action by or in respect of, or filing with, any Governmental Entity 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 (ii) in seeking any such
55
actions, consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers. Without limiting the provisions of
this Section 6.5, Buyer and each Seller shall, and each Seller shall cause the
Company to, (i) to the extent applicable, cause its "ultimate parent entity," to
file all necessary registrations and filings under the HSR Act in respect of the
transactions contemplated hereby within five (5) Business Days of the date of
this Agreement, and, subject to Section 6.5(c) hereof, use its reasonable best
efforts to take or cause to be taken all actions necessary, including to
promptly and fully comply with any requests for information from regulatory
Governmental Entities, to obtain any clearance, waiver, approval or
authorization relating to the HSR Act that is necessary to enable the
consummation of the transactions contemplated by this Agreement and (ii) use
reasonable best efforts to promptly make the filings required to be made by it
with all foreign Governmental Entities in any jurisdiction in which the parties
reasonably believe it is necessary or advisable.
(b) Subject to Section 6.5(c) hereof, (i) Buyer and each
Seller shall, and each Seller shall cause the Company to, use its reasonable
best efforts to resolve such objections, if any, as may be asserted with respect
to any of the transactions contemplated by this Agreement under any Regulatory
Law and (ii) if any administrative, judicial or legislative Action, including
any Action by a private party, is instituted (or threatened to be instituted)
challenging any of the transactions contemplated by this Agreement as violative
of any Regulatory Law, Buyer and each Seller shall, and each Seller shall cause
the Company to, cooperate in all respects and use its reasonable best efforts to
contest and resist any such Action and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents or
prohibits consummation of any of the transactions contemplated by this
Agreement, including by pursuing all reasonable avenues of administrative and
judicial appeal.
(c) If any objections are asserted with respect to the
transactions contemplated hereby under any Regulatory Law or if any Action is
instituted by any Governmental Entity or any private party challenging any of
the transactions contemplated hereby as violative of any Regulatory Law, Buyer
and each Seller shall, and each Seller shall cause the Company to, use its
reasonable best efforts as may be required in order to resolve any such
objections or challenge as such Governmental Entity or private party may have to
such transactions under such Regulatory Law so as to permit consummation of the
transactions contemplated by this Agreement. Buyer and each Seller shall, and
each Seller shall cause the Company to, promptly inform the parties hereto of
any material communication received by it from the Federal Trade Commission, the
Antitrust Division of the Department of Justice, the Commission of the European
Community or any other Governmental Entity regarding any of the transactions
contemplated hereby.
Section 6.6 Public Announcements. None of the parties hereto
or any of their respective Affiliates shall issue or cause the publication of
any press release or other public announcement with respect to this Agreement or
the transactions contemplated hereby without the prior written approval of the
other parties hereto (which approval shall not be reasonably withheld or
delayed), except as may be required by Law and except for statements approved by
Buyer in connection with the Subordinated Notes Consent Solicitation, the
Discount Notes
56
Consent Solicitation, the Floating Rate Notes Consent Solicitation, the
Subordinated Notes Offer, the Discount Notes Offer and the Floating Rate Notes
Offer.
Section 6.7 Employee Matters.
(a) For a period of one year following the Closing Date,
except (i) with respect to Plans terminated or benefits and compensation paid in
connection with the consummation of the transactions contemplated by this
Agreement and (ii) as agreed to following the Closing Date by the Company and
the Chief Executive Officer of the Company, Buyer Holdings shall use its
reasonable best efforts to cause the Company to provide compensation and
employee benefits (excluding any benefits attributable to equity based plans or
grants) to employees of the Company that are substantially similar in the
aggregate to those provided to such persons immediately prior to the Closing
Date.
(b) Following the Closing, Buyer Holdings shall and shall
cause the Company to agree, that each employee of the Company and its
Subsidiaries shall receive service credit for all years of service with the
Company or any of its Subsidiaries for purposes of eligibility to participate
and vesting under those employee benefit plans maintained by Buyer Holdings or
any of its Subsidiaries in which such employee participates after the Closing
Date to the extent that such service was recognized by the Company and its
Subsidiaries under the corresponding Plan in which such employee participated
immediately prior to the Closing Date.
(c) Options.
(i) Each Option shall become fully
vested and immediately exercisable as of the Closing. Each
Cashed Out Option shall be cancelled effective as of the
Closing and, pursuant to Section 2.3(c), Buyer shall deliver
or cause to be delivered to the Paying Agent an amount of cash
sufficient for the Paying Agent to make the payments to the
Option Sellers contemplated by Section 2.3(e)(iv). Each
Cancelled Option shall be cancelled, effective as of the
Closing and Buyer shall deliver or cause to be delivered to
OpCo, as the surviving company of the Company Merger, an
amount of cash sufficient for OpCo to pay holders of Cancelled
Options the Cancelled Option Consideration in respect of each
Cancelled Option pursuant to Section 12 of the Option Plan.
(ii) Each Exchanged Option shall be
cancelled effective as of the Closing. In exchange therefor,
each Exchanged Option Holder shall receive the right (the
"Deferred Share Right") to receive the number of shares of
Buyer Holdings Common Stock (each a "Converted Option Common
Share") determined by dividing (1) the aggregate Exchanged
Option Consideration with respect to all Exchanged Options
held by such Exchanged Option Holder by (2) the Buyer Holdings
Common Stock Per Share Consideration; provided that a single
lump sum cash payment may, at OpCo's option, be paid in lieu
of any fractional shares that would have been issued. The
Deferred Share Rights and the Converted Option Common Shares
shall be subject to the terms and conditions of the Trust
Agreement.
57
(iii) The Buyer, Buyer Holdings and the
Sellers shall cause the Company or OpCo to withhold any amount
required to be deducted and withheld with respect to the
Cashed Out Options, Cancelled Options or Exchanged Options
under any provision of federal, state, local, foreign or other
Tax Law, including any withholding from any payment that is
treated as wages or compensation for the performance of
services.
(iv) Prior to the Closing, each Seller
shall use its reasonable best efforts to, and the Sellers
shall cause the Company to, take any such action as may be
necessary to obtain any required consent from Option holders
(which consent shall constitute part of the Option
Acknowledgment) and to give effect to the transactions
contemplated by this Section 6.7(c).
(v) Each of the persons set forth on
Section 6.7(c)(v) of the Company Disclosure Letter hereby
agrees to become an Exchanged Option Holder and agrees to
exchange no less than the number of total Exchanged Options
set forth opposite his name on Exhibit B under the heading
"Exchanged Options" (it being understood that for purposes of
this Section 6.7(c)(v), the amount of Exchanged Options cannot
be decreased below the amount set forth on Exhibit B as of the
date hereof with respect to the persons set forth on Section
6.7(c)(v) of the Company Disclosure Letter) for Deferred Share
Rights pursuant to Section 6.7(c).
(vi) For the purposes of this Agreement:
(1) "Equity Value" shall mean,
with respect to each holder of Options, the amount
(without giving effect to any deductions for
withholding Taxes) equal to the sum of:
(a) (1) the product of (A)
the Per Share Deal Price multiplied by (B)
the number of shares of Class A Common
Stock, if any, set forth opposite such
Seller's name on Exhibit A hereto; plus
(b) the product of (x) the
Per Share Deal Price multiplied by (y) the
number of shares of Class A Common Stock
subject to all Options held by such holder
minus (B) the aggregate Exercise Price with
respect to all Options held by such holder.
(2) "50% Option Equity Number"
shall mean, with respect to each holder of Options,
the number of Options that such holder would need to
tender for cancellation to receive payment in respect
therefor pursuant to Article II (assuming solely for
purposes hereof, that all such holder's Options would
be treated as Cashed Out Options hereunder) in order
for such holder to receive fifty percent (50%) (or as
close thereto as practicable) of the Equity Value of
such holder (after taking into account the deduction
of the Exercise Prices with respect to
58
such Options) (but without giving effect to any
deductions for withholding Tax).
(d) At the Closing, Sellers shall cause the Company to
transfer the insurance policies listed on Section 6.7(d) of the Company
Disclosure Letter to the person named therein.
(e) Prior to the Closing, Sellers shall cause the Company
to use its reasonable best efforts to obtain all required consents, waivers and
approvals so that none of the payments that the Company makes or is obligated to
make shall constitute a "parachute payment" within the meaning of Code
Section 280G(b).
(f) The Option Sellers will not exercise any Options
prior to Closing.
Section 6.8 Certain Notifications. Between the date hereof and
the Closing Date, each party shall promptly notify the other party hereto in
writing after becoming aware of the occurrence of any event which shall, or is
reasonably likely to, result in the failure to satisfy any of the conditions
specified in ARTICLE VII hereof; provided, however, that such disclosure shall
not be deemed to update or amend the Company Disclosure Letter.
Section 6.9 Financing; Cooperation.
(a) Buyer shall use its reasonable best efforts to timely
obtain the Financing, including in such a manner so as to timely satisfy the
condition contained in Section 7.3(h) hereof. In the event that the financing
under the Indebtedness Commitment Letter is not made available to Buyer so as to
enable Buyer to proceed with the transactions contemplated by this Agreement in
a timely manner, Buyer shall use its reasonable best efforts to obtain alternate
financing on terms not less favorable in any material respect than those set
forth in the Indebtedness Commitment Letters, which alternate financing would
not materially delay the consummation of the transactions contemplated by this
Agreement. In no event shall the amount of equity financing for the Purchase
Price be less than that contemplated by the Equity Commitment Letter and at
least $300 million of Buyer's financing of the Purchase Price shall be provided
by the THL Fund or its limited partners, or investors affiliated with the THL
Fund.
(b) Sellers shall cause the Company and its Subsidiaries
and their respective Representatives to provide all necessary cooperation
reasonably requested by Buyer in connection with the arrangement of, and the
negotiation of agreements with respect to, the Financing (and any replacements
or refinancing thereof), including by making available to Buyer and such lenders
and their representatives, personnel (including for participation in road shows)
documents and information of the Company and its Subsidiaries as may reasonably
be requested by Buyer or such lenders and by cooperating with lenders under the
Commitment Letters.
(c) In the event Buyer is required to deliver or cause to
be delivered pursuant to the terms of the Commitment Letters or the related
financing contemplated thereby, or actually delivers or causes to be delivered,
a letter or opinion with respect to the solvency, sufficiency of assets,
sufficiency of capital or any similar or related status, in each case, of the
Company, Buyer or any of their respective Subsidiaries, then Buyer shall (at
Buyer's expense) cause such letter or opinion to (i) be delivered to the Company
and Sellers and (ii) contain a
59
statement that the Company and Sellers may rely on such letter or opinion as
though such letter or opinion had been addressed to the Company and Sellers.
Section 6.10 Consent Solicitation; Offer; Redemption.
(a) Consent Solicitation; Offer.
(i) Sellers shall cause the Company to
cause OpCo to commence (x) a solicitation of consents (the
"Subordinated Notes Consent Solicitation") from holders of the
Subordinated Notes to amend the Subordinated Notes Indenture
in the manner provided in subsection 1 of Section 6.10 of the
Company Disclosure Letter (collectively, the "Subordinated
Notes Amendments") and (y) an offer (as such offer may be
amended from time to time, the "Subordinated Notes Offer") to
acquire all of the outstanding Subordinated Notes, in each
case, upon and subject to the terms set forth in subsection 1
of Section 6.10 of the Company Disclosure Letter;
(ii) Sellers shall cause the Company to
commence (x) a solicitation of consents (the "Discount Notes
Consent Solicitation") from holders of the Discount Notes to
amend the Discount Notes Indenture in the manner provided in
subsection 2 of Section 6.10 of the Company Disclosure Letter
(collectively, the "Discount Notes Amendments") and (y) an
offer (as such offer may be amended from time to time, the
"Discount Notes Offer") to acquire all of the outstanding
Discount Notes, in each case, upon and subject to the terms
set forth in subsection 2 of Section 6.10 of the Company
Disclosure Letter;
(iii) Sellers shall cause the Company to
cause OpCo to commence (x) a solicitation of consents (the
"Floating Rate Notes Consent Solicitation") from holders of
the Floating Rate Notes to amend the Floating Rate Notes
Indenture in the manner provided in subsection 3 of Section
6.10 of the Company Disclosure Letter (collectively, the
"Floating Rate Notes Amendments") and (y) an offer (as such
offer may be amended from time to time, the "Floating Rate
Notes Offer") to acquire all of the outstanding Floating Rate
Notes, in each case, upon and subject to the terms set forth
in subsection 3 of Section 6.10 of the Company Disclosure
Letter;
(iv) In the event that a sufficient
number of holders of Subordinated Notes provide consents in
the Subordinated Notes Consent Solicitation necessary to
effect the Subordinated Notes Amendments, then (x) Sellers
shall cause the Company to cause OpCo, at or prior to the
Closing, to enter into a supplemental indenture (the
"Subordinated Notes Supplemental Indenture") with the Trustee
under the Subordinated Notes Indenture reflecting the
Subordinated Notes Amendments (which Subordinated Notes
Supplemental Indenture shall be prepared jointly by the
Company, the Sellers' Representative and Buyer and shall not
be effective (or at the Sellers' Representative's option, the
Subordinated Notes Amendments to be effected thereby shall not
be effective) until the Closing or substantially concurrently
therewith), except to the extent of
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waiving any conflict between such Indenture and the
transactions contemplated hereby, which waiver shall be
effective immediately, and (y) at or prior to or substantially
concurrently with the Closing, Buyer shall deliver to the
Depositary an amount of cash (the "Subordinated Notes Offer
Amount") necessary for OpCo to consummate the Subordinated
Notes Consent Solicitation and the Subordinated Notes Offer
pursuant to the terms set forth in subsection 1 of Section
6.10 of the Company Disclosure Letter;
(v) In the event that a sufficient
number of holders of Discount Notes provide consents in the
Discount Notes Consent Solicitation necessary to effect the
Discount Notes Amendments, then (x) Sellers shall cause the
Company, at or prior to the Closing, to enter into a
supplemental indenture (the "Discount Notes Supplemental
Indenture") with the Trustee under the Discount Notes
Indenture reflecting the Discount Notes Amendments (which
Discount Notes Supplemental Indenture shall be prepared
jointly by the Company, the Sellers' Representative and Buyer
and shall not be effective (or at the Sellers'
Representative's option, the Discount Notes Amendments to be
effected thereby shall not be effective) until the Closing or
substantially concurrently therewith), except to the extent of
waiving any conflict between such Indenture and the
transactions contemplated hereby, which waiver shall be
effective immediately, and (y) at or prior to the Closing,
Buyer shall deliver to the Depositary an amount of cash (the
"Discount Notes Offer Amount") necessary for OpCo to
consummate the Discount Notes Consent Solicitation and the
Discount Notes Offer pursuant to the terms set forth in
subsection 2 of Section 6.10 of the Company Disclosure Letter;
and
(vi) In the event that a sufficient
number of holders of Floating Rate Notes provide consents in
the Floating Rate Notes Consent Solicitation necessary to
effect the Floating Rate Notes Amendments, then (x) Sellers
shall cause the Company to cause OpCo, at or prior to or
substantially concurrently with the Closing, to enter into a
supplemental indenture (the "Floating Rate Notes Supplemental
Indenture") with the Trustee under the Floating Rate Notes
Indenture reflecting the Floating Rate Notes Amendments (which
Floating Rate Notes Supplemental Indenture shall be prepared
jointly by the Company, the Sellers' Representative and Buyer
and shall not be effective (or at the Sellers'
Representative's option, the Floating Rate Notes Amendments to
be effected thereby shall not be effective) until the Closing
or substantially concurrently therewith, except to the extent
of waiving any conflict between such Indenture and the
transactions contemplated hereby, which waiver shall be
effective immediately, and (y) at or prior to the Closing,
Buyer shall deliver the Depositary an amount of cash (the
"Floating Rate Notes Offer Amount") necessary for OpCo to
consummate the Floating Rate Notes Consent Solicitation and
the Floating Rate Notes Offer pursuant to the terms set forth
in subsection 3 of Section 6.10 of the Company Disclosure
Letter.
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(b) Redemption.
(i) If the Discount Notes Consent
Solicitation does not result in a Successful Consent
Solicitation, then at or prior to the Closing, Buyer shall
irrevocably deposit, or cause to be deposited, with the
Trustee under the Discount Notes Indenture, an amount of cash
(the "Discount Notes Redemption Amount") sufficient for the
Company (x) to redeem the Discount Notes pursuant to Article
III of the Discount Notes Indenture (the "Discount Notes
Redemption") and (y) to comply with the provisions of Section
8.01 of the Discount Notes Indenture; and
(ii) If the Floating Rate Notes Consent
Solicitation does not result in a Successful Consent
Solicitation, then at or prior to, or substantially
concurrently with, the Closing, Buyer shall irrevocably
deposit, or cause to be deposited, with the Trustee under the
Floating Rate Notes Indenture, an amount of cash (the
"Floating Rate Notes Redemption Amount") sufficient for OpCo
(x) to redeem the Floating Rate Notes pursuant to Article III
of the Floating Rate Notes Indenture (the "Floating Rates
Notes Redemption") and (y) to comply with the provisions of
Section 8.01 of the Floating Rate Notes Indenture.
(c) Redemption Notices; Cooperation.
(i) In the event that the Discount
Notes Consent Solicitation does not result in a Successful
Consent Solicitation, (x) Buyer shall take (and following the
Closing, Buyer shall use its reasonable best efforts to cause
the Company to take) all other actions necessary or advisable
in order for the Company to be in compliance with the
provisions of Article VIII of the Discount Notes Indenture and
(y) Sellers shall cause the Company to coordinate with Buyer
to mail the notice of redemption pursuant to the terms of
Article III and Article VIII of the Discount Notes Indenture
(the "Discount Notes Redemption Notice") at the Closing; and
(ii) In the event that the Floating Rate
Notes Consent Solicitation does not result in a Successful
Consent Solicitation, (x) Buyer shall take (and following the
Closing, Buyer shall use its reasonable best efforts to cause
OpCo to take) all other actions necessary or advisable in
order for OpCo to be in compliance with the provisions of
Article VIII of the Floating Rate Notes Indenture, and (y)
Sellers shall cause the Company to cause OpCo to coordinate
with Buyer to mail the notice of redemption pursuant to the
terms of Article III and Article VIII of the Floating Rate
Notes Indentures (the "Floating Rate Notes Redemption Notice")
at the Closing.
Section 6.11 Termination of Certain Contracts.
(a) The Sellers shall cause on and as of the Closing
Date, the following agreements to be terminated in all respects without any
further force and effect, and without any obligations or liabilities thereunder
on the part of any party thereto, including the Company and its Subsidiaries:
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(i) the Stockholders Agreement, dated
as of January 9, 2003, by and among the Company, OpCo and
Sellers (the "Pre-Closing Stockholders Agreement");
(ii) the Financial Advisory Services
Agreement, dated January 9, 2003, by and between Xxxxx, the
Company and OpCo (the "Financial Advisory Agreement");
(iii) the Registration Rights Agreement,
dated as of January 9, 2003, by and among the Company, OpCo
and Sellers (the "Registration Rights Agreement"); and
(iv) the Preemptive Rights Agreement,
dated as of January 9, 2003, by and among the Company and
Xxxxxxx X. Xxxxxx.
(b) The Sellers hereby authorize the Sellers'
Representative to agree on their behalf, to, and shall cause the Company to
agree to, terminate the Pre-Closing Stockholders Agreement and the Registration
Rights Agreement or to amend the Pre-Closing Stockholders Agreement and the
Registration Rights Agreement in such manner as the Sellers' Representative
determines so as to cause it to terminate immediately prior to the Closing, and
in any case to amend the Pre-Closing Stockholders Agreement and the Registration
Rights Agreement to provide that no provisions of such agreements or rights
thereunder will survive termination. The foregoing agreement by the Sellers
constitutes the written consent of each such Seller to the foregoing amendments
under the Pre-Closing Stockholders Agreement and the Registration Rights
Agreement. The Sellers, effective as of Closing, hereby release any and all of
their rights under the Pre-Closing Stockholders Agreement and the Registration
Rights Agreement and any and all of their claims against the other parties
thereto and the Sellers will cause the Company, effective as of the Closing, to
release its rights and claims under the Pre-Closing Stockholders Agreement and
the Registration Rights Agreement, against the other parties thereto.
Section 6.12 Certain Transactions. Buyer shall not, and shall
cause its Controlled Affiliates not to, acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial portion of the assets of
or equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets if the entering into of a
definitive agreement relating to, or the consummation of such acquisition,
merger or consolidation would reasonably be expected to (i) impose any material
delay in the obtaining of, or significantly increase the risk of not obtaining,
any authorizations, consents, orders, declarations or approvals of any
Governmental Entity necessary to consummate the transactions contemplated by
this Agreement or the expiration or termination of any applicable waiting
period, (ii) significantly increase the risk of any Governmental Entity entering
an order prohibiting the consummation of the transactions contemplated by this
Agreement, (iii) significantly increase the risk of not being able to remove any
such order on appeal or otherwise or (iv) materially delay or prevent the
consummation of the transactions contemplated by this Agreement.
Section 6.13 Tax Matters. Notwithstanding any other provision
of this Agreement, Buyer, on the one hand, and Sellers, on the other hand, shall
each pay and be
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responsible for fifty percent (50%) of all transfer, documentary, sales, use,
stamp, registration, value added and other such Taxes and fees (including any
penalties and interest) incurred in connection with transactions contemplated by
this Agreement (including any real property transfer Tax and any similar Tax);
provided, however, that in the event the Company or any of its Subsidiaries are
responsible for payment of any such taxes within ninety (90) days following the
Closing, the Xxxxx Stockholders shall pay to the Company or its designees their
proportionate share of such taxes (based upon the portion of the Purchase Price
received by the Xxxxx Stockholders). Any Tax Returns that must be filed in
connection with such Taxes shall be prepared and timely filed by the party
primarily or customarily responsible under the applicable local Law for filing
such Tax Returns, and such party shall provide to the other party a true copy of
each such Tax Return as filed and evidence of the timely filing thereof.
Section 6.14 Fee. At or immediately following the Closing (but
on the Closing Date) Buyer shall cause OpCo, as the surviving company of the
Company Merger, to pay to Xxxxx or its designee a fee of $10.5 million (the
"Fee").
Section 6.15 Stockholder Approval of Certain Benefit
Arrangements. The Company shall have the right prior to the Closing to solicit a
vote of its stockholders pursuant to Section 280G of the Code with respect to
the approval of certain payments to its employees, if the Company deems it
necessary or appropriate to do so.
Section 6.16 Exclusivity.
(a) From the date of this Agreement until the Closing or,
if earlier, the termination of this Agreement in accordance with ARTICLE VIII,
the Sellers shall not (whether directly or indirectly through Representatives)
and shall cause the Company and its Subsidiaries and their respective
Representatives not to, directly or indirectly, (x) solicit, initiate, knowingly
encourage or knowingly facilitate (including by way of furnishing information)
any inquiries or the making or submission of any proposal that constitutes, or
may reasonably be expected to lead to, an Acquisition Proposal, (y) participate
or engage in discussions or negotiations with, or disclose any non-public
information or data relating to the Company or any of its Subsidiaries or afford
access to the properties, books or records of the Company or any of its
Subsidiaries to, any Person that has made an Acquisition Proposal or to any
Person in contemplation of an Acquisition Proposal, or (z) accept an Acquisition
Proposal or enter into any Contract or agreement in principle providing for or
relating to an Acquisition Proposal or enter into any Contract or agreement in
principle requiring the Company to abandon, terminate or fail to consummate the
transactions contemplated by this Agreement.
(b) For purposes of this Agreement, "Acquisition
Proposal" means any offer or proposal regarding a merger, consolidation, share
exchange, recapitalization, reclassification, liquidation or other business
combination involving the Company or any of its Material Subsidiaries (as
defined herein) or the acquisition or purchase of thirty percent (30%) or more
of any class of equity securities of the Company or any of its Material
Subsidiaries, or any tender offer (including self-tenders) or exchange offer or
stock purchase (including any repurchase by the Company) that if consummated
would result in any Person (other than the Sellers) beneficially owning thirty
percent (30%) or more of any class of equity securities of the Company or any of
its Material Subsidiaries, or a substantial portion of the assets or properties
64
of, the Company or any of its Subsidiaries, taken as a whole, other than the
transactions contemplated by this Agreement. As used herein, "Material
Subsidiary" means any Subsidiary whose consolidated revenues, net income or
assets constitute ten percent (10%) or more of the revenues, net income or
assets of the Company and its Subsidiaries, taken as a whole.
Section 6.17 Confidentiality. For a period of four (4) years
from the date of this Agreement, the Xxxxx Stockholders agree to hold, and shall
use their reasonable best efforts to cause their Representatives and Affiliates
(including Xxxxx) to hold, in confidence and not, directly or indirectly, to
disclose without the prior written consent of Buyer, any confidential or
proprietary information of the Company or any of its Subsidiaries; provided,
however, that the forgoing shall not apply to disclosures (i) to Representatives
of the Xxxxx Stockholders who have a need to know such information and are
informed of their obligation to hold such information confidential to the same
extent as is applicable to the parties hereto and in respect of whose failure to
comply with such obligations the Xxxxx Stockholders will be responsible, (ii) if
the Xxxxx Stockholders or their Representatives are compelled to disclose such
information by judicial or administrative process or by other requirements of
Law provided that the Xxxxx Stockholders will provide Buyer with reasonable
prior notice and a reasonable opportunity to contest the same, (iii) of
information that is generally available to, or known by, the public (other than
as a result of a violation of this Section 6.17) or (iv) of information lawfully
acquired from other sources by the Xxxxx Stockholders or its Representatives.
Notwithstanding anything to the contrary set forth herein, the Xxxxx
Stockholders shall be deemed to have satisfied its obligations pursuant to this
Section 6.17 if it exercises the same degree of care (but no less than a
reasonable degree of care) as it takes to preserve confidentiality for its own
similar information.
Section 6.18 Non-Solicitation. From the date of this Agreement
and for a period of five (5) years after the Closing Date, the Xxxxx
Stockholders shall not and shall cause Xxxxx and their respective Controlled
Affiliates not to, directly or indirectly, recruit, offer employment, hire or
engage as a consultant any person set forth on Section 6.18 of the Company
Disclosure Letter to leave the employ of the Company or its Subsidiaries, except
that such person may be hired by Xxxxx Stockholders, Xxxxx or its Controlled
Affiliates if such person's employment was terminated by the Company or its
Subsidiaries following the Closing or if such person voluntarily terminated his
or her employment two years or more prior to the date of hire by the Xxxxx
Stockholders, Xxxxx or its Controlled Affiliates.
Section 6.19 Notice of Developments. From the date of this
Agreement until the Closing Date, Sellers, on the one hand, shall give Buyer
prompt written notice and Buyer, on the other hand, shall give prompt written
notice to the Sellers, in each case, upon such party becoming aware of the
occurrence of any event which has had since the date of this Agreement or is
reasonably likely to result in the failure to satisfy any of the conditions
specified in ARTICLE VII; provided, however, that no such disclosure shall be
deemed to prevent or cure any such breach of, or inaccuracy in, amend or
supplement any Section to the Company Disclosure Letter or otherwise disclose
any exception to, any of the representations and warranties set forth in this
Agreement.
Section 6.20 Option Transaction. Prior to Closing, the Buyer
and the Sellers shall use their reasonable best efforts to cause each holder of
an Option (other than the Sellers and any other Person who executes this
Agreement on the date hereof for purposes of Section
65
6.7(c)) to agree to enter into a separate exchange option agreement pursuant to
which such holder shall become an Exchanged Option Holder and agree to exchange
for Deferred Share Rights pursuant to Section 6.7(c) a number of Options held by
such holder equal to such holder's 50% Option Equity Number on the same terms
provided in Section 6.7(c) and subject to their making customary
representations, as applicable, set forth in ARTICLE III (such transactions
collectively, the "Option Transaction"). Each of the Persons who executes this
Agreement only for purposes of Section 6.7(c) shall enter into a separate
exchange option agreement pursuant to which such Person shall become an
Exchanged Option Holder and agree to exchange for Deferred Share Rights pursuant
to Section 6.7(c) the number of total Exchanged Options set forth opposite his
name on Exhibit B (as in effect on the date of this Agreement) under the heading
"Exchanged Options" on the same terms as provided in Section 6.7(c) and shall
make customary representations, as applicable, set forth in Article III.
Section 6.21 LaCornue.
(a) The Sellers agree that prior to entering into a
definitive agreement for the disposition of LaCornue, Inc., Sellers shall cause
the Company to obtain Buyer's consent to enter into such agreement (which
consent shall not be unreasonably withheld or delayed).
(b) Buyer Holdings shall cause the Company or its
applicable Subsidiary to distribute any amounts obtained from and after the
Closing but prior to December 31, 2004 by the Company or Buyer or any of their
Affiliates by reason of the disposition of LaCornue, Inc. (whether such
disposition is by way of merger, consolidation, reclassification,
recapitalization, stock sale, sale of all or substantially all of the assets or
other transaction) (after deducting (A) any taxes, any transaction expenses
incurred by the Company or its Subsidiaries as a result of such disposition and
(B) the amount of any operating losses sustained by LaCornue, Inc. and funded by
the Company or by any of its Subsidiaries (other than LaCornue, Inc.), between
the Closing Date and the date of such disposition of LaCornue, Inc.) to the
Paying Agent whom the parties will instruct to distribute such amounts to the
Sellers, the Option Sellers and the holders of Cancelled Options and Exchanged
Options in the same manner and in the same relative proportions that the
Purchase Price (x) in the case of the Seller and Option Sellers, was distributed
to such Seller or Option Seller and (y) without duplication, in the case of the
holders of Cancelled Options and Exchanged Options, would have been distributed
if all of such holder's Cancelled Options and Exchanged Options had been
designated as Cashed Out Options under this Agreement; provided, however, that
(i) prior to any such distribution, the Company and its Subsidiaries shall be
allowed to retain an amount (established as reasonably agreed upon by Buyer,
OpCo and Sellers' Representative) of such proceeds as a reserve against any
indemnification or other post-closing financial obligations (including with
respect to retained liabilities) of the Company and its Subsidiaries with
respect to such disposition of LaCornue, Inc., and (ii) at such time that the
Company or its Subsidiaries no longer have any such indemnification or other
post-closing financial obligations described under clause (i) above, Buyer shall
cause the Company to distribute the amount of such reserve that has not been
paid out to satisfy or as expenses in connection with such indemnification or
other post-closing financial obligations to the Paying Agent for distribution to
the Sellers, Option Sellers and the holders of the Cancelled Options and
Exchanged Options (or directly to the Sellers, Option Seller and holders of
Cancelled Options and Exchanged Options if the arrangement with the
66
Paying Agent has been terminated pursuant to the provisions of Section 2.6(c))
in the same manner and in the same relative proportions that the Purchase Price
(x) in the case of the Seller and Option Sellers, was distributed to such Seller
or Option Seller and (y) without duplication, in the case of the holders of
Cancelled Options and Exchanged Options, would have been distributed if all of
such holder's Cancelled Options and Exchanged Options had been designated as
Cashed Out Options.
(c) In the event that the sale of LaCornue, Inc. is
consummated prior to the Closing, then a reserve for indemnification and other
post-closing financial obligations (including in respect of retained
liabilities) shall be established, in an amount reasonably agreed by Buyer and
the Sellers' Representative and the amount of cash proceeds from such Sale
included in the Cash Amount for purposes of ARTICLE II shall be reduced (but not
below zero) by the amount of such reserve, and the procedures set forth in
clause (ii) of Section 6.21(b) shall apply to such reserve.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations. The
respective obligations of Sellers and Buyer to consummate the transactions set
forth in ARTICLE II are subject to the satisfaction or, to the extent permitted
by applicable Law, the waiver on or prior to the Closing Date of each of the
following conditions:
(a) Any applicable waiting periods (including any
extensions thereof) under the HSR Act or any Foreign Monopoly Laws shall have
expired or been terminated. Approval of the transactions contemplated by this
Agreement by the European Commission, if required, shall have been obtained
pursuant to the EC Merger Regulation. All Foreign Monopoly Laws shall have been
complied with and all consents, approvals and actions of, filings with, and
notices to, all Governmental Entities required of the parties hereto or the
Company or any of its respective Subsidiaries in connection with the
transactions contemplated by this Agreement shall have been made, obtained or
effected, as the case may be, except for those, the failure of which to be made,
obtained or effected would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect; and
(b) No Law shall have been enacted, entered, promulgated
or enforced by any Governmental Entity which prohibits or restricts the
consummation of the transactions contemplated by this Agreement.
Section 7.2 Conditions to the Sellers' Obligations. The
obligation of each Seller to consummate the transactions set forth in ARTICLE II
shall be further subject to the satisfaction or, to the extent permitted by
applicable Law, the waiver, on or prior to the Closing Date by the Sellers'
Representative on behalf of Sellers, of each of the following conditions:
(a) The representations and warranties of Buyer contained
in ARTICLE V of this Agreement shall be true and correct in all respects as of
the Closing Date as if made at such time (or, to the extent such representations
and warranties speak as of a specified date, (including
67
references in ARTICLE V to "the date of this Agreement" or words of similar
import, they need only be true and correct in all respects as of such specified
date) interpreted without giving effect to the words "materially" or "material"
or to any qualifications based on such terms or based on the defined term "Buyer
Material Adverse Effect," except where the failure of all such representations
and warranties to be true and correct does not and would not reasonably be
expected to have, in the aggregate, a Buyer Material Adverse Effect. Without
limiting the foregoing, the representations and warranties contained in the
first sentence of Section 5.1 and in Section 5.2 and Section 5.4 shall be true
and correct in all respects as of the Closing Date (or, to the extent such
representations and warranties speak as of an earlier date, they shall be true
and correct in all respects as of such earlier date);
(b) Buyer shall have performed, or complied with, in all
material respects its agreements and covenants contained in or contemplated by
this Agreement that are required to be performed by it at or prior to the
Closing Date pursuant to the terms hereof;
(c) The Sellers' Representatives, on behalf of Sellers,
shall have received a certificate signed by the Chief Executive Officer of
Buyer, dated the Closing Date, to the effect that the conditions set forth in
Section 7.2(a) and Section 7.2(b) hereof have been satisfied;
(d) No Action by any Governmental Entity shall have been
commenced (and be pending) against such Seller, the Company or any of their
Affiliates, partners, associates, officers or directors or any officers or
directors of such parties seeking (i) to prevent the transactions contemplated
hereby, (ii) material damages in connection therewith or (iii) to impose
criminal liability on any of the foregoing Persons in connection with the
transactions contemplated by this Agreement;
(e) If (i) the Discount Notes Consent Solicitation is (or
would be automatically upon the Closing) a Successful Consent Solicitation, then
Buyer shall have delivered to the Depositary the Discount Notes Offer Amount,
pursuant to Section 6.10(a)(v), or (ii) the Discount Notes Consent Solicitation
is not (or would not be automatically upon the Closing) a Successful Consent
Solicitation, then Buyer shall have delivered to the Trustee under the Discount
Notes Indenture, the Discount Notes Redemption Amount, on behalf of the Company,
pursuant to Section 6.10(b)(i);
(f) If (i) the Floating Rate Notes Consent Solicitation
is (or would be automatically upon the Closing) a Successful Consent
Solicitation, then Buyer shall have delivered to the Depositary the Floating
Rate Notes Offer Amount, pursuant to Section 6.10(a)(vi), or (ii) the Floating
Rate Notes Consent Solicitation is not (or would not be automatically upon the
Closing) a Successful Consent Solicitation, then Buyer shall have delivered to
the Trustee under the Floating Rate Notes Indenture, the Floating Rate Notes
Redemption Amount, on behalf of OpCo, pursuant to Section 6.10(b)(ii); and
(g) (i) the Subordinated Notes Consent Solicitation shall
have been (or would be automatically upon the Closing) a Successful Consent
Solicitation, and (ii) Buyer shall have delivered to the Depositary the
Subordinated Notes Offer Amount, pursuant to Section 6.10(a)(iv).
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Section 7.3 Conditions to Buyer's Obligations. The obligation
of Buyer to consummate the transactions set forth in ARTICLE II shall be further
subject to the satisfaction, or to the extent permitted by applicable Law, the
waiver, on or prior to the Closing Date of each of the following conditions:
(a) The representations and warranties of Sellers
contained in ARTICLE IV of this Agreement shall be true and correct in all
respects as of the Closing Date as if made as of such time (or to the extent
such representations and warranties speak as of a specified date including
references in ARTICLE IV to "the date of this Agreement" or words of similar
import, they need only be true and correct in all respects as of such specified
date) interpreted, without giving effect to the words "materially" or "material"
or to any qualifications based on such terms or based on the defined term
"Company Material Adverse Effect," except where the failure of all such
representations and warranties to be true and correct does not and would not
reasonably be expected to have, in the aggregate, a Company Material Adverse
Effect. Without limiting the foregoing, the representations and warranties
contained in the first sentence of Section 4.1 and in Section 4.3 shall be true
and correct in all respects as of the Closing, except, in the case of Section
4.3, by reason of the exercise of Options after the date hereof by Persons other
than the Option Sellers;
(b) The Company shall have performed, or complied with,
in all material respects the agreements and covenants contained in or
contemplated by this Agreement that Sellers are required to cause the Company to
perform or comply with at or prior to the Closing Date pursuant to the terms
hereof;
(c) Except as set forth in Schedule 4.7 of the Company
Disclosure Letter, since January 1, 2004, there shall have occurred no events
nor shall there exist any circumstances which have or would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect;
(d) Buyer shall have received a certificate of the
Company signed by the Chief Executive Officer of the Company dated the Closing
Date, to the effect that the conditions set forth in Section 7.3(a), Section
7.3(b) and Section 7.3(c) hereof have been satisfied;
(e) The representations and warranties of Sellers
contained in ARTICLE III of this Agreement shall be true and correct in all
respects as of the Closing Date as if made as of such time (or, to the extent
such representations and warranties speak as of a specified date including
references in ARTICLE III to "the date of this Agreement" or words of similar
import which shall mean the date of this Agreement, they need only be true and
correct in all respects as of such specified date) interpreted without giving
effect to the words "materially" or "material" or to any qualifications based on
such terms (including "material adverse effect"), except where the failure of
all such representations and warranties to be true and correct does not and
would not reasonably be expected to have, in the aggregate, a material adverse
effect on Sellers ability to consummate the transactions contemplated by this
Agreement or result in a material liability to Buyer or its successors. Without
limiting the foregoing, the representations and warranties of Sellers contained
in the first sentence of Section 3.1 and in Section 3.2, Section 3.3 and Section
3.4 shall be true and correct in all respects as of the Closing Date (or, to the
extent such
69
representations and warranties speak as of an earlier date, they shall be true
and correct in all respects as of such earlier date);
(f) Sellers shall have performed, or complied with, in
all material respects, the agreements and covenants contained in or contemplated
by this Agreement that are required to be performed or complied with by them at
or prior to the Closing Date pursuant to the terms hereof;
(g) Buyer shall have received a certificate of each
Seller, as to itself, or at the option of the Sellers' Representative, on behalf
of any one or more Sellers, a certificate signed by the Sellers' Representative
on behalf of such Sellers, as to themselves, dated the Closing Date, to the
effect that the conditions set forth in Section 7.3(e) and Section 7.3(f) hereof
have been satisfied;
(h) (x) The Company or Buyer shall have received the
proceeds of the financing contemplated by the Indebtedness Commitment Letter
(or, as modified in accordance with Section 6.9(a), on other terms and
conditions no less favorable in any material respect than the terms specified
and described in the corresponding Commitment Letter) prior to or simultaneously
with the Closing and (y) the Company or Buyer shall have available to it on an
unconditional basis (except as specified in the Indebtedness Commitment Letters)
the proceeds of the Subsequent Indebtedness Financing contemplated by the
Indebtedness Commitment Letter (or as modified in accordance with Section
6.9(a), on terms and conditions no less favorable in any material respect than
the terms specified and described in the corresponding Commitment Letter);
provided that Buyer may not rely on this Section 7.3(h) as a Closing condition
unless Buyer has complied with its obligations under Section 6.9(a) and the THL
Fund has complied with its obligations under the Equity Commitment Letter.
(i) The Contracts listed in Section 6.11(a) shall have
been terminated pursuant to instruments reasonably satisfactory to Buyer,
including a release from Xxxxx with respect to the Financial Advisory Agreement;
(j) No Action by any Governmental Entity shall have been
commenced (and be pending) against Buyer (or its permitted designees), the
Company or any of their respective Affiliates, partners, associates, officers or
directors, or any officers or directors of such Persons, seeking (i) to prevent
the transactions contemplated hereby, (ii) material damages in connection
therewith, (iii) any other remedy which would materially impair the intended
benefits to Buyer (or its permitted designees) of the transactions contemplated
by this Agreement or otherwise have a Company Material Adverse Effect or (iv) to
impose liability on any of Buyer or the Company or any of their respective
Affiliates, partners, associates, officers or directors, or any officers or
directors of such Persons in connection with the transactions contemplated by
this Agreement (each of clauses (i) through (iv), a "Material Adverse
Consequence") and additionally in each case, other than (iv), which Buyer
reasonably believes is likely to result in a Material Adverse Consequence;
(k) The Company shall have delivered to Buyer on the
Closing Date, a complete, accurate and valid statement conforming with the
requirements of Treasury Regulation
70
section 1.1445-2(c)(3) certifying that shares of capital stock of the Company do
not constitute "United States real property interests" under Section 897(c) of
the Code;
(l) On the Closing Date, the Company's and its
Subsidiaries' Working Capital shall be equal to or greater than $150,000,000
(the "Target Working Capital Amount");
(m) The Subordinated Notes Consent Solicitation shall
have been (or would be automatically upon the Closing) a Successful Consent
Solicitation;
(n) Buyer shall have received (x) a certificate of the
Company signed by the Chief Financial Officer of the Company dated the Closing
Date, to the effect that the condition set forth in Section 7.3(l) hereof has
been satisfied and (y) such certificate shall have attached thereto a reasonably
detailed calculation of the Company's and its Subsidiaries' Working Capital as
of a date not more than three Business Days prior to the Closing Date; and
(o) Xxxxx X. Xxxxxxxx shall have executed a waiver of any
payments or benefits which would be "parachute payments" within the meaning of
Section 280(G) of the Code, subject to restoration of such payments upon
stockholders approval described in Section 280(G) of the Code.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the Closing Date, by action taken or authorized as follows:
(a) By mutual written consent of Buyer and the Sellers'
Representative (on behalf of Sellers);
(b) By the Sellers' Representative (on behalf of
Sellers), or Buyer if the Closing Date shall not have occurred on or before
October 31, 2004; provided, however, that if (x) any of the conditions precedent
set forth in Section 7.1, have not been satisfied or waived on or prior to
October 31, 2004 or (y) the Closing is delayed primarily due to a dispute
between the parties with respect to the calculation of the Cash Amount, the
Closing Indebtedness Amount, the Additional Deduction Amount or the Working
Capital Amount pursuant to Section 2.5, then neither the Sellers' Representative
nor the Buyer may terminate this Agreement pursuant to this Section 8.1(b) on or
before December 31, 2004 (such date, as it may be so extended shall be referred
to as the "Termination Date" for purposes of this Agreement); provided, further,
however, that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party whose breach or failure to perform any
covenant or fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Closing Date to occur on or before the
Termination Date;
(c) By the Sellers' Representative (on behalf of
Sellers), or Buyer if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which the parties shall have used their
reasonable best efforts to resist, resolve or lift, as
71
applicable, in accordance with Section 6.4 and Section 6.5 hereof) permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable;
(d) By Sellers' Representative (on behalf of Sellers), if
there is an intentional breach by Buyer of any representation, warranty,
covenant or agreement contained in this Agreement that would give rise to a
failure of a condition set forth in Section 7.2(a) or Section 7.2(b) and which
has not been cured (or is not capable of being cured) within fifteen Business
Days following receipt by Buyer of written notice of such breach; and
(e) By Buyer, if there is an intentional breach of any
representation, warranty, covenant or agreement contained in this Agreement that
would give rise to a failure of a condition set forth in Section 7.3(a), Section
7.3(b), Section 7.3(e) or Section 7.3(f) and which has not been cured (or is not
capable of being cured) within fifteen Business Days following receipt by
Sellers of written notice of such breach.
(f) By Buyer, if there is a material breach of Section
4.3 which has not been cured within fifteen Business Days following receipt by
the Buyer of written notice of such breach; provided that the foregoing shall
not limit Buyer's right to refuse to close in the event the condition set forth
in Section 7.3(d) or in the last sentence of Section 7.3(a) is not satisfied.
Section 8.2 Effect of Termination. In the event of termination
of this Agreement by the Sellers' Representative or Buyer as provided in Section
8.1 hereof, prior written notice thereof shall forthwith be given to the other
parties, specifying the provisions hereof pursuant to which such termination is
made, and except as set forth below, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of the parties hereto
or their respective officers or directors; provided that, (i) subject to Section
8.3, none of Sellers nor Buyer shall be relieved or released from any
liabilities or damages arising out of its respective willful and knowing breach
of this Agreement prior to termination, (ii) notwithstanding the termination
hereof, the following Sections of this Agreement shall remain in full force and
effect: (a) Section 3.7, Section 4.22 and Section 5.9 relating to finders and
other fees, (b) Section 6.6, (c) this ARTICLE VIII, (d) the last two sentences
of Section 6.2 relating to confidentiality matters and (e) ARTICLE X.
Section 8.3 Limitation on Breach. No Seller shall be
responsible for any breach of any representation or warranty contained in
ARTICLE III or any covenant by any other Seller and, except as set forth in
Section 9.2, no Seller shall be responsible for any breach of any representation
or warranty contained in ARTICLE IV; provided, however, in the event that this
Agreement is terminated and there has been a breach of a representation or
warranty contained in ARTICLE IV (without giving effect to the knowledge
qualifier in the preamble to ARTICLE IV) as to which the persons set forth on
Section 8.3 of the Company Disclosure Letter had actual knowledge as of the date
of this Agreement, then Sellers shall cause the Company or cause the Company to
cause OpCo, as applicable, to be liable to Buyer for its Losses (other than
consequential damages and lost profits) up to an amount not to exceed $15
million.
72
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival. The representations and warranties
contained herein and in any certificate or other writing delivered pursuant
hereto shall expire at, and shall not survive, the Closing Date; provided,
however, that the representations and warranties made by (i) Sellers contained
in Section 3.1 (Due Authorization and Good Standing), Section 3.2 (Authorization
of Transaction), Section 3.3 (Ownership of Class A Common Stock, Series B
Preference Stock and Options), Section 3.6 (Investment Representations), Section
3.7 (Finders' and Other Fees) and Section 4.3 (Capitalization) shall remain in
full force and effect for a period of three (3) years after the Closing, (ii)
Sellers contained in Section 3.4 (Consents and Approvals; No Violations), and
Section 3.5 (Litigation) shall remain in full force and effect for a period of
eighteen (18) months after the Closing and (iii) Buyer Holdings and Buyer
contained in Section 5.1 (Corporate Existence and Power; Capitalization),
Section 5.2 (Authorization), Section 5.7 (Investment Representations), and
Section 5.9 (Finders' and Other Fees) shall remain in full force and effect for
a period of three (3) years after the Closing and (iv) Buyer Holdings and Buyer
contained in Section 5.3 (Consent and Approvals; No Violations) and Section 5.6
(Litigation) shall remain in full force and effect for a period of eighteen (18)
months after the Closing. All covenants and agreements contained herein which by
their terms contemplate actions or impose obligations following the Closing
shall survive the Closing and remain in full force and effect in accordance with
their terms. All covenant and agreements contained herein which by their terms
contemplate full performance at or prior to Closing shall terminate upon
Closing.
Section 9.2 Indemnification by Sellers. Each Seller shall,
severally and not jointly, indemnify Buyer Holdings, Buyer and their successors,
permitted assigns and Affiliates, and their respective officers, directors,
employees, agent, representatives and Affiliates (collectively, the "Buyer
Indemnified Parties") from and against all Losses which may be suffered,
sustained or incurred by, or claimed or assessed against, any of them or to
which any of them may be subject, which arise from or are related to (a) the
failure to be true of any representation or warranty made by such Seller in
Section 3.1, Section 3.2, Section 3.3, Section 3.4, Section 3.5, Section 3.6,
and Section 3.7, as if such representation or warranty were made as of the
Closing Date, (b) the failure to be true of any representation or warranty made
by such Seller in Section 4.3 as if such representation or warranty were made as
of the Closing Date; provided, however (i) with respect to Section 4.3, no
Seller shall be responsible for Losses suffered by a Buyer Indemnified Party by
reason of any failure of such representation or warranty to be true unless any
of the Persons set forth in Section 10.3 had knowledge of such failure to be
true at Closing, in which event such Seller shall be responsible for its
Applicable Percentage of such Losses, (ii) that no Buyer Indemnified Party shall
be entitled to indemnification with respect to the failure to be true of any
representation or warranty in Section 4.3 if such failure was set forth in the
certificate delivered to Buyer pursuant to Section 7.3(d) and Buyer nonetheless
closed the purchase of shares contemplated by this Agreement, and (iii) in the
event the failure to be true of any representation or warranty contained in
Section 4.3 also constitutes a breach of a representation or warranty contained
in Section 3.3, then the Buyer Indemnified Parties' remedy shall be limited to
indemnification for the failure to be true of the
73
representation and warranty in Section 3.3 rather than Section 4.3 and (c) the
failure of such Seller to duly perform or observe any term, provision or
covenant in this Agreement that requires performance at or following the Closing
and (d) the failure of such Seller to duly perform or observe any term,
provision or covenant pursuant to Section 6.17 or Section 6.18 that requires
performance prior to Closing. In the event any Seller makes an indemnification
payment pursuant to this Section 9.2, such Seller can recover a pro rata portion
of such payments from all other Sellers who had actual knowledge of such failure
to be true, based upon such Sellers' proportionate Applicable Percentages
ownership of stock in the Company or in the event of a breach of a post-closing
covenant in this Agreement. As used herein, a Sellers' "Applicable Percentage"
shall mean a quotient (expressed as a percentage) of (i) the amount of the
Purchase Price distributed to such Seller (assuming for this purpose that all
Exchanged Options had been designated as Cashed Out Options under this
Agreement) divided by (ii) the amount of the Purchase Price distributed to all
Sellers (assuming for this purpose that all Exchanged Options had been
designated as Cashed Out Options under this Agreement).
Section 9.3 Indemnification by Buyers. Buyer shall indemnify
each Seller and their respective successors, permitted assigns and Affiliates,
and their respective officers, directors, employees, agent, representatives and
Affiliates (collectively, the "Seller Indemnified Parties") from and against all
Losses, which may be suffered, sustained or incurred by, or claimed or assessed
against, any of them or to which any of them may be subject, which arise from or
are related to (a) the failure to be true of any representation or warranty made
by Buyer in Section 5.2, Section 5.3, Section 5.6 or Section 5.9 as if such
representation or warranty were made as of the Closing Date, and (b) the failure
of Buyer to duly perform or observe any term, provision or covenant in this
Agreement that requires performance at or following the Closing.
Section 9.4 Indemnification Generally. The indemnification
provisions of this ARTICLE IX (i) shall be the exclusive remedy following the
Closing with respect to (x) the breach or failure to be true of any
representations or warranties and (y) the failure of a party hereto to perform
or observe any term, provision or covenant in this Agreement, and (ii) are
intended to be comprehensive and not to be limited by any requirements of Law
concerning prominence of language or waiver. The obligations of the parties set
forth in Section 9.2 and Section 9.3 shall be conditioned upon the Closing
having occurred. Claims for indemnification pursuant to Section 9.2 and Section
9.3 shall not be made after the expiration of the representations and warranties
as provided for in Section 9.1; provided, however, that in the event an
Indemnity Notice shall have been given within the applicable survival period,
the representation or warranty that is the subject of such indemnification claim
shall survive until such time as such claim is finally and fully resolved.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices, requests, demands, waivers
and other communications required or permitted to be given under this Agreement
to any party hereunder shall be in writing and deemed given upon (a) personal
delivery, (b) transmitter's confirmation of a receipt of a facsimile
transmission, (c) confirmed delivery by a standard overnight carrier or when
delivered by hand or (d) when mailed in the United States by certified or
registered mail,
74
postage prepaid, addressed at the following addresses (or at such other address
for a party as shall be specified by notice given hereunder):
If to the Management Stockholders or to RGIP, LLC, to
the address set forth below such Management
Stockholder's name on Exhibit A attached hereto,
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Sellers' Representative, to:
c/x Xxxxx & Company, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx XX
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Xxxxx Stockholders or Common Stockholders
(other than the Management Stockholders and other
than RGIP, LLC), to the address set forth below such
stockholder's name on Exhibit A attached hereto,
with, in the case of the Xxxxx Stockholders, a copy
to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
75
If to Buyer or Buyer Holdings, to:
THL Buildco, Inc.
c/o THL Managers V, LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
Section 10.2 Representations and Warranties; Covenants.
(a) Buyer hereby acknowledges and agrees that none of
Sellers or any of their representatives is making any representation or warranty
whatsoever, express or implied, except those representations and warrantees
explicitly set forth in this Agreement.
(b) Sellers hereby acknowledge and agree that neither
Buyer nor any of its representatives is making any representation or warranty
whatsoever, express or implied, except those representations and warrantees
explicitly set forth in this Agreement.
Section 10.3 Interpretation.
(a) For purposes of ARTICLE III, references herein to the
"knowledge" of a Person shall mean (i) if such Seller is an individual, such
individual, (ii) if such Seller is a corporation (including a corporation acting
as a general partner of a Partnership or a managing member of a limited
liability company), the executive officers of such corporation, (iii) if such
Seller is a partnership, an officer or general partner of such partnership, or
(iv) if such Seller is a limited liability company, the managing member of such
limited liability company, in each case following due inquiry (or if they fail
to conduct due inquiry, the knowledge such Seller would have had if he, she or
it would have had if they had conducted due inquiry). For purposes of ARTICLE
IV, ARTICLE V, ARTICLE VII, ARTICLE VIII, AND ARTICLE X, and Section 6.3,
Section 6.4, Section 6.5, Section 6.6, Section 6.7, Section 6.9 and Section
6.12, the Mergers, and for purposes of ARTICLE IV, ARTICLE VII, ARTICLE VIII AND
ARTICLE X, the Financing to the extent specified and set forth in the Commitment
Letters, each constitute a "transaction contemplated hereby," or by this
Agreement (or as expressed with words of similar import). For purposes of
ARTICLE IV and Section 9.2(b), references to "knowledge" of the Sellers means,
collectively, the actual knowledge of (i) any Seller (determined in accordance
with the first sentence of this Section 10.3(a)) and (ii) Messrs. Xxxxxx, Hall,
Hiley, Xxxxxxxx and
76
Xxxxxx following due inquiry (or if they fail to conduct due inquiry, the
knowledge they would have had if they had conducted due inquiry) by such
Persons. Whenever the words "include," "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation." The phrases "delivered" or "made available" when used in this
Agreement shall mean that the information referred to has been physically or
electronically delivered to the relevant parties (including, in the case of
material "made available" to Buyer, material that has been posted, retained and
thereby made available to Buyer and Buyer's Representatives throughout the
period from June 22, 2004 through the Closing Date through the on-line "virtual
data room" established by the Company through Intralinks, Inc.). References to
"the date hereof" shall mean as of the date of this Agreement. The words
"hereof," "herein," "hereto" and "hereunder" and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. When a reference is made in this
Agreement to an Article, Section, Exhibit or Schedule or the Company Disclosure
Letter, such reference shall be to an Article or Section of, or an Exhibit or
Schedule of this Agreement or the Company Disclosure Letter with respect to,
this Agreement unless otherwise indicated.
(b) The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement. Any matter disclosed pursuant to any Section
of the Company Disclosure Letter shall not be deemed to be an admission or
representation as to the materiality of the item so disclosed.
Section 10.4 Amendments, Modification and Waiver.
(a) Except as may otherwise be provided herein, any
provision of this Agreement may be amended, modified or waived by the
Stockholders' Representative (on behalf of the Xxxxx Stockholders and Third
Party Stockholders), the Management Representative (on behalf of the Management
Stockholders and the Option Sellers) and Buyer if, and only if, such amendment
or waiver is in writing and signed, in the case of an amendment, by Buyer, the
Stockholder's Representative and the Management Representative or, in the case
of a waiver, by the party against whom the waiver is to be effective; provided
that, in order to (x) amend Section 2.4, ARTICLE IX, Section 10.2 or Section
10.4, (y) to change the relative portions of the Purchase Price payable to any
Seller pursuant to ARTICLE II hereof or (z) to take any action with the intent
to discriminate against any Seller or Option Seller who is a party to this
Agreement, the consent of each Seller or Option Seller who is a party to this
Agreement being adversely effected by such amendment, reduction or
discrimination shall be required.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law.
Section 10.5 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that the parties hereto
may not assign, delegate or otherwise transfer any of
77
their rights or obligations under this Agreement unless such assignment is
consented to by the Sellers' Representative and Buyer. Notwithstanding anything
to the contrary herein, Buyer may (i) collaterally assign any of its rights
hereunder to any of its financing sources, and (ii) assign any of its rights
hereunder to any direct or indirect wholly owned Subsidiary or limited liability
company of Buyer, but in each case no such assignment shall relieve Buyer of its
obligations hereunder.
Section 10.6 Specific Performance. The parties acknowledge and
agree that any breach of the terms of this Agreement would give rise to
irreparable harm for which money damages would not be an adequate remedy and
accordingly the parties agree that, in addition to any other remedies, each
shall be entitled to enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy of money damages as
a remedy.
Section 10.7 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware
(regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof).
Section 10.8 Jurisdiction; Forum; No Jury Trial.
(a) The parties hereto agree that the appropriate,
exclusive and convenient forum for any disputes between any of the parties
hereto arising out of this Agreement or the transactions contemplated hereby
shall be in any state or federal court in the State, City and County of
Delaware, and each of the parties hereto irrevocably submits to the personal
jurisdiction of such courts solely in respect of any Action arising out of or
related to this Agreement. Each of the parties further agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any state or federal court in the State, City and County of
Delaware. The parties hereto further agree that the parties will not bring suit
with respect to any disputes arising out of this Agreement or the transactions
contemplated hereby in any court or jurisdiction other than the above specified
courts; provided, however, that the foregoing shall not limit the rights of the
parties to obtain execution of judgment in any other jurisdiction. The parties
hereto further agree, to the extent permitted by Law, that final and
unappealable judgment against a party in any action or proceeding contemplated
above shall be conclusive and may be enforced in any other jurisdiction within
or outside the United States by suit on the judgment, a certified or exemplified
copy of which shall be conclusive evidence of the fact and amount of such
judgment.
(b) To the extent that any party hereto has or hereafter
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, each such party hereby irrevocably (i) waives such immunity in
respect of its obligations with respect to this Agreement and (ii) submits to
the personal jurisdiction of any court described in Section 10.8(a).
(c) THE PARTIES HERETO AGREE THAT THEY HEREBY IRREVOCABLY
WAIVE AND AGREE TO CAUSE THEIR RESPECTIVE SUBSIDIARIES
78
TO WAIVE, THE RIGHT TO TRIAL BY JURY IN ANY ACTION TO ENFORCE OR INTERPRET THE
PROVISIONS OF THIS AGREEMENT.
Section 10.9 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated herein are not affected in any
manner materially adverse to any party hereto. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner.
Section 10.10 Acknowledgement of Severance Adjustment. The
parties hereto recognize that the provisions of this Agreement take into account
all severance payments due or that may become due to employees of the Company
and its Subsidiaries as a result of the transactions contemplated by this
Agreement.
Section 10.11 Third Party Beneficiaries. This Agreement shall
inure solely to the benefit of and be binding upon (x) the parties hereto and
their respective successors and permitted assigns and (y) solely with respect to
the payment of the Fee pursuant to Section 6.14, Xxxxx. This Agreement shall not
be deemed to confer upon or give to any Persons other than the parties hereto
and their successors and permitted assigns any remedy, claim, liability,
reimbursement, cause of action or other right; provided, however, that the
Indemnitees referred to in Section 6.3 hereof shall be third party beneficiaries
entitled to enforce the provisions of Section 6.3 of this Agreement.
Section 10.12 Entire Agreement. This Agreement, including any
exhibits or schedules hereto, constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all other prior
agreements or understandings, both written and oral, between any of the parties
with respect to the subject matter hereof.
Section 10.13 Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be deemed an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto.
Section 10.14 Financial Advisory Agreement. Sellers
acknowledge that, at or immediately following the Closing, Buyers shall or shall
cause the Company or cause the Company to cause OpCo to enter into a financial
advisory agreement with THL Managers V, LLC with respect to services to be
provided by THL Managers V, LLC or certain of its related parties to the Company
or OpCo in return for certain financial advisory fees (the amount of which shall
not exceed $2 million per annum), to be paid annually to THL Managers V, LLC by
the Company or OpCo, which agreement shall also include indemnification by the
Company or OpCo of THL Managers V, LLC, and certain related parties with respect
to the transactions contemplated by this Agreement, including the Financing and
any services to be provided by Buyer or any related party to the Company and
OpCo on a going forward basis.
* * *
79
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
THL BUILDCO HOLDINGS, INC.
By: /s/ Xxxxxxx XxXxxx
-------------------------------------
Name: Xxxxxxx XxXxxx
Title: President
THL BUILDCO, INC.
By: /s/ Xxxxxxx XxXxxx
-------------------------------------
Name: Xxxxxxx XxXxxx
Title: President
XXXXX INVESTMENT ASSOCIATES VI, L.P.
By: Xxxxx XX VI, LLC, its General Partner
By: /s/ Xxxxxx X. Xxxx, XX
-------------------------------------
Name: Xxxxxx X. Xxxx, XX
Title: Managing Member
KEP VI, LLC
By: /s/ Xxxxxx X. Xxxx, XX
-------------------------------------
Name: Xxxxxx X. Xxxx, XX
Title: Managing Member
XXXXX NORTEK INVESTORS, LLC
By: Xxxxx XX VI, LLC, its Managing Member
By: /s/ Xxxxxx X. Xxxx, XX
-------------------------------------
Name: Xxxxxx X. Xxxx, XX
Title: Managing Member
STOCKHOLDERS
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
(SIGNATURE PAGE FOR STOCK SALE AGREEMENT)
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
By: /s/ Xxxxxx E.G. Ractliffe
-------------------------------------
Name: Xxxxxx E.G. Ractliffe
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
XXXXXXX X. XXXXXXXXX FAMILY TRUST
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, its Trustee
THIRD PARTY INVESTORS
MAGNETITE ASSET INVESTORS III, L.L.C.
By: Black Rock Financial Management Inc.,
its Managing Member
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Authorized Signatory
2
RGIP, LLC
By: /s/ Xxxxxxxx X. Xxxxx, Xx.
-------------------------------------
Name: Xxxxxxxx X. Xxxxx, Xx.
Title: Managing Member
DAROTH INVESTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Managing Member
3
AGREED TO AND ACCEPTED, WITH RESPECT ONLY TO THE AGREEMENTS SET FORTH IN SECTION
6.7(c) AND THE LAST SENTENCE OF SECTION 6.20 OF THIS AGREEMENT.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
4
