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Exhibit 10.32
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made this 19th
day of December, 1997, by and among OM GROUP, INC., a Delaware corporation
("OMG"), OM GROUP ACQUISITION COMPANY, INC., a Delaware corporation and a direct
wholly-owned subsidiary of OMG ("OMGAC"), and AURIC CORPORATION, a Delaware
corporation ("Auric").
RECITALS
WHEREAS, the Board of Directors of OMG, OMGAC and Auric have approved,
and deem it advisable and in the best interests of their respective companies
and stockholders to consummate, a merger of OMGAC with and into Auric (the
"Merger"), with Auric as the surviving corporation in the Merger, upon the terms
and subject to the conditions set forth in this Agreement, pursuant to which the
shares of common stock, par value $.10 per share, of Auric ("Auric Common
Stock") issued and outstanding immediately prior to the Effective Time (as
defined herein) other than (a) shares of Auric Common Stock owned, directly or
indirectly, by Auric or any subsidiary (as defined herein) of Auric or by OMG,
OMGAC or any other subsidiary of the OMG and (b) Dissenting Shares (as defined
herein), will be converted into the right to receive the Merger Consideration
(as defined herein); and
WHEREAS, the Board of Directors of Auric has directed that this
Agreement be submitted for consideration at a special meeting of the voting
stockholders of Auric;
NOW, THEREFORE, in consideration of their respective representations,
warranties, covenants, agreements and undertakings set forth herein, the parties
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms, subject to the conditions and in
reliance on the representations, warranties and covenants set forth herein, and
in accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time, as defined in Section 1.2, (a) OMGAC shall be merged with and
into Auric and the separate existence and corporate organization of OMGAC shall
cease; (b) Auric shall be the surviving corporation in the Merger (the
"Surviving Corporation") having the name Auric Corporation and shall continue to
be governed by the laws of the State of Delaware; (c) the Certificate of
Incorporation of the Surviving Corporation shall be amended so as to read in its
entirety as set forth on Exhibit A hereto and, as so amended, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein or by applicable law; and (d) the Bylaws of OMGAC as
in effect immediately prior to the Effective Time shall become the Bylaws of the
Surviving Corporation until thereafter amended as provided therein or by
applicable law; provided, that, there shall be an amendment by virtue of the
Merger to change the name of the Surviving Corporation to "Auric Corporation."
1.2 Effective Time of the Merger. Subject to the provisions of this
Agreement, a certificate of merger shall be duly prepared, executed and
acknowledged by the Surviving
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Corporation in the Merger (the "Certificate of Merger") and thereafter delivered
on the Closing Date (as defined herein) to the Secretary of State of Delaware
(the "Secretary") for filing in accordance with the DGCL. The Merger shall
become effective upon the filing of the Certificate of Merger with the
Secretary, or at such other time as is permissible in accordance with the DGCL
and as OMG and Auric shall agree should be specified in the Certificate of
Merger (the time the Merger becomes effective being the "Effective Time").
1.3 Effects of the Merger. The Merger shall have the effects set forth
in the DGCL.
1.4 Closing. Unless this Agreement shall have been terminated and the
transactions contemplated herein shall have been abandoned pursuant to Section
8.1, and subject to the satisfaction or waiver of the conditions set forth in
Article 6, the closing of the Merger (the "Closing") will take place at 9:00
a.m., Eastern time, on the second business day after satisfaction of the
conditions set forth in Section 6.1 (or, if the conditions set forth in Sections
6.2 and 6.3 are not satisfied or waived at that time, as soon as practicable
thereafter following such satisfaction or waiver) (the "Closing Date"), at the
offices of Squire, Xxxxxxx & Xxxxxxx L.L.P., 0000 Xxx Xxxxx, 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx, unless another date, time or place is agreed to in writing by
the parties hereto.
1.5 Directors and Officers of Surviving Corporation. The directors of
OMGAC at the Effective Time shall be the directors of the Surviving Corporation.
The officers of Auric at the Effective Time shall be the officers of the
Surviving Corporation. Each of the officers and directors shall hold office
until their respective successors are duly elected or appointed and qualified or
until their earlier death, resignation or removal in the manner provided in the
Articles of Incorporation and Bylaws of the Surviving Corporation, or as
otherwise provided by law.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF OMGAC AND AURIC;
CONVERSION OF AURIC COMMON STOCK
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares of Auric
Common Stock (the "Auric Stockholders") or capital stock of OMGAC:
(a) Capital Stock of OMGAC. Each issued and outstanding share of the
common stock of OMGAC shall be converted into and become one fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation (the "Surviving Corporation Common Stock").
(b) Cancellation of Treasury Stock and OMG-Owned Auric Common Stock.
Each share of Auric Common Stock that is owned by Auric or by any subsidiary of
Auric, and each share of Auric Common Stock that is owned by OMG, OMGAC or any
other subsidiary of OMG shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered or deliverable in
exchange therefor.
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(c) Exchange of Auric Common Stock. The issued and outstanding shares
of the Auric Common Stock (other than Dissenting Shares, as defined in Section
2.1(d) and shares to be canceled in accordance with Section 2.1(b) hereof) shall
be converted into the right to receive an amount equal to Eighty Million Dollars
($80,000,000), (i) less any amounts that are paid to OMG or the Stockholders'
Representative (as defined herein) as provided in the Escrow Agreement (as
defined herein) and (ii) plus any amounts that are paid by OMG into the Escrow
Fund (as defined herein) pursuant to Article IX hereof (the "Merger
Consideration"). All shares of Auric Common Stock, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
(each, an "Auric Certificate") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon
surrender of such Auric Certificate in accordance with Section 2.2, without
interest, or, as provided in Section 2.1(d), to perfect any rights of appraisal
as a Dissenting Shareholder (as defined herein) pursuant to Section 262 of the
DGCL. The Merger Consideration shall be distributed to the Auric Shareholders in
accordance with Section 2.2(b) below.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding shares of Auric Common
Stock held by a person (a "Dissenting Shareholder") who duly demands appraisal
of his shares of Auric Common Stock pursuant to Section 262 of the DGCL and
complies with all the provisions of the DGCL concerning the right of holders of
Auric Common Stock to demand appraisal of their shares in connection with the
Merger ("Dissenting Shares") shall not be converted as described in Section
2.1(c) but shall become the right to receive such cash consideration as may be
determined to be due to such Dissenting Shareholder as provided in the DGCL. If,
however, such Dissenting Shareholder withdraws his demand for appraisal or fails
to perfect or otherwise loses his right of appraisal, in any case pursuant to
the DGCL, his shares shall be deemed to be converted as of the Effective Time
into the right to receive the Merger Consideration. Auric shall give OMG (i)
prompt notice of any demands for appraisal of shares received by Auric and (ii)
the opportunity to participate in and direct all negotiations and proceedings
with respect to any such demands. Auric shall not, without the prior written
consent of OMG, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
2.2 Exchange of Auric Certificates.
(a) Payment of Exchange Price. As of the Effective Time, OMG shall
deliver (i) to First Union National Bank or such other bank or trust company
designated by OMG (and reasonably acceptable to Auric) (the "Exchange Agent"),
for the benefit of Auric Stockholders, for conversion in accordance with this
Article II, an amount of cash equal to Seventy Seven Million Dollars
($77,000,000) (such amount being hereinafter referred to as the "Exchange Fund")
and (ii) to First Union National Bank (the "Escrow Agent"), under an Escrow
Agreement in the form attached hereto as Exhibit B (the "Escrow Agreement"),
cash in the amount of Three Million Dollars ($3,000,000) (the "Escrow Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, but in no event more than three business days thereafter, the
Exchange Agent shall mail to each holder of record as of the Effective Time of
an Auric Certificate or Certificates whose shares
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were converted pursuant to Section 2.1 hereof into the right to receive the
Merger Consideration, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Auric Certificates
shall pass, only upon delivery of the Auric Certificates to the Exchange Agent
and shall be in such form and have such other provisions as OMG and Auric may
reasonably specify) (the "Transmittal Letter") and (ii) instructions for use in
effecting the surrender of the Auric Certificates in exchange for the Merger
Consideration. Upon surrender of an Auric Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by OMG and
OMGAC, together with such Transmittal Letter, duly executed, the holder of such
Auric Certificate shall be entitled to receive in exchange therefor the Initial
Exchange Price (as defined herein) and the right to receive the remainder of the
Merger Consideration for each share of Auric Common Stock formerly represented
by such Auric Certificate as provided in the Escrow Agreement, and the Auric
Certificate so surrendered shall forthwith be canceled. For purposes hereof,
"Initial Exchange Price" shall be equal to the Exchange Fund divided by the
total number of shares of Auric Common Stock issued and outstanding on the
Closing Date.
In the event of a transfer of ownership of Auric Common Stock which is
not registered in the transfer records of Auric, the Merger Consideration may be
paid to a transferee if the Auric Certificate representing such Auric Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Auric Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the Merger
Consideration as contemplated by this Section 2.2.
(c) No Further Ownership Rights in Auric Common Stock; Transfer Books.
The Merger Consideration paid in exchange for the surrender of shares of Auric
Common Stock in accordance with the terms hereof shall be deemed to have been
paid and issued in full satisfaction of all rights pertaining to such shares of
Auric Common Stock, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which may have been declared or made by Auric on such shares
of Auric Common Stock in accordance with the terms of this Agreement or prior to
the date hereof and which remain unpaid at the Effective Time. As of the
Effective Time, entries shall be made in the stock transfer books of Auric to
reflect the cancellation of the Auric Common Stock issued and outstanding
immediately prior to the Effective Time and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Auric Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, Auric
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and converted as provided in this Section 2.2.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the Auric Stockholders for one year after the Effective
Time shall be delivered to OMG, upon demand, and any Auric Stockholders who have
not theretofore complied with this Article II shall thereafter look only to OMG
for payment of their claim for the Merger Consideration.
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(e) No Liability. None of OMG, OMGAC or Auric shall be liable to any
person for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Auric Certificate
shall not have been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration in
respect of such certificate would otherwise escheat to or become the property of
any Governmental Entity (as defined herein)), any such Merger Consideration in
respect of such certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AURIC
Auric represents and warrants that the following are true and correct
on the date of this Agreement:
3.1 Organization and Good Standing. Auric is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and has full corporate power to enter into this Agreement and
to consummate the transactions contemplated hereby. Auric is qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business or the properties owned or leased by it requires such qualification,
except where the failure to be so qualified and in good standing would not have
a material adverse effect with respect to Auric. Each state or jurisdiction in
which Auric is qualified to do business is set forth on Schedule 3.1. Schedule
3.1 also sets forth each jurisdiction in which assets of Auric are located and
each jurisdiction in which Auric has employees.
3.2 Authority, Noncontravention. The execution and delivery of this
Agreement by Auric and the consummation by Auric of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Auric, subject to the Auric Stockholders' Approval of this
Agreement and the Merger. This Agreement has been duly executed and delivered by
Auric and constitutes a valid and binding obligation of Auric, enforceable
against Auric in accordance with its terms. Except as disclosed in Schedule 3.2,
the execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby and compliance with the provisions of this
Agreement will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, (a) the
Certificate of Incorporation or Bylaws of Auric, (b) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Auric or any
subsidiary of Auric or their respective properties or assets or (c) subject to
the governmental filings and other matters referred to in Section 3.3, any
judgment, order, decree, statute, law, ordinance, rule, regulation or
arbitration award applicable to Auric or any other subsidiary of Auric or their
respective properties or assets, other than, in the case of clauses (b) and (c),
any such conflicts, breaches, violations, defaults, rights, losses or liens that
individually or in the aggregate would not have a material adverse effect with
respect to Auric or would not prevent, hinder or materially delay the ability of
Auric to consummate the transactions contemplated by this Agreement.
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3.3 Consents and Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, nor notice to,
any federal, state or local government or any court, administrative agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to Auric or any
subsidiary of Auric in connection with the execution and delivery of this
Agreement by Auric or the consummation by Auric of the transactions contemplated
hereby, except for (a) the filing of a premerger notification and report form by
Auric under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (b) the filing of the Certificate of Merger with the Secretary,
and appropriate documents with the relevant authorities of other states in which
Auric is qualified to do business and (c) such other consents, approvals,
orders, authorizations, registrations, declarations, filings or notices as are
set forth in Schedule 3.3.
3.4 Capital Structure.
(a) Auric Common Stock. As of the date hereof, the authorized capital
stock of Auric consists solely of 2,000,000 shares of Auric Common Stock. As of
the date of this Agreement, 318,200 of Auric Common Stock were issued and
outstanding and 52,500 were held by Auric as treasury shares.
(b) Other Securities. Except as described in Section 3.4(a) with
respect to the Auric Common Stock and options (and related agreements) to
purchase 74,800 shares of Auric Common Stock (the "Auric Stock Options"), there
are no debt or equity securities outstanding and no options, warrants or other
rights to purchase, agreements or other obligations to issue, or other rights to
convert any obligation into, any shares of capital stock of Auric.
3.5 Subsidiaries. Except as provided in Schedule 3.5, Auric has no
subsidiaries either wholly or partially owned.
3.6 Vote Required. The affirmative vote of a majority of the
outstanding shares of Auric Common Stock entitled to vote thereon is necessary
to approve this Agreement, the Merger and the other transactions contemplated
hereby.
3.7 Financial Statements and the Balance Sheet. Auric has delivered as
described in Schedule 3.7 the following financial information set forth in
subsections (a)-(d) below and will deliver to OMG the other following financial
information (collectively, the "Financial Statements") for Auric:
(a) as of the date of this Agreement, audited consolidated balance
sheets of Auric and its subsidiary as of September 30, 1995 and 1996;
(b) as of the date of this Agreement, a draft consolidated balance
sheet of Auric and its subsidiary as of September 30, 1997 (the "Balance
Sheet"); and
(c) as of the date of this Agreement, the related audited consolidated
statements of operations, stockholders' equity and cash flows for each of
Auric's and its subsidiary's fiscal years in the two-year period ended September
30, 1996.
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(d) as of the date of this Agreement, draft consolidated statements of
operations, stockholders' equity and cash flows of Auric and its subsidiary for
the fiscal year ended September 30, 1997.
(e) within ten (10) days after the date of this Agreement, audited
consolidated balance sheet of Auric and its subsidiary as of September 30, 1997
which will not differ materially from the Balance Sheet.
(f) within ten (10) days after the date of this Agreement, audited
consolidated statements of operations, stockholders' equity and cash flows for
Auric and its subsidiary for the fiscal year ended September 30, 1997 which will
not differ materially from the statements provided under Section 3.7(d).
The Financial Statements are or will be, as the case may be, true and correct in
all material respects, in accordance with the books and records of Auric and
present fairly, in all material respects, the financial position and results of
operation of Auric as of the respective dates thereof and for such periods in
conformity with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis.
3.8 Absence of Certain Liabilities and Changes. Except (a) for
liabilities and obligations reflected or reserved for in the Balance Sheet, (b)
for liabilities and obligations incurred in the ordinary course of business
since the date of the Balance Sheet, (c) for liabilities and obligations
incurred in connection with the Merger or otherwise as contemplated by this
Agreement and (d) as set forth in Schedule 3.8, there are no liabilities or
obligations, secured or unsecured (whether accrued, absolute, contingent or
otherwise) which would be required by GAAP to be reflected or reserved against
in a consolidated balance sheet of Auric or in the notes thereto and which,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect with respect to Auric. Since the date of the Balance
Sheet, Auric has been operated in the ordinary course consistent with past
practice and, except as set forth on Schedule 3.8, or contemplated by Schedule
5.2, there has not been:
(a) any material adverse effect with respect to Auric;
(b) any material change in the accounting methods or principles of
Auric;
(c) any grant of any severance or termination pay by Auric to any
executive officer or director of Auric or any increase in compensation or
benefits payable by Auric under existing employment agreements or severance or
termination pay policies to any of their employees other than (i) in the
ordinary course of business consistent with past practices, (ii) increases or
grants required by contracts disclosed herein or by applicable law, or (iii)
increases, agreements and bonuses disclosed in Schedule 3.14;
(d) any entry by Auric into any employment, bonus or deferred
compensation agreement with any of its directors, officers or other employees,
other than as disclosed in Schedule 3.14;
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(e) any entry by Auric into, or any amendment or termination of, any
material contract, agreement, lease, franchise, security, instrument, permit or
license between Auric and any party, except in the ordinary course of business;
(f) any declaration or payment of a distribution of cash or any other
asset of Auric to Auric Stockholders (i) in the nature of a dividend, (ii) in
redemption or as the purchase price of any of its capital stock, or (iii) in
discharge or cancellation, whether in part or in whole, of any indebtedness
owing to Auric Stockholders, other than as disclosed on Schedule 3.14; or
(g) any purchase commitments in excess of its normal business
requirements.
3.9 Inventory. The Inventory is of a quality and quantity usable in the
ordinary course of business of Auric, except for obsolete items or items below
standard quality as to which a provision determined in a manner consistent with
the prior practice of Auric has been made on the books of Auric in accordance
with GAAP. The value of all inventory items, including finished goods,
work-in-process and raw materials, has been recorded on the books of Auric at
the lower of cost (determined in accordance with the accounting inventory
valuation methods of Auric) or fair market value.
3.10 Receivables. Auric has delivered to OMG an accurate aging schedule
of all of the accounts receivable reflected on the books of Auric as of
September 30, 1997. The reserve on the Balance Sheet for bad debt is reasonable
in light of the nature of the business and Auric's past experience. Any
receivable due from Auric Stockholders (other than business and travel advances
made in the ordinary course of business) shall be paid in full in cash on or
prior to the Closing Date.
3.11 Taxes. Except as set forth on Schedule 3.11, (i) Auric has filed
(or caused to be filed or had filed on its behalf) in a timely manner all
material federal, state, local and foreign returns required by applicable law to
be filed (each a "Return") with respect to all federal, state, local and foreign
taxes and assessments (including all interest, penalties and additions to tax
imposed with respect to such amounts) of Auric ("Taxes") and has paid (or the
consolidated, combined or unitary group of which Auric is a member has paid on
its behalf) all Taxes shown due on such Returns for which Auric may be liable,
except for Taxes that are being contested in good faith by appropriate
proceedings and set forth on Schedule 3.11; (ii) there is no outstanding
agreement, waiver or consent providing for an extension of the statutory period
of limitations applicable to the assessment of any Tax and no power of attorney
granted by Auric with respect to any tax matter is currently in force; (iii)
there is no action, suit, proceeding, investigation, audit or claim now pending
against Auric with respect to any Tax, nor is there any assessment asserted in
writing by any Tax authority; (iv) Auric has not filed any agreement or consent
under Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"); (v) no property of Auric is "tax-exempt use property" within the
meaning of Section 168(h) of the Code nor property that OMG will be required to
treat as being owned by another person pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986; (vi) Auric has made timely payments of
all material Taxes required to be deducted and withheld from the wages paid to
employees; (vii) Auric has not been a party to any Tax allocation or sharing
agreement; (viii)
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Auric has not received a written claim made by an authority in a jurisdiction
where it does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction; (ix) Auric has not agreed to (nor is it required to make) any
material adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise; (x) all Returns filed by Auric are true,
correct, and complete in all material respects and all material Taxes owed by
Auric that are due and payable prior to the Closing Date have been, or will be
prior to the Closing Date, fully paid in a timely fashion; (xi) Auric has no
material liability, contingent or otherwise, for Taxes not due and payable
except as provided in the Balance Sheet or to the extent incurred since the date
of such Balance Sheet in the ordinary course of its business; (xii) the U.S.
Federal Income Tax Liabilities of Auric have been finally determined by the
Internal Revenue Service and satisfied, or the time for audit has expired, for
all taxable periods through September 30, 1994; (xiii) the most recent federal
income tax audit of Auric by the Internal Revenue Service involved the taxable
year 1994 and such audit was concluded with no adjustment; and (xiv) Auric is
not currently being audited by any state taxing authority and the aggregate
amount of additional taxes assessed (as a result of audit or other
investigation) by state taxing authorities subsequent to January 1, 1993
(regardless of whether the taxable period at issue began before or after January
1, 1993) did not exceed $100,000.
3.12 List of Material Contracts.
(a) Schedule 3.12 lists as of the date of this Agreement: (i) all
commitments and agreements for the purchase or sale of any supplies or services
that involve an expenditure by or payment to Auric of more than $50,000 for any
one contract or series of related contracts; (ii) all personal property leases
under which Auric is either lessor or lessee that involve annual payments or
receipts of $50,000 or more; (iii) all agreements, mortgages, indentures and
other instruments relating to indebtedness for borrowed money to which Auric is
a party or by which it or its properties are bound that require annual payments
by Auric of more than $50,000, (iv) all government contracts and all other
agreements with customers that involve an annual payment to Auric of more than
$50,000 for any one contract or related contracts, and (v) all non-competition
agreements, sales representation, distributorship or consulting agreements, and
non-disclosure agreements entered into by Auric. Auric has made available to OMG
complete and correct copies of all items listed on Schedule 3.12 that are in
writing, and the descriptions of the material terms contained in Schedule 3.12
of all items listed therein that are not in writing are accurate and correct.
(b) Except as disclosed in Schedule 3.12, as of the date of this
Agreement, Auric is not in default under the terms of any item listed on
Schedule 3.12, except where such defaults would not have a material adverse
effect with respect to Auric.
(c) To the best of Auric's knowledge, as of the date of this Agreement,
no other party is in default under the material terms of any of the contracts,
arrangements, instruments or other agreements listed in Schedule 3.12 and each
is valid and in full force and effect with respect to Auric. No party has
notified Auric in writing of its intention to cease to perform any material
services required to be performed by it or withhold any material payment
required to be made by it thereunder.
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3.13 Labor Matters.
(a) During the two (2) years ending on the date hereof, to the
knowledge of Auric, no petition has been filed or proceedings initiated by any
employee or group of employees seeking recognition of a bargaining
representative for Auric. During the two (2) years ending on the date hereof,
Auric has not experienced any strike or work stoppage of any kind. To the best
of Auric's knowledge, there is no organizational effort currently being made or
threatened to organize employees of Auric for the purpose of forming or joining
any labor union. There are no controversies or disputes pending between Auric
and any of its employees other than controversies and disputes with individual
employees arising in the ordinary course of business which have not had and
could not reasonably be foreseen to have, individually or in the aggregate, a
material adverse effect. Except as set forth on Schedule 3.13, there are no
unfair labor practice or other administrative or court proceedings pending, or
to the best of Auric's knowledge, threatened, between Auric and its employees.
(b) No present or former employee of Auric has asserted any claim of
more than $50,000 against Auric under any employment agreement, or otherwise, on
account of or for (i) overtime pay, other than overtime pay for the current
payroll period, (ii) wages or salary for any period other than the current
payroll period, (iii) vacation or time off (or pay in lieu thereof), other than
that earned in respect of the previous twelve months, or (iv) any violation of
any statute, ordinance or regulation relating to minimum wages or maximum hours
of work.
(c) No persons or parties (including but not limited to, governmental
agencies of any kind) have asserted any claim arising out of any breach or
violation by Auric of any statute, ordinance or regulation relating to
discrimination in employment or employment practices or occupational safety and
health standards (including without limitation, the Occupational Safety and
Health Act, the Fair Labor Standards Act, Title VII of the Civil Rights Act of
1964, or the Age Discrimination in Employment Act of 1967) except as set forth
on Schedule 3.13.
3.14 Employee Benefit Plans.
(a) General. Schedule 3.14 sets forth a true and complete list and
brief description of each "employee pension benefit plan" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA) and other employee benefit plans, programs and arrangements (including
without limitation, those providing any stock option, stock purchase, stock
appreciation right, bonus, incentive, deferred compensation, excess benefits,
profit sharing, pension, thrift, savings, stock bonus, employee stock ownership,
salary continuation, severance, retirement, supplemental retirement, disability,
dental, vision care, hospitalization, major medical, life insurance, accident
insurance, vacation, holiday and/or sick leave pay, tuition reimbursement,
fringe benefits, executive perquisite or other employee benefits) now or
heretofore maintained, or contributed to, or required to be contributed to, by
Auric or by any ERISA Affiliate for the benefit of any officer, director or
employee, current or former, active or inactive, maintained by Auric (all the
foregoing being herein called "Benefit Plans"). Auric does not have any formal
plan or commitment, whether legally binding or not, to create any additional
plan or modify or change any existing Benefit Plan that would affect any
employee
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11
or former employee or officer or director of Auric, except as required by
applicable law. As used herein, "ERISA Affiliate" means any subsidiary of Auric
and any trade or business (whether or not incorporated) that is part of the same
controlled group, or under common control with, or part of an affiliated service
group that includes, Auric within the meaning of Code Sections 414(b), (c), (m)
or (o).
(b) Administration. To the best of Auric's knowledge, each Benefit Plan
has been administered in all material respects in accordance with its terms. All
of the Benefit Plans and Auric are in material compliance in all respects with
the applicable provisions of ERISA and the Code. To the best of Auric's
knowledge, all material reports, returns and similar documents with respect to
the Benefit Plans required to be filed with any government agency or distributed
to any Benefit Plan participant have been duly and timely filed or distributed.
To the best of Auric's knowledge, there are no investigations by any
governmental agency, termination proceedings or other claims (except claims for
benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan that could reasonably be expected to
give rise to any liability to Auric or an ERISA Affiliate, nor is Auric aware of
any facts that could reasonably be expected to give rise to any liability in the
event of any such investigation, claim, suit or proceeding.
(c) Contributions; Funding. All contributions to, and payments from,
the Benefit Plans that may have been required to be made in accordance with the
Benefit Plans and applicable law have been timely made. None of the Benefit
Plans is subject to the minimum funding requirements of Section 302 of ERISA or
Section 412 of the Code.
(d) Compliance. To the best of Auric's knowledge, all the Benefit
Plans, as and from the date adopted or as they may have been amended, as, when
and to the extent required, comply, and at all times applicable complied, in all
material respects, with the applicable provisions of the Code, ERISA, the Equal
Pay Act of 1963, as amended, the Age Discrimination in Employment Act of 1967,
as amended, Title VII of the Civil Rights Act of 1964, as amended, all other
federal or state laws regulating employment and employee benefits, and all
regulations and rulings issued by government agencies responsible for the
administration or enforcement of one or more of such laws. Each Benefit Plan
that is an employee pension benefit plan within the meaning of Section 3(2) of
ERISA has received a determination letter from the Internal Revenue Service (the
"IRS") to the effect that such Benefit Plan is currently qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor has revocation been
threatened, nor has any such Benefit Plan been amended since the date of its
most recent determination letter or application therefor in any respect that
would adversely affect its qualification or increase its cost; and all
amendments required to be adopted by such determination letters have been
adopted within the requisite time periods.
(e) Prohibited Transactions; Reportable Events. No "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of ERISA)
has occurred which involves the assets of any Benefit Plan which could
reasonably be expected to subject any employees of Auric, a trustee,
administrator or other fiduciary of any trusts created under any Benefit Plan
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12
to the tax or penalty on prohibited transactions imposed by Section 4975 of the
Code or the sanctions imposed under Title I of ERISA. None of the Benefit Plans
has been terminated nor have there been any "reportable events" (as defined in
Section 4043 of ERISA and the regulations thereunder) with respect thereto,
except for reportable events with respect to which the 30-day notice period has
been waived. To the best of Auric's knowledge, neither Auric nor any trustee,
administrator or other fiduciary of any Benefit Plan nor any agent of any of the
foregoing has engaged in any transaction or acted or failed to act in a manner
which could reasonably be expected to subject Auric or any Benefit Plan to any
material tax, penalty or other liability under ERISA or any other applicable
law, whether by way of indemnity or otherwise. No Benefit Plan or related trust
has any liability of any nature, accrued or contingent, including, without
limitation, liabilities for federal, state or local taxes, other than for
routine payments to be made in due course to participants, investment managers,
trustees and beneficiaries.
(f) PBGC. None of the Benefit Plans is subject to Title IV of ERISA,
nor is Auric aware of any facts which might give rise to any liability of Auric
under Title IV of ERISA and which could reasonably be anticipated to result in
any claims being made against Auric by the Pension Benefit Guaranty Corporation.
(g) Certain Matters. Except with respect to payments made under the
ESOP or as disclosed in Schedule 3.14, the execution and performance of the
transactions contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Benefit Plan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, vesting or increase in benefits with respect to any
employee, former employee, officer or director of Auric. Except with respect to
payments made under the ESOP or as disclosed in Schedule 3.14, no payment which
will be or may be made by Auric to any employee, former employee, officer or
director or agent thereof will or may be characterized as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code. Except with
respect to payments made under the ESOP or as disclosed in Schedule 3.14, no
payments of any kind will become due in connection with the execution and
performance of the transactions contemplated in this Agreement (either alone or
upon the occurrence of any additional or subsequent events) under any Benefit
Plan.
(h) Post-Retirement Benefits. Except as disclosed in Schedule 3.14, no
Benefit Plan provides benefits, including without limitation, death, disability,
or medical benefits (whether or not insured), with respect to current or former
employees of Auric beyond their retirement or other termination of service other
than (i) coverage mandated by applicable law, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of Auric or (iv) benefits the full cost of which is, and which will
continue to be, borne solely by the current or former employee (or his
beneficiary).
(i) COBRA. Each Benefit Plan that is a "group health plan" (within the
meaning of Section 5000(b)(1) of the Code) maintained by Auric as of the first
day of each group health plan's first plan year beginning on or after July 1,
1986, has been administered in compliance with the continuation coverage
requirements contained in the Consolidated Omnibus Budget Reconciliation Act of
1985 ("COBRA") and as provided under ERISA Sections 601-609 and
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13
under former Section 162(k) and current Section 4980B(f) of the Code and any
regulations promulgated or proposed thereunder.
(j) Multiemployer Plans. At no time has Auric or any ERISA Affiliate
been required to contribute to, or incurred any withdrawal liability (within the
meaning of Section 4201 of ERISA) to any Benefit Plan which is a multiemployer
plan as defined in ERISA Section 3(37) (a "Multiemployer Plan").
(k) ESOP. With respect to the ESOP, neither Auric nor any ERISA
Affiliate has incurred, and neither is reasonably expected to incur, any
liability (i) under ERISA or the Code, (ii) to any participant or beneficiary of
the ESOP, or (iii) to any fiduciary of the ESOP for indemnification or
otherwise, arising out of or pertaining to the ESOP's sale of its shares of
Auric Common Stock to OMG.
3.15 Litigation; Compliance with Laws.
(a) Except as disclosed in Schedule 3.15, there is no judicial or
administrative action, proceeding or, to the best of Auric's knowledge,
investigation pending or, to the best of Auric's knowledge, judicial or
administrative action, proceeding or investigation threatened, that could
reasonably be expected to (i) have a material adverse effect with respect to
Auric or (ii) impair Auric's ability to perform its obligations under this
Agreement. Except as disclosed in Schedule 3.15, Auric is not subject to any
outstanding order, injunction or decree which, if adversely determined insofar
as can be reasonably foreseen by Auric, either individually or in the aggregate,
would have such effect.
(b) Auric is not in violation of any applicable law, regulation,
ordinance or any other applicable requirement of any Governmental Entity or
court, which violations in the aggregate would have a material adverse effect
with respect to Auric. As of the date of this Agreement no written notice has
been received by Auric alleging any such violations, except as set forth on
Schedule 3.15.
3.16 Real Property.
(a) Schedule 3.16(a) sets forth all of the real property used by Auric
and owned in fee by Auric (the fee property being hereinafter referred to as the
"Owned Property" and, together with all other real property used by Auric, the
"Property"). As of the Closing Date, the Property is all of the real property
used by Auric, and is adequate for the uses to which it is being put and
sufficient for the conduct of Auric's business and operations as presently
conducted in all material respects. Auric has made available to OMG copies of
any title insurance policies or surveys in its possession relating to the Owned
Property. Auric has, or as of the Closing will have, good and marketable title
to each parcel of Owned Property free and clear of all liens, security
interests, equities, encumbrances and claims of every kind ("Liens"), other than
Permitted Liens (as hereinafter defined).
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14
(b) Except as disclosed in Schedule 3.16(b), Auric is not a party to
any real property leases. Auric is not in default under the material terms of
any of the real property leases set forth in Schedule 3.16(b).
(c) Auric has not received any notice of violation of any ordinance,
law or regulation of any Governmental Entity resulting from the current uses of,
or the buildings or improvements on, the Property. No proceedings are pending as
of the date hereof or, to the best of Auric's knowledge, threatened for
condemnation of all or any part of the Property.
3.17 Tangible Personal Property. All of the fixtures, machinery and
equipment reflected in the Balance Sheet (the "Tangible Personal Property") are
in existence (except for dispositions made since the date of the Balance Sheet
in the ordinary course of business). Schedule 3.17(a) contains a listing as of
September 30, 1997 of each category of the Tangible Personal Property (other
than items having a value of $5,000 or less). Substantially all of the Tangible
Personal Property is located at the Owned Property. Except as set forth on
Schedule 3.17(b), Auric has good title to, or holds by valid and existing lease,
all of the Tangible Personal Property, free and clear of all Liens, other than
Permitted Liens. The Tangible Personal Property is, to the best of Auric's
knowledge, adequate for the uses to which it is being put and sufficient for the
conduct of Auric's business and operations as presently conducted.
3.18 Proprietary Rights.
(a) Schedule 3.18(a) sets forth a list of all inventions which are the
subject of issued letters patent or an application therefor and all trade and
service marks which have been registered or for which an application for
registration is pending, in each case which are owned and used or held for use
by Auric (each a "Proprietary Right"), specifying as to each, as applicable: (i)
the nature of such Proprietary Right; (ii) the owner of such Proprietary Right;
(iii) the jurisdictions by or in which such Proprietary Right has been issued or
registered or in which an application for such issuance or registration has been
filed, including the respective registration or application numbers, if
available; and (iv) material licenses, sublicenses and other agreements to which
Auric is a party and pursuant to which any person is authorized to use such
Proprietary Right.
(b) Except as set forth on Schedule 3.18(b), (i) Auric is not a
defendant in any claim, suit, action or proceeding which involves a claim of
infringement of any Proprietary Rights, and (ii) to Auric's knowledge, there are
no existing infringements by any other person of any Proprietary Right. Auric
has such rights to use all Proprietary Rights as are necessary to permit Auric
to conduct operations as currently conducted, except where the failure to have
such rights would not have a material adverse effect with respect to Auric. To
Auric's knowledge, the conduct of the business of Auric, as currently conducted,
does not infringe on any proprietary right of any third party. Except as
disclosed on Schedule 3.18(b), to Auric's knowledge, no Proprietary Right is
subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by Auric or restricting the licensing thereof by
Auric to any person. With the exception of those matters disclosed on Schedule
3.18(b), Auric has not entered into any special agreement to indemnify any other
person against any charge of infringement of any patent, trademark, service xxxx
or copyright of Auric.
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15
3.19 Environmental Matters.
(a) Except as set forth in Schedule 3.19:
(i) Auric is in compliance with all applicable Environmental
Laws including, but not limited to, the possession of all permits and other
governmental authorizations required under applicable Environmental Laws, where
the failure to comply with such Environmental Laws would be reasonably likely to
have a Material Adverse Effect on Auric;
(ii) There is no pending or, to the knowledge of Auric,
threatened claim, lawsuit or administrative proceeding against Auric under any
Environmental Law, which would be reasonably likely to have a Material Adverse
Effect on Auric. Auric has not received written notice from any person,
including a Governmental Entity, alleging that Auric is in violation of any
applicable Environmental Law or otherwise may be liable under any applicable
Environmental Law, which violation or liability is unresolved and would be
reasonably likely to have a Material Adverse Effect on Auric; and
(iii) There have been no Releases, spills or discharges of
Hazardous Materials on or underneath any of the Properties that would be
reasonably likely to have a Material Adverse Effect on Auric.
(b) The following terms shall have the indicated meaning:
"Environmental Laws" means all federal, state, local and
foreign laws and regulations relating to pollution or protection of human health
or the environment, including without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials and all laws and
regulations with regard to record keeping, notification, disclosure and
reporting requirements respecting Hazardous Materials.
"Hazardous Materials" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or
defined as such by, or regulated as such under, any Environmental Law.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the indoor or outdoor environment (including, without limitation, ambient
air, surface water, groundwater and surface or subsurface strata) or into or out
of any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, groundwater or property.
"Remediation Standard" means a numerical standard that defines
the concentrations of Hazardous Substances that may be permitted to remain in
any environmental media after an investigation, remediation or containment of a
release of Hazardous Substances.
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3.20 Permits and Licenses. Set forth in Schedule 3.20(i) is a list of
all material permits, licenses, franchises or other authorizations held by
Auric. Except as set forth on Schedule 3.20(ii), Auric has all permits,
licenses, franchises and other authorizations necessary for the conduct of the
business and operations as currently conducted, except those the failure of
which to have would not, individually or in the aggregate have a material
adverse effect with respect to Auric. To Auric's knowledge, all such permits,
licenses, franchises and authorizations are valid and in full force and effect
and Auric is in compliance with the terms and conditions of such permits except
where the failure to so comply would not have a material adverse effect with
respect to Auric.
3.21 Insurance. Set forth in Schedule 3.21 is a list of all insurance
policies pursuant to which Auric is insured as of the date of this Agreement.
3.22 Suppliers and Customers. No supplier or customer which accounted
for more than five percent (5%) of the sales or purchases of Auric since
September 30, 1996 has terminated or, to the best of Auric's knowledge,
threatened to terminate, its relationship with Auric. To the best of Auric's
knowledge as of the date hereof, there will not be any adverse effect on the
relationship of Auric with any of its suppliers or customers solely due to Auric
Stockholders ceasing to beneficially own the capital stock of Auric.
3.23 Experience Matters. Set forth in Schedule 3.23 is a reasonably
detailed description of the history of the experience of Auric during the two
(2) years ending on the date hereof with respect to (i) product liability claims
and product warranty claims exceeding $10,000, and (ii) all workers'
compensation claims. Schedule 3.23 also contains a reasonably detailed
description, as of the date of this Agreement, of all product warranty, product
liability and workers' compensation claims currently pending.
3.24 Brokers' or Finders' Fees. Except for Xxxxxxxx, Xxxxxxx & Company
and Houlihan, Lokey, Xxxxxx & Xxxxx, no agent, broker, investment banker,
financial advisor or other firm or person is entitled to any brokers' fees,
finders' fees, agents' commissions or other similar forms of compensation in
connection with this Agreement or the transactions contemplated hereby.
3.25 Disclosure. Neither this Agreement (including the Exhibits and
Schedules hereto) nor any certificate by Auric under this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OMG AND OMGAC
OMG represents and warrants that the following are true and correct on
the date of this Agreement:
4.1 Organization and Good Standing. Each of OMG and OMGAC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware
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and has full corporate power and authority to enter into this Agreement and
consummate the transactions contemplated hereby.
4.2 Authority; Noncontravention. The execution and delivery of this
Agreement by OMG and OMGAC and the consummation by OMG and OMGAC of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of OMG and OMGAC. This Agreement has been
duly executed and delivered by and constitutes a valid and binding obligation of
each of OMG and OMGAC, enforceable against such party in accordance with its
terms. The execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any breach or
violation of, or default (with or without notice or lapse of time, or both)
under, (a) the certificate of incorporation or bylaws of OMG or OMGAC, (b) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
OMG, OMGAC or any other subsidiary of OMG or their respective properties or
assets or (c) subject to the governmental filings and other matters referred to
in Section 4.3, any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to OMG, OMGAC or any other subsidiary
of OMG or their respective properties or assets, other than, in the case of
clauses (b) and (c), any such conflicts, breaches, violations, defaults, rights,
losses or liens that individually or in the aggregate would not have a material
adverse effect with respect to OMG or would not prevent, hinder or materially
delay the ability of OMG to consummate the transactions contemplated by this
Agreement.
4.3 Consents and Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notice to, any
Governmental Entity is required by or with respect to OMG, OMGAC or any other
subsidiary of OMG in connection with the execution and delivery of this
Agreement by OMG or OMGAC or the consummation by OMG or OMGAC, as the case may
be, of any of the transactions contemplated by this Agreement, except for (a)
the filing of a premerger notification and report form under the HSR Act and (b)
the filing of the Certificate of Merger with the Secretary.
4.4 Sufficient Funds. OMG has sufficient funds available (through
existing credit arrangements or otherwise) to provide the Merger Consideration
for all of the outstanding shares of Auric Common Stock and to pay all of its
fees and expenses related to the transactions contemplated by this Agreement.
4.5 Brokers' or Finders' Fees. Except for the engagement of Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation ("DLJ"), OMG has not dealt with any
broker or finder or incurred any liability for brokers' fees, finders' fees,
agents' commissions or other similar forms of compensation in connection with
this Agreement or the transactions contemplated hereby. OMG shall be solely
responsible for any fees and expenses owing DLJ.
4.6 OMGAC's Operations. OMGAC was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby.
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4.7 Investigation by OMG. OMG has conducted its own independent review
and analysis of the business, operations, assets, liabilities, results of
operations, financial condition, technology and prospects of Auric and any
subsidiary of Auric and acknowledges that OMG has been provided access to the
personnel, properties, premises and records of Auric and any subsidiary of Auric
for such purpose and, in entering into this Agreement, OMG has relied solely
upon its own investigation and analysis and the representations and warranties
contained herein.
ARTICLE V
FURTHER AGREEMENTS OF THE PARTIES
5.1 Access to Information. Upon reasonable notice, Auric shall give to
OMG and its counsel, accountants and other representatives reasonable access,
during normal business hours throughout the period prior to the Closing, to the
property, books, commitments, agreements, records, files and personnel of Auric,
and Auric shall furnish to OMG during that period all copies of documents and
information concerning the business, properties, financial condition, operations
and personnel of Auric as OMG may reasonably request subject to applicable law.
OMG shall hold, and shall cause its counsel, accountants and other agents and
representatives to hold, all such information and documents in accordance with,
and subject to the terms of, the confidentiality agreement previously executed
by OMG with respect to this transaction.
5.2 Conduct of the Business Pending the Closing. Until the Closing or
the termination of this Agreement, except as otherwise set forth in Schedule 5.2
or contemplated by this Agreement, Auric shall comply with the provisions set
forth below:
(a) Auric shall operate the business in the ordinary course;
(b) Auric shall not grant any general increase in the rates of salaries
or compensation of its employees or any specific increase to any employee except
such as are in accordance with regularly scheduled periodic increases;
(c) Except as provided for under the existing Benefit Plans, Auric
shall not (i) grant or agree to grant any bonuses to any employee, or (ii)
provide for any new pension, retirement or other employment benefits to any of
its employees or any increase in any existing benefits;
(d) Auric shall not amend its Certificate of Incorporation or Bylaws or
enter into any merger or consolidation agreement;
(e) Auric shall use commercially reasonable efforts to maintain and
preserve in all material respects its business, and to maintain its existing
relationships with customers, suppliers, employees and other business
associates;
(f) Other than in the ordinary course of business, Auric shall not
sell, assign, voluntarily encumber, grant a security interest in or license with
respect to, or dispose of, any of its material assets or properties tangible or
intangible in excess of $100,000, or incur any material liabilities;
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(g) Auric shall maintain in full force and effect all insurance
currently maintained by Auric; and
(h) No Benefit Plan, nor any trust established thereunder, shall be
amended or terminated by formal action of Auric after the date copies thereof
are disclosed, and no Benefit Plan or trust relating thereto shall be amended or
terminated by formal action of Auric prior to the Effective Date, except as an
amendment may be necessary to effect the transactions contemplated by this
Agreement so long as any such amendment does not adversely affect Auric's
interests in the Benefit Plan being amended, or as may be adopted as a condition
to the issuance of a favorable determination letter by the IRS, or as otherwise
may be required to comply with the requirements of ERISA and the Code.
5.3 No Solicitation.
(a) Auric and any subsidiary of Auric will not, and will use their best
efforts to cause their officers, directors, employees and investment bankers,
attorneys or other agents retained by or acting on behalf of Auric or any
subsidiary of Auric not to, (i) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal that constitutes or is
reasonably likely to lead to any Acquisition Proposal (as defined herein), (ii)
except as permitted below, engage in negotiations or discussions with, or
furnish any information or data to any third party relating to an Acquisition
Proposal, or (iii) except as permitted below, enter into any agreement with
respect to any Acquisition Proposal or approve any Acquisition Proposal.
Notwithstanding anything to the contrary contained in this Section 5.3 or in any
other provision of this Agreement, Auric and its Board of Directors (i) may
participate in discussions or negotiations (including, as a part thereof, making
any counterproposal) with or furnish information to any third party making an
unsolicited Acquisition Proposal (a "Potential Acquiror") or approve an
unsolicited Acquisition Proposal if Auric's Board of Directors is advised by its
financial advisor that such Potential Acquiror has the financial wherewithal to
be reasonably capable of consummating such an Acquisition Proposal, and Auric's
Board of Directors determines in good faith, based upon written advice of its
outside legal counsel, that the failure to participate in such discussions or
negotiations or to furnish such information or approve an Acquisition Proposal
would violate the Board's fiduciary duties under applicable law, and (ii) shall
be permitted to (X) take and disclose to the Auric Stockholders a position with
respect to any tender or exchange offer by a third party, or amend or withdraw
such position or (Y) make disclosure to the Auric Stockholders, in the case of
clause (X) or clause (Y) if Auric's Board of Directors determines in good faith,
based upon advice of its outside legal counsel, that the failure to take such
action would violate such Board's fiduciary duties under, or otherwise violate,
applicable law. Auric agrees that any non-public information furnished to a
Potential Acquiror will be pursuant to a confidentiality agreement substantially
similar to the confidentiality provisions of the confidentiality agreement
entered into between Auric and OMG. In the event that Auric shall determine to
provide any information as described above, or shall receive any Acquisition
Proposal, it shall promptly inform OMG in writing as to the fact that
information is to be provided and shall furnish to OMG the identity of the
recipient of such information and the Potential Acquiror and the terms of such
Acquisition Proposal, except to the extent that Auric's Board of Directors
determines in good faith, based upon written advice of its outside legal
counsel, that any such action described in this sentence would violate such
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Board's fiduciary duties under, or otherwise violate, applicable law. Auric will
keep OMG reasonably informed of the status (including amendments or proposed
amendments) of any such Acquisition Proposal except to the extent that Auric's
Board of Directors determines in good faith, based upon advice of its outside
legal counsel, that any such action would violate such Board's fiduciary duties
under, or otherwise violate, applicable law.
(b) Auric's Board of Directors shall not (i) withdraw or modify or
propose to withdraw or modify, in any manner adverse to OMG, the approval or
recommendation of such Board of this Agreement or the Merger or (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal unless
such Board determines in good faith, based upon written advice of its outside
legal counsel, that the failure to take such action would violate such Board's
fiduciary duties under applicable law.
(c) For purposes of this Agreement, "Acquisition Proposal" shall mean
any bona fide proposal, whether in writing or otherwise, made by a third party
to acquire beneficial ownership (as defined under Rule 13(d) of the Securities
Exchange Act of 1934, as amended) of all or a material portion of the assets of,
or any material equity interest in, Auric or any subsidiary of Auric pursuant to
a merger, consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender offer or exchange offer or similar transaction
involving Auric or any subsidiary of Auric including, without limitation, any
single or multi-step transaction or series of related transactions which is
structured to permit such third party to acquire beneficial ownership of any
material portion of the assets of, or any material portion of the equity
interest in, Auric or any subsidiary of Auric (other than the transactions
contemplated by this Agreement).
5.4 Approval of Auric Stockholders. As soon as reasonably practicable,
Auric shall:
(a) take all steps necessary duly to call, give notice of, convene and
hold a special meeting of Auric Stockholders (the "Auric Special Meeting") (i)
for the purpose of adopting this Agreement (the "Auric Stockholders' Approval")
and (ii) for such other purposes as may be necessary or desirable;
(b) distribute to Auric Stockholders a proxy statement or other
document required in accordance with applicable federal and state law and with
its Certificate of Incorporation and Bylaws to obtain approval of this Agreement
and the Merger;
(c) recommend, through its Board of Directors, to the Auric
Stockholders the adoption of this Agreement and such other matters as may be
submitted to such stockholders in connection with this Agreement; provided that
Auric may withdraw or modify or propose to withdraw or modify, in a manner
adverse to OMG, such approval or recommendation of its Board of Directors in
accordance with Section 5.3 herein; and
(d) cooperate and consult with OMG with respect to each of the
foregoing matters.
5.5 Employment of Employees Following Closing. On the Closing Date, OMG
agrees that the Surviving Corporation will continue to employ the employees of
Auric.
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5.6 ESOP Participants. Auric and the trustees of the ESOP (the
"Trustee") shall take all actions necessary in accordance with applicable law
and the terms of the ESOP to provide the Participants (as such term is defined
in the ESOP) of the ESOP with information regarding the Merger and the
transactions contemplated hereby at least seven days prior to the date of the
Auric Special Meeting for the Auric Stockholders' Approval. Representatives of
OMG shall be entitled to review and comment on any materials to be provided to
the Participants, and shall be entitled to provide information to the
Participants regarding the Merger.
5.7 Environmental Matters. (a) At OMG's sole cost and expense, OMG may,
on or before the date 20 days after the date hereof, perform or have performed
an environmental assessment of the Property at a time mutually convenient to
Auric and OMG; and
(b) After the Closing, OMG shall be solely responsible and liable for
the Property's compliance with all Environmental Laws; subject only, however, to
the obligations of Auric expressly set forth in Section 9.2(a)(ii).
5.8 Real Property. At or prior to the Closing, Auric shall enter into a
purchase agreement, substantially in the form of Exhibit C hereto, providing for
the purchase by Auric of the Real Property presently leased to Auric by Xx.
Xxxxxxx Xxxx.
5.9 Regulatory Approvals. The parties hereto shall use their best
efforts to file as soon as practicable all notifications, filings and other
documents required to obtain all governmental authorizations, approvals,
consents or waivers, including, without limitation, under the HSR Act, and to
respond as soon as practicable to any inquiries received from the Federal Trade
Commission, the Antitrust Division of the Department of Justice, and any other
Governmental Entity for additional information or documentation and to respond
as promptly as practicable to all inquiries and requests received from any
Governmental Entity in connection therewith. The parties hereto will not take
any action that will have the effect of delaying, impairing or impeding the
receipt of any required approvals and will use their best efforts to secure such
approvals as promptly as possible.
5.10 Other Action. Subject to the terms and conditions of this
Agreement, each of the parties shall use its best efforts to cause the
fulfillment at the earliest practicable date but, in any event, prior to the
Closing Date, of all of the conditions to their respective obligations to
consummate the transactions under this Agreement.
5.11 Notices. Each party shall promptly notify the other party in
writing of, and furnish to such party any information that such party may
reasonably request with respect to, (a) the occurrence or nonoccurrence of any
event or the existence of any state of facts that would likely, or with the
lapse of time would likely, cause (i) any representation or warranty contained
herein to be untrue or inaccurate or (ii) any covenant, condition or agreement
contained herein not to be complied with or satisfied and (b) any failure of
Auric or OMG, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.11 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
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5.12 Publicity. OMG and Auric shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release concerning the transactions contemplated by this Agreement and
will not issue a press release prior to such consultation.
5.13 Supplement to Disclosures. For purposes of determining the
accuracy of the representations and warranties of Auric contained in Article III
and the fulfillment of the conditions precedent set forth in Section 6.1, the
Schedules delivered by Auric shall be deemed to include only that information
contained therein on the date of this Agreement and as the same may be amended
or supplemented by Auric, which Auric shall have the right to do at any time
prior to the Closing Date; provided, however, that any amendment or supplement
shall not be deemed to cure a breach of a representation or warranty of Auric
unless permitted by OMG and, in the event that OMG closes the transactions
contemplated by this Agreement, OMG shall have no right to assert a breach of a
representation or warranty with respect to such amended or supplemented
representation or warranty.
5.14 Preservation of Records. OMG agrees, at its own expense, to (a)
preserve and keep the records of Auric for a period of seven (7) years from the
Closing, or for any longer periods as may be required by any government agency
or ongoing litigation, and (b) make such records available to the other as may
be reasonably required by the other. In the event either party wishes to destroy
such records after the time specified above, it shall first give sixty (60)
days' prior written notice to the other and the other shall have the right at
its option and expense, upon prior written notice given to the other within that
sixty (60) day period, to take possession of the records.
5.15 Stockholders' Representative. OMG and Auric agree that from and
after the Closing (i) all communications, notices and deliveries by OMG to the
Stockholders' Representative with respect to any and all matters pertaining to
this Agreement and the Escrow Agreement shall be deemed to be sufficient
communications with, notices or deliveries to Auric, and OMG shall not be
required to communicate with, give notices or make any deliveries to, Auric if
it has communicated with, given notices or made delivery to, the Stockholders'
Representative and (ii) OMG, its officers, directors, agents, counsel and
assigns shall be fully protected in relying upon any communications, notices or
deliveries to them by the Stockholders' Representative on behalf of Auric and
the Auric Stockholders, and shall be entitled to rely upon any act or acts
performed, or undertaken or omitted to be taken by Stockholders' Representative
on behalf of Auric and the Auric Stockholders.
5.16 Stock Options and Purchase Obligations. OMG agrees that
immediately prior to the Closing, Auric may loan to the two employees of Auric,
who hold options to purchase or who have rights to purchase, an aggregate of
20,000 and 24,800 shares of Auric Common Stock, respectively, the amount of
$920,000 and $1,140,800, respectively, to exercise their rights to purchase such
shares. Auric agrees that such loans will be evidenced by promissory notes with
a maturity date of no later than seven (7) days after the Closing Date and that
the Exchange Agent may be instructed by OMG to withhold the amount of such loans
from any payments of Merger Consideration to be paid to such persons for their
Auric Common Stock received upon exercise.
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5.17 ISRA Compliance.
(a) As a condition precedent to consummating the Merger that is the
subject of this Agreement, Auric shall (i) at its sole expense, obtain from the
New Jersey Department of Environmental Protection ("NJDEP") and execute a
Remediation Agreement ("RA") pursuant to sections 13:1K-11.5 and 13:1K-9(e) of
the Industrial Site Recovery Act; NJSA 13:1K-6 et seq. ("ISRA"), the regulations
promulgated thereunder and any amending or successor legislation and
regulations, (ii) identify the Surviving Corporation as the "responsible person"
under the RA and, as such, shall conduct any remediation or other activity
required by NJDEP in connection with the Newark facility and its ISRA
obligations triggered by this Merger transaction, and (iii) obtain and post or
execute prior to the Closing Date, at the lowest cost reasonably possible, and
thereafter maintain in full force and effect, any remediation trust fund,
environmental insurance policy, line of credit, self-guarantee or other
remediation funding source required by the NJDEP, or pursuant to ISRA, until
such remediation funding source is released by the NJDEP. The Surviving
Corporation shall pay any and all remediation funding source surcharges. Within
thirty (30) days of receiving notice that any such remediation funding source is
not satisfactory to the NJDEP (or within such shorter time as may be specified
by the NJDEP or as may be necessary to avoid the imposition of a penalty), the
Surviving Corporation shall take all actions necessary to cure or correct any
deficiency.
(b) Subsequent to the consummation of the Merger, the Surviving
Corporation, as the "responsible person" under the RA, shall conduct any
remediation or other activity required by NJDEP in connection with its ISRA
obligations triggered by this Merger transaction.
(c) All costs associated with Auric's post-closing ISRA obligations
including, but not limited to, counsel fees, investigative costs, monitoring
costs, laboratory costs, consultants' fees, any New Jersey Pollutant Discharge
Elimination System permit or Memorandum of Agreement requirements, any remedial,
removal, or restoration work required or performed by federal, state or local
government agencies or a political subdivision thereof, or performed by any
non-governmental entity or person because of the presence, suspected presence,
release or suspected release of a hazardous substance in soil, surface water or
ground water at the Newark facility, shall be subject to the environmental cost
sharing agreement established under Section 9.2 of this Agreement.
(d) If for any reason the Closing does not occur, OMG shall have no
obligations to NJDEP, and Auric will take all actions that are necessary to
terminate any obligation of OMG to any Governmental Authority under this
Agreement, provided that any such actions will not affect any remedies that
might otherwise be available to the parties.
5.18 ESOP Matters.
(a) Auric may, in its sole discretion, amend the ESOP prior to the
Closing Date, provided that such amendment shall not result in failure of the
ESOP to qualify under Section 401(a) of the Internal Revenue Code of 1986. Auric
shall furnish OMG with copies of such amendments.
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(b) Auric shall, prior to the Closing Date, terminate the ESOP
effective as of the Closing Date. The effect of termination shall be vesting of
all participant accounts as of the Closing Date and distribution of participant
ESOP account balances as soon as practicable following the Closing Date.
(c) The Surviving Corporation shall not amend the ESOP after the
Closing Date except with respect to remedial amendments required by the Internal
Revenue Service as a condition for determination by the Internal Revenue Service
that the ESOP has at all times been a qualified plan under Section 401(a) of the
Internal Revenue Code.
(d) The Surviving Corporation shall, promptly after the Closing Date,
apply to the Internal Revenue Service for a determination that the ESOP is a
qualified plan under Section 401(a) of the Internal Revenue Code as of
termination of the ESOP. The Surviving Corporation shall make any remedial
amendments required by the Internal Revenue Service as a condition of such
determination.
(e) The Surviving Corporation shall, within sixty (60) days after the
receipt of a favorable determination letter from the Internal Revenue Service,
cause the ESOP to distribute participant ESOP account balances to ESOP
participants and beneficiaries or the trustee of an Eligible Retirement Account
designated by such ESOP participants or beneficiaries.
(f) The Surviving Corporation shall, within sixty (60) days following
receipt by the ESOP of any Merger Consideration in accordance with the terms of
the Escrow Agreement, cause the ESOP to allocate such Merger Consideration to
participant ESOP account balances in proportion to such balances as of the
Closing Date and distribute such participant ESOP account balances to ESOP
participants and beneficiaries or the trustee of an Individual Retirement
Account designated by such ESOP participants or beneficiaries.
5.19 Indemnification and Insurance. OMG agrees that all rights to
indemnification for acts or omissions occurring prior to the Effective Time of
the Merger now existing in favor of the current directors or officers of Auric
and its subsidiaries (collectively, the "Indemnified Parties") as provided in
their respective charters or by-laws or, with respect to Auric, by the General
Corporation Law of the State of Delaware shall survive the Merger and shall
continue in full force and effect for a period of not less than six (6) years
from the Closing Date to the fullest extent permitted thereby. For a period of
six (6) years from and after the Closing Date, OMG shall use reasonable efforts
to obtain and maintain standard director's and officer's insurance for the
directors and executive officers of Auric or to obtain "tail insurance" for such
directors and officers in an amount of no less than $2,000,000. Nothing in the
foregoing shall obligate OMG with respect to indemnification for acts or
omissions occurring after the Effective Time.
5.20 Notwithstanding anything to the contrary herein, Auric and OMG
agree that OMG shall not be entitled to indemnification from Auric for: (i) any
increase in the cost of cleanup or correcting a noncompliance with law subject
to indemnity by Auric due to an act or omission after the Closing Date by a
person other than Auric; (ii) any capital improvements and repairs and
modifications to capital improvements associated with the property or the
facilities of the
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Surviving Corporation; (iii) except for any indemnity obligations under Section
9.2, matters arising out of agreements or consent orders with any Governmental
Entity entered into by Auric prior to the Closing Date; and (iv) any costs that
are incurred by Auric in performing its indemnity obligations under Section 9.2
due to any change with respect to the Property or the Surviving Corporation
resulting or arising from the closure or sale of a facility or business, the
construction of new structures or equipment, a modification to existing
structures or equipment, excavation or movement of soil not required by
Environmental Law, or a change in use of the facilities from manufacturing to
any other use.
ARTICLE VI
CONDITIONS OF CLOSING
6.1 Conditions Precedent to Obligations of OMG and OMGAC. The
obligations of OMG and OMGAC to effect the Merger shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by OMG):
(a) All representations and warranties of Auric contained in this
Agreement shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date with the same effect as
though made on and as of the Closing Date;
(b) Auric shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be performed or
complied with by Auric at or prior to the Closing Date;
(c) OMG shall have been furnished with the documents referred to in
Section 7.1;
(d) There shall have been no material adverse change with respect to
Auric, except for changes generally affecting the industry in which Auric is a
member;
(e) The holders of no more than five percent (5%) of the outstanding
shares of Auric Common Stock entitled to vote on the Merger shall, at the
Effective Time, have perfected their dissenters' rights under Delaware law;
(f) Before Closing, OMG shall receive at Auric's expense a survey of
the Owned Property prepared after the date hereof by a registered land surveyor,
which survey will not show any encroachment of improvements on or from the
property or other matters that would have a material adverse effect on the use
of such property;
(g) Before Closing, OMG shall receive, at Auric's expense, the title
commitments relating to Auric's title to the Property from a title company
reasonably satisfactory to OMG; and
(h) The Trustee shall have complied with all provisions of the
governing documents of the ESOP and applicable law necessary for the
consummation of the transactions contemplated hereby.
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6.2 Conditions Precedent to Obligations of Auric. The obligation of
Auric to effect the Merger shall be subject to the satisfaction on or prior to
the Closing Date of each of the following conditions (any or all of which may be
waived by Auric):
(a) All representations and warranties of OMG and OMGAC contained in
this Agreement shall be true and correct in all material respects with the same
effect as though made on and as of the Closing Date;
(b) Each of OMG and OMGAC shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by OMG or OMGAC, as the case may be, at or
prior to the Closing Date; and
(c) Auric shall have been furnished with the documents referred to in
Section 7.2.
(d) Auric shall have received an opinion of Berenson & Xxxxxxx &
Company to the effect that the Merger Consideration to be received in the Merger
by the Auric Stockholders, other than the ESOP, officers and directors of Auric
or controlling stockholders of Auric, is fair to such holders from a financial
point of view.
6.3 Conditions Precedent to the Conditions of Both Parties. The
respective obligations of each party to effect the Merger shall be further
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) The Trustee shall have received an opinion of Houlihan, Lokey,
Xxxxxx & Zukin, dated as of the Closing Date, to the effect that, as of such
date the amount paid by OMG for the shares of Auric Common Stock owned by the
ESOP, is not less than the value of such shares and the transactions
contemplated hereby are fair to the ESOP from a financial point of view (the
"ESOP Fairness Opinion"), and the Trustee shall have made the determination, as
required by applicable law, that the Merger is prudent and in the best interest
of the ESOP Participants and their beneficiaries.
(b) Any waiting period applicable to the Merger under the HSR Act shall
have expired or been terminated;
(c) OMG and Auric shall have received evidence, in form and substance
reasonably satisfactory to each of them, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Entities
and other third parties as are necessary in connection with the transactions
contemplated hereby have been obtained, except such licenses, permits, consents,
approvals, authorizations, qualifications and orders which are not, individually
or in the aggregate, material to OMG or Auric or the failure of which to have
been received would not (as compared to the situation in which such license,
permit, consent, approval, authorization, qualification or order had been
obtained) materially dilute the aggregate benefit to OMG of the Merger;
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(d) This Agreement shall have been approved and adopted by the
affirmative vote of a majority of the votes that the Auric Stockholders are
entitled to cast at the Auric Special Meeting; and
(e) No statute, rule, regulation, order, decree or injunction shall
have been enacted, promulgated or issued by any Governmental Entity or court
which prohibits the consummation of the Merger.
ARTICLE VII
DOCUMENTS TO BE DELIVERED AT THE CLOSING
7.1 Documents to be Delivered by Auric. At the Closing, Auric shall
deliver, or cause to be delivered, to OMG the following:
(a) a copy of resolutions of the board of directors of Auric
authorizing the execution, delivery and performance of this Agreement by Auric
and a certificate of the secretary or assistant secretary of Auric, dated the
Closing Date, that such resolutions were duly adopted and are in full force and
effect;
(b) a certificate, dated the Closing Date, executed by the chief
executive officer or the chief financial officer of Auric certifying to the
fulfillment of the conditions specified in Sections 6.1;
(c) a favorable opinion of Auric's counsel, subject to customary
qualifications and limitations, as to the matters set forth on Annex A hereto;
and
(d) a Noncompetition Agreement substantially in the form of Exhibit D
hereto executed by Xxxxxxx Xxxx.
7.2 Documents to be Delivered by OMG. At the Closing, OMG shall deliver
to Auric the following:
(a) payment and evidence of the wire transfer referred to in Section
2.2(a);
(b) a copy of the resolutions of the board of directors of OMG
authorizing the execution, delivery and performance of this Agreement by OMG,
and a certificate of its secretary or assistant secretary, dated the Closing
Date, that such resolutions were duly adopted and are in full force and effect;
(c) a certificate, dated the Closing Date, executed by the chief
executive officer or the chief financial officer of OMG certifying to the
fulfillment of the conditions specified in Section 6.2; and
(d) a favorable opinion of OMG's counsel, subject to customary
qualifications and limitations, as to the matters set forth on Annex B hereto.
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ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time of the Merger, whether before or after approval
of the Merger by the Auric Stockholders:
(a) by mutual written agreement executed by Auric and OMG;
(b) by OMG, if any of the conditions specified in Section 6.1 shall not
have been satisfied or waived in writing by OMG on or before March 31, 1998;
(c) by Auric, if any of the conditions specified in Section 6.2 shall
not have been satisfied or waived in writing by Auric on or before March 31,
1998;
(d) by either party, if any of the conditions specified in Section 6.3
shall not have been satisfied on or before March 31, 1998;
(e) by Auric or OMG if the Closing shall not have occurred by March 31,
1998; or
(f) by Auric, if Auric exercises its right pursuant to Section 5.3(b).
8.2 Effect of Termination. In the event of termination of this
Agreement by either Auric or OMG as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of OMG, OMGAC or Auric, other than pursuant to the
provisions of this Section, Section 5.12 and Section 10.1. Nothing contained in
this Section 8.2 shall relieve any party from liability for any willful breach
of the representations, warranties, covenants or agreements set forth in this
Agreement.
8.3 Amendment. This Agreement may be amended by the parties at any time
before or after the Auric Stockholders' Approval; provided, however, that after
such approval, there shall be made no amendment that by law requires further
approval of the Auric Stockholders without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 Survival and Remedies. Notwithstanding any investigations made by
OMG or Auric, the representations, warranties and covenants of Auric and OMG set
forth in this Agreement shall survive the Closing until the first anniversary of
the Closing Date, except that the environmental indemnity provided for in
Section 9.2(a)(iii) and (v) which shall survive until the third anniversary of
the Closing Date. Each party to this Agreement shall have as the sole and
exclusive remedy a claim for indemnity under this Article IX and shall be
precluded from asserting against another party any other rights resulting from
the breach of any representation, warranty or covenant made by the other party
to this Agreement.
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9.2 Auric's Indemnification.
(a) Subject to the terms, conditions and limitations set forth in this
Section 9.2, Auric agrees to indemnify and hold OMG harmless from and after the
date of this Agreement against and in respect of any losses, liabilities,
damages, deficiencies, attorney's fees or related expenses not reimbursed to OMG
by other third parties (collectively, the "Losses"), resulting from:
(i) claims relating to any misrepresentation or breach of a
representation or warranty made by Auric or nonfulfillment of any covenant on
the part of Auric under this Agreement;
(ii) claims relating to any products sold by Auric prior to
the Closing Date, including but not limited to claims based on tort liability,
product liability, warranty, negligence or strict liability in excess of the
amount reserved therefor on the Balance Sheet or the books of Auric as of the
Closing Date but only to the extent such reserves were calculated in accordance
with GAAP and consistent with past practice;
(iii) claims relating to waste material shipped or sold by
Auric prior to the Closing Date;
(iv) claims for Taxes due from Auric with respect to the
conduct of the business and operations of Auric prior to the Closing Date in
excess of the amount reserved therefor on the Balance Sheet or the books of
Auric as of the Closing Date but only to the extent such reserves were
calculated in accordance with GAAP and consistent with past practice;
(v) (1) claims resulting from cleanup of Hazardous Materials
Released, disposed of or discharged on or prior to the Closing Date on or
beneath the Property owned or operated by Auric on or prior to the Closing Date;
(2) all liabilities arising from the failure of Auric prior to the Closing Date
to be in compliance with any Environmental Laws in effect as of and enforceable
as of the Closing Date; and (3) all requirements imposed by ISRA under Section
5.17 hereof.
(b) Notwithstanding the foregoing, Auric shall not be obligated to
indemnify OMG for any Losses with respect to any claims pursuant to Section
9.2(a)(i), (ii) and (iv) unless and until the amount of all such Losses shall
exceed $250,000 in the aggregate, and then only to the extent of such excess.
OMG shall have no right to make any claim with respect to Section 9.2(a)(i),
(ii) and (iv) unless written notice thereof is given to Auric within one year
from the Closing Date. Such notice shall state the basis of the claim, including
the Section or Sections of this Agreement alleged to have been breached and, to
the extent feasible, the amount or estimated amount of the claim.
(c) Notwithstanding all other provisions hereof, Auric shall be
obligated to indemnify OMG with respect to Losses pursuant to Section
9.2(a)(iii) and (v) which exceed $150,000 per year and then only to the extent
of one-half (50%) of the amount of such excess up to the extent of the Escrow
Funds then held by the Escrow Agent; provided, however, that Auric will be
obligated for Losses only to the extent that:
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(i) cleanup of the Hazardous Materials is required by a
Governmental Entity under an applicable Environmental Law that is in effect as
of and is enforceable as of the Closing Date or is required by an applicable
Environmental Law that is in effect as of and is enforceable as of the Closing
Date;
(ii) the Remediation Standards that must be met in order to
satisfy the requirements of the applicable Environmental Law or Governmental
Entity are the least stringent Remediation Standards that would be applicable
given the use of the property as of the day before the Closing Date;
(iii) such cleanup is for substances that were designated as
Hazardous Materials and would have been subject to cleanup under an applicable
Environmental Law had such cleanup been initiated on or before the Closing Date;
and
(iv) such cleanup is conducted using the most cost effective
methods for investigation, remediation and/or containment consistent with
applicable Environmental Law or the requirements of a Governmental Entity.
To the extent that the Losses incurred in connection with a cleanup
covered by Section 9.2(a)(iii) and (v) are in excess of the Losses that would be
incurred for a cleanup meeting the conditions set forth in this subsection,
Auric shall have no obligation to indemnify OMG for such excess Losses.
Indemnification for Losses shall be available under Section 9.2(a)(iii)
and (v) only with respect to those specific claims for which OMG has provided
written notice to Auric by the third (3) anniversary of the Closing Date. Such
notice must include, based on reasonably available evidence, the following: (i)
location; (ii) the extent of contamination and the impacted media, if known;
(iii) a copy of any notices filed with or received from any Governmental Entity
or other person, or, if no such notice has been filed or received, the basis
upon which the claimant seeks indemnification; and (iv) whether the cleanup was
or will be consistent with the conditions set forth in this Section 9.2(c). If,
before the third anniversary of the Closing, any claim shall have been made in
accordance with Section 9.2(a)(iii) and (v), such claim shall remain a basis for
indemnity until such claim is finally resolved or disposed of, even if beyond
the third anniversary of Closing.
(d) The Escrow Funds held pursuant to the Escrow Agreement shall be the
sole and exclusive source for payment indemnification by Auric of OMG under this
Agreement and shall provide that OMG's claims for indemnification hereunder may
be offset against the amounts then remaining to be paid to the Auric
Stockholders under the Escrow Agreement.
(e) OMG shall promptly notify Auric and the Stockholders'
Representative in writing (with copy to the designated counsel, if any) of the
amount and nature of any claim for indemnification under this Agreement. In the
event of the assertion against OMG by any third party of any liability or claim
with respect to which OMG is entitled to indemnification hereunder, each of
Auric and the Stockholders' Representative shall have the right to compromise or
defend with monies from Escrow Funds as provided therein any such asserted
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liability (and OMG shall cooperate with respect to any such compromise or
defense); provided, however, that Auric shall indemnify OMG against any Loss
resulting from Auric's failure to pay any such liability up to the remaining
amount in the Escrow Fund as may finally be determined. Upon payment of
indemnification, OMG will assign to Auric all of its rights against any
applicable account debtor or other responsible party to the extent of the
indemnification payment and shall thereafter, at the request of Auric, provide
such reasonable assistance as is requested by Auric in connection with the
collection of such assigned third-party claim which, if collected, shall be paid
into the Escrow Fund.
(f) If any claim arising under Section 9.2(a)(iii) and (v) concerns a
Hazardous Substance or Condition involving contamination that occurred both
before and after the Closing Date, a court or other entity or individual having
jurisdiction over such claim shall allocate the cost of the remediation between
OMG and Auric in proportion to each party's contribution to the contamination to
the extent such contribution can be determined and otherwise in proportion to
the period of time each party has owned or had an interest in the Property.
9.3 OMG's Indemnification.
(a) OMG hereby agrees to indemnify and hold Auric and the Auric
Stockholders harmless at all times from and after the Closing Date against and
in respect of any Losses resulting from any misrepresentation or breach of a
representation, warranty made by OMG or non-fulfillment of any covenant on the
part of OMG under this Agreement.
Auric and the Stockholders' Representative shall have no right to make
any claim with respect to Section 9.3(a) unless within one year from the Closing
Date, written notice thereof is given to OMG. Such notice shall state the basis
of the claim, including the Section or Sections of this Agreement alleged to
have been breached and, to the extent feasible, the amount or estimated amount
of the claim.
(b) Auric or the Stockholders' Representative shall promptly notify OMG
in writing of the amount and nature of any claim for indemnification under this
Agreement. In the event of the assertion against Auric by any third party of any
liability or claim with respect to which Auric is entitled to indemnification
hereunder, OMG and its legal representatives shall have the right to compromise
or defend any such asserted liability; provided, however, that OMG shall
indemnify Auric against any loss resulting from OMG's failure to pay any such
liability as may finally be determined by payment of such amount into the Escrow
Fund.
ARTICLE X
MISCELLANEOUS
10.1 Costs and Expenses. Each party hereto shall bear its own costs and
expenses, including attorneys' fees, in connection with this Agreement and the
transactions contemplated hereby except as specifically provided in this
Agreement or the Escrow Agreement.
10.2 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed to be properly given when delivered personally,
telecopied (which is confirmed) or
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sent by certified or registered mail, postage prepaid, properly addressed to the
parties entitled to such notice at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to OMG or OMGAC, to:
OM Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: General Counsel
with a copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
(b) If to Auric, to:
Auric Corporation
000 Xxxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxx, Xx.
Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
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33
10.3 Definitions. For purposes of this Agreement:
(a) "material adverse change" or "material adverse effect" means, when
used in connection with Auric or OMG, any change or effect that either
individually or in the aggregate with all other such changes or effects is
materially adverse to the business, assets, properties, condition (financial or
otherwise) or results of operations of such party and its subsidiaries taken as
a whole; provided, however, that a decline in general economic conditions
affecting Auric or OMG shall not be deemed to be a "material adverse change" or
to have a "material adverse effect" with respect to either such party or its
subsidiaries;
(b) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(c) "Permitted Liens" shall mean (i) liens for current taxes, general
assessments and other governmental charges not yet due and payable; (ii) (1)
those matters affecting title disclosed in the title reports, title policies and
surveys as to the Property delivered by Auric to OMG as of the date of this
Agreement; (2) easements, including utility easements, and (3) changes in facts
affecting the Property since the last survey of or title report for such
Property which, in each case referred to in clauses 1-3, do not and will not,
individually or in the aggregate, materially interfere with the use of the
property or assets subject thereto or affected thereby as presently used,
otherwise materially detract from the value of the property or assets encumbered
thereby; (iii) present mechanics', carriers', workmen's, repairmen's and similar
liens not to exceed in the aggregate $10,000; (iv) liens reflected or reserved
against on the Balance Sheet; and (v) any purchase money security interest;
(d) "Stockholders' Representative" shall mean Xxxxxxx Xxxx or, if he is
unable or unwilling to act Xxxx Xxxxxxx, or if he is unwilling or unable to act
Xxxxxx Xxxxxx, Xx., who shall act on behalf of Auric and the Auric Stockholders
as provided herein and in the Escrow Agreement.
(e) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interest of which is owned directly or indirectly by such first
person); and
(f) "knowledge" means the actual knowledge of the officers of Auric,
Xxxxxxxxx Xxxx, the Managing Director of Fidelity Chemical Products (Malaysia)
Sdn. Bhd. and Xxxxx Xxxxxxx and Xxxxxxx Xxxx of Auric.
10.4 Schedules and Exhibits. The Schedules and Exhibits attached to
this Agreement are made a part of this Agreement.
10.5 Representations as to Compliance with Law. Whenever a
representation or warranty is made herein with respect to compliance with any
law, that representation means the applicable subject matter is in compliance
with applicable statutes, regulations, case law and
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34
ordinances as in existence on the date hereof and on the Closing Date and does
not extend to any amendments, interpretations or revisions of such laws adopted
subsequent to such dates.
10.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. No party shall assign any of its rights or obligations hereunder
without the prior written consent of the other parties.
10.7 Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all previous negotiations,
commitments and writings.
10.8 Waiver, Discharge, Etc. This Agreement may not be released,
discharged or modified except by an instrument in writing signed on behalf of
each of the parties hereto by their duly authorized officers and
representatives. The failure of either party to enforce any provision of this
Agreement shall not be a waiver of any other provision or subsequent breach of
the same or any other obligation hereunder.
10.9 Governing Law. This Agreement shall be construed and the rights of
the parties hereunder shall be governed by the laws of the State of Delaware,
without regard to its principles regarding conflict of law.
10.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the date first set forth above.
OM GROUP, INC.
By /s/ Xxxxx X. Xxxxxx
--------------------------------
Name Xxxxx X. Xxxxxx
------------------------------
Title Chairman and CEO
-----------------------------
OM GROUP ACQUISITION
COMPANY, INC.
By /s/ Xxxxx X. Xxxxxx
--------------------------------
Name Xxxxx X. Xxxxxx
------------------------------
Title President
-----------------------------
AURIC CORPORATION
By /s/ Xxxxxx Xxxx
--------------------------------
Name Xxxxxxx Xxxx
------------------------------
Title President
-----------------------------
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35
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
Auric Corporation
FIRST: The name of the Corporation is Auric Corporation (hereinafter
the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 0000 Xxxxxx Xxxxxx, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"DGCL").
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, each having a par value
of one xxxxx ($.01).
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall
be managed by or under the direction of the Board of
Directors.
(2) The directors shall have concurrent power with
the stockholders to make, alter, amend, change, add to or
repeal the By-Laws of the Corporation.
(3) The number of directors of the Corporation shall
be as from time to time fixed by, or in the manner provided
in, the By-Laws of the Corporation. Election of directors need
not be by written ballot unless the By-Laws so provide.
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36
(4) No director shall be personally liable to the
Corporation or any of its stockholders for monetary damages
for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the DGCL or (iv) for any transaction from which
the director derived an improper personal benefit. Any repeal
or modification of this Article SIXTH by the stockholders of
the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the
time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
(5) In addition to the powers and authority
hereinbefore or by statute expressly conferred upon them, the
directors are hereby empowered to exercise all such powers and
do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the
DGCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided; however, that no
By-Laws hereafter adopted by the stockholders shall invalidate
any prior act of the directors which would have been valid if
such By-Laws had not been adopted.
SIXTH: Meetings of stockholders may be held within or without the State
of Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the DGCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
SEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the DGCL, do make this
Certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have hereunto set my hand this
______ day of December 1997.
______________________________
Xxxxxxx X. Xxxxxx
Sole Incorporator
