EXHIBIT 10.1
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
Dated as of January 15, 2000
and Amended and Restated as of March 24, 2000
The parties to this Amended and Restated Securities Purchase
Agreement (this "Agreement") are U.S. Industries, Inc., a Delaware corporation
("USI"), JUSI Holdings, Inc., a Delaware corporation that is an indirect
wholly-owned subsidiary of USI ("JUSI" and, collectively with USI, the
"Seller"), Strategic Industries, LLC, a Delaware limited liability company (the
"Company"), and Automotive Interior Products LLC, a Delaware limited liability
company (the "Buyer"). Capitalized terms used in this Agreement without
definition have the meanings ascribed to them in Section 9.14.
In consideration of the mutual agreements set forth below, and
intending to be legally bound hereby, the parties to this Agreement agree as
follows:
ARTICLE I
CORPORATE REORGANIZATION, REPAYMENT OF INTERCOMPANY DEBT,
REDEMPTION OF SHARES, SALE OF UNITS AND RELATED MATTERS
1.01. Corporate Reorganization. Prior to the Closing (as defined
below), USI shall cause the actions described in paragraphs (a) through (h)
below to occur, which actions shall result in a reorganization of certain assets
and entities owned directly or indirectly by USI (the "Corporate
Reorganization").
(a) USI shall cause the Company to adopt the limited liability
company operating agreement substantially in the form attached as Annex I hereto
(the "Company Operating Agreement"). The Company Operating Agreement shall
provide for the following classes of membership interests having the terms set
forth therein: (i) Class A Common membership interests (the "Class A Common
Units"); (ii) Class B Common membership interests (the "Class B Common Units");
and (iii) Series A Junior Preferred membership interests (the "Junior Preferred
Units"). JUSI initially shall be the sole member of the Company, owning 100% of
the Class A Common Units (171,886 units valued at $171,886), 100% of the Class B
Common Units (370,514 units valued at $370,514) and 100% of the Junior Preferred
Units (494,576 units valued at $49,457,600) issued in exchange for the capital
stock referred to in paragraph (g).
(b) USI shall cause the Company to form SILLC Holdings, LLC, a newly
organized Delaware limited liability company (the "Company LLC") to be owned
directly by the Company.
(c) USI shall cause the Company LLC to form Strategic Finance
Company, a newly organized Delaware corporation (the "Finance Company"), to be
owned directly by the Company LLC.
NY2:\823533\32\78595.0031
(d) USI shall cause EJ Footwear Corp. ("EJ") to be merged into a
newly formed limited liability company of which JUSI shall be the sole member
("New EJ"). USI shall also cause each of EJ's direct and indirect subsidiaries
to be merged into a newly formed limited liability company which has as its sole
member, respectively, the limited liability company into which its own direct
parent has been merged (together with the New EJ merger, the "EJ Mergers").
(e) USI shall cause the outstanding capital stock of Atech Turbine
Components, Inc. to be transferred to JUSI.
(f) USI shall cause all of the assets used in the businesses of but
not already owned by (i) Atech Turbine Components, Inc., (ii) Bearing Inspection
Holdings Inc., (iii) BiltBest Products, Inc., (iv) Carisbrook Industries Inc.,
(v) New EJ (other than the proceeds of the sale of its subsidiary, Trimfoot
Co.), (vi) Garden State Tanning Inc., (vii) Huron Inc., (viii) Jade Holdings Pte
Ltd, (ix) Xxxx Plastics Inc. and (x) SCF Industries, Inc. ((i) through (x)
collectively referred to as the "Operating Companies") and each of the
subsidiaries of the Operating Companies that are owned, leased or controlled by
USI and its subsidiaries (other than the Operating Companies and their
subsidiaries), including but not limited to the assets reflected on the Balance
Sheet (as defined in Section 3.06), to be transferred to the appropriate
Operating Company or subsidiary thereof; provided, however, that Seller may
retain any assets or reserves related to a USI Specified Liability (as defined
in the Indemnification Agreement) for which Seller has agreed to indemnify Buyer
pursuant thereto.
(g) USI shall cause all of the capital stock (or, in the case of New
EJ, membership interests) of each of the Operating Companies (other than certain
shares or membership interests retained by JUSI as "Redeemed Shares" and
"Contributed Shares" substantially as set forth on Annex II) to be owned
directly by the Company (such capital stock and membership interests to be owned
by the Company are hereinafter referred to as the "Transferred Shares").
(h) USI shall cause the Company to contribute the Transferred Shares
to the Company LLC.
1.02. Bank Borrowing; Issuance of Notes; Repayment of Intercompany
Debt and Redemption of Redeemed Shares.
(a) At the Closing, certain of the Operating Companies shall (i)
redeem from JUSI (the "Redemption") the Redeemed Shares for an aggregate of
approximately $93,428,000 (the "Redemption Consideration") and (ii) repay or
cause to be repaid by their subsidiaries (the "Repayment") to JUSI and USI
Global Corp., a Delaware corporation ("Global"), an aggregate of $259,734,000
principal amount of intercompany debt (the "Intercompany Debt"), in each of case
(i) and (ii) in accordance with Annex II. The Operating Companies shall obtain
the consideration for the Repayment and the Redemption from the bank borrowing
and issuance of Notes described in paragraphs (b) and (c) below. The Redemption
Consideration shall be subject to adjustment as provided in Section 1.04.
(b) At the Closing, the Operating Companies (and one or more of their
subsidiaries) shall borrow senior secured bank debt on the terms and conditions
set forth in the commitment letter attached as Annex IV (the "Bank Commitment
2
Letter"). The amount borrowed shall equal the total amount available on the
Closing Date pursuant to the credit facility contemplated by the Bank Commitment
Letter (the "Credit Facility") (the "Initial Bank Drawdown"). The Operating
Companies shall use the Initial Bank Drawdown to the extent necessary and
available, first, to repay all indebtedness of Jade Holdings Pte Ltd to Bank of
America (the "Jade Holdings Pay-off"); second, to pay the Designated Expenses
(as defined below); third, to effect the Repayment; and, fourth, to pay the
Redemption Consideration (adjusted by the Estimated Adjustment Amount).
(c) At the Closing, the Finance Company, as borrowing agent for the
Operating Companies, shall issue senior unsecured notes having terms
substantially as set forth in Annex V (the "Notes") as follows:
(i) The Finance Company shall issue to Citicorp Mezzanine III,
L.P., a Delaware limited partnership ("Citicorp Mezzanine Fund"), $25 million
principal amount of Notes (the "CMF Note") in consideration for $25 million in
cash.
(ii) The Finance Company shall issue to JUSI and Global an
aggregate principal amount of Notes (collectively, the "Seller Note") equal to
the excess of $325 million over the Initial Bank Drawdown, in repayment of
Intercompany Debt and/or redemption of the Redeemed Shares.
(d) At the Closing, all Intercompany Debt not repaid pursuant to the
Repayment shall be capitalized.
1.03. Sale and Purchase of Purchased Units. The sale and purchase of
the securities set forth in this Section 1.03 shall be consummated at the
Closing, but after those transactions set forth in Section 1.02, and each
transaction in this Section 1.03 shall be conditioned upon the occurrence of
those transactions set forth in Section 1.02.
(a) JUSI shall sell, assign, transfer and deliver to Buyer, and Buyer
shall purchase from JUSI, (i) 100% of the outstanding Class A Common Units, (ii)
100% of the outstanding Class B Common Units and (iii) 100% of the outstanding
Junior Preferred Units (hereinafter collectively referred to as the "Purchased
Units" and, together with the CMF Note, the "Purchased Securities"). Buyer shall
pay an aggregate of $50 million in cash (the "Unit Consideration") to JUSI in
consideration for the Purchased Units, consisting of $171,886 for the Class A
Common Units, $370,514 for the Class B Common Units and $49,457,600 for the
Junior Preferred Units of which $72 of Class A Common Units and $1,144,400 of
Junior Preferred Units are purchased as agent for certain members of management
(and trusts in their favor) and will be transferred to such persons on the date
of the purchase hereby pursuant to the Stockholders Agreement (as defined
herein).
(b) The Purchased Securities shall be free and clear of all claims,
liens, encumbrances, security interests, pledges, mortgages, title defects of
any kind, options, voting trusts, proxies, voting agreements, rights of first
refusal or first offer, preemptive rights, covenants, charges or restrictions on
transfer of any nature whatsoever (each, an "Encumbrance"), except those created
in favor of Buyer or Citicorp Mezzanine Fund under this Agreement or any other
agreements entered into at the Closing.
3
1.04. Adjustment of Redemption Consideration.
(a) The Redemption Consideration shall be subject to adjustment at
the Closing (in the same manner as is specified in paragraph (f) below for
payment of the Final Adjustment Amount (as defined below)) as follows:
Redemption Consideration less (x) Estimated Debt plus (y) the amount, if any, by
which Estimated Working Capital exceeds the Reference Amount, minus (z) the
amount, if any, by which the Reference Amount exceeds Estimated Working Capital
(the aggregate adjustments in clauses (x), (y) and (z) being the "Estimated
Adjustment Amount"). The Reference Amount has been, and the Estimated Working
Capital and Final Working Capital will be, calculated in accordance with Section
1.04(e) of the Disclosure Schedule.
(b) No less than five (5) Business Days (as defined) prior to the
Closing Date, the Seller shall have delivered to Buyer a good faith estimate of
(x) Debt as of the close of business on the Closing Date ("Estimated Debt") and
(y) Working Capital as of the close of business on the Closing Date ("Estimated
Working Capital") together with (i) a statement of the calculation of Estimated
Debt and Estimated Working Capital and (ii) a certificate signed by an officer
of the Seller to the effect that Estimated Debt and Estimated Working Capital
were determined in good faith in accordance the provisions of this Section 1.04,
which calculation shall be subject to Buyer's approval not to be unreasonably
withheld.
(c) Within ninety (90) days after the Closing Date, Seller shall
cause to be prepared and shall deliver to Buyer a statement (the "Closing
Statement") setting forth in reasonable detail (A) Debt as of the close of
business on the Closing Date ("Closing Date Debt") and (B) Working Capital as of
the close of business on the Closing Date ("Closing Working Capital"). Each of
the Company, the Seller and Buyer agrees that it will, and it will use
reasonable efforts to cause its respective agents and representatives to,
cooperate and assist in the preparation of the Closing Statement and the
calculation of the Closing Date Debt and Closing Working Capital and in the
conduct of the reviews and dispute resolution process referred to in this
Section 1.04.
(d) During the 30-day period following Buyer's receipt of the Closing
Statement, Buyer and the Company's independent accountants shall at Buyer's
expense be permitted to review the working papers of the Company and Seller
relating to the Closing Statement. The Closing Statement shall become final and
binding upon the parties on the Business Day following the thirtieth (30th) day
following delivery thereof, unless Buyer gives written notice of its
disagreement with the Closing Statement ("Notice of Disagreement") to the Seller
prior to such date, which notice shall comply with this Section 1.04 and Section
1.04 of the Disclosure Schedule. Any Notice of Disagreement shall (i) specify in
reasonable detail the nature of any disagreement so asserted, and include all
supporting schedules, analyses, working papers and other documentation, and (ii)
only include disagreements based on mathematical errors or based on Closing Date
Debt or Closing Working Capital not being calculated in accordance with this
Section 1.04. Buyer shall be deemed to have agreed with all items and amounts
included in the calculation of the Closing Date Debt and Closing Working Capital
delivered pursuant to this Section 1.04 except such items that are specifically
disputed in the Notice of Disagreement.
During the 30-day period following the delivery of a Notice of
Disagreement that complies with the preceding paragraph or such longer period as
the Seller and Buyer shall mutually agree, Seller and Buyer shall seek in good
4
faith to resolve in writing any differences that they may have with respect to
the matters specified in the Notice of Disagreement. If, at the end of such
30-day period (or such longer period as mutually agreed among Seller and Buyer),
Seller and Buyer have not so resolved such differences, Seller and Buyer shall
submit the dispute for resolution to an independent accounting firm (the
"Arbiter") for review and resolution of any and all matters which remain in
dispute and which were properly included in the Notice of Disagreement in
accordance with this Section 1.04. The Arbiter shall be a mutually acceptable
internationally recognized independent public accounting firm agreed upon by
Seller and Buyer in writing; provided, that in the event the parties are not
able to mutually agree on an accounting firm, the Arbiter shall be Xxxxxx
Xxxxxxxx. Seller and Buyer shall use reasonable efforts to cause the Arbiter to
render a decision resolving the matters in dispute within thirty (30) days
following the submission of such matters to the Arbiter, or such longer period
as the Seller and Buyer shall mutually agree. Seller and Buyer agree that the
determination of the Arbiter shall be final and binding upon the parties and
that judgment may be entered upon the determination of the Arbiter in any court
having jurisdiction over the party against which such determination is to be
enforced; provided, that the scope of the disputes to be resolved by the Arbiter
is limited to only such items included in the Closing Statement that Seller has
disputed in the Notice of Disagreement, based upon mathematical errors in the
Closing Statement or based upon Closing Date Debt or Closing Working Capital not
having been calculated in accordance with this Section 1.04. The Arbiter shall
determine, based solely on presentations by the Buyer and the Seller and their
respective representatives, and not by independent review, only those issues in
dispute specifically set forth on the Notice of Disagreement and shall render a
written report as to the dispute and the resulting calculation of Closing Date
Debt and Closing Working Capital which shall be conclusive and binding upon the
parties. In resolving any disputed item, the Arbiter: (x) shall be bound by the
principles set forth in this Section 1.04 and (y) shall not assign a value to
any item greater than the greatest value for such item claimed by either party
or less than the smallest value for such item claimed by either party. The fees,
costs, and expenses of the Arbiter (i) shall be borne by the Company in the
proportion that the aggregate dollar amount of such disputed items so submitted
that are unsuccessfully disputed by the Company (as finally determined by the
Arbiter) bears to the aggregate dollar amount of such items so submitted and
(ii) shall be borne by Seller in the proportion that the aggregate dollar amount
of such disputed items so submitted that are successfully disputed by Seller (as
finally determined by the Arbiter) bears to the aggregate dollar amount of such
items so submitted. Whether any dispute is resolved by agreement among the
parties or by the Arbiter, changes to the Closing Statement shall be made
hereunder only for items as to which Buyer has taken exception in the Notice of
Disagreement. The fees and expenses of the Company's independent accountants
incurred in connection with the review of any Notice of Disagreement shall be
borne by the Company, and the fees and expenses of the Seller's independent
accountants incurred in connection with their review of the Closing Statement
shall be borne by the Seller.
(e) Upon determination of the Final Working Capital, the aggregate
Redemption Consideration shall be adjusted as follows:
(i) The aggregate Redemption Consideration shall be increased
dollar for dollar by the amount by which the Final Working Capital exceeds the
Estimated Working Capital;
5
(ii) The aggregate Redemption Consideration shall be reduced
dollar for dollar by the amount by which the Estimated Working Capital exceeds
the Final Working Capital;
(iii) The aggregate Redemption Consideration shall be increased
dollar for dollar by the amount by which Estimated Debt exceeds the Final Debt;
and
(iv) The aggregate Redemption Consideration shall be reduced
dollar for dollar by the amount by which the Final Debt exceeds the Estimated
Debt.
(f) The cumulative net adjustment to the Redemption Consideration
pursuant to paragraph (e) above, whether positive or negative, together with
interest thereon from the Closing Date to the date of actual payment at a
variable rate equal to the prime rate (as reported in The Wall Street Journal
"Money Rates") from and including the Closing Date to, but not including, the
date of payment, is the "Final Adjustment Amount." The Final Adjustment Amount
shall be paid by the Company (on behalf of the Operating Companies) or the
Seller, as the case may be, within ten (10) Business Days after the Closing
Statement becomes final and binding upon the parties. If the Redemption
Consideration is increased pursuant to paragraph (e)(i) above, the Company (on
behalf of the Operating Companies) shall first use any cash then available under
the Credit Facility (so long as the Company has availability of $35 million at
such time) up to the Final Adjustment Amount to make payment to the Seller and
then, to the extent of any shortfall, the Company (on behalf of the Operating
Companies) shall have the Company LLC cause the Finance Company to issue an
additional Note to Seller having a principal amount equal to the Final
Adjustment Amount less the cash payment, if any, made (an "Adjustment Note"). If
the Redemption Consideration is decreased pursuant to paragraph (e)(ii) above,
the Seller shall deliver the Final Adjustment Amount to the Company (on behalf
of the Operating Companies) as follows: first, if an Adjustment Note was issued
at the Closing to pay all or part of the Estimated Adjustment Amount, by
redelivering the Adjustment Note to the Company (and, if the principal amount
thereof exceeds the Final Adjustment Amount, receiving a new Adjustment Note for
the balance thereof), and then by making a cash payment in the amount of any
shortfall. Any cash payment shall be made by wire transfer of immediately
available funds. Any increase or decrease in the Redemption Consideration shall
be made by appropriate adjustments to Annex II, as mutually agreed by the
parties hereto.
1.05. Transfers of Contributed Shares.
(a) JUSI shall contribute the Contributed Shares to the Company in
exchange for 177,072 Class A Common Units valued at $177,072 and 194,974 Junior
Preferred Units valued at $19,497,400 (the "JUSI Units").
(b) The Company shall contribute the Contributed Shares to the
Company LLC.
1.06. Company Right to Require Repurchase of Stock of UPI.
(a) During the period beginning on the Closing Date and ending on a
date two hundred and seventy (270) days following the Closing Date, the Company
shall have the right, upon written notice to the Seller (the "Repurchase
Notice"), to require the Seller to repurchase from the Company all common shares
6
(the "Repurchase Shares") of United Pacific Industries Limited, a company listed
on the Stock Exchange of Hong Kong, owned directly or indirectly by the Company
on the Closing Date for the price and in the manner set forth below.
(b) The purchase price for the Repurchase Shares (the "Repurchase
Price") shall be $5 million.
(c) Within thirty (30) days of the date the Repurchase Notice is
received by the Seller, (i) the Company shall deliver to the Seller stock
certificates representing the Repurchase Shares accompanied by stock powers duly
endorsed in blank or duly executed instruments of transfer (together with any
additional common shares resulting from stock splits, stock dividends or similar
transactions and any non-cash distributions thereon occurring after the Closing
Date) at the principal office of the Seller and (ii) Seller shall pay the
Repurchase Price to the Company by wire transfer to an account in a bank located
in the United States designated by the Company for such purpose.
ARTICLE II
THE CLOSING
2.01. Time and Place of Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices of
Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:30
A.M. (local time) on the first Business Day following the date on which all of
the conditions to each party's obligations hereunder have been satisfied or
waived, or at such other place or time or both as the parties may agree. The
date on which the Closing actually occurs and the transactions contemplated
hereby become effective is referred to herein as the "Closing Date."
2.02. Deliveries by Seller. (a) At the Closing, Seller will deliver
or cause to be delivered the following to Buyer:
(i) Certificates representing the Purchased Units, in each case
accompanied by unit powers or unit transfer forms duly endorsed in blank or
accompanied by duly executed instruments of transfer;
(ii) The resignations of all members of the Board of Directors of
the Company and each Company Subsidiary (as defined) other than as indicated by
Buyer in writing prior to the Closing;
(iii) The stock books, stock ledgers, minute books and corporate
seals of the Company and each Company Subsidiary;
(iv) The certificates contemplated by Section 7.04 hereof;
7
(v) An executed counterpart of the Tax Sharing and
Indemnification Agreement substantially in the form of Annex VI hereto (the "Tax
Sharing Agreement");
(vi) An executed counterpart of the Indemnification Agreement
substantially in the form of Annex VII hereto (the "Indemnification Agreement");
(vii) An executed counterpart of the Registration Rights
Agreement substantially in the form of Annex VIII hereto (the "Registration
Rights Agreement");
(viii) An executed counterpart of the Securities Purchase and
Holders Agreement substantially in the form of Annex IX hereto (the
"Stockholders Agreement");
(ix) An executed counterpart of the Registration Rights and
Remarketing Agreement substantially in the form of Annex X hereto (the
"Remarketing Agreement");
(x) An executed counterpart of the Transition Services Agreement
substantially in the form of Annex XI hereto (the "Transition Services
Agreement");
(xi) A legal opinion of Weil, Gotshal and Xxxxxx LLP, counsel to
Seller, as to customary matters in a form reasonably acceptable to Buyer; and
(xii) An executed counterpart of the mutual release substantially
in the form of Annex XII hereto (the "Release").
(b) At the Closing, Seller will deliver or cause to be delivered to
the Company certificates representing the Contributed Shares, accompanied by
stock transfer forms duly endorsed to the Company.
2.03. Deliveries by Buyer. At the Closing, Buyer or its assignee will
deliver or cause to be delivered the following:
(a) The Unit Consideration in immediately available funds to an
account designated in writing by JUSI at least two (2) Business Days prior to
the Closing;
(b) The certificates contemplated by Section 6.04 hereof;
(c) An executed counterpart of the Stockholders Agreement; and
(d) A legal opinion of Dechert Price & Xxxxxx, counsel to Buyer, as
to customary matters in a form reasonably acceptable to Seller.
2.04. Delivery by Citicorp Mezzanine Fund. At the Closing, Citicorp
Mezzanine Fund, will deliver $25 million in immediately available funds to an
account designated in writing by the Finance Company at least two (2) Business
Days prior to the Closing.
8
2.05. Deliveries by the Company. At the Closing, the Company will
deliver or cause to be delivered the following:
(a) The Seller Notes to JUSI and Global;
(b) The CMF Note to Citicorp Mezzanine Fund;
(c) The Redemption Consideration and certificates representing the
JUSI Units to JUSI;
(d) An executed counterpart of the Tax Sharing Agreement;
(e) An executed counterpart of the Indemnification Agreement;
(f) An executed counterpart of the Registration Rights Agreement;
(g) An executed counterpart of the Stockholders Agreement;
(h) An executed counterpart of the Remarketing Agreement;
(i) A letter from Bank of America confirming the Jade Holdings
Pay-off;
(j) An executed counterpart of the Release; and
(k) A copy of the Indenture, dated March 24, 2000, executed by the
Finance Company, the Company LLC and the other Guarantors named therein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller hereby jointly and severally represents and warrants to
Buyer (it being understood that, for purposes of all such representations and
warranties, the Corporate Reorganization shall be deemed to have been
completed):
3.01. Corporate Organization; Etc. The Company is a limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of its formation and has all requisite limited liability
company power and authority to conduct its business as it is now being conducted
and to own, lease and operate its property and assets. Each of the Subsidiaries
of the Company (each a "Company Subsidiary" and collectively, the "Company
Subsidiaries") is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation and has all requisite corporate or limited liability
company (as the case may be) power and authority to conduct its business as it
is now being conducted and to own, lease and operate its property and assets
except where the failure to have such power or authority is not, in the
9
aggregate, reasonably likely to have a Company Material Adverse Effect. Each of
the Company and the Company Subsidiaries is qualified or otherwise authorized to
transact business as a foreign corporation and, in the case of the Company, the
Company LLC, New EJ and New EJ's Subsidiaries, as a foreign limited liability
company, and is in good standing in each jurisdiction set forth in Section 3.01
of the Disclosure Schedule, which jurisdictions are the only jurisdictions in
which the location of its properties or the conduct of its business requires
such qualification or authorization and in which the failure so to qualify would
either individually or in the aggregate have a Company Material Adverse Effect
(as defined).
3.02. Capitalization of the Company. Immediately prior to the
Closing, the authorized membership interests of the Company shall consist of
1,000,000 Class A Common Units, 1,000,000 Class B Common Units and 1,000,000
Junior Preferred Units, of which 171,886 Class A Common Units, 370,514 Class B
Common Units and 494,576 Junior Preferred Units shall be issued and outstanding.
Immediately prior to the Closing, JUSI shall be the record and beneficial owner
of all of the Purchased Units and shall have good and valid title to the
Purchased Units, free and clear of all Encumbrances. All the Purchased Units
shall be duly authorized, validly issued, fully paid and nonassessable, shall
not be issued in violation of any agreement or other understanding binding upon
the Seller or the Company or any preemptive rights, and shall be issued in
compliance with all applicable federal and state securities or "blue sky" laws
and regulations. Except as listed in Section 3.02 of the Disclosure Schedule
hereto and as contemplated by this Agreement, there are no outstanding (a)
securities convertible into or exchangeable for membership interests of the
Company, (b) options, warrants or other rights (including, without, limitation,
preemptive rights) to purchase or subscribe for securities of the Company or (c)
contracts, commitments, agreements, understandings or arrangements of any kind
relating to the issuance of any capital stock or other equity securities or any
such convertible or exchangeable securities or any such options, warrants or
rights, pursuant to which, in any of the foregoing cases, the Company or any
Company Subsidiary is subject or bound. The consummation of the transactions
contemplated hereby will convey to Buyer good title to the Purchased Units free
and clear of all proxies, voting agreements and other Encumbrances, except for
those created in favor of Buyer under this Agreement or the Stockholders
Agreement.
3.03. Company Subsidiaries. All of the Company Subsidiaries are
listed in Section 3.03(a) of the Disclosure Schedule together with their
jurisdiction of incorporation or organization and the percentage interest held
directly or indirectly by the Company. Except as listed in Section 3.03(b) of
the Disclosure Schedule, all issued and outstanding capital stock or membership
interests of each Company Subsidiary is validly issued, fully paid and
nonassessable, was not issued in violation of any agreement or other
understanding binding upon the Seller, the Company or the Company Subsidiaries
or any preemptive rights, and was issued in compliance with all applicable
federal and state securities or "blue sky" laws and regulations, and is owned,
directly or indirectly, by the Company, free and clear of all Encumbrances.
Except as listed in Section 3.03(b) of the Disclosure Schedule, there are no
outstanding (a) securities convertible into or exchangeable for the equity
securities of any of the Company Subsidiaries, (b) options, warrants or other
rights (including without limitation preemptive rights) to purchase or subscribe
for securities of any of the Company Subsidiaries or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
of any equity securities of any of the Company Subsidiaries, any such
convertible or exchangeable securities or any such options, warrants or rights
pursuant to which, in any of the foregoing cases, the Company or any Company
Subsidiary is subject or bound.
10
3.04. The Seller's and the Company's Authority Relative to this
Agreement. The Seller is a corporation duly organized and validly existing under
the laws of Delaware. The Seller has all requisite corporate authority and power
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The Company has all requisite limited liability company
authority and power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
and the other agreements and instruments to be executed in connection herewith
and the consummation of the transactions contemplated hereby by the Seller and
the Company have been duly and validly authorized by all required action on the
part of the Seller and the Company and no other proceedings on the part of the
Seller or the Company are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Seller and the Company and, assuming this
Agreement has been duly authorized, executed and delivered by Buyer, constitutes
a valid and binding agreement of the Seller and the Company, enforceable against
the Seller and the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith, and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). As of the Closing,
the other agreements and instruments contemplated hereby will have been duly and
validly executed and delivered by the Seller and the Company and, assuming due
authorization, execution and delivery by Buyer, will constitute valid and
binding agreements of the Seller and the Company, enforceable against the Seller
and the Company in accordance with their terms.
3.05. Consents and Approvals; No Violations. Except as set forth in
Section 3.05 of the Disclosure Schedule, neither the execution and delivery of
this Agreement or the other agreements and instruments to be executed by Seller
in connection herewith, nor the consummation of the transactions contemplated
hereby or thereby will (a) violate any provision of the Certificate of
Incorporation or By-Laws (or other comparable governing documents) of the
Company, the Company Subsidiaries or the Seller, (b) require any consent,
waiver, approval, authorization or permit (a "Consent") of, or filing with or
notification to, any governmental or regulatory authority, arbitrator, agency or
commission, including courts of competent jurisdiction, domestic or foreign (a
"Governmental Entity"), except where the failure to obtain such Consent or make
such filing or notification is not reasonably likely to have a Company Material
Adverse Effect, (c) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default, or give rise to any
right of termination, cancellation or acceleration or any obligation to repay
under, any of the terms, conditions or provisions of any indenture, mortgage,
note, bond, encumbrance, license, government registration, contract, lease,
agreement or other instrument or obligation (each, an "Obligation") to which the
Company, any Company Subsidiary or the Seller is a party or by which the
Company, any Company Subsidiary or the Seller or any of their respective
property or assets may be bound, except such violations, breaches and defaults
which, in the aggregate, are not reasonably likely to have a Company Material
Adverse Effect or would not impair, hinder or adversely affect the ability of
the Seller to perform any of its obligations under this Agreement or to
consummate the transactions contemplated hereby (a "Seller Material Adverse
11
Effect") or those as to which requisite waivers or Consents have been obtained
or (d) violate any order, writ, settlement, judgment, injunction, decree,
statute, ordinance, rule, law, code, regulation or other requirement (each, an
"Order") of any Governmental Entity applicable to the Company, any Company
Subsidiary or the Seller, except such violations which, in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect or a Seller
Material Adverse Effect.
3.06. Financial Statements. Attached hereto as Section 3.06 of the
Disclosure Schedule are copies of the audited combined balance sheets of the
Company as of September 30, 1999 and 1998 and the related audited combined
statements of operations, cash flows and changes in invested capital (deficit)
for each of the three years ended September 30, 1999 (the balance sheet as of
September 30, 1999, being hereinafter referred to as the "Balance Sheet" and all
such financial statements being hereinafter collectively referred to as the
"Financial Statements"). The Financial Statements (i) were compiled from the
books and records of the Company, and (ii) fairly present the combined financial
position, the combined results of operations and the combined cash flows of the
Company as of the dates or for the periods presented in conformity with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved except as otherwise noted therein.
3.07. Form 10; Absence of Certain Changes. As of the date on which it
was filed, the information contained in the Form 10 did not contain any untrue
statement of a material fact nor omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except as set forth in
the Form 10 or Section 3.07 of the Disclosure Schedule, since the date of the
Balance Sheet, none of the Company or any Company Subsidiary has:
(a) suffered any adverse change in its business, operations or
financial position, except such changes which, in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect;
(b) conducted its business outside the ordinary and usual course
consistent with past practice, except in connection with the transactions
contemplated hereby or by the Form 10;
(c) made any election for Tax (as defined below) purposes or for
purposes of a Return (as defined below) (or had any such election made on its
behalf), (including any election pursuant to Treasury Regulation ss. 301.7701)
or entered into any agreement, arrangement or settlement with respect to
material Taxes with any Governmental Entity or other Person;
(d) other than as required by collective bargaining agreements,
granted any increase in the salaries or other compensation payable or to become
payable to, or any advance (excluding advances for ordinary business expenses)
or loan to, any officer, employee or shareholder of the Company or any Company
Subsidiary (other than normal merit increases for employees previously budgeted
made in the ordinary course of business and consistent with past practice), or
any increase in, or any addition to, other benefits (including any bonus,
profit-sharing, pension, retirement or other plan) to which any of the officers
and employees may be entitled;
12
(e) made any contributions or payments to any pension, retirement, or
under any profit-sharing, bonus or similar plan except payments in the ordinary
course of business and consistent with past practice made pursuant to the
Benefit Plans described in Section 3.12 of the Disclosure Schedule, or any other
payment of any kind to or on behalf of any officer or employee other than
payment of base compensation and reimbursement for reasonable expenses in the
ordinary course of business;
(f) suffered any change in or, to the knowledge of the Seller,
received any written notice of any loss of any of the suppliers, clients,
distributors, customers or employees that are material to the business of the
Company or any Company Subsidiary, including any loss or change which may result
from the transactions contemplated by this Agreement, except any losses or
changes which, in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect;
(g) been involved in any disposition of or has failed to keep in
effect any rights in, to or for the use of any franchise, right, license, permit
or certificate material to the business of the Company or any Company
Subsidiary, except any failures to keep in effect any right which, in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect;
(h) changed any method of keeping of its books of account or
accounting practices other than pursuant to the Corporate Reorganization;
(i) disposed of or failed to keep in effect any rights in, to or for
the use of any of the intellectual property material to the business of the
Company or any Company Subsidiary, except any such dispositions or failures
which, in the aggregate, are not reasonably likely to have a Company Material
Adverse Effect;
(j) sold, transferred or otherwise disposed of any material assets,
properties or rights of any of the businesses of the Company or any Company
Subsidiary, except inventory sold in the ordinary course of business consistent
with past practice;
(k) made nor authorized any single capital expenditure in excess of
$100,000 or capital expenditures in excess of $500,000 in the aggregate (other
than pursuant to an approved budget or emergency expenditures; it being
understood that Seller shall use its reasonable efforts under the circumstances
to contact Buyer prior to making any material emergency expenditure outside of
these baskets);
(l) except as set forth in Section 3.07(l) of the Disclosure
Schedule, changed or modified in any manner the Company's or any Company
Subsidiary's existing credit, collection and payment policies, procedures and
practices with respect to accounts receivable and accounts payable,
respectively, including without limitation, acceleration of collections of
receivables, failure to make or delay in making collections of receivables
(whether or not past due), acceleration of payment of payables or failure to pay
or delay in payment of payables;
(m) incurred any damage, destruction or loss, whether covered by
insurance or not, materially affecting the financial condition or business of
the Company or any Company Subsidiary;
13
(n) waived or released any material right or claim of the Company or
any Company Subsidiary; or
(o) permitted or suffered any Encumbrances on any assets (tangible or
intangible) or properties of the Company or any Company Subsidiary other than
Encumbrances incurred in the ordinary course of business consistent with past
practice and except those Encumbrances which, in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
3.08. Compliance with Law. Except as set forth in Section 3.08(a) of
the Disclosure Schedule, the Company and the Company Subsidiaries have complied
and are in compliance with all, and have not received any written notice of any
violation of any, applicable Orders of any Governmental Entity, except such
non-compliances which, in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect. Except as set forth in Section 3.08(b) of the
Disclosure Schedule, the Company and the Company Subsidiaries have all domestic
and foreign governmental licenses, permits and other authorizations to conduct
their businesses as currently conducted and all such permits, licenses and
authorizations are in full force and effect, except where the failure to have
such licenses and permits or to have such licenses and permits in full force and
effect, in the aggregate, is not reasonably likely to have a Company Material
Adverse Effect.
3.09. Contracts. Section 3.09 of the Disclosure Schedule sets forth a
complete list of all written and oral material contracts of the Company and the
Company Subsidiaries as follows:
(a) employment, severance and consulting agreements that provide for
severance or termination payments in excess of $100,000 to which the Company or
any of the Company Subsidiaries is presently a party (the "Benefit
Arrangements");
(b) collective bargaining agreements;
(c) agreements that were required to be filed as an exhibit to the
Form 10, other than such agreements which would become effective only upon the
consummation of the proposed Spin-off (as defined in the Form 10); and
(d) indentures, mortgages and notes or other debt instruments
evidencing indebtedness, other than any such instrument in a principal amount of
less than $100,000.
Each material contract to which the Company or the Company
Subsidiaries is a party or is bound is valid, binding and enforceable against
the Company or any Company Subsidiary, as the case may be, and to the knowledge
of Seller, the other parties thereto, in accordance with its terms and is in
full force and effect, except those the absence of which would not, individually
or in the aggregate, have a Company Material Adverse Effect. Except as set forth
in Section 3.09 of the Disclosure Schedule, the Company and the Company
Subsidiaries are not in default under any of the material contracts, and no
event has occurred which, with notice or lapse of time, or both, would
constitute such a default, except for any defaults which, in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect.
14
Neither the Company nor any Company Subsidiary has received any
written claim from any other party to any material contract that the Company or
any Company Subsidiary has breached any obligations to be performed by it
thereunder, or is otherwise in default or delinquent in performance thereunder,
except any of the foregoing which, in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect.
3.10. Litigation. Except as set forth in the Form 10 or Section
3.10(a) of the Disclosure Schedule, there is no action, suit, investigation or
proceeding pending or threatened against the Company or any Company Subsidiary
before any Governmental Entity which is reasonably likely to have a Company
Material Adverse Effect. Except as set forth in Section 3.10(b) of the
Disclosure Schedule, none of the Company or any Company Subsidiary has received
notice that it is subject to any outstanding Order of any Governmental Entity
which is reasonably likely to have a Company Material Adverse Effect.
3.11. Taxes.
(a) Except as set forth in Section 3.11(a) of the Disclosure
Schedule, each of the Company and each Company Subsidiary has duly and timely
filed all material returns, declarations, reports, estimates, information
returns and statements ("Returns") required to be filed with respect to it in
respect of any Taxes, and each of the Company and each Company Subsidiary has
timely paid all Taxes that are shown to be due and payable on such Returns.
Except as set forth in Section 3.11(a) of the Disclosure Schedule, no material
deficiencies for any Taxes have been asserted in writing or assessed against the
Company or any Company Subsidiary, which remain unpaid or for which adequate
provision, net of any reserves provided for matters set forth in Sections
3.11(a) and 3.11(c) of the Disclosure Schedule, has not been made in the
Financial Statements. Except as set forth in Section 3.11(a) of the Disclosure
Schedule, none of the Company or any Company Subsidiary (a) has, with respect to
any assets or property held, filed a consent to the application of Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code"), (b) has
made any payments, is obligated to make any payments, or is a party to any
agreement, including this Agreement, that could obligate it to make any payments
that will not be deductible under Code ss. 280G, (c) is required to make any
adjustment under Code ss. 481 (or any comparable provision of state, local or
foreign law) by reason of a change in accounting method, or (d) is a partner in
any entity considered to be a partnership for federal income tax purposes. For
purposes of this Agreement, "Taxes" shall mean all income taxes (including any
tax on or based upon net income, or gross income, or income as specially
defined, or earnings, or profits, or selected items of income, earnings, or
profits) and all gross receipts, estimated, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, or windfall profit taxes, environment,
alternative, or add-on minimum taxes, custom duties or other taxes, fees,
assessments, or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any federal,
state, local or foreign taxing or other authority.
(b) Neither the Company nor any Company Subsidiary is a "U.S. Real
Property Holding Corporation" within the meaning of Section 897 of the Code.
(c) Except as set forth in Section 3.11(c) of the Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to or bound
by any Tax allocation or Tax sharing agreement or has any current or potential
15
contractual obligation or liability as a transferee or successor to indemnify
any other person with respect to Taxes.
(d) Except as set forth in Section 3.11(d) of the Disclosure
Schedule, no Governmental Entity currently is auditing any of the Company or
Company Subsidiaries' Returns, nor has any of the Company or Company
Subsidiaries received written notice of any proposed material audits of such
Returns. Except as set forth in Section 3.11(d) of the Disclosure Schedule, with
respect to each of the Company and Company Subsidiaries, no written claim for
Taxes (or written request for Returns) has ever been made by a Governmental
Entity in a jurisdiction where the Company or Company Subsidiary, as the case
may be, does not file Returns. Except as set forth in Section 3.11(d) of the
Disclosure Schedule, none of the Company or Company Subsidiaries has outstanding
any waiver of any statute of limitations in respect of Taxes or any outstanding
agreement regarding any extension of time with respect to a Tax assessment or
deficiency. Except as set forth in Section 3.11(d) of the Disclosure Schedule,
since the beginning of fiscal 1996, none of the Company or Company Subsidiaries
is a party to a closing agreement, or the subject of a private ruling,
concerning Taxes with any Governmental Entity which would have a material effect
continuing after Closing.
(e) Except as set forth in Section 3.11(e) of the Disclosure
Schedule, each of the Company and Company Subsidiaries has withheld and paid, in
all material respects, all Taxes required to be withheld and paid in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder or third party.
3.12. Employee Benefit Plans; ERISA.
(a) All material written "employee benefit plans", as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all other pension, profit sharing, retirement, supplemental
retirement, stock, stock option, change of control, basic and supplemental
accidental death and dismemberment, basic and supplemental life and health
insurance, post-retirement medical or life, welfare, dental, vision, savings,
bonus, deferred compensation, incentive compensation, business travel and
accident, severance pay, salary continuation, short-term and long-term
disability, termination or other compensation plan, arrangement or agreement or
other material employee fringe benefit plans maintained by the Company or any of
the Company Subsidiaries or any other employer (an "ERISA Affiliate") that is,
or at any relevant time was, together with the Company or any of the Company
Subsidiaries, treated as a "single employer" under Section 414(b), 414(c),
414(m) or 414(o) of the Code, or to which the Company or any of the Company
Subsidiaries or any ERISA Affiliate contributes or is obligated to contribute
thereunder for current or former employees of the Company or any of the Company
Subsidiaries (the "Employee Benefit Plans") other than any Employee Benefit Plan
which is a multiemployer plan, as defined in Section 3(37) of ERISA
("Multiemployer Plan"), are, in all material respects, maintained in accordance
with their terms and with all applicable provisions of the Code and ERISA
(including rules and regulations thereunder) and other applicable federal and
state laws and regulations, including the timely filing of all material reports,
returns and similar documents with the appropriate government agency or
distribution to Employee Benefit Plan participants, as applicable, except where
the failure to so maintain them would not be reasonably likely to result in a
Company Material Adverse Effect. True and complete copies of each such Employee
Benefit Plan, and where applicable, a copy of the most recent determination
16
letter received from the Internal Revenue Service (the "IRS"), and the most
recent IRS Form 5500 filed, with respect to each such Employee Benefit Plan,
have been furnished to Buyer.
(b) Except as indicated in Section 3.12(b) of the Disclosure
Schedule, the Employee Benefit Plans (other than the Multiemployer Plans)
intended to qualify under Section 401 of the Code are, and at all times since
their inception have been, so qualified and the trusts maintained pursuant
thereto are exempt from federal income taxation under Section 501 of the Code,
and nothing has occurred with respect to the operation of such plans which would
be reasonably likely to result in the loss of such qualification or exemption or
the imposition of any material liability, penalty or tax under ERISA or the
Code. Except as set forth in Section 3.12(b) of the Disclosure Schedule, each
such Employee Benefit Plan intended to qualify under Section 401 of the Code has
received a determination letter from the IRS to the effect that each such plan
is qualified and all related trusts are exempt from federal income taxes on a
determination letter request is pending with the IRS to such effect, and no
determination letter with respect to any such plan has been revoked nor, is
there any reason for such revocation, nor has any such plan been amended, or
failed to be amended, since the date of its most recent determination letter in
any respect which would adversely affect its qualification.
(c) All contributions (including all employer contributions and
employee salary reduction contributions) and payments required to have been made
under any of the Employee Benefit Plans or by law (without regard to any waivers
granted under Section 412 of the Code) or in connection therewith have been made
by the due date thereof (including any valid extension, except where the failure
to make such contribution would not be reasonably likely to result in a Company
Material Adverse Effect). Except as indicated in Section 3.12(c) of the
Disclosure Schedule, no asset of the Company or any Company Subsidiary is
subject to any lien under Sections 401(a)(29) or 412(n) of the Code or Section
4068 of ERISA or arising out of any action filed under Section 4301(b) of ERISA.
(d) Except as set forth in Section 3.12(d) of the Disclosure
Schedule, neither the Employee Benefit Plans, the Company, the Company
Subsidiaries, any ERISA Affiliate, nor any employee of the foregoing, nor any
trusts created thereunder, has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the Code or Section 406 of ERISA, nor has any such
person breached any duty imposed by Title I of ERISA, with respect to any
Employee Benefit Plan.
(e) Neither the Company, the Company Subsidiaries nor any ERISA
Affiliate has incurred any material liability to the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to any Employee Benefit Plan subject to
Title IV of ERISA, other than for the payment of premiums, all of which have
been paid when due. No Employee Benefit Plan has applied for or received a
waiver of the minimum funding standards imposed by Section 412 of the Code. The
Company has furnished to Buyer the most recent actuarial report with respect to
each Employee Benefit Plan that is a defined benefit pension plan, as defined in
Section 3(35) of ERISA. To the knowledge of the Seller, the information supplied
to the actuary by the Company, the Company Subsidiaries and any ERISA Affiliate
for use in preparing those reports was complete and accurate. No event has
occurred since the date of any such actuarial report that had, or is likely to
have, a materially adverse effect on the ratio of plan assets to the actuarial
present value of plan obligations for accumulated benefits shown in such report.
17
(f) At no time since May 31, 1995 has the Company, the Company
Subsidiaries or any ERISA Affiliate incurred any liability which could subject
Buyer to any material liability under Section 4062, 4063, 4064 or 4069 of ERISA.
(g) Except as indicated in Section 3.12(g) of the Disclosure
Schedule, at no time since May 31, 1995, have the Company, the Company
Subsidiaries or any ERISA Affiliate, been required to contribute to, or incurred
any withdrawal liability, within the meaning of Section 4201 of ERISA to any
multiemployer pension plan, within the meaning of Section 3(37) of ERISA nor
does the Company, the Company Subsidiaries or any ERISA Affiliate to the
knowledge of the Seller have any potential withdrawal liability arising from a
transaction described in Section 4204 of ERISA. All required contributions,
withdrawal liability payments or other payments of any type that the Company,
the Company Subsidiaries or any ERISA Affiliate have been obligated to make to
any multiemployer plan have been duly and timely made. Any withdrawal liability
incurred with respect to any multiemployer plan has been fully paid as of the
Original Date. Neither the Company, the Company Subsidiaries nor any ERISA
Affiliate has undertaken any course of action that could reasonably be expected
to lead to a complete or partial withdrawal from any multiemployer plan.
(h) Except as indicated in Section 3.12(h) of the Disclosure
Schedule, no payment which is or may be made by from or with respect to any
Employee Benefit Plan, to any employee, former employee, director or agent of
the Company, the Company Subsidiaries, either alone or in conjunction with any
other payment, will or could properly be characterized as an excess parachute
payment under section 280G of the Code.
3.13. Title to Properties. Each of the Company and the Company
Subsidiaries has good, valid and, in the case of real property, marketable title
to all of the material assets and properties which it owns, including but not
limited to those reflected on the Balance Sheet or acquired by the Company and
any Company Subsidiary since the date of the Balance Sheet (except for assets
and properties sold, consumed or otherwise disposed of by the Company or any
Company Subsidiary in the ordinary course of business consistent with the past
practice since the date of the Balance Sheet), and such material assets and
properties are owned free and clear of all Encumbrances, except for (a)
Encumbrances disclosed in the Form 10 or listed in Section 3.13 of the
Disclosure Schedule, (b) liens for current Taxes not yet due and payable or for
Taxes the validity of which is being contested in good faith by appropriate
proceedings and for which adequate reserves have been established on the Balance
Sheet, (c) Encumbrances to secure indebtedness reflected on the Balance Sheet or
indebtedness incurred in the ordinary course of business and consistent with
past practice after the date thereof, (d) mechanic's, materialmen's and similar
Encumbrances which have arisen in the ordinary course of business and (e) any of
the foregoing Encumbrances which, in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect or materially adversely interfere with
the use of such assets and properties as they are presently being used.
3.14. Patents, Trademarks, Etc. Except as set forth in Section 3.14
of the Disclosure Schedule:
18
(a) the Company and the Company Subsidiaries own or possess adequate
licenses or other valid rights to use all United States and foreign patents,
trademarks, trade names, service marks, copyrights and applications, including
foreign applications therefor, which are material to the conduct of the business
of the Company and the Company Subsidiaries taken as a whole (the "Patent and
Trademark Rights"),
(b) the validity of the Patent and Trademark Rights and the title
thereto of the Company or any Company Subsidiary are not being questioned in any
litigation to which the Company or any Company Subsidiary is a party, nor is any
such litigation overtly threatened, and
(c) the conduct of the business of the Company and the Company
Subsidiaries as now conducted does not infringe or otherwise conflict with any
valid patents, trademarks, trade names, service marks or copyrights of others in
any way which is reasonably likely to have a Company Material Adverse Effect.
3.15. Environmental Matters.
(a) Except as set forth in the Form 10 or Section 3.15 of the
Disclosure Schedule, the Company and the Company Subsidiaries hold, and are in
compliance with, all material permits, licenses and government authorizations
required for the Company and the Company Subsidiaries to conduct their
respective businesses under any U.S. federal and state or foreign statutes and
regulations relating to pollution or protection of human health or the
environment, including the Comprehensive Environmental Response, Compensation,
and Liability Act, the Resource Conservation and Recovery Act, the Clean Air
Act, the Clean Water Act, and similar state laws ("Environmental Laws"), and the
Company and the Company Subsidiaries are otherwise in compliance with all
applicable Environmental Laws, except where the failure to be in compliance
would not be reasonably likely to have a Company Material Adverse Effect.
(b) Except as set forth in the Form 10 or Section 3.15 of the
Disclosure Schedule, none of the Company or any Company Subsidiary has been
notified that it is a potentially responsible party under the Comprehensive
Environmental Response, Compensation, and Liability Act or any similar state or
foreign law with respect to any on-site or off-site location for which liability
is currently being asserted which is reasonably likely to have a Company
Material Adverse Effect.
(c) Except as set forth in the Form 10 or Section 3.15 of the
Disclosure Schedule, none of the Company or any Company Subsidiary is subject to
any Order relating to compliance with any Environmental Law or to investigation
or cleanup of substances regulated under any Environmental Law as hazardous
which is reasonably likely to have a Company Material Adverse Effect.
(d) Except as set forth in the Form 10 or Section 3.15 of the
Disclosure Schedule, no substances regulated under Environmental Laws have been
released, spilled, leaked, discharged, disposed of, pumped, poured emitted,
emptied, injected, leached, dumped or allowed to escape at any property now or
formerly owned, operated or leased by the Company or the Company Subsidiaries or
any former Company subsidiaries which is reasonably likely to have a Company
Material Adverse Effect.
19
(e) Seller has provided Buyer copies of all material environmental
inspections, investigations, studies, audits, tests, reviews or other analyses
in Seller's possession or control conducted in relation to any property now or
previously owned, operated or leased by the Company or the Company Subsidiaries
or any former Company subsidiaries.
3.16. Brokers and Finders. None of the Seller, the Company or any
Company Subsidiary or any of their respective officers, directors or employees
has incurred any liability for any investment banking fees, brokerage fees,
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement except for such liability as shall
be borne by the Seller.
3.17. Undisclosed Liabilities. Neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature whatsoever, whether
due or to become due, accrued, absolute, contingent or otherwise, other than (i)
liabilities and obligations that are fully reflected, accrued or reserved for in
the Balance Sheet, (ii) liabilities and obligations incurred in the ordinary
course of business and consistent with past practice since the date of the
Balance Sheet, (iii) liabilities and obligations set forth in Section 3.17 of
the Disclosure Schedule to the extent readily apparent on its face, and (iv)
other liabilities and obligations that individually or in the aggregate are not
reasonably likely to result in a Company Material Adverse Effect.
3.18. Related Party Transactions. Except as described in Section 3.18
of the Disclosure Schedule or in connection with the Corporate Reorganization,
since October 1, 1998, neither the Seller nor any Affiliate of the Seller (other
than the Company or any Company Subsidiary) (i) has had any interest in any
assets or property (whether real or personal, tangible or intangible), used by
the Company or any Company Subsidiary in the conduct of its business, or (ii)
has engaged in any other transaction with the Company or any Company Subsidiary.
Neither the Seller nor any Affiliate of the Seller (other than the Company or
any Company Subsidiary) has made any agreement or arrangement to make any
payments to any officer or employee of the Company or any Company Subsidiary
conditioned upon the execution of this Agreement or the consummation of the
transactions contemplated hereby for which the Company or any Company Subsidiary
will be liable.
3.19. Adequacy of Assets. Except for (i) cash management services
currently provided by USI and (ii) as contemplated by the Transition Services
Agreement, the Company owns directly or through the Company Subsidiaries all
assets necessary for the Company Subsidiaries to conduct their businesses as
currently operated.
3.20. Securities Act Considerations.
(a) JUSI is acquiring the JUSI Units for investment and not with a
view toward, or for sale in connection with, any distribution thereof, nor with
any present intention of distributing or selling such JUSI Units. JUSI agrees
that the JUSI Units may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the Securities
Act of 1933, as amended (the "Securities Act"), except pursuant to an exemption
from, or in a transaction not subject to, registration under the Securities Act.
JUSI is an "accredited investor" as defined in Rule 501 under the Securities
Act.
20
(b) Each of JUSI and Global agrees that the Seller Notes may not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed
of without registration under the Securities Act or pursuant to an exemption
from, or in a transaction not subject to, registration under the Securities Act.
Global is an "accredited investor" as defined in Rule 501 under the Securities
Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Seller as follows:
4.01. Organization; Etc. Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and has all requisite power and authority to
conduct its business as it is now being conducted and to own, lease and operate
its property and assets, except where the failure to have such power or
authority is not, in the aggregate, reasonably likely to have a Buyer Material
Adverse Effect (as defined).
4.02. Authority Relative to this Agreement. Buyer has all requisite
limited liability company authority and power to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the other agreements and instruments to be
executed by Buyer in connection herewith and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
required limited liability company action on the part of Buyer and no other
limited liability company proceedings on the part of Buyer are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Buyer and,
assuming this Agreement has been duly authorized, executed and delivered by the
Seller, constitutes a valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
4.03. Consents and Approvals; No Violations. Neither the execution
and delivery of this Agreement or the other agreements and instruments to be
executed by Buyer in connection herewith, nor the consummation of the
transactions contemplated hereby or thereby by Buyer will (a) violate any
provision of its Certificate of Formation or Limited Liability Company Operating
Agreement, true and correct copies of which have been furnished to Seller, (b)
require any Consent of, or filing with or notification to, any Governmental
Entity, except where the failure to obtain such Consent or make such filing or
notification is not reasonably likely to have a Buyer Material Adverse Effect,
(c) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or any obligation to repay) under, any
of the terms, conditions or provisions of any Obligation to which Buyer is a
party or by which Buyer or any of its properties or assets may be bound, except
such violations, breaches and defaults which, in the aggregate, are not
21
reasonably likely to have a Buyer Material Adverse Effect or those as to which
requisite waiver or Consents have been obtained or (d) violate any Order of any
Governmental Entity applicable to Buyer, except such violations which, in the
aggregate, are not reasonably likely to have a Buyer Material Adverse Effect.
4.04. Securities Act Considerations.. Buyer is acquiring the
Purchased Securities for investment and not with a view toward, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling such Purchased Securities. Buyer agrees that the
Purchased Securities may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
registration under the Securities Act. Buyer is an "accredited investor" as
defined in Rule 501 under the Securities Act.
4.05. Financial Capability. Buyer has obtained a commitment letter
(the "Commitment Letter") providing an aggregate of $70 million of financing for
this transaction and the transactions contemplated by the Subscription Agreement
(as defined) and naming Seller as a third-party beneficiary, a true and correct
copy of which letter is contained in Section 4.05 of the Disclosure Schedule.
4.06. Brokers and Finders. Neither Buyer nor any of its officers,
directors or employees has employed any investment banker, broker or finder or
incurred any liability for any investment banking fees, brokerage fees,
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement.
4.07. Buyer's Sophistication. Buyer is an informed and sophisticated
purchaser, and has engaged expert advisors, experienced in the evaluation and
purchase of securities such as the Purchased Securities. Buyer has undertaken
such investigation as it has deemed necessary to enable it to make an informed
and intelligent decision with respect to this Agreement and the transactions
contemplated hereby. Buyer acknowledges that none of the Seller or the Company
(or their agents or representatives) has made any representation or warranty as
to the Company, any Company Subsidiary, or their prospects (financial or
otherwise), except as expressly set forth in this Agreement. Except as otherwise
set forth in this Agreement, the Indemnification Agreement or the Tax Sharing
Agreement, it is therefore expressly understood and agreed that Buyer accepts
the condition of the properties of the Company and the Company Subsidiaries "AS
IS, WHERE IS" without any representation, warranty or guarantee, express or
implied, as to merchantability, fitness for a particular purpose or otherwise as
to the condition, size, extent, quantity, type or value of such property.
ARTICLE V
COVENANTS OF THE PARTIES
5.01. Conduct of Business of the Company. Except as contemplated by
this Agreement, the Corporate Reorganization or Section 5.01 of the Disclosure
Schedule or with the prior written consent of Buyer (which consent shall not be
unreasonably withheld) during the period from the Original Date to the Closing
Date, Seller will cause the Company and each Company Subsidiary to (a) conduct
22
its business and operations in the ordinary course of business consistent with
past practice except for the Corporate Reorganization and (b) use all
commercially reasonable efforts consistent therewith to preserve intact its
properties, assets and business organizations, to keep available the services of
its officers and employees and to maintain satisfactory relationships with
customers, suppliers, distributors and others having commercially beneficial
business relationships with it, to maintain its books of account and records, in
each case, in the ordinary course of business consistent with past practice.
Without limiting the generality of the foregoing, and except as otherwise
provided in this Agreement or as contemplated hereby or by the Corporate
Reorganization or as set forth in Section 5.01 of the Disclosure Schedule,
Seller will cause the Company and each Company Subsidiary not to, prior to the
Closing Date, without the prior written consent of Buyer (which consent shall
not be unreasonably withheld):
(a) issue, sell or pledge, or authorize or propose the issuance, sale
or pledge of (i) additional shares of capital stock or membership interests of
the Company or any Company Subsidiary, as the case may be, or securities
convertible into any such shares or membership interests, or any rights,
warrants or options to acquire any such shares or membership interests or other
convertible securities or (ii) any other securities in respect of, in lieu of,
or in substitution for, the shares of capital stock or membership interests of
the Company or any Company Subsidiary, as the case may be, outstanding on the
Original Date;
(b) declare or pay any dividend or distribution on any units of
Company Common Membership Interests or Company Preferred Membership Interests or
shares of capital stock or membership interests of any Company Subsidiary;
(c) redeem, purchase or otherwise acquire any outstanding units of
Company Common Membership Interests or Company Preferred Membership Interests or
any outstanding shares of capital stock of any Company Subsidiary (or any
warrants, rights or options to acquire Company Common Membership Interests or
Company Preferred Membership Interests or any outstanding shares of capital
stock of any Company Subsidiary);
(d) amend its Certificate of Incorporation, By-Laws or Operating
Agreement (or other comparable governing documents);
(e) incur any long-term indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse the obligations of any other
Person;
(f) (i) increase the rate or terms of compensation of any of its
directors, officers or employees, except such increases for employees as are
granted in the ordinary course of business consistent with past practice
previously budgeted (a copy of which budget has been delivered to Buyer prior to
the Original Date), or (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit not required or permitted by any existing
Employee Benefit Plan or other agreement or arrangement to any such director,
officer or employee, whether past or present;
(g) sell, transfer, lease or otherwise dispose of any of its property
or assets (other than inventory in the ordinary course of business) or mortgage
or encumber any of its material property or assets;
23
(h) make any loan to, or enter into or effect any other transaction
with, any of its directors or officers, or the Seller or any Affiliate of the
Seller (excluding the Company and the Company Subsidiaries);
(i) enter into other material agreements, commitments or contracts,
except agreements, commitments or contracts made in the ordinary course of
business consistent with past practice;
(j) make any election for Tax purposes or for purposes of a Return
(or have any such election made on its behalf), including any election pursuant
to Treasury Regulation ss. 301.7701, or enter into any agreement, arrangement or
settlement with respect to material Taxes with a Governmental Entity or other
Person;
(k) change any method of accounting;
(l) merge or consolidate with, or purchase substantially all of the
assets of, or otherwise acquire any business of any Person, except pursuant to
the Corporate Reorganization;
(m) take any action or omit to take any action which will result in a
material violation of any applicable law or Order or cause a material breach of
any agreements, contracts or commitments by it which is material to its business
(including, without limitation, the material contracts disclosed in Section 3.09
of the Disclosure Schedule); or
(n) agree or commit to take any of the foregoing actions.
5.02. Financial Capability.
(a) Buyer shall maintain the Commitment Letters in full force and
effect until the Closing Date.
(b) At the Closing, upon delivery of the CMF Note to the Citicorp
Mezzanine Fund, the Buyer will cause the Citicorp Mezzanine Fund to deliver $25
million in immediately available funds to an account designated in writing by
the Finance Company at least two (2) Business Days prior to the Closing.
5.03. Additional Information.
(a) From the Original Date until the Closing Date, Seller will cause
the Company and the Company Subsidiaries to provide Buyer and its officers,
consultants, employees, counsel, agents, lenders and other representatives with
reasonable access during normal business hours to the properties, books,
contracts, and records of the Company and the Company Subsidiaries. All such
information shall be subject to the terms and conditions of the letter agreement
dated August 17, 1999 (the "Confidentiality Agreement"), between Citicorp
Venture Capital Ltd. and USI.
(b) After the Closing, upon reasonable written notice, Buyer will
give or cause to be given to Seller and its authorized representatives,
reasonable access to such information relating to the Company and the Company
Subsidiaries as is reasonably necessary for the preparation or filing of any Tax
24
return, financial statement or report, or is otherwise reasonably requested;
provided, however, that any such access shall be conducted at a reasonable time
and in such a manner as not to interfere unreasonably with the operations of the
business of the Company and the Company Subsidiaries. Buyer agrees to cause each
of the Company and the Company Subsidiaries to preserve its records for a period
of seven (7) years from the Closing Date and, if it wishes to destroy any such
records after the retention period, it shall first give sixty (60) days' prior
written notice to Seller, which shall then have the right to take possession of
such records, at its expense, within sixty (60) days after the delivery of such
notice.
(c) Certain Post-Closing Assistance by the Buyer. So long as it does
not unreasonably interfere with the business operations of the Company or any
Company Subsidiary, Buyer agrees to cause the appropriate personnel at the
Company and the Company Subsidiaries, at no cost or expense to the Seller, to
prepare, during normal business hours and with reasonable advance notice, all
customary accounting and related reports with respect to the Company and the
Company Subsidiaries for periods since September 30, 1999, up to the Closing
Date which are reasonably requested by the Seller in connection with the
Seller's preparation and/or filing of various financial and accounting reports.
(d) Cash Management. Seller shall continue to cause the funding by
the Company and the Company Subsidiaries of the Company and Company Subsidiary
checks, in accordance with past practices, which are presented for payment
through the day prior to the Closing Date. Seller shall have no obligation to
fund checks which are presented for payment on and after the Closing Date.
Amounts received in the lockbox and depository accounts of Seller through the
Closing Date shall continue to be paid to Seller in accordance with past
practices, provided that such collections are appropriately reflected on the
Balance Sheet. The bank accounts of the Company and the Company Subsidiaries
will continue to be owned by the Company and the Company Subsidiaries after the
Closing Date.
5.04. Covenant to Satisfy Conditions. The Seller will use all
reasonable efforts to ensure that the conditions set forth in Article VII hereof
are satisfied. Buyer will use all reasonable efforts to ensure that the
conditions set forth in Article VI hereof are satisfied.
5.05. Employee Matters.
(a) Except as may otherwise be required by a collective bargaining
agreement or contract, the Company and the Company Subsidiaries shall maintain
after the Closing Date the Employee Benefit Plans or substitute for such Plans
other plans and policies which shall provide benefits and coverage to current
and retired employees of the Company and the Company Subsidiaries that are in
the aggregate substantially similar to the benefits and coverage afforded by the
Employee Benefit Plans. Prior to the Closing, the Seller and the Company will
take any and all such actions necessary or appropriate to establish, adopt,
enter into and implement such plans, policies, administrative systems and
contracts, including, without limitation, establishing as necessary plans and
related trust agreements that are substantially identical to the pension benefit
plans included within the Employee Benefit Plans, continuing such benefits and
coverage in accordance with this Section 5.05(a). Nothing in this Agreement
shall preclude the Company from amending or terminating any Employee Benefit
Plan or any other Company benefit plan.
25
(b) As soon as practicable, but no more than sixty (60) days
following the Closing Date, the Seller shall cause the assets related to the
accounts maintained for the benefit of current and former employees of the
Company and the Company Subsidiaries pursuant to the 401(k) plans set forth on
Section 5.05(b) of the Disclosure Schedule (the "Company 401(k) Plans") held in
the applicable Master Trusts (the "Master 401(k) Trusts") to be transferred to a
successor trust established by the Company or one of its Affiliates (the "New
401(k) Trust"). The amount of assets transferred from the Master 401(k) Trusts
to the New 401(k) Trust shall be equal to the fair market value of the assets
held in the Master 401(k) Trusts for such employee and former employees'
accounts.
(c) As soon as practicable following the Closing Date, but in no
event later than (i) 60 days after the Closing Date and (ii) 30 days after the
finalization of the necessary data required for determination of assets and
liabilities, the Seller shall spin off assets and liabilities from the Seller's
USI Group Pension Plan and U.S. Industries, Inc. Pension Plan (the "Spinoff
Plans") for benefits accrued as of the Closing Date with respect to the active
employees of the Company and active and terminated vested and retired former
employees of the Company Subsidiaries participating in the Spinoff Plans as
detailed in Section 5.05(c) of the Disclosure Schedule. The amount of assets
transferred shall be calculated in accordance with section 1.414(1)-1(n)(1) of
the Treasury Regulations applying the following PBGC assumptions used for plans
terminating as of the Closing Date:
o PBGC interest rate used to value annuities specified in Table
I of Appendix B of Part 4044 of the PBGC regulations
promulgated under ERISA
o 1983 Group Annuity Mortality Table o Expense load in
accordance with Appendix C of Part 4044 of the PBGC
regulations promulgated under ERISA
o Expected retirement ages as specified in Appendix D of Part
4044 of the PBGC regulations promulgated under ERISA
o No other demographic assumption shall be used.
The amount of assets to be transferred shall be calculated as of the Closing
Date based on employee data as of 12/31/99, aged to the Closing Date and
credited with actual trust earnings from the Closing Date to the actual transfer
date, adjusted for applicable benefit payments and plan expenses in accordance
with past practices.
(d) As soon as practicable following the Closing Date, but no more
than sixty (60) days following the Closing Date, the Seller shall cause all of
the assets related to the pension plans set forth on Section 5.05(d) of the
Disclosure Schedule (the "Company Subsidiary Pension Plans") held in the Master
Trust to be transferred to the New Pension Trusts. The "Spinoff Plans" and the
"Company Subsidiary Pension Plans" together are "USI Pension Plans."
(e) All contributions that are, or will be, required to be made to
any USI Pension Plan, or a successor to such plan, by Section 302 of ERISA or
section 412 of the Code with respect to the plan year of any such USI pension
26
plan, or successor plan, beginning or ending in 1999, to the extent not paid by
the Seller prior to the Closing Date, will be paid subsequent to the Closing
Date by the Seller in accordance with Section 302 of ERISA and section 412 of
the Code.
5.06. Further Assurances. Each of the parties hereto agrees to use
its reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations or otherwise to consummate and make effective the
transactions contemplated by this Agreement including the Corporate
Reorganization, the sale, assignment, transfer and conveyance of the Purchased
Securities and the underlying assets and properties used in the conduct of the
business of any Company Subsidiary or the benefits thereof. If at any time after
the Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement including the Corporate Reorganization and the sale,
assignment, transfer and conveyance of the Purchased Securities and the
underlying assets and properties used in the conduct of the business of any
Company Subsidiary or the benefits thereof, the parties hereto shall take or
cause to be taken all such necessary action, including, without limitation, the
execution and delivery of such further instruments and documents as may be
reasonably requested by any party for such purposes or otherwise to consummate
and make effective the transactions contemplated hereby.
5.07. Binding on Successors. In the event Buyer, the Company or any
of their respective successors or assigns or Seller or any of its respective
successors or assigns (a) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (b) transfers all or substantially all of its
properties and assets to any Person, then and in each such case, proper
provision shall be made so that the successors and assigns of Buyer or the
Company or the Seller, as applicable (or their successors and assigns), shall
assume any obligations set forth in this Article V that survive the Closing
Date.
5.08. Non-Compete and Non-Solicitation.
(a) So that Buyer may enjoy the full benefits of the aircraft bearing
inspection and repair business, Seller agrees with the Buyer that for a period
of three (3) years after the Closing, neither the Seller nor any of its
Affiliates shall engage, directly or indirectly, in lines of businesses
competitive to the business of the Company's subsidiary, Bearing Inspection
Holdings Inc. or its Subsidiaries (collectively, "Bearing") anywhere in the
world, provided, however, should the Seller or any of its Affiliates purchase a
business, a division or subsidiary which engages in a line of business which is
competitive with the business of Bearing as it exists on the Closing Date, the
Seller or its Affiliate, as applicable, shall have a period of twelve (12)
months following the date of such purchase to dispose of such competing
business. Seller agrees that the foregoing covenant is intended to prohibit
Seller from engaging in such activities, as the case may be, as owner, creditor
(except as a trade creditor in the ordinary course of business), partner,
stockholder or lender (except as a holder of equity or debt securities in the
Company or a corporation which has a class of securities that are publicly
traded on a stock exchange or the recognized over-the-counter market, and then
only to the extent of owning not more than five percent (5%) of the issued and
outstanding debt or equity securities of such corporation), contractor or agent
for any person, firm or corporation.
27
(b) In consideration of the Unit Consideration and the Seller Note
and in order that the Buyer may enjoy the full benefits of the business, Seller
covenants and agrees that, for three (3) years after the Closing Date, neither
Seller nor any of its Affiliates shall solicit, employ, retain as a consultant,
interfere with or attempt to entice away from the Company or any Company
Subsidiary or any successor to any of the foregoing any individual who is, has
agreed to be or within one year of such solicitation, employment, retention,
interference or enticement has been, employed or retained by the Company, the
Company Subsidiary or any successor to any of the foregoing.
(c) Seller acknowledges and agrees that the remedy at law for any
breach, or threatened breach, of any of the provisions of this Section 5.08 will
be inadequate and, accordingly, Seller covenants and agrees that the Buyer
shall, in addition to any other rights and remedies which the Buyer may have, be
entitled to equitable relief, including injunctive relief, and to the remedy of
specific performance with respect to any breach or threatened breach of such
covenant, as may be available from any court of competent jurisdiction. Such
right to obtain equitable relief may be exercised, at the option of the Buyer,
concurrently with, prior to, after, or in lieu of, the exercise of any other
rights or remedies that the Buyer may have as a result of any such breach or
threatened breach.
(d) In the event that the provisions of this Section 5.08 shall be
determined by a court of competent jurisdiction to be unenforceable under
applicable law as to that jurisdiction (the parties agreeing that such decision
shall not be binding, res judicata or collateral estoppel in any other
jurisdiction) for any reason whatsoever, then any such provision or provisions
shall not be deemed void, but the parties hereto agree that said limits may be
modified by the court and that said covenant contained in this Section 5.08
shall be amended in accordance with said modifications, it being specifically
agreed by Seller and the Buyer that it is their continuing desire that this
covenant be enforced to the full extent of its terms and conditions or if a
court finds the scope of the covenant unenforceable, the court should redefine
the covenant so as to comply with applicable law.
5.09. Confidentiality. Seller shall, and shall cause its Affiliates
and representatives to, keep confidential and not disclose to any other Person
or use for its own benefit or the benefit of any other Person any confidential
proprietary information, technology, know-how, trade secrets (including, without
limitation, all results of research and development), product formulas,
industrial designs, franchises, inventions or other industrial and intellectual
property in its, his, her or their possession or control regarding the Company,
any Company Subsidiary or their business and operation. The obligations of the
Seller under this Section 5.09 shall not apply to information which (i) is or
becomes generally available to the public without breach of the commitment
provided for in this Section; or (ii) is required to be disclosed by law, order
or regulation of a court or tribunal or governmental authority; provided,
however, that, in any such case, the Seller subject to such requirement shall
notify the Buyer and the Company as early as reasonably practicable prior to
disclosure to allow the Buyer and the Company to take appropriate measures to
preserve the confidentiality of such information.
5.10. Change in Control Payments. Seller shall pay or shall cause to
be paid all amounts (to the extent not reflected in the Closing Statement) which
shall become due and payable by the Company or any Company Subsidiaries as a
result of a trigger of a change in control or similar provision in any agreement
as a result of consummation of the transactions contemplated herein.
28
5.11. Jade Holdings. Prior to the Closing, Jade Holdings shall not,
and Seller shall cause Jade Holdings not to, make any dividend or distribution
to Seller or its respective subsidiaries.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller to effect the transactions contemplated
hereby shall be subject to its receipt of the deliveries contemplated by Section
2.03 hereof and to the fulfillment, or written waiver by Seller, at or prior to
the Closing of each of the following conditions:
6.01. Representations and Warranties True.
(a) Each of the representations and warranties of Buyer contained in
Sections 4.01, 4.02 and 4.06 of this Agreement shall be true and correct at and
as of the Closing Date, with the same force and effect as though made at and as
of the Closing Date (except to the extent that any representation or warranty is
made as of a specific date, in which case such representation or warranty shall
be true and correct as of such date).
(b) The representations and warranties of Buyer in this Agreement
(other than those referred to in Section 6.01(a)) shall be true and correct at
and as of the Closing Date with the same force and effect as though made at and
as of the Closing Date (except to the extent that any representation or warranty
is made as of a specific date, in which case such representation or warranty
shall be true and correct as of such date). The determination of whether the
condition set forth in this Section 6.01(b) shall be satisfied shall be made on
a cumulative basis by adding the effect of all breaches of representations and
warranties (determined without regard to any materiality or Buyer Material
Adverse Effect or similar qualifiers). If the effect of the aggregation of such
breaches of representations or warranties does not result in a Buyer Material
Adverse Effect, then this condition shall be deemed satisfied.
6.02. Performance. Buyer shall have performed and complied in all
material respects with all agreements, obligations, covenants and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing, including without limitation Buyer's obligation in Section 5.02(b).
6.03. No Injunction or Proceeding. No Order shall have been enacted,
entered, promulgated or enforced by any Governmental Entity which prohibits or
restricts the consummation of the transactions contemplated hereby. No action or
proceeding by any Governmental Entity shall be pending or threatened in writing
against Buyer, the Seller, the Company or any of their respective Affiliates,
associates, officers or directors seeking to prevent or delay the transactions
contemplated hereby or challenging any of the terms or provisions of this
Agreement or seeking material damages in connection therewith.
29
6.04. Certificates. Buyer shall have furnished JUSI with such
certificates of its officers and others to evidence its compliance with the
conditions set forth in this Article VI as may be reasonably requested by JUSI.
6.05. Credit Facility. There shall be availability to the Operating
Companies under the Credit Facility of not less than $35 million (after giving
effect to the Jade Holdings Pay-off and payment of the Designated Expenses).
6.06. Rexair Transaction. The transaction contemplated by the
Subscription Agreement shall have been consummated.
6.07. Material Adverse Effect. No Buyer Material Adverse Effect shall
have occurred nor shall any event or circumstance which could reasonably be
expected to produce a Buyer Material Adverse Effect have occurred.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to effect the transactions contemplated
hereby shall be subject to its receipt of the deliveries contemplated by Section
2.02 hereof and to the fulfillment, or written waiver by Buyer, at or prior to
the Closing of each of the following conditions:
7.01. Representations and Warranties True.
(a) Each of the representations and warranties of Seller contained in
Sections 3.01, 3.02, 3.03, 3.04 and 3.16 of this Agreement shall be true and
correct at and as of the Closing Date, with the same force and effect as though
made at and as of the Closing Date (except to the extent that any representation
or warranty is made as of a specific date, in which case such representation or
warranty shall be true and correct as of such date).
(b) The representations and warranties of Seller in this Agreement
(other than those referred to in Section 7.01(a)) shall be true and correct at
and as of the Closing Date with the same force and effect as though made at and
as of the Closing Date (except to the extent that any representation or warranty
is made as of a specific date, in which case such representation or warranty
shall be true and correct as of such date). The determination of whether the
condition set forth in this Section 7.01(b) shall be satisfied shall be made on
a cumulative basis by adding the effect of all breaches of representations and
warranties (determined without regard to any materiality or Company Material
Adverse Effect or similar qualifiers). If the effect of the aggregation of such
breaches of representations or warranties does not result in a Company Material
Adverse Effect, then this condition shall be deemed satisfied.
7.02. Performance. The Seller shall have performed and complied in
all material respects with all agreements, obligations, covenants and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing.
30
7.03. No Injunction or Proceeding. No Order shall have been enacted,
entered, promulgated or enforced by any Governmental Entity which prohibits or
restricts the consummation of the transactions contemplated hereby. No action or
proceeding by any Governmental Entity shall be pending or threatened in writing
against Buyer, the Seller, the Company or any of their respective Affiliates,
associates, officers or directors seeking to prevent or delay the transactions
contemplated hereby, challenging any of the terms or provisions of this
Agreement or seeking material damages in connection therewith.
7.04. Certificates. The Seller shall have furnished Buyer with such
certificates of its officers or other representatives and others to evidence
compliance by the Seller with the conditions set forth in this Article VII as
may be reasonably requested by Buyer.
7.05. Credit Facility. There shall be availability to the Operating
Companies under the Credit Facility of not less than $35 million (after giving
effect to the Jade Holdings Pay-off and payment of the Designated Expenses).
7.06. Consents. The Seller, the Company or the appropriate Company
Subsidiary shall have received all consents from third parties (including any
Governmental Entity), the absence of which could reasonably be expected to have
a Company Material Adverse Effect, including the consents described in Section
3.05 of the Disclosure Schedule, in form and substance reasonably acceptable to
Buyer.
7.07. Material Adverse Effect. No Company Material Adverse Effect
shall have occurred nor shall any event or circumstance which could reasonably
be expected to produce a Company Material Adverse Effect have occurred.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.01. Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by written mutual consent of the Seller and Buyer;
(b) by either the Seller or Buyer by written notice given to the
other at any time after March 31, 2000 if, through no fault of the party seeking
termination, the Closing shall not have occurred;
(c) by Buyer by written notice given to the Seller, if there has been
a material violation or breach by the Seller of any agreement, representation or
warranty contained in this Agreement and such violation or breach has not been
cured within 30 days following notice thereof; or
(d) by the Seller by written notice given to the Buyer, if there has
been a material violation or breach by Buyer of any agreement, representation or
31
warranty contained in this Agreement and such violation or breach has not been
cured within 30 days following notice thereof.
8.02. Procedure and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by any or all of the parties pursuant to Section 8.01 hereof, written
notice thereof shall forthwith be given to the other party or parties hereto and
this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
(a) upon request therefor, each party will redeliver all documents,
work papers and other material of any other party or of the Company or any
Company Subsidiary relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, to the party furnishing or
causing to be furnished the same;
(b) all information received by Buyer with respect to the business of
the Company or any Company Subsidiary shall be held subject to and in accordance
with the terms of the Confidentiality Agreement, which agreement shall continue
notwithstanding the termination of this Agreement; and
(c) any termination pursuant to Section 8.01(c) or (d) shall not be
deemed a waiver of any rights or remedies otherwise available under this
Agreement, by operation of law or otherwise, to the party who so terminates and
shall not relieve the breaching party (whether or not it is the terminating
party) from any liability to the other party hereto arising from or related to
such breach.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01. Amendment and Modification. This Agreement may be amended,
modified or supplemented at any time by the parties hereto only by an instrument
in writing duly signed by the parties hereto.
9.02. Extension; Waiver. At any time prior to the Closing Date, the
parties entitled to the benefits of the respective term or provision may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein any document, certificate or writing delivered
pursuant hereto or (c) waive compliance with any obligation, covenant, agreement
or condition contained herein. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of the parties entitled to the benefits of such
extended or waived term or provision.
No waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a waiver of any other provision hereof (whether or not
similar). No delay on the part of any party in exercising any right, power, or
privilege hereunder shall operate as a waiver thereof.
32
9.03. Non-Survival of Representations and Warranties. Except as
otherwise provided for in the Indemnification Agreement and the Tax Sharing
Agreement, the representations and warranties made in this Agreement shall not
survive beyond the Closing.
9.04. Entire Agreement; Assignment. This Agreement together with the
Indemnification Agreement, the Tax Sharing Agreement, the Remarketing Agreement
and the underlying documentation to effect the Corporate Reorganization (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof (other than the Confidentiality Agreement) and (b) shall not be
assigned by operation of law or otherwise by the Seller without the prior
written consent of the Company, which shall not be unreasonably withheld. This
Agreement may be assigned by the Company or Buyer to (i) any Affiliate (but no
such assignment shall release Company or Buyer of its obligations hereunder),
(ii) one or more of its lenders if required by same or (iii) to any purchaser of
the outstanding stock or all or substantially all of the assets of any Company
Subsidiary without the prior written consent of Seller.
9.05. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
9.06. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission or telexed or three days after
being mailed by registered or certified mail (return receipt requested), postage
prepaid, and one Business Day after deposited with an overnight courier service
if delivered by overnight courier, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice;
provided, that notices of a change of address shall be effective only upon
receipt thereof):
(a) if to the Seller, to:
c/o U.S. Industries, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
(b) if to Buyer, to:
Automotive Interior Products LLC
c/o Citicorp Venture Capital Ltd.
000 Xxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
33
with a copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: G. Xxxxxx X'Xxxxxxx
9.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
9.08. Specific Performance. The parties hereto agree that if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
9.09. Public Disclosure. Notwithstanding anything herein to the
contrary, each of the parties to this Agreement hereby agrees with the other
party or parties hereto that, except as may be required to comply with the
requirements of any applicable laws and the rules and regulations of any stock
exchange upon which the securities of one of the parties (or its Affiliate) is
listed, in which case the party making the release or announcement shall provide
a copy of such release or announcement 48 hours in advance to the other parties,
no press release or announcement with respect to the transactions contemplated
by this Agreement shall be issued by any party to this Agreement prior to the
Closing without the advance consent of the other parties.
9.10. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning interpretation of this Agreement.
9.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.12. Fees and Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, Seller shall pay all of the out-of-pocket
expenses incurred by the Seller, the Company and any Company Subsidiary in
connection with the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, all legal, accounting, financial advisory and other costs and
expenses; provided, however, that any out-of-pocket expenses incurred in
connection with the Bank Commitment Letter and the Credit Facility (including
without limitation reimbursement of the $500,000 advance made by Seller under
the commitment letter) shall be paid out of the Initial Bank Drawdown. If the
transactions contemplated by this Agreement are consummated, the Company, as
Agent for the Operating Companies, shall pay out of the Initial Bank Drawdown
the Citicorp Mezzanine Fund commitment fee of $700,000 and up to $1.3 million of
34
reasonable and invoiced out-of-pocket legal, accounting and environmental
consulting expenses incurred by the Buyer in connection with the negotiation and
preparation of this Agreement and the consummation of the transactions
contemplated hereby and Buyer shall pay any other out-of-pocket expenses
incurred by it in connection therewith. If the transactions contemplated by this
Agreement are not consummated, Buyer shall be responsible for all its own
out-of-pocket expenses. All expenses payable out of the Initial Bank Drawdown as
provided above shall be referred to as the "Designated Expenses".
9.13. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and nothing in this Agreement,
express or implied, is intended by or shall confer upon any other Person or
Persons any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
9.14. Definitions. As used in this Agreement:
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities and Exchange Act of 1934, as
amended.
"Applied GAAP" means GAAP (A) subject to the same exceptions as
specifically set forth in the notes to the Balance Sheet and otherwise using the
same accounting methods, policies, practices, and procedures, with consistent
classification, judgments, and estimation methodology, as were used in preparing
the Balance Sheet (as hereinafter defined), (B) not taking into account any
changes in circumstances or events occurring after the opening of business on
the Closing Date and (C) in no event including any receivables or payables owed
by or owed to Seller or any Affiliates thereof.
"Business Day" shall mean any day in which banks are open for
business in New York City.
"Buyer Material Adverse Effect" shall mean a material adverse effect
(or series of related changes or effects) on the business, financial condition
or results of operations of the Buyer; provided, that for purposes of this
Agreement, changes or effects (i) attributable to worldwide, national or local
economic conditions or (ii) generally affecting the industries in which the
Buyer operates shall, in each case, not be deemed to constitute a Buyer Material
Adverse Effect.
"Company Material Adverse Effect" shall mean a material adverse
effect (or series of related changes or effects) on the business, financial
condition or results of operations of the Company and the Company Subsidiaries
taken as a whole; provided, that for purposes of this Agreement, changes or
effects (i) attributable to worldwide, national or local economic conditions or
(ii) generally affecting the industries in which the Company or any Company
Subsidiary operates shall, in each case, not be deemed to constitute a Company
Material Adverse Effect.
"Debt" means (a) all indebtedness of the Company and the Company
Subsidiaries for borrowed money, (b) all obligations of the Company and the
Company Subsidiaries for the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business and
consistent with past practice), (c) all obligations of the Company and the
35
Company Subsidiaries evidenced by notes, bonds, debentures or other similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by the
Company or the Company Subsidiaries (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations of the Company and
the Company Subsidiaries as lessee or lessees under leases that have been or
should be in accordance with generally accepted accounting principles recorded
as capital leases having future payments in excess of an aggregate of $6.2
million, (f) all obligations, contingent or otherwise, of the Company and the
Company Subsidiaries under acceptance, letter of credit (other than to the
extent that such letter of credit (A) secures goods or services purchased or to
be purchased by the Company or the Company Subsidiaries in the ordinary course,
(B) secures or supports a liability on the Closing Statement or (C) supports
insurance or employee benefit obligations of the Company or the Company
Subsidiaries) or similar facilities, (g) all Debt of the type referred to in
clauses (a) through (f) above guaranteed directly or indirectly in any manner by
the Company or the Company Subsidiaries, or in effect guaranteed directly or
indirectly by the Company or the Company Subsidiaries through an agreement, (h)
all Debt of the type referred to in clauses (a) through (f) above secured by (or
for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any lien on property (including, without
limitation, accounts and contract rights) owned by the Company or any of the
Company Subsidiaries, even though such person has not assumed or become liable
for the payment of such Debt, and (i) all accrued but unpaid interest (or
interest equivalent) to the date of determination, and all prepayment premiums
or penalties, related to any items of Debt of the type referred to in clauses
(a) through (h) above; provided, however, intercompany debt among any of the
Company Subsidiaries or between any of the Company Subsidiaries and JUSI or
Global, which shall be canceled or prior to the Closing Date shall not be deemed
to be Debt. For the avoidance of doubt, any letters of credit issued on behalf
of the Company or any of the Company Subsidiaries in connection with the
transactions contemplated by this Agreement or the Indemnification Agreement
shall not be deemed to be Debt.
"Final Working Capital" shall mean Closing Date Working Capital (x)
as shown in the Closing Statement if no Notice of Disagreement with respect
thereto is duly and timely delivered pursuant to Section 1.04 or (y) if such a
Notice of Disagreement is so delivered, as agreed by Seller and Buyer pursuant
to Section 1.04 or (z) if such Notice of Disagreement is so delivered and in the
absence of such agreement, as shown in the Arbiter's calculation delivered
pursuant to Section 1.04.
"Form 10" shall mean the following sections of Amendment No. 2 to the
Form 10 filed with the Securities and Exchange Commission on November 4, 1999,
solely as it relates to the Company Subsidiaries: "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
"Original Date" shall mean January 15, 2000.
"Person" shall mean any individual, corporation, partnership,
association, limited liability company, trust, unincorporated organization,
other entity or group (as group is defined in Section 13(d)(3) of the Exchange
Act).
"Reference Amount" shall mean $182,200,000.
36
"Subscription Agreement" shall mean the Subscription Agreement, dated
as of the Original Date and amended and restated as of the date hereof, among
Seller, the Company, Strategic Industries, Inc. and Buyer.
"Subsidiary" shall mean any Person of which more than 50% of the
total voting power of stock or other equity interests having ordinary voting
power for the election of directors or managers of such Person is at the time
owned or controlled, directly or indirectly, by another Person.
"Working Capital" shall mean the amount equal to (x) the book value
of the current assets of the Company and the Company Subsidiaries minus (y) the
book value of the current liabilities of the Company and the Company
Subsidiaries in each case as such "current assets" and "current liabilities" are
properly, or should be, accrued and reflected on the combined financial
statements of the Company and the Company Subsidiaries in accordance with
Applied GAAP, except that (i) all current Debt and (ii) Taxes based on income
will be excluded from "current liabilities." For the avoidance of doubt, such
amount shall be calculated in accordance with Section 1.04(e) of the Disclosure
Schedule and the accrual for Taxes shall not include any provision or reserve
for audit adjustments or contested liabilities.
37
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be signed by its duly authorized officers as of the date first above written.
U.S. INDUSTRIES, INC.
By: /s/ Xxxxxx X. XxxXxxx
--------------------------------
Name: Xxxxxx X. XxxXxxx
Title: Vice President
JUSI HOLDINGS, INC.
By: /s/ Xxxxxx X. XxxXxxx
--------------------------------
Name: Xxxxxx X. XxxXxxx
Title: Vice President
STRATEGIC INDUSTRIES, LLC
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
AUTOMOTIVE INTERIOR PRODUCTS LLC
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
38
================================================================================
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
U.S. INDUSTRIES, INC.,
JUSI HOLDINGS, INC.,
STRATEGIC INDUSTRIES, LLC
AND
AUTOMOTIVE INTERIOR PRODUCTS LLC
Dated as of January 15, 2000
and Amended and Restated as of March 24, 2000
================================================================================
39
TABLE OF CONTENTS
PAGE
----
ARTICLE I CORPORATE REORGANIZATION, REPAYMENT OF
INTERCOMPANY DEBT, REDEMPTION OF SHARES,
SALE OF UNITS AND RELATED MATTERS .............................................................................1
1.01. Corporate Reorganization.............................................................................1
1.02. Bank Borrowing; Issuance of Notes; Repayment of Intercompany Debt and Redemption of Redeemed Shares..2
1.03. Sale and Purchase of Purchased Units.................................................................3
1.04. Adjustment of Redemption Consideration...............................................................3
1.05. Transfers of Contributed Shares......................................................................6
1.06. Company Right to Require Repurchase of Stock of UPI..................................................6
ARTICLE II THE CLOSING 7
2.01. Time and Place of Closing............................................................................7
2.02. Deliveries by Seller.................................................................................7
2.03. Deliveries by Buyer..................................................................................8
2.04. Delivery by Citicorp Mezzanine Fund..................................................................8
2.05. Deliveries by the Company............................................................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER..................................................................9
3.01. Corporate Organization; Etc..........................................................................9
3.02. Capitalization of the Company.......................................................................10
3.03. Company Subsidiaries................................................................................10
3.04. The Seller's and the Company's Authority Relative to this Agreement.................................10
3.05. Consents and Approvals; No Violations...............................................................11
3.06. Financial Statements................................................................................12
3.07. Form 10; Absence of Certain Changes.................................................................12
3.08. Compliance with Law.................................................................................14
3.09. Contracts ..........................................................................................14
3.10. Litigation .........................................................................................15
3.11. Taxes...............................................................................................15
3.12. Employee Benefit Plans; ERISA.......................................................................16
3.13. Title to Properties.................................................................................18
i
3.14. Patents, Trademarks, Etc............................................................................18
3.15. Environmental Matters...............................................................................19
3.16. Brokers and Finders.................................................................................20
3.17. Undisclosed Liabilities.............................................................................20
3.18. Related Party Transactions..........................................................................20
3.19. Adequacy of Assets..................................................................................20
3.20. Securities Act Considerations.......................................................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................................21
4.01. Organization; Etc...................................................................................21
4.02. Authority Relative to this Agreement................................................................21
4.03. Consents and Approvals; No Violations...............................................................21
4.04. Securities Act Considerations.......................................................................22
4.05. Financial Capability................................................................................22
4.06. Brokers and Finders.................................................................................22
4.07. Buyer's Sophistication..............................................................................22
ARTICLE V COVENANTS OF THE PARTIES......................................................................................22
5.01. Conduct of Business of the Company..................................................................22
5.02. Financial Capability................................................................................24
5.03. Additional Information..............................................................................24
5.04. Covenant to Satisfy Conditions......................................................................25
5.05. Employee Matters....................................................................................25
5.06. Further Assurances..................................................................................27
5.07. Binding on Successors...............................................................................27
5.08. Non-Compete and Non-Solicitation....................................................................27
5.09. Confidentiality.....................................................................................28
5.10. Change in Control Payments..........................................................................28
5.11. Jade Holdings.......................................................................................29
ARTICLE VI CONDITIONS TO THE OBLIGATIONS OF SELLER.......................................................................29
6.01. Representations and Warranties True.................................................................29
6.02. Performance.........................................................................................29
6.03. No Injunction or Proceeding.........................................................................29
6.04. Certificates........................................................................................30
6.05. Credit Facility.....................................................................................30
ii
